Gambling (Licensing and Advertising) Bill
Debate between Baroness Heyhoe Flint and Lord Gardiner of Kimble
Baroness Heyhoe Flint (Con)
My Lords, this amendment returns us to an issue that has already received considerable scrutiny. As we have heard, it is vital that national sports governing bodies receive information and intelligence about any untoward betting patterns as a matter of urgency so that they have the greatest opportunity to prevent corrupt activities and behaviour. Spread betting needs to be regulated just as effectively as fixed odds betting. Yesterday, the Minister informed noble Lords that the Gambling Commission is to extend the remit of its licensing code 15.1 to include spread betting in its information reporting requirements, as is placed on those who have a fixed odds betting licence. I commend this remit, because it will address most of the issues that sports bodies have raised. Presently, the two companies that offer spread betting also offer fixed betting and thus have Gambling Commission licences. Could my noble friend tell me when the Gambling Commission will introduce this new licensing code?
I am also pleased that in recent weeks the FCA has finally agreed to take responsibility on this issue, no doubt following pressure generated by noble Lords— I say, immodestly. It has come forward with proposals for its own industry guidance for spread betting companies that take bets on sport. This guidance will be broadly similar to that issued by the Gambling Commission, but there are two main areas where it will be deficient in comparison and concerns remain.
The first is that the guidance will not be made public. I find that somewhat curious. Surely, regulatory requirements set by public bodies should be open, transparent and accountable. How is the sports sector to have confidence in a regulation if it does not know what it says? How can it be used as educational material or act as a deterrent in the sporting world if we cannot show people the actual guidance? Can the Minister give an assurance that a way will be found to make sure that this guidance is made publicly available to those in the sports sector?
Secondly, the industry guidance issued by the FCA will not require as a statutory requirement that the spread betting company must share any information that it has, not just with the FCA but, most importantly, with sports governing bodies. Sports bodies understandably have ongoing concerns about the quality of information that they might eventually receive and the speed at which it will be made available. I gather that the reason for this 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. That would be a major anomaly and a threat to sports integrity, should a spread betting firm operate without having a fixed betting arm. That means that it would not fall under the regime being proposed by the Gambling Commission. Can the Minister tell me what action the Government are taking to ensure that any future spread betting company that is established and does not have a fixed betting operator licence will still be subject to the same requirements that the Gambling Commission is introducing?
The easiest way in which to guarantee a level regulatory playing field between traditional and spread betting companies would be to transfer responsibility for sports spread betting from the FCA to the Gambling Commission, as the amendment would seek to do. I understand that there are powers contained in a Treasury-regulated activities order that would enable the transfer of sports spread betting from the FCA to the Gambling Commission, which may be a more suitable route to address the issue than in this Bill. Could the Minister give a commitment that that option will be further explored as a matter of urgency, and that, should there be any development of standalone spread betting companies setting up, we could expect to see the application of a transfer of sports spread betting from the FCA to the Gambling Commission using that Treasury-regulated activities order? That would ensure that sports integrity continues to be upheld.
Lord Gardiner of Kimble (Con)
My Lords, I thank the noble Lord, Lord Stevenson, for tabling his amendment, which seeks to ensure that spread betting operators who hold a remote gambling licence from the Gambling Commission are required to report suspicious betting patterns to both the regulator and sports governing bodies under licence condition 15.1. Your Lordships have heard that my noble friend has tabled an amendment on that issue.
First, I acknowledge the determination with which Members of both Houses have pursued this matter—and the noble Lord, Lord Stevenson, mentioned one of his colleagues in the other place. The point about our deliberations is that it has undoubtedly led to more speedy progress.
As I said in Grand Committee, the Government take the issue of ensuring the integrity of sport very seriously. People must be able to trust that the sport that they are watching is fair and uncorrupted by cheating. The effect of this Bill will be that this will apply to all operators who offer remote gambling in the British market, regardless of where they are based, and information is at the very heart of the detection and disruption of any such corruption by regulators and sports governing bodies. But the Government believe that the following two-pronged approach achieves the objectives that noble Lords seek. This approach will ensure greater consistency in how suspicious activity is reported, and in a way that can be effectively enforced.
First, the Gambling Commission will soon be publishing its revised licensing conditions and codes of practice, which will include a change to licensing condition 15.1. This will make it clearer that, when a sports spread betting firm holds an operating licence with the Gambling Commission for its fixed odds activity, it will be required to report suspicious activity arising in relation to its sports spread betting activity. The revised licensing conditions will be published by the end of this month, and I say to my noble friend Lady Heyhoe Flint that the revised 15.1 will take effect in June.
Secondly, noble Lords will be aware of the FCA’s commitment to issue guidance for sports spread betting operators. The guidance will be issued under FCA Rule 15.3.17, which relates to the types of fraud and irregularities that must be reported to the FCA. The guidance will make it clear that the fraud and irregularities that will need to be reported by sports spread betting firms include suspicious sports betting. The FCA is also in discussion with the firms to put in place a mechanism by which information received by the FCA can be notified to the Gambling Commission and the relevant sports governing body. The finer details of the guidance are in the process of being finalised with the individual firms. However, I should make it clear that the underlying FCA Rule 15.3.17 is in place now.
I should say to the noble Lord, Lord Stevenson, and my noble friend Lady Heyhoe Flint that where a spread betting firm does not have a Gambling Commission licence, it will be bound by the updated FCA guidance, which will, of course, be mandatory.
We believe that the approach we are taking will work and will facilitate the appropriate sharing of information —the noble Lord, Lord Stevenson, particularly emphasised sharing of information, which is absolutely key to success—and it ensures that the licensing conditions, be it the expanded licence condition 15.1 adopted by the Gambling Commission, or the guidance issued by the FCA under the FCA rules, have a clear route back to the relevant regulator. Any failure to comply by an operator will be enforceable by the relevant regulator.
My noble friend Lady Heyhoe Flint asked a number of questions, seeking confirmation. As regards publishing the FCA’s guidance, as this is individual guidance it would not normally be made public. However, I will ask the two spread betting firms if they would be content to publish this individual guidance, once it is finalised. I should also mention that the first draft of the guidance was shared with the Gambling Commission, for its consideration and comment.
On best practice in information sharing—another point raised by my noble friend—I can confirm that the commission established the tripartite forum, involving betting operators and representatives of sports governing bodies. That forum continues to provide a space for debating these kinds of issues, which, again, is very important.
As regards future changes to the regulation of sports spread betting, I understand that there has been recent discussion between the FCA and the Gambling Commission as to whether the question of transfer needs to be revisited. Indeed, this matter remains very much alive. However, it is a very complex issue, and there was a deliberate decision at the time of the 2005 Act that it remain within the regulatory purview of the FCA as a financial services product. However, I can confirm that the mechanism for transferring the regulation from the FCA to the Gambling Commission is by amending the regulated activities order by statutory instrument. That issue was raised by my noble friend.
I hope that I have been able to reassure noble Lords that action has, and is being, taken on this important issue to ensure greater consistency in the way that suspicious activity is reported, and how this can achieved. The Government take this issue extremely seriously as the work currently going on around sports integrity and match fixing illustrates. We believe that the steps we are taking, and what noble Lords seek, is the right path. Indeed, we think that our approach goes somewhat further than what is sought in the amendments in so far as the new FCA guidance complementing an enhanced 15.1 provision is concerned. On that basis, I very much hope that the noble Lord will feel able to withdraw the amendment.
Lord Gardiner of Kimble
My Lords, first, I thank my noble friend for moving this amendment. I very much agree with her and regret that my noble friend Lord Moynihan is not with us tonight. I thank all noble Lords for speaking in this debate.
Match fixing is an issue about which I know many of your Lordships feel very strongly. The Government fully share those concerns. Match fixing has no place in sport and we must do all we can to eradicate it. That is precisely why the Secretary of State held a match-fixing summit on 10 December and the Sport and Tourism Minister followed that up with a second meeting on 3 February. That work remains a priority. I emphasise that Ministers in the department see this as extremely important ongoing work.
My noble friend’s amendment suggests that Section 42 of the Gambling Act 2005, covering the offence of cheating at gambling, is inadequate in its current form. The Government recognise that sports governing bodies have concerns about that section. Indeed, sports governing bodies were invited on 3 February to provide case studies that they believe demonstrate the failings of Section 42 in dealing with gambling-related match fixing. The Government will consider any such evidence when it is supplied. We have received two case studies to date and are aware that there may be others in the pipeline. However, we have yet to see robust evidence demonstrating a problem with Section 42 as opposed to other factors such as lack of evidence. Indeed, lack of evidence of a link between match fixing and corrupt betting would make it difficult to pursue a successful prosecution under either Section 42 or my noble friend’s amendment.
I should also say to my noble friend Lady Heyhoe Flint that Section 42, as a gambling provision, can apply only where there is evidence of cheating at gambling, as has already been discussed. As the noble Lord, Lord Stevenson, said, that is why we have long established and recognised that other criminal offences may need to be used, given that match fixing can be realised in various forms.
The noble Lord, Lord Stevenson, also referred to Section 42 in the context of negotiations on the Council of Europe’s draft convention. The Government recently reviewed Section 42 in that context. All the legal teams and others came to the conclusion that Section 42 as currently drafted, together with other fraud and corruption offences already on the statute book, gives prosecutors the tools required to deal with the circumstances that might constitute match fixing.
As the noble Lord, Lord Stevenson, said, there have been some criticisms of the 2005 Act and, perhaps, some of its consequences. At the time, Section 42 was deliberately crafted to be a broad offence in which “cheating” was intended to have its normal, everyday meaning. The provision expressly extends to actions that involve actual or attempted deception or interference with the processes involved in the conduct of gambling or any other race, game, event or process to which gambling relates. That was done precisely to ensure that it could be used in a wide range of circumstances. That is why we are concerned about changing it. I emphasise that point.
Section 42 also clearly spells out that the offence is committed not just by the person who cheats but also by a person who does something for the purpose of assisting or enabling another person to cheat. That means that Section 42 already covers all the ground that my noble friend’s amendment seeks to add. Section 42 already applies to both remote and non-remote types of betting, whereas this amendment applies only to remote betting. We therefore believe the amendment could create confusion and that it is better to retain the existing provision for that reason.
My noble friend’s amendment would also raise the custodial tariff for Section 42 offences from two to 10 years. It has been argued that an increase in custodial sentencing will both act as a deterrent to those who may be involved in criminal match fixing, and influence law enforcement agencies to investigate and prosecute more cases.
I will explain to your Lordships why we believe that there is no need for a change in the tariff. The Government consider that the penalties in Section 42 remain proportionate and appropriate, and are consistent with other offences in the Gambling Act. There is nothing to suggest that the threat of a two-year jail sentence is not a sufficient deterrent or that law enforcement agencies do not take match fixing sufficiently seriously.
The UK has a number of legislative tools at its disposal to combat corruption of sports competitions. The toolkit naturally includes Section 42 of the Gambling Act 2005, where there is a link with betting. We can also use other fraud and corruption offences where that link with betting cannot be established. It does not mean that Section 42 is inadequate simply because it cannot be applied in every situation. When a sportsperson is found to be engaged in match fixing not linked to betting, the penalties under the bribery and fraud Acts are severe, as your Lordships have already said.
The fight against match fixing is not just about legislation. The UK’s approach to combating match fixing, based on effective collaboration between the Government, the regulator, betting operators, sports governing bodies and the law, is working and, indeed, is highly regarded internationally.
I emphasise that the Government take the fight against match fixing extremely seriously. I do not know whether the match-fixing summit was the first, but it is an indication that the Secretary of State and Ministers take this matter very seriously and want to work with the sports governing bodies.
My noble friend Lady Heyhoe Flint asked whether the Government would be prepared to undertake a formal review of Section 42, in line with what the Parry review suggested. As I said, in the cross-government review of Section 42 in the context of the European convention on match fixing, we concluded, and the legal advice was, that Section 42 was robust as written. However, of course we are willing to consider carrying out a review if and when sports bodies provide robust evidence demonstrating that there actually is a problem with Section 42. That is the position that we have come to.
I will be asking my noble friend to withdraw her amendment—not because we think that match fixing is not a priority; we do. The lawyers have looked at the provisions of Section 42 and we are of the view that, until we have proper and robust evidence that elements of Section 42 are not working properly, we think it is premature and unwise to move. I have not gone back to read Hansard, but I have been informed that Section 42 was drafted to capture as much of the conceivable parameters as possible. That is why it was couched in the way it was.
I have looked into this matter very strongly because I know that it is of extreme concern to the sporting world and beyond, to those who enjoy sport. I have looked into it. I have sought to outline the reasons why we think that Section 42 is robust but, as I said, we are willing and look forward to hearing from sports bodies if they can come forward with robust evidence, which we will then consider very thoroughly. In the mean time, I ask my noble friend to withdraw her amendment.
Baroness Heyhoe Flint
My Lords, we are moving into extra time. I thank the Minister for his responses and, in most cases, his assurances. I know that there has been a great amount of background work and energy put into what he referred to as a small or niche Bill. I thank the Bill team sincerely for the courtesy of the meetings which we have had and I apologise for not being fully attentive in the earlier debate on Amendment 4, when I think that I must have been dreaming in the outfield.
Perhaps I might reiterate that sport has had and has concerns and, to a certain extent, I am very aware of the fact that the Government are seeking to deal with them. In the eyes of sport and in the protection of its integrity, even though my noble friend the Minister referred to the Bill in the early days as a small Bill, I think that sport considers it to be a big Bill because this is a growing threat to the integrity of sport. I accept the assurances from the Minister in true sporting spirit. I came off the substitutes’ bench to support my noble friend Lord Moynihan, who bowled me a googly when he told me that he had to be abroad at this stage and was unable to contribute. I have a feeling that he may continue to pursue his concerns on his return but, in the hope that he will not then put me into the sin bin, I beg leave to withdraw my amendment.
Gambling (Licensing and Advertising) Bill
Debate between Baroness Heyhoe Flint and Lord Gardiner of Kimble(10 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text
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.