Gambling (Licensing and Advertising) Bill

Baroness Golding Excerpts

Tuesday 14th January 2014 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, such was the clamour to sign this amendment that I was unable to put my name on it, but if I had been able to I would have done. As was intended by my noble friend Lord Falkland, an interesting debate has been raised today, and I hope the second intention—to produce a positive response from the Minister—will also be achieved as part of that.

I was extremely interested to hear what the noble Lord, Lord Lipsey, had to say. I do not think I have heard him speak quite as passionately on any subject since he defended his minority report on the long-term care of the elderly. He was no less cogent today than he was on that subject. However, I disagree with him on this matter as much as I disagreed with him about that report. He seems to believe that those involved in horseracing should do it for love not money, which seems an extraordinary position for an economist, because I cannot see, if there were no levy, where the industry would have the leverage to ensure that bookmakers made a contribution towards the welfare of the industry.

The welfare of the industry is an important part of our national life, considering not only how many people attend horseracing, but also the 85,000 people who work in the industry. I am not a socialist myself, but if I were my first consideration might be about the number of people employed in an industry. There is no doubt that the rise in betting operators licensed offshore over the years has contributed to a fall in revenue from the levy of about half between 2003 and today—a drastic reduction in support for the industry. There is only one major operator in the British market—Bet365—which is fully licensed for remote sports book operations by the UK Gambling Commission, and is therefore obliged to pay levy.

During the debate we have heard that a five-year deal was agreed with Betfair last year. There is also a four-year arrangement with William Hill, Ladbrokes, Coral and Betfred to make an additional voluntary contribution to the industry’s funding as part of the recent levy agreement. However, these are all voluntary arrangements, and legislative action is still required to provide a level playing field for all operators in the betting market in respect of their payments to British racing. Successive Governments—including the Labour Government—and Ministers have said that their preferred policy outcome is that all betting operators taking bets in Britain pay levy wherever they are located.

All amendments in Grand Committee are probing amendments. I hope that the amendment will elicit from the Government their views about the future of the horserace betting levy. The amendment would allow the Secretary of State to introduce a power. As was alluded to by my noble friend Lord Cavendish earlier, in discussions with the Minister that seemed to be an eminently sensible way forward: a power that would allow the Government to extend the levy to overseas bookmakers through a point-of-consumption licensing regime.

We have heard a considerable amount this afternoon about the ruling from the European Commission and the French power of fiscal levy; if I knew what a power of fiscal levy was, I would be far wiser than I am. Clearly, that set a precedent as far as the Commission was concerned. The noble Lord may be correct in saying that this is a permissible element of state aid rather than not constituting state aid; I am sure that he has a point there. Nevertheless, if we can get through the eye of a needle with the betting levy in this country on the precedent of the French power of fiscal levy, then surely we should be pursuing that.

What is the preliminary conclusion of the DCMS lawyers on that? Does the collection of levy from remote operators under a point-of-consumption licensing regime in their view constitute state aid or not? Is this a platform on which we can build a future levy? I hope that my noble friend the Minister can give us more information.

The reserve power is surely a way forward of which we could take advantage. It would allow us, as a number of noble Lords have said, to have proper consultation with the European Commission and other affected parties on the measure, and would allow the full implications of the ruling on the French power of fiscal levy to be assessed. Measures could therefore be enacted afterwards once the Government were satisfied of their legal position. What is not to like about that solution? I look forward very much to hearing what my noble friend the Minister has to say.

[Baroness Golding (Lab)]

My Lords, briefly, I share an office with my noble friend Lord Lipsey. We go to gambling meets together—horseracing and dog meetings—and share a great interest in it. I have never heard him say what he said today. I agree with every word that he said, and I wish to support him.

[Lord Gardiner of Kimble (Con)]

My Lords, I thank the noble Viscount for his amendment and the Government fully acknowledge the strength of feeling on this issue. I will therefore explain why we feel that we are unable to accept the current amendment, clarify the state aid position and explain what we are doing to address the issue of levy reform.

The problem with the amendment is that it is too narrow in scope to offer the flexibility we would need to reform the existing system. Much has been said about the current levy regime no longer reflecting modern betting and racing. We want to consider reform across the whole system and the amendment will not enable or facilitate this wider approach. If we accepted this clause and notified the European Commission of our intentions, it could come back, as it did in the case of the French levy, requiring us to make changes to the levy system which could be made only through primary legislation. For that reason, among others, the clause is too narrow in scope to cater for such an eventuality.

A number of your Lordships—the noble Lord, Lord Lipsey, and my noble friend Lord Cavendish in particular—referred to the state aid position. I hope it will help your Lordships to address some of the issues raised in the European Commission decision about the French levy. The Commission ruled that France’s levy on online horserace betting operators was a state aid compatible with the state aid rules. That confirms the Government’s position that the UK levy also is a state aid. Any substantive alteration to an existing state aid requires approval by the European Commission. The French decision does not mean that the UK would not have to seek separate approval for a substantive change to the existing system. Indeed, the French had to make changes to the proposal they originally notified to the Commission in order to gain its approval. As I have said before, the amendment does not provide any room for manoeuvre should the Commission seek changes to the levy system to maintain state aid compliance.

I move on to levy reform. I am particularly mindful of what the noble Lord, Lord Collins of Highbury, said about many of the other activities of the levy board. Training is one that I know something about. The recent figures published by the Horserace Betting Levy Board indicate that levy yields, including voluntary contributions from bookmakers, will rise in the next two years from £74.4 million in 2012-13 to an estimated £75.6 million in 2013-14 and an estimated £80.2 million in 2014-15. That is clearly good news—I think that the noble Lord, Lord Lipsey, described it as encouraging—but it does not mean that the Government are kicking levy reform into the long grass. The Government have said that they would like to see the levy replaced by a more commercial arrangement between racing and betting, but a workable replacement that is fair, sustainable, enforceable and legally sound has yet to emerge. We all wish to see a vibrant racing industry. I am very much aware of just how important that industry is in many parts of the country.

Some points were made by my noble friends Lord Clement-Jones and Lord Cavendish about why the Government do not take a broader power to reform the levy. The Government are rightly cautious before adopting broad reserve powers, but are thinking carefully about how such a power could appropriately be used to achieve levy reform.

I understand your Lordships’ desire to make progress. The Government want to make progress too and are giving levy reform current and active consideration. As an immediate next step, the department is initiating discussions about the state aid implications of reform with the European Commission this month. For the reasons I have outlined and in the circumstances, I very much hope that the noble Viscount will feel able to withdraw his amendment.

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[Lord Moynihan (Con)]

My Lords, I support my noble friend’s amendment. The amendment is important, because it goes right to the heart of integrity in sport, and the fight against irregular and illegal betting is critical if we are to maintain the integrity of sport, on which all international sport and indeed all sport depends. I declare an interest as a member of the working group of the International Olympic Committee, which has sought to define a common approach in the fight against irregular and illegal betting. The work we have done was touched upon in a number of speeches made in Grand Committee this afternoon, and fell into three distinct areas.

First, there is the importance of education, which is critical. In the context of sport that means the education of the athletes and the entourage around them, ensuring that they understand the impact of betting and in some cases what they can and cannot bet on. Secondly, it is vital to maintain the integrity of sport. We need to monitor and have first-rate intelligence and analysis. The global monitoring system that was introduced for the first time in London 2012 went a long way in the right direction, but we need to build on the work that was done in London. The third area is legislation and regulation. This legislation before us is important in that context. It is important because, as my noble friend has pointed out, there is a loophole here, which applies to sports and spread betting and which needs to be closed through her amendment either now or subsequently, in later consideration of the Bill.

In the run-up to the Olympic Games in London 2012 it was interesting that the president of the International Olympic Committee, at that time Jacques Rogge, opined that the greatest threat to the Games in London was illegal gaming. I take issue with that view, as I think the threat of doping in sport is currently a greater threat. Nevertheless, he was right that we need to be serious in our approach to suspicious betting patterns. If that does not happen then we challenge the integrity of sport, and that challenge will grow exponentially.

It is not just a matter of a small bet. I shall give the Committee an example. If you are a young athlete in Africa and someone comes along and says, “I’ll give you $10,000 if you come second or third in the race”, and you know that in that heat you will still manage to qualify for the final, then that $10,000 is a vast amount of money. That sum can then be multiplied in bets that can be made in the irregular markets and indeed in the legal markets, and they require very close monitoring. It is that type of example that can undermine sport and lead to widespread international movements of illegal gaming, the kind of gaming that can corrupt young people and, as in the amendment that we have just discussed, goes to the very heart of the integrity of, in this case, my noble friend’s subject: sport.

Compliance with the Gambling Commission’s licence condition 15.1 on information sharing is a really important step forward and I hope it is welcomed by all sides of the House, but it should be all-embracing within the industry and we should not leave a loophole here when it comes to sports spread betting. In this context, I strongly urge the Government to continue to work with all members of the sports movement to update their internal rules, to use legislation such as the Bill before us to remove any loopholes that exist and, in the case of government legislation, to ensure that we combat irregular and illegal sports betting.

We need effective regulations, we need sanctions and we need to combat all forms of cheating linked to sports betting, including spread betting. We co-operated well for the first time in London and I think that all those involved in that work, particularly within the IOC, can be proud of the fact that there was greater co-operation than we have ever seen at a sporting event. It was not just the UK experts who were brought together; it was the industry, working with the United Nations Office on Drugs and Crime, the UNODC, and of course Interpol was critically important. This cannot be seen in the domestic or European context; it has to be seen in a completely international one.

I hope that my noble friend gets a fair hearing on this. If that requires further consultation and discussion between now and the latter stages of the Bill, I for one would welcome that.

[Baroness Golding]

My Lords, a number of years ago the All-Party Betting and Gaming Committee did a very short inquiry into suspicious betting in sports. We took evidence from a number of sporting organisations, which was very freely given. We published the results of it and there was quite a bit of talk about it at the time, but nothing has happened. I should say to the noble Baroness that the area of most concern was cricket, and this was before any big scandal arose. The report was put on the shelf and left there. I hope that with the noble Baroness’s help we will bring this to a greater audience. It is a real problem, and something needs to be done. I hope that the Minister will help give the amendment a favourable reply.

[Baroness Grey-Thompson (CB)]

My Lords, I must apologise for not being present at Second Reading but I am not an expert in gambling, although I visited a casino once. As ever, it is a joy to be here today in your Lordships’ House; it truly is an education. I congratulate the noble Baroness on tabling the amendment because of how it refers to sport. She has put forward a very strong case for what needs to be done in this area so I will not repeat it, and of course I defer to the extensive experience of the noble Lord, Lord Moynihan, in this area.

The area that I would like to pick up on is around the sharing of information, which is vital. Every time we see a story in the press about match fixing or dishonourable behaviour, it affects the wider public perception of sport and raises further doubts and gossip. Ultimately, it affects how parents think about that sport and how they encourage their children to be involved in it, and how people engage in that sport. It does a great disservice to the wonderful parts of sport that we all know. I think that national governing bodies and international bodies would welcome all the support and help that they can receive, not just to tackle ongoing cases but to put measures in place for the future. Governing bodies cannot always be two steps behind, as they are now. With drug-testing in sport, much more information is shared and we are able to look at it intelligently, to track patterns and see how we tackle it. This is such an important issue that I hope that the noble Baroness continues to press it at further stages of the Bill.