Gambling (Licensing and Advertising) Bill

Lord Collins of Highbury Excerpts

Tuesday 14th January 2014 Grand Committee

[Lord Cavendish of Furness (Con)]

My Lords, I support the amendment proposed by my noble friend Lord Astor. First, I should declare an interest—a very direct one—as a racecourse owner. As I said at Second Reading, I have never made money out of owning a racecourse and I do not think that there is room in racing for hungry shareholders; I do not think that it is greedy from that point of view.

The noble Viscount, Lord Astor, was called away to China, as some of your Lordships know, which is why he is not present. He has ridden and won in point-to-points, and he told a story a long time ago of how he and the late Lord Longford were racing together and fell off together, and their heads collided together. He always said that, before that collision, the late Lord Longford was a very staunch Conservative and that that changed him for ever—he then joined the other side. Whether that tale is apocryphal remains to be seen; I remember him as being a wonderful addition to your Lordships’ House.

I am much intrigued by what the noble Lord, Lord Lipsey, said and take issue only in one thing, which is that I do not really regard the levy as a subsidy—it is the wrong definition. After all, we are producing a product which is used by bookmakers and all we ask is that they contribute for that product. Racing has to be co-ordinated centrally, or else we would all race on one day and there would be no racing on a lot of other days. Also—here, I do not declare an interest—I race on very favourable fixtures and I think that one ought to have regard for the people who stage races on very unattractive racecourses in February on a windy, cold day.

After Second Reading, my noble friend the Minister kindly gave some of us the time to discuss the Bill. I went to the part of the meeting on the levy and I thank him for that—it was very kind. During that meeting, I think that it was the noble Lord, Lord Stevenson, who summed it up best by saying, “Well, since this amendment probably cannot be included in the Bill, could at least powers be taken in this Bill?”. The significance of that is that any reform of the levy will require primary legislation, slots for which are not easily come by.

We heard that the Government still had anxieties—the noble Lord, Lord Lipsey, referred to this—about state aid, which may well be the case. I think that there was also a feeling that this was not entirely the appropriate Bill for this kind of amendment. Although the Treasury is very keen to reclaim leaked taxation, I think that the Government understood that we are also very keen to retrieve some of our leaked revenue. I therefore ask the Minister, since this is a probably a probing amendment, whether there would be a possibility of the Government bringing forward their own amendment if this one was not right, taking those powers in due course so that the need for primary legislation could be avoided.

[Lord Collins of Highbury (Lab)]

My Lords, I have added my name to this amendment, which is a reflection of cross-party support for the levy and the principles that underpin it, even if there is not exactly unity on it within one party. Its purpose is to capture the revenue that racing should be paid, as Parliament has already determined, from all betting operators who take online and telephone bets on British racing, wherever they are located—in effect, to secure levy payments from exactly those operators whom this Bill brings within the remit of the UK tax regime, as we have heard, and who will have to have a Gambling Commission licence in order to be allowed to continue to operate in the British market.

I do not want to repeat all the reasons why there has been a fall in the value of the levy; we have heard them already in the debate. But this change in arrangements could be worth up to £20 million a year to British horseracing and, in my humble opinion, would lead to a healthier sport, more investment, growth and jobs.

I have heard the ideological arguments today and I am impressed by them, but too often people focus on the prize money, which of course is substantial. However, there is other work that the levy provides and the board distributes, such as training, education and employment initiatives, which are key to the sport retaining its integrity and developing. Nor do people see the broader picture of how the racing industry has a direct link to building sustainable rural economies. In the past, as a socialist, I have been very keen to support training levies and to ensure that the small firm is able to benefit from the overall expansion of training and education.

This measure would also create a level playing field among all betting operators. Why should onshore betting operators and those in betting shops pay the full levy while others based overseas, which do not have a voluntary agreement with British racing, do not pay a penny? This unfairly distorts competition. It is not the free market that we are talking about. I understand the frustration for racing of seeing the Government now acting to require overseas betting operators to comply with Gambling Commission regulation, to pay the social responsibility levy and subsequently to pay tax. The only area not to be harmonised is for them to pay the levy, which Parliament has already decreed they should. Perhaps the Minister can explain why the Government have not seen fit to act further and faster for racing.

The Bill does not make any provision in relation to racing or the horserace betting levy, meaning that the sport will not receive a return from remote betting activity even once it is licensed by the UK Gambling Commission. We have heard the very persuasive argument from my noble friend that any reform to the levy to capture revenues under a point-of-consumption licensing regime would constitute state aid. He and I know that the British racing industry strongly disagrees with this interpretation and, having read and heard the arguments, I am inclined to agree with the industry.

My noble friend also made reference to what I believe is a comprehensive ruling on this by the European Commission. A French parafiscal levy on online horserace betting has been approved, recognising racing’s special status and common interest with the betting industry. That sets a precedent and I know it is in the process of being reviewed by DCMS lawyers.

Like my noble friend, I am sure that the Minister may want to look at a more modern and commercial framework for the levy in the long term. Certainly, we have had many serious reviews of it, but very little progress. I know that the racing industry itself would support that—not just the owners, but the workers in the industry, who for a long time I have worked to support. Therefore, will the Minister reassure noble Lords and the racing industry that we are not going to wait several more years during which the racing industry will continue to lose out on this vital source of income—as I said at the beginning, £20 million a year?

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Moved by

[Lord Collins of Highbury]

9: After Clause 1, insert the following new Clause—
“Review of connection between non-paying social networking media gambling activities and use of licensed remote gambling operations
The Secretary of State shall conduct a review into whether and how the existence of non-paid for gambling activities on social networking media interacts with use of licensed remote gambling operations, and whether such non-paid for activities can act as an inducement to participate in paying activities.”

[Lord Collins of Highbury]

My Lords, I will preface my remarks by repeating what my noble friend said in an earlier discussion, which is that the answer to all questions is more research. That is basically what this amendment is saying.

I will be really brief. It is widely believed among the public and people in public health and gambling regulation that online gambling represents the greatest challenge to be faced in the next few years in the prevention of problem gambling. As we heard earlier, problem gambling is often how you get started, how you become addicted—it is not necessarily the money; it is the addictive nature of the gaming system.

Of course, nowadays online gambling is not a social activity. It is not even about being in your own home; you are on the tube. When I am travelling on the tube I am struck by the number of people playing a certain game on their system. That is particularly true of young people but I confess that even I have the app on my iPad: Candy Crush Saga. There was a really interesting article in the paper last week by Mark Griffiths, director of the International Gaming Research Unit at Nottingham Trent University, who described it as,

“a bit like chocolate. You say you’ll just have one chunk, and you end up having the whole lot. So you say I’ll just play for 15 minutes, and you end up still there four or five hours later”.

Unbelievably, Candy Crush Saga has been downloaded 500 million times. Although it is possible to play this game for free, 40% of players pay for add-ons. As Mark Griffiths said, there is an overlap between online games that allow players to spend money on virtual accessories, or to access higher levels, and gambling. He said:

“It’s a psychological masterstroke that people pay money to buy virtual items. The next step is for gambling firms to say, maybe you could win back some of the money you’re spending”.

That is the hook, the encouragement, and it is young people who are doing this. They are doing it on the move on their mobile phones—God knows what their phone bills are like. Mark Griffiths also said:

“Children who play these free games are more likely to gamble and more likely to develop problem gambling behaviours. These are gateway activities that can lead people down the gambling road. When you start winning, you start thinking that if I was playing with real money I could be doing quite well”.

I tend to share his view that there is nothing wrong with kids playing gambling-type games. I am not in favour of legislating or banning things all the time but we must accompany the use of these games with education. We must be much more aware of the consequences, and certainly children need to be much more aware of them.

Something that struck me on daytime television—which I do not watch a lot but occasionally I do—is the constant advertising by bingo companies. Bingo is no longer a social activity. It was something that people went to do once a week to meet people. Now they are being encouraged to do it in their own home in isolation and, what is worse, they are being told: “Have £10 or £20 free”. Actually, nothing is free; they have to lodge £30 or £40 to get that £10.

I would like the Minister to address this issue. Surely we need to better understand how these games interact with gambling. I urge him to look into this issue in more detail. I beg to move.

[Lord Gardiner of Kimble]

My Lords, I am grateful to the noble Lord for his amendment and indeed for raising the emerging area of social gaming. The Government fully understand and share the concern about the possible use of social media by gambling operators to attract new players to real-money gambling by offering them “free to play” gambling-like activities on sites such as Facebook. The noble Lord, Lord Collins, expressed particular concern for young people, and the Government also have concerns about the possible impact on underage users of social media who may become habituated to gambling-like activities and may start to pay, in effect, for more time—the so-called premium social gaming business model—or be tempted into real-money gambling as soon as they are able.

The Secretary of State for Culture, Media and Sport already has the power to conduct such a review and the Gambling Commission has already started the process. It has commissioned and published a review of what was known of the potential risks from social gambling on social media and has been working with the Responsible Gambling Strategy Board and the providers of social gaming, some of which are licensed gambling operators, to analyse the data on players and assess the potential impact in relation to problem gambling-type risks. This approach should help us to decide whether there are elements of social gaming that need to be addressed by either the Government or the regulator. We believe that to legislate on this issue at this stage would be premature.

However, the Bill will enable the Gambling Commission and/or the Secretary of State to impose any improved protection measures on all overseas operators that wish to engage with British consumers. I hope that the Committee will understand that work has already started on some of this process and we await more reporting on it. For those reasons, I hope that the noble Lord will feel able to withdraw his amendment.

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[Lord Collins of Highbury]

In the light of the Minister’s comments, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.