Gambling (Licensing and Advertising) Bill

Baroness Heyhoe Flint Excerpts

Tuesday 14th January 2014 Grand Committee

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[Baroness Heyhoe Flint]

4: After Clause 1, insert the following new Clause—
“Licensing of remote gambling: conditions
(1) This section applies in any case where a remote gambling licence is awarded to an operator of sports spread betting.
(2) It shall be a condition of a licence to which this section applies that the operator shall report to the Gambling Commission and to sports governing bodies any activity (including financial transactions) which the operator considers suspicious in relation to sports spread betting (whether or not that information is relevant to any ongoing criminal investigation).
(3) The Gambling Commisson may require an operator to furnish any information to it if it considers that the provisions of subsection (2) may apply with regard to that information.
(4) The powers of the Gambling Commission under this section substitute for powers of the Financial Conduct Authority in respect of the provisions of this section.”

[Baroness Heyhoe Flint (Con)]

My Lords, this is a probing amendment. I fully support the general principles of the Bill. Not only will it create a level playing field—if that is not a well worn cliché in these surroundings—for all betting operators, regardless of whether they are located in the UK or offshore, but it will have a positive impact from a consumer protection perspective. Crucially, it provides a huge boost to the integrity of sport. Operators will be required to comply with the Gambling Commission’s licence condition 15.1 on information sharing, meaning that any suspicious betting patterns will have to be reported to both the Gambling Commission and sports governing bodies. Given the growing threat of match fixing and betting-related corruption, this is a very welcome development. The Bill has been endorsed by all major sports bodies in the UK, including the Sport and Recreation Alliance, formerly the Central Council of Physical Recreation, and the England and Wales Cricket Board, where I have to declare an interest, being on its board.

Spread betting is, for example, betting in what year England will next win a test match in Australia between 2014 and 2018, although that might be negated by the fact that the women actually won their test match yesterday in Perth, and long may that continue. To be slightly more serious, though, unfortunately the Bill fails to address the anomaly of spread betting. While traditional betting operators are regulated by the Gambling Commission, at present spread-betting operators are regulated by the Financial Conduct Agency. However, the FCA regulations do not contain an equivalent to Gambling Commission licence condition 15.1 on the sharing of suspicious information. The two companies that currently offer spread betting on sport in the UK have voluntary information-sharing agreements in place with the FCA, but spread-betting companies in totality are under no binding legal obligation to report suspicious activity. Herein lies the problem, because there is no statutory obligation for spread-betting companies to report suspicious activity. Sports bodies cannot be entirely confident that they are receiving all the available intelligence about suspected corrupt activity.

Indeed, the weakness of non-statutory agreements was highlighted by Jenny Williams from the Gambling Commission during the pre-legislative scrutiny stage of the Bill. Using the example of fixed-odds betting operators, she said that the Gambling Commission received one or two reports of suspicion a month from its online gambling licensees, who handled less than 20% of the market, but that from the 80% licensed overseas, which had voluntary agreements in place, the commission had received a total of about 10 since 2007. Jenny Williams suggested that it was “implausible” that so few suspicious transactions had been reported. That is one of the reasons why the Bill is before this House; it clearly makes little sense to introduce statutory arrangements for sports betting but not to do so for spread betting on sports.

The Government have assured us that the FCA is looking into the issue and, in turn, the FCA has confirmed that it will be issuing new guidance for spread betting. While this is a positive development, sports bodies are not satisfied that the new arrangements will be directly comparable to, or as effective as, the requirements set out for fixed-odds operators under licence condition 15.1. Specifically, sport has ongoing concerns over the quality of information that might eventually reach governing bodies, and the speed with which it will be made available. Furthermore, sports bodies are yet to receive confirmation on whether the new FCA guidance will even be made publicly available for them to see. Perhaps the Minister could offer some hope as to whether that confirmation is imminent or likely.

I gather that the reason for the non-confirmation is that the FCA says that its own statutes do not allow it to instruct spread-betting companies to share information directly with sports governing bodies. They also preclude it from publishing formal—on the record—guidance. Those are major problems, which is why I have tabled this amendment, for I feel that now we have the opportunity before us, we must seek to correct the primary legislation and use every weapon—or even cricket bat—at our disposal. As a member of the ECB I know how vital it is that sports bodies receive timely information when there is a betting concern, and that they do not pick up that information from revelations in the national media. If received in real time, this allows governing bodies such as us, the ECB, to warn the umpires officiating and the players involved, which acts as a great deterrent. I hope that all Members of the House will support me in looking to give these powers to sports governing bodies through the Bill.

--- Later in debate ---

[Lord Gardiner of Kimble]

My Lords, I am most grateful to my noble friend for her amendment and, indeed, for raising the important issue of reporting suspicious betting patterns by spread-betting operators. It provides me with an opportunity to update your Lordships on the work that is already under way.

We all expect and seek integrity in sport. We could have no better ambassadors here than my noble friend Lord Moynihan and the noble Baroness, Lady Grey-Thompson, on these matters; that is clearly important. What my noble friend Lord Moynihan said about education is also extremely important.

The Government are clear that all gambling operators, whether they provide spread betting or fixed-odds betting services, should be subject to obligations to report suspicious market activity of the sort which is set out in licence condition 15.1. The Government confirmed in the other place that the FCA would issue guidance to the sports spread-betting firms operating in the United Kingdom regarding how they report suspicious betting transactions under the Financial Services and Markets Act 2000. So far as is possible, it will be aligned to those requirements on the fixed-odds betting operators licensed by the Gambling Commission under licence condition 15.1. This is an important development that will strengthen the existing arrangements, and allow for greater consistency in the way that suspicious activity is reported. I am pleased to be able to confirm that work on this has been progressing. Officials from the FCA met the representatives of sports governing bodies and the Gambling Commission on 5 December 2013. The FCA is now in the process of drafting the guidance, and I understand that it hopes to be in a position to issue a draft to operators in early February. The department will continue to explore the provision of draft guidance with the FCA.

Concerns have been raised about whether compliance with the FCA guidance will be just voluntary. Compliance will indeed not be voluntary. Real consequences can flow from a failure to follow the guidance. Failure to comply could result in the FCA determining an operator has breached FCA rules, which would put the operator at risk of enforcement action by the FCA. In parallel to the FCA guidance, the Gambling Commission has just completed consulting on changing licence condition 15.1 to make it clearer that the Gambling Commission expects operators to report all information about suspicious betting patterns in its knowledge to the Gambling Commission and sports governing bodies, whether or not those occurred on their Gambling Commission-licensed bets. This would include information about suspicious betting patterns in its spread-betting operations. Those changes will be made as part of other changes being made to the licence code and conditions in anticipation of the new licensing requirements.

This is an important part of the picture, because the vast majority of sports spread betting is covered by the two operators that are also licensed by the Gambling Commission for fixed-odds betting. The commission has found the operators co-operative in responding to inquires about spread betting on specific events, and willing to volunteer such information. However, if contrary to the commission’s experience of working with them, its licensees breach the licence condition, it would be open to the commission to consider an appropriate sanction, which can include financial penalty, imposition of licence condition or, in extremis, licence revocation. The commission therefore already has the powers suggested in Amendment 11.

Amendment 12 raises the question of whether sports spread betting should be transferred from the FCA to the Gambling Commission. As I have said, the integrity of sport is absolutely paramount. The public has to be confident that what they are seeing in front of them is true and fair. However, the Government do not believe that at this stage there is a case for fundamental change to the existing arrangements or that non-legislative options for strengthening sports integrity have been exhausted.

Given that the FCA regulates and supervises spread-betting firms more generally, only two of the spread-betting operators relate to sport out of 26. There are advantages to ensuring that responsibility for the regulation of sports spread betting remains with the FCA, in that it allows for a consistent approach to the regulation of all spread betting—both sports and financial spread betting. The Government believe that that is the right approach and that regulation of spread betting in all its forms should remain with the FCA. Enshrining licence conditions in primary legislation also limits the flexibility to amend this position should that be necessary in future.

Obviously, the Government acknowledge the importance of ensuring that there is consistency in the way that suspicious activity is reported between sports spread-betting and fixed-odds betting operators licensed by the Gambling Commission. The Government believe that the FCA guidance and work being done by the Gambling Commission will create that consistency without the need for legislative intervention.

The noble Lord, Lord Stevenson, mentioned a new offence of cheating at sport. My understanding is that in response to proposals from the Council of Europe for a convention on sports integrity, the Government reviewed the case for a specific match-fixing offence. They concluded that it was not needed as any non-betting match fixing, as well as betting-related match fixing, already was covered adequately by existing legislation. The “cheating at gambling” offence under the Gambling Act 2005 is deliberately wide to extend its applicability and we would not want to lose that flexibility.

Only last month, the Secretary of State brought sports and the Gambling Commission together to work to combat match fixing. We believe that this is the right forum in which to consider further action to safeguard the integrity of sport. Clearly, I understand that this is a matter of concern to your Lordships. Obviously, as with meetings we already have had, I am always interested in hearing issues that may be alive on this matter. However, on the basis of the reasons I have outlined, I ask my noble friend to withdraw her amendment.

[Baroness Heyhoe Flint]

My Lords, first, I thank the noble Baroness, Lady Golding, and our finely tuned athletes the noble Baroness, Lady Grey-Thompson, and my noble friend Lord Moynihan, for their contributions. If the noble Baroness, Lady Golding, would like it, I will put her into the “finely tuned athletes” bracket. I feel so passionately about this amendment, which has so many implications for sport not just in this country but globally. Who better to speak on that than my noble friend Lord Moynihan with his experience throughout the world of the Olympics and the noble Baroness, Lady Grey-Thompson, with her level of participation? I sincerely hope that this issue is revisited and is given consideration later during the passage of the Bill.

The noble Lord, Lord Stevenson of Balmacara, mentioned the Sports Betting Integrity Panel report led by Rick Parry. That was in 2010, since when there have been four years during which we still have concerns about matters relating so deeply to sport. We had the wonderful presentation of the Olympic Games in this country. However, had one betting incident occurred, all those memories and the kudos brought to this country from staging such a memorable event would have been erased. That is probably why, more than anything, I hold this concern about protecting the integrity of sport.

I have received assurances from the Minister. We will keep an eye on this issue. I beg leave to withdraw the amendment.

Amendment 4 withdrawn.