Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2018

Baroness Chisholm of Owlpen Excerpts

Tuesday 20th March 2018 Grand Committee

Moved by

[Baroness Chisholm of Owlpen]

That the Grand Committee do consider the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2018

[Baroness Chisholm of Owlpen (Con)]

My Lords, the draft regulations would impose a new mandatory condition on the holders of any betting operating licence issued under the Gambling Act 2005. The purpose of this new condition is to prevent these operators accepting bets from British consumers on the outcome of the EuroMillions draw or a EuroMillions game in a participating country outside the UK. Section 95 of the Gambling Act 2005 already prohibits the holder of a betting licence from offering a bet on the outcome of any lottery which forms part of the National Lottery. This includes the lottery known in the UK as EuroMillions.

This additional licence condition extends the existing prohibition on betting on the National Lottery to all EuroMillions lottery games, and will apply to all general betting operating licences, pool betting licences, and betting intermediary licences issued by the Gambling Commission. This will reduce customer confusion that has arisen as a result of operators offering these bets and maintain the “clear blue water” between the National Lottery and other forms of gambling, as set out in Section 95 of the Gambling Act 2005.

I will set out the background to this SI. Because EuroMillions is structured as a separate game in each of the nine countries in which it is played, a small number of gambling operators are able to circumvent the prohibition in Section 95 and offer bets on the outcome of a non-UK EuroMillions lottery—for example, a bet on the outcome of the Spanish EuroMillions lottery. Our consultation showed that this has led to customer confusion, with research showing that a percentage of players are unable to distinguish between placing such a bet and buying a National Lottery EuroMillions ticket. Some operators even undercut the National Lottery and advertise products at a lower price than the National Lottery EuroMillions or offer multiple tickets for the price of one. They are able to do this because they do not return a proportion of their proceeds to good causes.

The Gambling Commission has already undertaken a number of measures to reduce customer confusion, and this has resulted in changes to how products are promoted, but even where such proactive steps have been taken we still see evidence of customers unable to distinguish between the two products. A further point of confusion is how players can potentially arrive at these betting websites. It cannot be right that if you want to buy a National Lottery EuroMillions ticket online, and you search for “EuroMillions”, you get a proliferation of sites offering a range of betting services to choose from. Between March and May 2017, the Government consulted on prohibiting betting on EuroMillions. Respondents included lottery operators, beneficiaries of lottery funding, betting operators and members of the public. There were 52 responses and 32 strongly agreed with the proposal that non-UK EuroMillions bets should be prohibited. Not surprisingly, the only respondents to strongly disagree were operators offering these bets.

Betting on the outcome of lotteries is nothing new—it has been offered legally for many years, but not on the National Lottery. For most operators offering bets on lotteries, the product is one element of a wider portfolio. British customers will still be able to participate in the other products offered by these operators, which remain unaffected by this action. Betting on EuroMillions is a growing market, and it is important that we maintain the clear distinction between the National Lottery and other forms of gambling, as set out in Section 95 of the Gambling Act 2005. The effect of these regulations will be to bring non-UK EuroMillions draws in line with the UK draws and prevent gambling operators from taking advantage of the technical way EuroMillions is structured, as individual country draws. More urgently, this action will eliminate customer confusion. For these reasons, I commend these regulations to the Committee.

[Lord Faulkner of Worcester (Lab)]

I am happy to support the regulations. I declare an interest as the chairman of the Alderney Gambling Control Commission and as a veteran of the scrutiny committee on the draft Gambling Act 2005. I recall very well that there were a lot of debates then about whether betting on the National Lottery should be permitted. Our advice was that it should not, for the reasons that the Minister has explained. There has always been a conflict of interest for the National Lottery and the role of the Gambling Commission as its regulator, which remains unresolved. The Gambling Commission—and the National Lottery Commission before it—had the twin objectives of player protection, in ensuring that people did not spend excessive amounts on the lottery and get themselves into difficulty, and the requirement to maximise the return to good causes. As I say, that conflict remains unresolved and will, I suspect, continue to remain so.

The regulations deal with companies such as Lottoland, from which I received a certain amount of unsolicited promotional material. It is based in Gibraltar and offers bets not just on the EuroMillions Lottery but on competitions such as the US Powerball, the Irish Lottery and something called the Bitcoin Lottery. I am not surprised that it opposed the regulations; being able to cash in on the promotion of EuroMillions is a nice little earner for it. Like the Minister, I do not agree that it is right for such companies to do that, so I support the order.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, I was not intending to speak on these regulations but I caught something my friend the noble Lord, Lord Clement-Jones, said and I thought I would respond to it. It was also mentioned by my noble friend Lord Griffiths in his response.

When we look at lottery matters, we should have regard to the fact that we are looking at a system under which the intention is to increase the amount of money paid out to good causes. We have adopted a model to do that which is not necessarily found in other parts of the world that have lotteries. I do not wish in any sense to emulate the length of time for which the noble Lord, Lord Clement-Jones, has presided over this brief in his party but when I came to debate it, a long time after he started, I wondered whether we should think harder about the percentages going out of the National Lottery system into the good causes. That was presumably not unrelated to the fact that money had to be found for the Olympics, so there was a lot of tension and a focus in that.

However, things have moved on and I felt that some of the figures being cited by the noble Lord, Lord Clement-Jones, were not exactly in line with the current state of knowledge on this. For instance, I understand that there is now a report from the National Audit Office indicating clearly that the money going to the Postcode Lottery does not deflect from people’s interest in the National Lottery and that the representations made on behalf of the Postcode Lottery—that it should be allowed to expand its prize money, which is the point he made—have been the subject of lengthy discussion and consideration in the department. I think there are still consultations going on.

The Minister may know that I have tabled a Question for Written Answer on this matter, to which I am sure she will want to speedily return to amplify what she says in response to this debate. If she wants to wait until then, I will be quite happy, but my point is that there is an ongoing debate to be had about the proportion of money that the public wish to see going to national causes, which means that our model needs to be robust and sustainable.

First, is it time to reflect on that? Secondly, is there room now for this in a society that has changed out of all recognition since the National Lottery was formed, and which has an interest in local events? Research exists now to show that the Postcode Lotteries which are done postcode by postcode in the full system, and which operate right across Europe successfully, may offer another approach to giving for good causes in that the committees set up under the Postcode Lottery seem to be locally focused. The giving is therefore not so much for the benefit of winning a big prize, because the prizes are more modest, but because there is more satisfaction in the direct channelling of money towards local causes. It may be appropriate for the Government to look at whether it is time to think again about these things so that we can get more sense, and, we hope, more money, into the system.

[Baroness Chisholm of Owlpen]

I thank all noble Lords who have taken part. As the noble Lord, Lord Griffiths, said, it might be a steep learning curve for him but it is an even steeper learning curve for me. It is marvellous to have so many experts here today. I am very much the old new girl on the block where this is concerned, so it is interesting to hear everything that the Committee has said.

The noble Lord, Lord Faulkner, talked about the deal with companies such as Lottoland. We feel that one problem is that this is a growing market, which is why it is so important to bring this SI in. As several noble Lords have mentioned, there is no doubt that it takes away from people taking part in the National Lottery, which then takes away from good causes and so on.

The noble Lord, Lord Clement-Jones, talked about society lotteries, as did the noble Lord, Lord Stevenson. Evidence shows that, to date, there has been no substitution between society lotteries and the National Lottery due to the very different prospects they offer the players who take part. We have been looking at the Digital, Culture, Media and Sport Select Committee’s recommendations on society lotteries and we will look closely at how we feel they are working, including on the top prize. We hope to provide a further update on that in due course.

The noble Lord, Lord Griffiths, talked about customer confusion. Again, we hope that this SI will sort this out. The ban certainly aims to reduce customer confusion by protecting those who wish to buy a EuroMillions lottery ticket online from ending up on a betting site.

It is always important to keep education in mind and find ways to improve it, making sure that people are betting on what they want to bet on and not on something else. It is not our intention to prevent operators offering bets on lotteries that do not form part of the National Lottery to consumers who genuinely wish to place legitimate bets on such a lottery. Betting on the National Lottery is already illegal and the point of this ban is to bring betting on all EuroMillions products in line with the rest of the National Lottery portfolio.

I think that has answered all the questions. I have a note that was handed to me; is it something I forgot? The National Lottery is a uniquely important part of British society. Each year, it raises around £1.6 billion for good causes and has raised a total of £37 billion—a pretty impressive sum—since it started in 1994, supporting important charity, heritage, arts and sports projects. From the charities I am involved in, I have found the National Lottery a great help on many occasions.

In bringing forward these regulations imposing a new licence condition, we are doing no more than extending the existing protection against betting on the National Lottery and taking action to remove consumer confusion in relation to bets on EuroMillions games. I commend the regulations to the House.

Motion agreed.