Gambling (Licensing and Advertising) Bill

Debate between Laurence Robertson and Philip Davies

Tuesday 5th November 2013 Commons Chamber

[Philip Davies]

My hon. Friend is absolutely right. As an occasional punter myself, I can speak with some authority in saying that I am very interested in which bookmaker is offering the best odds—naturally; that is what punters do. In many respects, online horse racing punters have never had it so good in terms of the competitiveness of the odds and offers such as “best odds guaranteed”, which means that if someone backs a horse at a particular price and its starting price is bigger than the price they backed it at, they will get the bigger price—a fantastic offer for punters. All those offers will probably cease once this Bill comes to fruition, when the cost base of bookmakers will go up. That will be a bad thing for punters, who will lose out on the returns they get from their gambling. That is an inevitable consequence of the Bill; it is no good pretending that it is not, and we should be open and honest with people about it. If they still think it is a good Bill anyway, that is fair enough, but at least we should be honest about its implications. There are no painless panaceas whereby everybody will get more money out of it; somebody has to lose, and the loser is undoubtedly going to be the punter.

Because of the competitive nature of the market and the fact that many punters have become used to betting with concessions such as “best odds guaranteed”, some online betting sites will obviously see an advantage in going somewhere else—in being unregulated, not applying for a licence, and hoping that the fact they are not advertising on Sky TV, or wherever it might be, will be overcome by their offering concessions that punters have come to love and that give them much greater value. That is clearly what the Treasury has factored into its predicted revenues. Because it has built its prediction on a tax rate of 15%, it is crucial for everybody concerned that the tax rate introduced when the Bill comes into being is not 15%, because the lower the tax rate, the less the chance of people using unregulated sites and of companies that are currently licensed and regulated becoming unlicensed and unregulated. I support the Bill in principle, but the key part of it is not this Minister’s responsibility but the relevant Treasury Minister’s. I hope she will keep his feet to the fire to make sure that what she intends is not undermined by the Treasury.

[Mr Laurence Robertson]

My hon. Friend is making some excellent points. He talked about people being tempted to bet illegally, possibly because of the withdrawal of special offers. I am sure he is aware, because he has greater knowledge of this than me, that in several countries there is monopoly betting, usually a tote monopoly, and it is illegal to bet beyond that, yet because the internet is so very difficult to control, people in those countries do bet illegally every day, all the time.

[Philip Davies]

My hon. Friend is absolutely right. He undersells how much he knows about this subject; he is far more of an expert than me. When the Select Committee took evidence on gambling during a visit to Brussels, where we met European Union regulators and others in Europe, it was clear that levels of illegal gambling in countries with much greater restrictions than ours were far higher. We can predict what happens if the restrictions imposed are too onerous, because we have seen it in other countries. People go on to illegal sites. As my hon. Friend the Chairman of the Select Committee explained, the efforts made to try to stop people doing that are not particularly successful, as they can be got round. If the focus is on closing down internet sites, they will immediately reopen elsewhere. If it is on blocking credit card payments, people will use PayPal and other methods to get round those restrictions too. It is a pointless exercise. People who want to get round these restrictions will do so. Other countries have proved that, because they have tried them all and they have all spectacularly failed. Nothing will change in this regard, because the Bill is not really about regulation but taxation.

I am concerned about the impact with regard to the Gambling Commission, which, like all quangos and bureaucracies, likes nothing more than a bit of empire building. I suspect that it has seen the Bill and thought, “My goodness me, all our Christmases have come at once!” Whereas before it has had to accept the licensing and regulation from the white list countries, and accept the companies that are considered to be good enough, it can now get its teeth into every single one of them. It can go jetting around the world checking out whether all these individual companies should be a given a licence. Lord knows how many extra people it will need in order to satisfy itself that those companies are fit and proper to advertise their wares in the UK and get themselves an appropriate licence. This Bill is a bureaucrat’s dream. I would be interested to hear what steps are being taken to stop any empire building by the Gambling Commission, because I am sure that would be an unintended consequence of the Bill, allowing a huge bureaucracy to grow on the back of it.

I do not know what the great problem was with the white list. During our Select Committee hearings, I was scrabbling around trying to think of examples of problems. Only one sprang to mind, which was a notorious case where the legendary gambler Barney Curley pulled off a huge coup one day when he had four horses running at different meetings around the country; I think one was somebody else’s that he used to train. The first three won and the last one, fortunately for the bookmakers, lost, but with three out of four winners he still reportedly ended up making a profit on his bets of some £10 million. He was paid out by all the British bookmakers, but the regulator in Gibraltar, I think, allowed the bookmakers based there not to pay him out, which led to a huge dispute over a long period. I think I am right in saying that the situation was eventually resolved and they paid him out.

That is the only case I can recall where the regulation in one jurisdiction was fundamentally different from that in another and the returns to the punter were materially affected. Nobody who came to the Committee ventured that particular example—I ventured it—so they did not seem to be acutely bothered about it. I am not sure, therefore, what was wrong with the old regime.

--- Later in debate ---

[Mr Robertson]

I shall have to accept my hon. Friend’s word on that, as I always do on everything. I have no expertise in the taxation of bingo.

The Bill identifies what might be termed a loophole, although it would be better described as an inconsistency. Companies that locate some of their online business offshore are not regulated, taxed or subject to a levy. I understand why that inconsistency worries a number of people, and I am happy to go along with the proposal to create a level playing field.

As I have said, the Bill does not at this stage refer to a tax or a levy, although it was suggested earlier today, probably by more than one speaker, that a recent European Union ruling was likely to give the Government an opportunity to extend the levy to companies that are based offshore. That might well bring in more money for horse racing, but I accept what was said by my hon. Friend the Member for Shipley. There have been some estimates of how much money it would bring in, which I think may have been exaggerated.

My hon. Friend was understandably concerned about the smaller bookmaking companies, but when it comes to the extra tax and the extra levy, I think we should be a little concerned about the larger ones as well, because we are talking about a very highly taxed industry. As well as the ordinary corporation tax and other taxes that apply to all businesses, it is subject to machine games duty, and to the general betting tax and levy.

[Philip Davies]

Should we not also recognise that bookmakers are giving an increasing amount of money to horse racing through picture rights, which is dwarfing the amount raised by the levy?

[Mr Robertson]

The bookmakers give money to horse racing through picture rights, through the levy, through voluntary sponsorship of races and indeed through hospitality. As my hon. Friend says, the amount of money they put into racing cannot be measured just by the levy, and we must be careful not to tax them too heavily. Last week, during DCMS questions, a number of Members attacked the so-called clustering and proliferation of betting shops. I pointed out that over the last 20 years the number of betting shops has actually halved. I am not sure that that can accurately be described as proliferation.

The pressures on betting shops and bookmakers have increased. As was mentioned earlier, the amount of money that certain individual shops make is very small, and the number of independent bookmakers has been reduced. Creating a level playing field should not mean heaping more tax on bookmakers. We should view the position another way. Yes, we should be searching for that level playing field, but the level could be a great deal lower than it is at present.

Rather than imposing a 15% tax on bookmakers who are based offshore, should we not try to attract them back onshore by reducing the overall burden of taxation, not just for those based abroad but for those in this country? It would be rather perverse to impose a 5% tax on those based in Gibraltar, for example, and a 15% tax on those based here. The levels should be compatible, but lower. I fear that imposing a 15% tax on bookmakers based in such places as Gibraltar would have a negative effect.

I mentioned in an intervention that I have been to countries—I am not going to name them—where there is a tote monopoly and it is illegal to bet outside that monopoly, and I have sat next to people as they have had illegal bets. That is not a clever situation. It is not something I was proud to witness, but it goes on. That is the real world.

We must be careful not to drive businesses from being legitimate and based in Gibraltar, for example, to being based anywhere else in the world and taking bets from this country, completely unregulated and without paying a penny in tax or levy. That would be the complete opposite of what the Government are trying to achieve. There would be no protection for consumers, and we know the internet is notoriously difficult to regulate. That is no fault of this or the previous Government; it is just what has happened.

A few years ago a company called Betfair stole a march on the entire betting industry by creating a betting exchange business. It was hugely successful, and Betfair puts a lot of money into racing, but that move took the entire country and industry by surprise. Nobody knew how to compete with or respond to it. That is the way of the world, however. That is the way things are going.

That is the way things have gone in this House, too. When I arrived here 16 years ago, there were no such things as iPads. Now, they can be used in Committees, and some Committees have even gone paperless: papers are not circulated and instead they use the iPad, which links into the internet. Things have changed, and we do not know how they will change over the next five or 10 years. It is difficult to regulate what goes on via the internet, and we should not pretend that we can. We have to ensure that we do not inadvertently, through well-intentioned measures, make the situation worse.

Mr Deputy Speaker, I am aware that you are anxious to get on to the next debate so I will not say any more. I entirely agree with many of the points made today, and I do not want to repeat them. I am basically in favour of the Bill and a level playing field for taxation, levy, regulation and customer protection. But as the Bill proceeds, I urge the Minister and the Government to ensure that we do not inadvertently make the situation worse.