Gambling (Licensing and Advertising) Bill

Baroness Pitkeathley Excerpts

Tuesday 17th December 2013 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, when it comes to gambling, I am far from being a usual suspect in your Lordships’ House. In fact, this is the first time I have ever addressed your Lordships’ House on this topic. I do so tonight because I have two important personal interests. The first is as a Channel Islander because this Bill has major implications for the Channel Islands, particularly Guernsey and Alderney. I am a very proud Guernsey woman—the only one, I think, in your Lordships’ House.

Electronic gambling is of major importance to both islands and is crucial to the economy of Alderney. The sector provides approximately £50 million a year of benefit to the Bailiwick of Guernsey’s economy, and it employs almost 400 people directly and in related services. For Alderney, one of the smallest of the Channel Islands with fewer than 2,000 residents, it accounts for 12% of its GDP. The consequences for Guernsey and, particularly, for Alderney, should this sector be threatened, are significant and would be of concern to those of us who recognise the importance of the Channel Islands to the British family, which the islanders always emphasise.

The development of e-gambling in Alderney since 2000 has been a huge success, largely because of the quality of regulation that its Gambling Control Commission provides. The commission knows that to survive and succeed it has to meet and exceed the highest international standards of regulation. It has set itself objectives which seek to ensure that all electronic gambling on Alderney is conducted honestly and fairly, that the funding, management and operation of electronic gambling on Alderney remains free from criminal influence and that electronic gambling is regulated and monitored so as to protect the interests of licensees’ customers as well as the young and vulnerable.

In order to do that, Alderney invested considerable effort and resource to become one of the very few jurisdictions to be placed on the UK’s e-gambling white list, which was mentioned by the Minister. The UK recognised Alderney as one of only five jurisdictions with regulatory regimes that were benchmarked to be of such a high standard that Alderney operators were allowed to advertise their e-gambling services in the UK. To achieve this, the Alderney Gambling Control Commission had to demonstrate the very highest standards of regulation, propriety and probity. It has done so to such an extent that the UK’s own Gambling Commission has come to rely on the AGCC providing a benchmark of best practice and it has recognised its enormous expertise in regulating remote gambling. Many British firms have established themselves there and have accessed the British public with little or no negative consequence in terms of player protection.

One of the consequences of the Bill should be that the UK and ordinary regulators should work even more closely together to protect the consumers of e-gambling. This would not only avoid duplication of effort, which is in itself sensible enough, but also ensure that, where the Gambling Commission finds itself stretched thinly by the new responsibilities in this Bill, it can ask Alderney to assist. Over the years the AGCC has worked closely with its UK counterparts in developing its own regulatory framework and has been influenced by what we do in the UK. It is one of the very few jurisdictions outside the UK which has placed a mandatory requirement on its licensees to contribute to research, education and counselling of problem gambling, and could be an exemplar for other jurisdictions. I know there is much concern about problem gambling, and rightly so, especially if unregulated operators are allowed to advertise their services, which might be a temptation to problem gamblers. Other noble Lords will no doubt speak about this.

Alderney is a jurisdiction which has had great success in e-gambling and relies on it as a significant driver of its economy. It is at the very forefront of excellence in e-gambling bodies around the world, and it wishes to develop its partnership with the Gambling Commission further within the framework of this Bill. Ministers will, I hope, not only recognise these developments but preserve them, as it is clearly in the interest of British players and the Gambling Commission for them to do so and to capitalise on the work done by the white-listed jurisdictions.

Can the Minister indicate to the House what has been done to ensure that the codes and practices as well as the expertise in the white-listed jurisdictions are being considered in the introduction and development of the new licensing framework? Can he also confirm that he will encourage the Gambling Commission to work with trusted white-listed jurisdictions to avoid any duplication of effort and to ensure that the best standards of regulation, of the sort that are provided by my sister island of Alderney, become the general standard for the United Kingdom?

I turn now to the other personal interest I have in this Bill, which is not as a proud Guernseywoman but as a proud mother. I have a daughter who is an amateur jockey and a son-in-law who is an owner. I often join them at racecourses in various parts of the country. Before I started doing this, I might have had an image of racecourses as rather bleak, rundown places peopled by shady characters out of a Dick Francis novel. Not so, my Lords. Even on cold and rainy weekdays I have found racecourses vibrant, exciting places full of both aficionados and newcomers, families as well as professionals—in short, people having a good time. They are also innovative, constantly trying new ideas and schemes to bring more people in—ladies’ days, music of all kinds and many other things which contribute to a family day out.

This is very pleasing to see and confirms the statistics of the British Horseracing Authority that horse racing is not only the country’s second most popular sport, with 5.6 million attendees at events in 2012, but also the second largest sporting employer. British racing supports a predominantly rural industry which makes a significant contribution to the British economy, generating £3.5 billion in annual expenditure and providing direct and associated employment for no fewer than 85,000 people.

There is, however, concern that the future of the industry is threatened by the inadequacies of the horserace betting levy, the legislative mechanism which provides racing a return from betting activity on its sport and which is used to fund prize money and other important expenditure, including regulatory and integrity services and veterinary research and education. This has fallen from an average of £106 million in 2003-04 to £66.7 million in 2008-09.

As just two knock-on effects, the number of horses in training has fallen by 10.6% between 2008 and 2012 while foal production was down 26% over the same period. The move by many betting operators to an offshore location for their remote gambling arms has been an important factor in the decline of the levy in recent years. Betting operators licensed offshore for remote operations are not liable to pay levy on their gross products on British racing from these sources. In other words, they are free riding. This is costing millions in annual levy receipts to racing and unfairly distorts the market against those operators which do pay the levy.

I think that British racing welcomes the Government’s introduction of this Bill, which will license all remote gambling, but as drafted it does not make any provision in relation to racing or the horseracing betting levy, meaning that the sport will not receive a return from remote betting activity, even once it is licensed with the UK Gambling Commission.

There was a Private Member’s Bill debate on offshore gambling in another place last year and the Minister of State for Sport, Hugh Robertson, said that any reform to the levy to capture revenues under a point-of-consumption licensing regime would constitute state aid, but a recent and comprehensive ruling from the European Commission will perhaps change the Government’s legal position. A French levy on online horserace betting has been approved, recognising racing’s special status and common interest with the betting industry. It sets a vital precedent and is, I believe, in the process of being reviewed by DCMS for any read-across to the Government’s previous legal position. I hope that the Minister will be able to update the House on that. The legal advice received by the British Horseracing Authority is that the collection of levy from remote operators under a point-of-consumption licensing regime does not constitute state aid. Amendments were put down on this matter in another place. Would the Minister be prepared to accept similar amendments in your Lordships’ House?

I should point out that there is no conflict between my support for Alderney in this regard and my call for changes to levy. The position of the Alderney Gambling Control Commission has always been that it would be willing to consider requiring its relevant licensees to contribute to the levy.

I understand that the Government have agreed to review the situation with regard to the levy. I hope that the Minister will be able to update your Lordships’ House on this when he winds up.