Gambling (Licensing and Advertising) Bill

Lady Hermon Excerpts

Tuesday 5th November 2013 Commons Chamber

[Clive Efford]

It can be difficult to draw a distinction between such transactions, and the hon. Gentleman has identified one of the reasons why spread betting is treated differently from straightforward betting. Some spread betting is provided by companies that also provide betting services, however, and therefore people might be confused about how this form of betting is regulated. We should consider how to deal with that. If the FCA is going to continue to be the regulator for spread betting, we must consider how it will comply with licence condition 15.1.

As I have said, there is a great deal of concern about problem gambling. Is the FCA able to deal with this issue? Is this a form of activity that would normally concern it? Does it have the power to require operators to have appropriate systems in place to identify individuals with problems? How will it monitor how the operators apply that?

If a scheme were introduced for people with gambling problems to self-exclude, how would it be implemented across two different enforcement regimes? If the Minister cannot satisfy herself that we can safeguard vulnerable people through the FCA, she must take steps to ensure that spread betting is regulated in the same way as all other forms of betting. In the meantime, however, will she give an assurance that spread betting operators who have a betting licence will be monitored by the commission for compliance with licence code 15.1? Should they be found to have failed to notify the FCA of suspicious activity, that must call into question whether they are fit and proper to hold a UK gambling licence, and the commission should have the power to take away their betting licence.

The European Parliament has recently passed a resolution calling on Governments to make match fixing a criminal offence. That has been taken up by Michel Platini, UEFA president, who has called for all European Governments to legislate. The request of Mr Platini is also supported by the Sports Rights Owners Coalition and David Collier, chief executive of the England and Wales Cricket Board, who, through his sport, is at the forefront of trying to ensure that every country across the world has as effective a regime as possible. So what is the response to Michel Platini’s request?

Is it possible to introduce a new clause into this Bill to amend section 42 of the Gambling Act 2005 on cheating? The Minister may be aware that the report of the Sports Betting Integrity Panel in 2010 chaired by Rick Parry recommended that the definition of cheating in the 2005 Act be reviewed. The power in that Act to tackle match fixing is too loosely defined and is not used. Indeed, it was not used in the case of the Pakistani bowlers. They were prosecuted under fraud laws, because the definition of cheating did not cover that form of match fixing sufficiently for it to be used in that case.

The Parry report also had recommendations for sports governing bodies to improve their act. The sports have done what was asked of them. We are all now waiting for the Government to act, and we have to ask why this is: why, when we are attempting to create the most robust system for regulating the gambling industry here in the UK, would we fail to introduce this specific form of sanction? Will the Government consult the sports governing bodies to address the problem of match fixing?

Given the international nature of the remote gambling industry, it is not possible to monitor how operators act in other jurisdictions when reporting suspicious activities. If they fail to notify the relevant licensing authority in any jurisdiction in which they operate of suspicious gambling activities, not just those related to UK-based sports, the commission should have the power to consider whether to revoke their licence to operate here in the UK.

The Bill proposes to amend section 33 of the 2005 Act so that a person providing facilities for remote gambling without a licence in the UK is guilty of committing an offence only

“if the person knows or should know that the facilities are being used, or are likely to be used, in Great Britain.”

Similar assumptions should apply to the reporting of suspicious activities. If an operator has been found knowingly to be providing facilities for unlicensed remote gambling in another jurisdiction, the Gambling Commission must have the power to consider that and remove a licence. Similarly, if the operator is found to have failed to notify the appropriate licensing authority in another jurisdiction of suspicious activity, in the interests of protecting the consumer, the Gambling Commission should be able to revoke the licence of such an operator.

The Minister will know that the issue of overseas betting operators paying the horse racing levy has been a cause of frustration for Government over many years. In answer to a debate on this issue on 20 January 2011, the Minister’s predecessor but one, the hon. Member for Weston-super-Mare, said:

“It is absolutely right for the House to urge the Government to come up with concrete proposals before the end of the year, and I am happy to accept that challenge, in line with the mood of the House.”—[Official Report, 20 January 2011; Vol. 521, c. 1067.]

It is now November 2013, and no Government solution to this issue is in sight.

At last Thursday’s Department for Culture, Media and Sport questions, the Minister said in answer to a question from me about whether she will review the Government’s legal advice in the light of the European Commission’s ruling on the French betting levy:

“I agree with the hon. Gentleman to a certain extent”—

so there is progress there—

“because the levy was created 50 years ago and does not completely deal with modern betting and racing practices, so, as I have previously said, I will consult. We will take evidence and look at the situation very carefully indeed, and try to find a modern, sustainable and enforceable legal solution.”—[Official Report, 31 October 2013; Vol. 569, c. 1062.]

The Bill, in effect, brings online gambling under the Betting, Gaming and Lotteries Act 1963 in exactly the same way as bricks and mortar betting shops are covered. I ask her again to review the advice on this, because a simple solution may be available. The Government rejected previous attempts to regulate for a betting levy that includes online betting, which has had the support of those from all parts of the House, on the basis that it would not satisfy European state aid rules. I believe that all parties would like betting operators to pay a levy on all bets, as the 1963 Act says they should.

We now have a rare legislative slot and we cannot afford not to get this Bill right. I am talking about a policy that the Minister’s colleagues, the hon. Member for Thirsk and Malton (Miss McIntosh) and the hon. Member for West Suffolk (Matthew Hancock), who is no longer in his place, have recently tried to pass into law, and I hope she will listen to them. There is a considerable legal view that the Bill will require levy payments automatically, as it will bring betting operators back into the regulatory environment and, de facto, within the scope of the 1963 Act. There is much concern in the industry that this should not be left to the courts to judge, as it inevitably will be.

[Lady Hermon (North Down) (Ind)]

May I gently take the hon. Gentleman back to one clause of the Bill and leave aside the things that have been omitted from it just for a moment? As he will know, clause 4 applies specifically to Northern Ireland. Did he take time and the opportunity to consult the relevant Department in Northern Ireland about the provisions of the clause and, in particular, about the penalties for breaching it, as six months’ imprisonment seems light indeed?

[Clive Efford]

I thank the hon. Lady for her question. The Government are introducing the Bill, not me. I understand that we have been given evidence sessions for the Public Bill Committee, so perhaps there will be an opportunity for people to give evidence and speak on that issue.

On the 1963 Act, it would help considerably if the Minister could make a clear statement and commitments about the levy. Alternatively, she could work with all parties to consider a simple amendment to the Bill to finally address the issue. The recent decision by the European Commission approving the French levy on remote operators gives us further reassurance that a legislative approach is valid. There is considerable good will among Members from all parts of the House, and in the other place, for such a measure. If we all work together, we should be able to ensure that this issue does not drag on too far into the future.

The Government have said that they will legislate on unclaimed winnings and dormant betting accounts held by operators—[Interruption.] I assure the hon. Member for Weston-super-Mare that I will soon be coming to a conclusion, and I thank him for his contribution from a sedentary position. The 2010 report by the right hon. Member for Bath (Mr Foster) on dormant betting accounts and unclaimed winnings said:

“It is important to be able to establish whether betting operators and bookmakers are able to accurately identify the number of dormant betting accounts and others, such as unclaimed winnings that their business creates.

Unfortunately, the Gambling Commission do not hold figures on the number and size of dormant accounts.”

I say to the Minister that we are missing an opportunity to require betting operators to record exactly how much and what they hold in dormant betting accounts and unclaimed winnings, so that when the Government come to legislate, as they have promised to do, they will be able to deal with the issue.

The Bill could also have included a definition of just exactly what constitutes a “betting shop”. The Gambling Commission definition of the “primary gambling activity” has permitted Trafalgar Leisure to introduce self-service betting terminals alongside fixed-odds betting terminals—FOBTs—in unstaffed premises, albeit against the better judgment of the commission. The commission is consulting on a new definition for the primary gambling activity test for its licence conditions and codes of practice, and anticipates being able to deal with the issue. However, it has unsuccessfully tried to interpret the primary purpose rule to require over-the-counter betting rather than move towards automated betting shops. At a time when there are concerns about single manning in betting shops, it is unacceptable that gambling organisations are seeking to remove the necessity to have staff at all. Will the Minister consider setting out in this Bill what services should be offered by betting shops if they wish to be licensed as such, and remove this loophole once and for all?

In conclusion, for the benefit of the hon. Member for Weston-super-Mare, I welcome the Bill as far as it goes, but more needs to be done. I hope that the Minister will consider the issues I have raised with her today and enter into cross-party discussions, so that we can all agree on a Bill that will protect vulnerable people and create the licensing system that is the gold standard for the world.

--- Later in debate ---

[Mrs Grant]

With the leave of the House, I thank all Members who have taken part in the debate. I shall try to remember everything that has been asked and to deal with as many of the questions as possible. I am glad to see that the Bill has support on both sides of the House and that most hon. Members are in favour of bringing in robust and consistent regulation of remote gambling.

Through the Bill, remote gambling will be regulated at the point of consumption. That will mean that all operators selling or advertising in the British market, whether from here or abroad, will be required to hold a Gambling Commission licence. The Bill will increase protection for Britain-based consumers and will level the regulatory playing field with all remote operators, allowing British-based operators to compete on an equal footing.

The shadow Minister, the hon. Member for Eltham (Clive Efford), raised a great number of issues in his opening speech, including the levy, fixed odds betting terminals, enforcement and compliance. I will touch on all those issues in my speech, subject to the time available. I can confirm that we continue to engage with and consult the industry, as does the Gambling Commission, to ensure that issues of detail are dealt with very carefully. Of course, in Committee we will have an evidence sitting followed by a scrutiny sitting, which should deal with any clarification that he needs.

We will not accept an amendment on spread betting. The current arrangements work well, with the FCA and the Gambling Commission working closely together. They are also working with operators that offer spread betting to ensure that suspicious betting behaviour is reported to regulators and that licence code 15.1 is adhered to.

The hon. Member for Bradford South (Mr Sutcliffe), the shadow Minister, my hon. Friends the Members for Shipley (Philip Davies) and for Tewkesbury (Mr Robertson) and many other hon. Members asked about horse race betting levy. I understand why the issue has been raised, but the Bill cannot be the vehicle for other measures that have been neither fully considered nor consulted on. I also want to consider the question of levy reform more broadly as there might be other options that should be considered and there should be proper consultation before any measures are put in place. I will consult on any options that are sustainable, enforceable and legally sound.

My hon. Friend the Member for Maldon (Mr Whittingdale), the hon. Member for Bradford South, my hon. Friend the Member for Poole (Mr Syms), the hon. Member for Manchester, Withington (Mr Leech) and my hon. Friend the Member for Rochford and Southend East (James Duddridge) all raised issues about online gambling, or the lack of it, in casinos. The suggested change in the Government’s position that has been mooted would undermine existing regulatory controls on gaming machine provisions. It would also allow casinos to offer an unlimited number of gaming machines with unlimited stakes and prizes within their premises. The Government see no reason why such machines should be offered on an unlimited basis in casinos, when all other categories of gaming machine remain subject to control. That would risk fundamentally changing the character of casinos and, very sadly, turning them into something that looks like a machine shed. There may be a case to consider greater flexibility in casino regulation, as I mentioned in my opening speech, but that would need to be subject to proper impact assessment and consultation, and the Bill is not, in my opinion, the appropriate vehicle at this stage to change casino policy.

The subject of problem gambling was rightly raised by numerous Members today, including the hon. Member for Bradford South, my hon. Friend the Member for Rochford and Southend East and the hon. Member for Strangford (Jim Shannon). I would say to them that despite the relatively low rates of problem gambling, there are obviously very high participation rates for gambling, at around 73%. The Gambling Commission 2010 prevalence survey showed that fewer than 1% of the adult population are problem gamblers, but the Government acknowledge that while only a very small fraction of gamblers develop problems, that can of course result in significant problems, not just for those people but for those close to them. That is why protecting children and vulnerable adults from harm is a key component of our remote gambling policy. The Bill would require operators to have effective policies and procedures in place in relation to socially responsible gambling, and to contribute to research, education and treatment in relation to problem gambling, as part of complying with the Gambling Commission licence conditions.

[Lady Hermon]

Will the Minister give way?

[Mrs Grant]

I am afraid I will not, because I have very limited time and still have an awful lot to say.

The level of taxation was discussed by many hon. Members, including my hon. Friends the Members for Maldon and for Shipley, the hon. Members for Newcastle-under-Lyme (Paul Farrelly) and for Islwyn (Chris Evans) and my hon. Friend the Member for Poole, to name but a few. The remote gambling Bill and the Treasury’s remote gambling taxation reforms are, while complementary, completely independent of each other and we absolutely reject the assertion that the licensing reforms are being pursued in order to generate tax income. The Bill includes, as Members know, no provision for the increasing of tax. Reform is entirely justified on its own merits for public participation and public protection reasons, regardless of the state of any tax plans.

On black and grey markets, I apologise to my hon. Friend the Member for Shipley if I did not answer his question fully earlier, but I can now say that I am confident that the Gambling Commission has the necessary tools to enforce the licence requirements and to deter illegality and black-market activity. It is not meaningful to try to speculate about the size of the black market, which by its nature is unknown. Whatever the size of any black market, the Gambling Commission will make risk-based decisions on when and where it may need to intervene.

Finally, on the extent of the tax, it will be no surprise to learn that I am telling the House that tax is a matter for the Treasury, which I know continually keeps these matters well under review.

On enforcement and compliance, I assure the shadow Minister and all the hon. Members who raised the issue that where illegal operators attempt to target British-based consumers, the Government and the Gambling Commission are confident that action can be taken through existing enforcement mechanisms to disrupt and stop unlawful gambling. Such action would include action on illegal advertising, player education and, ultimately and if necessary, prosecution. There will always, of course, be grey areas where judgments of risk and proportionality will need to be made in each individual case.

The hon. Member for Bradford South, the former Sports Minister, who knows a considerable amount about these matters, rightly mentioned sports betting integrity and cheating. Britain is proud to lead the way in approaches to sports betting and integrity. However, we do not believe that there is a need at this stage to introduce in this country a new criminal offence of match-fixing. We believe that existing law and sports rules are sufficient, but we will keep the matter carefully under review.

My hon. Friend the Member for Shipley asked whether software producers need to be licensed. The Gambling Commission is working with the industry on the issue. In the meantime overseas software suppliers will be able to continue to supply British licensees.

I thank the hon. Member for Islwyn for his kind comments and reassure him that I do sports other than tennis. He asked me for two assurances—first, that the Gambling Commission will take action and has capacity to stop illegal betting effectively, and secondly, that the tax rate is not set too high. On the first issue, the commission will fully implement its regulatory responsibilities in line with the requirements of the Bill, and I will continue to discuss with the commission its needs to ensure that it has the necessary capacity, resources and expertise. On the second issue, as I have already said, tax rates are a matter for the Treasury and I will not venture this afternoon on to its turf.

The hon. Member for Strangford queried whether the Bill would be enforced by ISP blocking or something similar. There is mixed evidence on the effectiveness of ISP blocking, but we do not rule anything out.

Finally, on the matter of fixed-odds betting terminals, which was mentioned by several hon. Members today, although we have decided not to reduce stakes and prizes on these machines at this stage, it is a priority for the Government that we develop a much better understanding of the impact of these machines, and further work is already under way. The research being conducted by the Responsible Gambling Trust into category B machines is very important and it would be wrong to pre-empt this work. Furthermore, we believe that the Bill is not the right legislative vehicle to deal with such difficult issues.

In conclusion, this is a small but important Bill that will increase protection for remote gambling consumers based in Britain. It is not empire-building by the Gambling Commission, as was suggested by my hon. Friend the Member for Shipley. It is about protection and proper oversight and it will ensure that all remote gambling, wherever the operator is based, is licensed by the Gambling Commission and subject to that body’s robust and consistent standards of controls. I look forward to debating these issues in Committee, and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

gambling (licensing and advertising) bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Gambling (Licensing and Advertising) Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall be completed on the first day on which it shall meet.

(3) The Public Bill Committee shall have leave to sit twice on that day.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of those proceedings.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on Consideration.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Karen Bradley.)

Question agreed to.

Gambling (licensing and advertising) bill (ways and means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Gambling (Licensing and Advertising) Bill, it is expedient to authorise an extension of the cases in which:

(1) a penalty may be imposed under section 121 of the Gambling Act 2005, and

(2) a levy may be imposed under section 123 of that Act.—(Karen Bradley.)

Question agreed to.