Gambling (Licensing and Advertising) Bill

John Leech Excerpts

Tuesday 5th November 2013 Commons Chamber

[Mrs Grant]

This is exactly why we are seeking to regulate remote gambling. The process is quite circular in many ways. Unfortunately, according to the Gambling Commission, 85% of the remote gambling that takes place in Britain is unregulated. Many people are therefore not protected. The Bill will enable them to enjoy a more consistent and robust level of protection. That is exactly what the Bill is about.

[Mr John Leech (Manchester, Withington) (LD)]

The Bill will also ensure that remote gambling organisations are paying something towards dealing with the outcomes of problem gambling.

[Mrs Grant]

Absolutely. It is important that they should pay their fair share, just as the onshore companies offering remote gambling already do. Again, this is about achieving a level playing field.

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[Clive Efford]

I think that we shall be seeking assurances from the Government on the issue of consumer protection. We shall want to see exactly where the lines will be drawn, and where the Government feel that action should be taken if any form of illegal activity is taking place or there is no protection for vulnerable people.

Online gambling is an important issue of public concern, and we are entitled to know how the Government intend to monitor it. The Bill does not specify a point at which operators would be required to intervene, and to discuss directly with their customers whether there is a problem. Some people have expressed concern about the fact that we have a weaker regulatory framework than that which operates under the regulators in white-listed countries such as Alderney and Gibraltar. There is new technology designed to identify people who may have problems, but there has been no indication from the Government that they intend to use it to protect vulnerable consumers.

[Mr John Leech (Manchester, Withington) (LD)]

One of the problems of the current system is that, while the likes of Gibraltar may have a fairly good regulatory system, those of other white-listed countries may be less than desirable.

[Clive Efford]

I have seen no evidence suggesting that any white-listed countries have a significantly lesser regulatory system. Indeed, the position appears to be quite the opposite when it comes to protecting vulnerable people. The Bill, however, opens the market to people who currently cannot operate within the United Kingdom, and that is one of the main points of concern. What steps does the Minister expect the Gambling Commission to take, and at what stage does she expect it to intervene if operators fail in their duty to monitor gambling activity?

There is widespread concern about pre-watershed gambling advertising. Although most gambling is not advertised before the watershed, there are exceptions for betting during sports fixtures that are televised before 9 pm. Can the Minister assure us, given the amount of concern about the issue, that she will consider reviewing that aspect of advertising regulation?

Although it is welcome that every gambling operator who advertises in the United Kingdom will be required to be licensed by the Gambling Commission, the Bill will open up the market to operators outside the European economic area and the white list. In her evidence to the Select Committee Jenny Williams, chief executive of the commission, said that

“the Gambling Commission received one or two reports per month from its online gambling licensees, who handled…20% of the market, but from the 80% licensed overseas the Commission had received a total of about ten since 2007. Ms Williams suggested it was implausible there were so few suspicious transactions.”

In that context, the Bill is a giant leap in the dark. What will be the demand on the commission’s resources? No one can say for certain what the scale of the problem may be. The Government have allowed themselves scope to regulate in the future, but given their reluctance so far to act to protect the consumer, we must insist on some indication from them of what they are prepared to tolerate before they will take such action. What will be their response if the commission says that it cannot cope with money from licence fees alone, and asks for extra resources? What if it needs extra powers with which to tackle the problems presented by the opening of our market to companies that are currently excluded? The Minister must explain what benchmarks the Government will set themselves, according to which we can hold them to account. It has taken so long for them to present the Bill that we cannot pass up the opportunity to secure from them clear guidelines explaining how they expect the market and the regulators to deal with these important issues.

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[Mr John Leech (Manchester, Withington) (LD)]

I am delighted to have this opportunity to speak in favour of the Bill. It will go a long way towards creating a level playing field for the onshore betting industry and towards reversing the trend of remote gambling companies setting up their businesses abroad to avoid the Gambling Commission’s regulatory regime and to avoid paying tax on transactions in the UK.

I pay tribute to the former sports Minister and my parliamentary colleague on the Culture, Media and Sport Committee, the hon. Member for Bradford South (Mr Sutcliffe), for recognising in April 2009 that changes would be required to keep up with the technological advances in online gambling. As a “Yorkshire United” supporter, he might not know anything about football, but it is fair to say that he knows a fair bit about gambling, and he was a pretty good Minister in his time in the Department. I also pay tribute to the fact that he took into consideration the arguments of my right hon. Friend the Member for Bath (Mr Foster), who had been arguing the case for reform throughout the whole of the last Parliament.

As a result of the Bill, remote gambling will be regulated at the point of consumption. All operators selling into the British market, whether from here or abroad, will be required to hold a Gambling Commission licence, which will level the playing field for British-based licence holders. The Bill will also repeal section 331 of the Gambling Act 2005, removing the offence of advertising foreign gambling and consequently the distinction between white-list and EEA countries and non-EEA jurisdictions. Instead, in order to advertise to British consumers, all operators will have to hold a GC remote licence, regardless of where they are based.

The changes will provide increased protection for British consumers, because all remote gambling operators will be subject to robust and consistent regulation, as well as being required to support action against illegal activity and corruption in sport, and to comply with licence conditions that protect children and vulnerable adults. They will also be required to contribute to research, education and treatment in relation to British problem gambling.

As the Chairman of the Select Committee, my hon. Friend the Member for Maldon (Mr Whittingdale), pointed out, the Committee carried out pre-legislative scrutiny of the Bill. It is perhaps not surprising that its provisions have not been well received by either the remote gambling operators or the overseas regulators. The Remote Gambling Association has questioned whether the legislation might fall foul of European Union law by creating a restriction on trade between EU states, but the Department’s response has been fairly robust, arguing that the Bill is necessary and proportionate for enhancing consumer protection for British citizens. Our Committee was satisfied that the Government had considered the question of compatibility, and we accepted their confidence that any legal action would be unsuccessful.

The Remote Gambling Association has argued that the change in legislation will send punters to unregulated sites on the black market where there is no regulatory regime. That view has been backed up by the Gibraltar Betting and Gaming Association, which has claimed that online gaming customers will migrate to unregulated and non-compliant operators who have a significant market advantage over the regulated and compliant operators, resulting in completely the opposite of what the Government are trying to achieve. That point was raised by the hon. Member for Shipley (Philip Davies).

I do not believe that that will be the case, however. Jenny Williams, the chief executive of the Gambling Commission, has made it clear that there will be little scope for significant expansion of the black market when there are already few restrictions on the type of gambling available and when advertising is freely available within the regulated market. The Department has also made it clear that this is not about more restrictive regulation; it is simply about consistent regulation.

The RGA has also claimed that this is all about tax. In giving evidence to the Select Committee, it declared that the provisions were a

“backdoor method to tax off-shore operators”.

They are not, but that would certainly be a welcome consequence—unintended or otherwise—of the Bill. Critics of the offshore remote gambling industry, and supporters of the Bill, legitimately point out that in many cases operators ended up as offshore remote gambling sites to avoid paying tax in the first place. The RGA told our Committee that about 7,000 people were working in the UK for remote gambling companies based offshore, but it could not answer my direct question about how many are working offshore. It effectively admitted, however, that it was only a fraction of that number. Let us be honest: these companies are effectively UK-based, barring certain technicalities, and they are based abroad only to avoid paying tax and to be able to compete with their genuinely foreign-based competitors.

The Department for Culture, Media and Sport is adamant that this is not about taxation, but the legislation will have the good unintended consequence of paving the way to ensuring that foreign-based operators are taxed on any gambling taking place in the UK. Our Committee report got it right when it stated:

“Whether or not this is the case, we regard it as a legitimate and desirable outcome of the change in the licensing regime that in future remote gambling companies doing business in the UK should be subject to the same taxation requirements, whether they are based onshore or offshore.”

[Philip Davies]

I am grateful to the hon. Gentleman for quoting so extensively from our Select Committee report, but does he agree that we were very careful in our wording about what the Government were doing? We said that we were

“satisfied that the Government has considered the compatibility of the proposed legislation with EU law and we note its confidence that any challenge to the legislation would be unlikely to succeed.”

We merely noted the Government’s confidence; we did not necessarily share it.

[Mr Leech]

I thank the hon. Gentleman for his helpful intervention. My impression from the evidence we took was slightly different from his; perhaps I am a little more confident about the Government’s potential for success if anyone in the industry decided to take further action.

While the Bill has its opponents among the remote gambling industry, it also has its supporters within it. Rank fully supports the Gambling Bill, even though it paves the way for measures that it estimates will cost approximately £10 million a year. It sees it as an important opportunity to provide greater consumer protection for British gamblers. Similarly, the British Horseracing Authority, the Sport and Recreation Alliance and the National Casino Industry Forum all welcome the Bill.

The Bill is, however, limited in scope, and many within the industry would have liked it to go further, whether it be in relation to the horse racing betting levy, British terrestrial casinos being able to offer their dedicated online products in their casino buildings, tackling the inequity of bingo taxation, which has not been mentioned so far, or even addressing very legitimate concerns about the proliferation of B2 machine use and its impact on problem gambling. I recognise that this Bill cannot address all those issues within its legislative scope, but perhaps the Minister will in her closing remarks recognise that many other issues remain unresolved and give some indication that the Government will seek to address them.