Offshore Gambling Bill

Paul Farrelly Excerpts

Friday 25th January 2013 Commons Chamber

[Miss McIntosh]

I pay tribute to my hon. Friend the Member for West Suffolk for the groundwork that he has done in that regard.

One of the unintended consequences of offshore betting has been to remove this activity from the remit of the Gambling Commission. It is my understanding that that was not the intention of the House when the Gambling Act was introduced in 2005. The Gambling Commission plays a key role in protecting young people and vulnerable people from such activities, and many of my right hon. and hon. Friends will agree on the need to protect the young from parts of the internet; indeed, one of my hon. Friends has just been appointed as adviser to the Prime Minister on that matter. In my view, it was never the intention of the House that this activity should be summarily removed from the remit of the Gambling Commission, which offers an enforcement mechanism.

Regarding the levy, we have to look at the European Commission, which should allow the proposals in clause 4.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

The hon. Lady is correct to highlight the flight offshore of online gambling as an unintended consequence that the Government are now addressing. Does she acknowledge that there is a major exception—bet365, which holds a Gambling Commission licence, and is based in north Staffordshire? It is one of the biggest employers in the area that I represent.

[Miss McIntosh]

I am delighted to do so, and I shall say a little more about bet365. Not only is it a major employer but it demonstrates what can be done to keep that type of operation onshore in this country while contributing to the local and national economy and employing people in the hon. Gentleman’s constituency.

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[Miss McIntosh]

I shall come to that point in a moment. The levy yield has gone down in the past 10 years by almost 35%, and the five-year trend shows that it has gone down by almost 21%. The current financial problems with racing revolve around betting companies having moved their businesses offshore, meaning that they are exempt from paying both tax and the levy. As soon as one company moved offshore, there was a need for others to follow, enabling more competition between those companies. My understanding is that, as the hon. Member for Newcastle-under-Lyme (Paul Farrelly) said, only one betting company, bet365, remains based in the UK for these betting operations, and it is a significant employer in his constituency.

As a result of this mass exodus offshore, the Government are losing approximately £300 million in tax each year, and the amount being paid into the levy has been reduced by between £5 million and £10 million. I repeat that the tax situation is properly a matter for the Treasury to address in the Budget. The point that I want to make for the purposes of the Bill is that the drop in levy and the drop in tax has meant that less prize money is available, making other countries such as Ireland and France more attractive for owners to buy horses there and enter them in races there.

To address the point made by my hon. Friend the Member for Bury North (Mr Nuttall), the figures that I have show that the average prize money per race over the past 10 years on flat race courses has seen a reduction of more than 16%, and for jump racing a reduction of almost 10%. Overall the reduction has been almost 14%. The five-year trend for flat racing shows a reduction of more than 3% in average prize money per race and in jump racing a reduction of almost 20%. Overall, average prize money per race has dropped by more than 9%. By comparison, the prize money available in France is approximately seven times higher than that on offer in the UK.

To give an idea of the difference between the UK and France, in 2011-12, £67.7 million on betting activity on British racing was returned to racing through the levy, but in France the PMU, the state-owned tote monopoly—I will talk more about this later—returned approximately £735 million to racing. In Australia approximately £280 million was returned to racing. British owners receive the lowest return from their investment in training fees for racehorses of any major racing nation. I think that the international statistics are powerful and show how weak British racing is in comparison because of the falling yield.

My hon. Friend the Member for Shipley serves with great distinction on the Culture, Media and Sport Committee. The Committee addressed this question in 2012 in its report, “The Gambling Act 2005: A bet worth taking?”, for which it took some compelling evidence. I will share with Members one of its conclusions:

“The failure of the Department for Culture, Media and Sport to work with the Treasury to set remote gambling taxation at a level at which online operators could remain within the UK and regulated by the Gambling Commission has led to almost every online gambling operator moving offshore whilst most are still able to advertise and operate into the UK. We therefore welcome the announcement, made in the 2012 Budget Statement, that the online industry will be taxed on a point-of-consumption rather than a point-of-supply basis. We also welcome the detailed consultation with the industry since the Budget over the design of the policy framework and look forward to the Government's response. To give certainty to online operators, and their investment plans, we urge the Government to adhere to its timetable for implementation by December, 2014 and to make plans to deal with any challenges to the proposed new system. However, the Treasury still needs to work with industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market.”

There we have it. My hon. Friend the Member for Shipley, a distinguished member of the Committee, did not, to my certain knowledge, dissent from or disagree with that conclusion, seek to distance himself from it, express an opposing minority view or table a minority report, so I am delighted that we will no doubt enjoy his full support today. In his own Committee’s report, he has drawn two conclusions: it is for the Treasury to close that gap to ensure fairness in taxation, but it is for the House today to ask the Minister either to accept the Bill or to give an assurance on the precise date and timetable for when the Government will bring forward their proposals for the remote gambling Bill. Should the worst happen today and the Bill falls, will my right hon. Friend the Minister accept an amendment on the levy when he brings forward the remote gambling Bill? I will move on to that momentarily.

[Paul Farrelly]

Heaven forbid that the hon. Lady should suspect the hon. Member for Shipley (Philip Davies) of ever opposing a private Member’s Bill. Clearly, the timing of the legislation is not entirely in the sport Minister’s hands, because it is dependent on the Treasury. I emphasise the importance of the December 2014 deadline, because of the investment plans of operators such as bet365 and the need for certainty. I must say that the plans of companies such as bet365, which is a European operator, might have been somewhat jolted by the Government’s announcement on holding an in/out referendum by 2018.

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[Miss McIntosh]

What we are trying to do is help racing in the UK by bringing activities that are deemed to be in the UK back here so that they fall within the remit of the Gambling Commission. That would lead to, I hope—mindful of those placing bets—a duty to behave responsibly and would provide legitimacy for licences based in the UK. I will come in a moment to why it would introduce a level playing field.

[Paul Farrelly]

Perhaps I can help with some facts. Will the hon. Lady acknowledge that it is important to compare like with like? There are examples of well-thought-out point of consumption regimes in Denmark and Spain that capture the vast majority of online gambling and bring revenue back to the Exchequer. In changing the regime here, the Government are showing every sign, I am pleased to say, of taking that very careful, considered and measured approach so that it will be effective at the end of the day.

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[Miss McIntosh]

I have a link with Sheikh Mohammed—his horses were at stud where I live in the constituency—but I take my hon. Friend’s point.

The fact is that the problem affects the race courses that are in far more remote areas of the country, located further away from racing centres. I am not thinking particularly of my area in that regard, but of further- flung courses in Scotland and the UK, which are feeling the effects of the reduction in the levy because they have less to offer to owners and trainers. A further consideration is the price of fuel and the location of the race course in relation to the trainer’s yard. The trainers to whom I have spoken have made that point most vigorously. They take not just one horse to one course on a given day, but multiple horses to multiple race courses. That makes certain race courses far less appealing than others.

I have argued that state aid rules should not be a significant issue, but if they are, a way around them has been suggested: all betting operators could require a UK licence. However, in order to obtain that licence, they must enter into a commercial deal with the British Horseracing Authority that ensures that a percentage of their gross profit goes back into racing. That approach has already been taken up by one betting operator, to which I have referred. Pressure must be placed on others to follow. There could be a further incentive: betting operators must have a commercial deal if they want to sponsor the big races and meets.

On the so-called problem of competition law—[Interruption.] I ask for the Minister’s attention at this point, because this is the crux of my argument and the main difference between the Gambling (Licensing & Advertising) Bill, which deals with remote gambling, and the Offshore Gambling Bill. I struggle to see why the Minister, the Department or the Government should so categorically state that extending the levy to overseas operators would breach the rules on state aid. I mentioned my own background information in that regard, but I have also taken advice from a legal counsellor.

To state the obvious, the levy already exists, so its extension to overseas operators would purely be to equalise the competition conditions and ought not to generate any new state aid problem. Those arguments arose at the time of the sale of the Tote—I argued vigorously with successive Governments that there were no state aid issues. We are often fearful in this country of debating with the European Commission, and yet, in my experience, Commission officials are even more open than officials from UK Government Departments. The existing levy of the 1960s pre-dates our entry into the Common Market in 1973 and has grandfather rights, as I have said. If it is thought to raise a state aid issue—as I have explained, there are good reasons why it should not—why has the Commission waited so long to raise this point? I put it to the Minister and the House that the Commission has chosen not to do so because there is no state aid issue. I want to help the Government and my right hon. Friend the Minister in this regard. The Government might be nervous that the Commission is currently examining the state aid aspects of the parafiscal levy on online horse race betting in France. France has been notified that such a measure is, in the Commission’s view, a state aid.

The Commission has opened proceedings under article 108(2) of the treaty on the functioning of the European Union. The case that the Commission brought against France commenced in 2010 and has still not been completed some three years on. It relates to a levy to finance the public service mission of

“improvement of the equine species and the promotion of horse breeding”—

this is from official journal, which is the reason for the legalese—and

“training in the horse racing and breeding sector and rural development.”

The invitation to submit comments under the treaty on the functioning of the EU was published in January 2011.

The case against France is that the French authorities notified the Commission of a proposal for a parafiscal levy on online horse race betting in order to fund a public service mission entrusted to horse racing companies. The notified measure comes in the context of the opening up of certain online games of betting and chance under the French law of 12 May 2010. That law ends the monopoly on online horse race betting held by Pari Mutuel Urbain, commonly known as PMU, an economic interest grouping of 51 horse race companies that, however, retains the monopoly of online horse race betting through its physical network of sales outlets. The French authorities argued their case that the purpose of the levy was to fund the public service mission improvement. They subsequently submitted this to the Commission and it considers that the aid measure contains all the features constituting the concept of state aid, and published its decision inviting comments and consultation.

My question to the Minister today is: have we, as a party, joined that case? Did the Government respond to that invitation to clarify the legal situation? That would have been immensely helpful to the Minister, both in responding to the Offshore Gambling Bill today and in preparing his own remote gambling Bill. I want to strengthen the Minister’s and the Government’s arm. We have nothing to fear on this point from the European Union. We have a very strong case to put, and it appears to me that there are distinctions between it and the French case. I hope the Minister has joy and that the Government did respond to that consultation and can use it as an opportunity to clarify the difference between the French proposed parafiscal levy and our levy which has existed since the early 1960s and enjoys grandfather rights, which by no stretch of the imagination can be said of the French proposed parafiscal levy. If the Minister did not respond to that consultation, he owes the House an explanation of why the Government chose not to respond, as it would have been a unique opportunity to clarify the law in this regard.

There are distinctions between the French case and the Horserace Betting Levy Board. Most importantly, the levy in this country is not paid to economic operators in the field of horse race betting, but paid direct to the Horserace Betting Levy Board, which then distributes the proceeds of the levy for the improvement of racehorses: and breeds of horses, and for the advancement of veterinary science and education. There is no direct participation by bookmakers in the proceeds of the levy, and if any advantage is conferred on them it is only on the maintenance of the stock of good quality horses, the provision of grants to cover the costs of regulating races and to provide loans for the improvements to racehorses. It is very hard to reconstruct what contribution bookmakers might have made without the levy, but it cannot be sensibly said that the levy relieves bookmakers of the burden that they would otherwise have had to assume. Indeed, the paradox before us today is that the existing levy confers an advantage on overseas operators, since they derive, albeit indirectly, the benefit from a healthy horse stock and well-provisioned race courses without having to make the contribution that their domestic competitors have to make. That must surely distort competition.

We are not proposing state aid. In no way would the Government, were it to agree to clause 4, be proposing state aid. Clause 4 seeks to equalise unfairness and to remove the distortion to competition between bet365 and others who place their bets in the UK, and those offshore operators who place their bets in Gibraltar and in other offshore territories. It may be that I have to concede that the levy is provided from state resources, because it is a statutory levy. However, there seem to be powerful arguments that its extension to overseas operators would tend to equalise the conclusions of competition, not distort it.

I therefore put it to the Minister that today is his opportunity to explain his views, his Department’s views and the Government’s views on state aid once and for all. We have never had the opportunity in the House to discuss this—this is a unique opportunity to do so. It is incumbent on the Minister to explain why, if he did not, he did not respond to the consultation’s points in the official journal called by the European Commission to the French-proposed parafiscal levy. I ask the Minister to explain his views on state aid, and explain why they are at such variance from mine and those of the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk who is sat next to him on the Front Bench. We believe that this does not constitute state aid but merely seeks to close the gap and remove the existing distortion from competition.

[Paul Farrelly]

The hon. Lady will probably be aware that there have been challenges to point of consumption legislation in Europe from operators affected. On that point, does she think that it may be better to deal with the levy separately from the rest of the legislation backing point of consumption, so that there is less opportunity for challenges to the change of the framework, which may just delay the Exchequer getting more money and the levelling of competition across the board in general, not with specific reference to horse racing?

[Miss McIntosh]

I see where the hon. Gentleman is coming from, but I think that would be unacceptable to the racing industry. The message that I want to go out from the House today is that the House cares about the racing industry, recognises the contribution the industry makes to the micro-economy in rural north Yorkshire—Thirsk, Malton and Filey—and to the greater economy of the United Kingdom. Racing has been cheated for months and years ever since these offshore operators have been operating out of Gibraltar, the Isle of Man and other such unacceptable points of establishment.

This is a unique opportunity to take the challenges facing racing in the round. I fully accept that we cannot deal with questions of taxation today—that has to be the remit of the Treasury. I am sure that my right hon. Friend the Chancellor of the Exchequer will address that point, giving those affected sufficient time to prepare for this tax. Some of the betting companies are alarmed about this, but I think unnecessarily so. That is a separate argument, however. Clause 4 and the matter of the horse racing levy is an integral part of the whole problem of racing being cheated out of the money. The consequences of licensing and advertising offshore and not paying towards the levy onshore need to be addressed together. We seek to improve competition and equalise the market. I notice that my right hon. Friend the Minister is shaking his head. He must be bold. He has nothing to fear. He has the whole of the House and the industry behind his not inconsiderable stature. I therefore hope that the Minister will march forth today and take on those companies, which want to do the right thing—one of them is already doing so. They should join in line and make the Minister’s life easier and the racing industry’s future much more certain.

The Bill aims to remedy the current flaws in the system to ensure that all betting companies pay the correct amount of tax and contribute to the future of racing by paying the levy. I accept that the levy in its current form is no longer fit for purpose and must change. The industry has some time to do so—it has been invited to do so by the Government, which I welcome. The purpose of today’s Bill is to equalise the competitive situation, as in France, to ensure that everybody pays the tax and the levy and that everybody knows and can see that they are doing so. The Bill is not anti-competitive; quite the reverse. It seeks to encourage competition by removing the current distortion in the market. Without this Bill, racing will continue to lose out on much-needed funding.

I recognise that costs are increasing—the costs of trainers, feed, bedding, fuel and travel—and prize money has gone down. I fully accept that racing has long been considered the sport of kings. In north Yorkshire it is also recognised as bringing tremendous enjoyment to local participants and tremendous returns—on a good day or a in a good year—to the trainers, stable boys and lasses, jockeys and owners, and also the local economy. It gives me great pleasure—it is also an honour—to take over the Bill today from my hon. Friend the Member for West Suffolk. I hope that the House will give it a fair hearing. We wait with great anticipation to hear the Minister’s response, to ensure that racing can proceed on a much firmer footing than in the recent past.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

I, too, start with a double congratulation to the hon. Member for West Suffolk (Matthew Hancock)—or perhaps the honourable Member for Newmarket, as he might more appropriately be known today—first, on securing this private Member’s Bill in the ballot and, secondly, on his promotion to Under-Secretary of State for Skills at both the Department for Education and the Department for Business, Innovation and Skills. He has certainly got a lot on his plate, so it is kind of the hon. Member for racing at Thirsk, if not Malton (Miss McIntosh) to take the Bill on so ably for him.

At this point I was going to say that I will make a short contribution, because I realised that the Bill’s promoters were not seeking to take it forward in its current form, but the hon. Lady’s lengthy speech has left me in some confusion about that. If she wants to intervene on me, I would be grateful for some clarity.

[Miss McIntosh]

What we are seeking is a number of assurances from the Minister, as I set out in my speech.

[Paul Farrelly]

It seems clear from that intervention that the Bill will not go forward in its current form, because the Government have just published their draft Gambling (Licensing & Advertising) Bill and, with the exception of the racing parts, today’s Bill covers the same ground. In fact, we will be scrutinising that draft Bill in the Select Committee on Culture, Media and Sport on Tuesday, so perhaps the promoters and sponsors of today’s Bill will want to make a detailed written submission to the Committee—or, indeed, send the Hansard report of this debate—as we perform that scrutiny. That draft Bill is the DCMS/regulatory end of what the Government propose as a major reform of the taxation regime—the move to point of consumption as the basis for taxation of remote online gambling. The business end of that change—the Treasury part—is at the detailed policy design stage, which has been the subject of extensive consultation by the Government.

We are still awaiting a response to that consultation, but the Government have just published their response to our report from last July, “The Gambling Act 2005: A bet worth taking?”, in which, as we heard from the hon. Lady, we unanimously welcomed the change of emphasis towards taxing remote gambling on a point-of-consumption basis, for three very good reasons. It may well encourage online operators to rebase themselves here, following a flight overseas—in particular, to Gibraltar. Changing the emphasis would level the playing field for operators such as bet365 that have chosen to remain here and pay tax in this country, and it would raise tax for the hard-pressed Treasury.

For certainty’s sake, we also recommended that the Government adhere to their timetable of December 2014 for implementing the new regime, bearing in mind the possibility of a challenge in Europe if the tax level in particular is not right or acceptable to the operators, which might wish to challenge it, as they have challenged other moves in the EU. Such a challenge might be a vexatious challenge at the last moment, simply to delay things as far as possible. That would have major repercussions for operators such as bet365 or others that might wish to return to the UK, as well as for some expensive investment plans, particularly in IT and servers, and in sales.

In their response to our report, the Government have said that they are still analysing the responses to the detailed policy design to make the system effective. I recognise that the Minister today is from the Department for Culture, Media and Sport, not the Treasury, but it might be useful in his summing up if he could give some guidance on when that response will be published, because we are all interested to see it. Indeed, the representations that the Government have received may well cover the same ground as the representations that our Committee has received for our scrutiny, because they will be from all the members of the Remote Gambling Association.

The RGA has much to commend it, not least the way it goes about promoting the industry in other jurisdictions—in particular, the other 26 members of the European Union—and making the case for sensible market reforms that are workable. The RGA is led well, works well and is respected as a body for the case it makes. However, the reality is that, in the UK, the RGA is a lobbying organisation with a strong vested interest, because the vast majority of its members are already based offshore and will therefore by definition oppose a point of consumption basis for taxation.

[Miss McIntosh]

As the hon. Gentleman has mentioned bet365 in his constituency and the RGA’s lobbying power, does he not accept that—with Malton as the main centre of training in my constituency, but with a few trainers in Thirsk as well—the trainers and, indeed, the whole racing industry are perhaps not as cohesive, but instead fragmented, which means that their views are not heard as clearly as those of a focused lobbying organisation such as the RGA?

[Paul Farrelly]

I take the hon. Lady’s point, but I think she is rather doing herself down, because the case made in this Bill and the fact that the horse racing levy exists at all show the power of the industry and the representations made on behalf of racing.

On the thrust towards a point of consumption basis, the vast majority of the RGA’s members are based offshore, where they pay very little tax. Therefore, although I respect the RGA in many respects, we have to take its arguments against the thrust of the change to the regime with a pinch of salt. The big exception among its members is bet365, which in 10 years has become the biggest employer in north Staffordshire. It is largely UK-based—all its sports betting has always been UK-based—because the founding Coates family believe in creating employment locally and paying their fair share of tax. Their commitment to our local area and sport in general is shown in their ownership of Stoke City football club, as the hon. Member for Shipley (Philip Davies) will very well know. Indeed, unless someone is a very wealthy racehorse owner—I am looking to Manchester—owning a premier league football club is going to make a big dent in their pocket. The commitment of the Coates family is demonstrated and well regarded.

We do not see it in the RGA’s representations, although it appears in its previous submissions to the Select Committee, but bet365 wholly welcomes the Government’s change to a point of consumption basis for taxation. By virtue of that, it is important to recognise that the RGA does not speak for all its members on that matter or, because of the success of bet365, for a big slice of the UK online market.

[James Duddridge]

It is interesting to hear what bet365 has done, for good reasons, within its community. Has the hon. Gentleman learned from his discussions with the company whether it has managed to persuade any other organisations to start thinking in a similar way and to come back onshore on a voluntary basis, or are those organisations so far removed from bet365 that it will remain an isolated case?

[Paul Farrelly]

I do not want to get involved in the internal politics of the RGA. All its members are reputable, and the vast majority—the likes of William Hill, Coral and bwin.party—will of course accept a licence if we move to the new regime. They will not want to be unlicensed operators. That is not how they do business and they would not make money in a big market such as the UK as comfortably as they do at the moment.

Cutting through the bluster, we can see that tax is the fundamental factor. It is important to recognise that, for those operators, this is about getting the tax right. The other arguments are incidental, and those operators will be able to live with the changes. Some will have different experiences because of their distance from the UK market, but they will all be able to live with the changes as long as they are comfortable with the tax arrangements. That very point was highlighted in William Hill’s submission to the Select Committee for our scrutiny of the Government’s draft Bill. Having made all its arguments, the RGA has effectively suggested that it could live with all the changes if the gross profits tax were reduced from, say, 15% to 5%. That is the crux of the argument. We will test all those objections in our scrutiny Committee on Tuesday. As the hon. Member for Thirsk and Malton said, our report called on the Treasury to establish what should be the current level of tax for online gambling, taking into account the need to bring everyone on board and not to encourage an unlicensed grey market.

The continued presence and success of bet365 in sports activities is rather inconvenient for the rest of the industry, because it shows that the doomsday arguments do not have any substance. Bet365’s success proves that it is fully able to compete here, and there is no reason why the other big names should not do so as well.

Let me set out some of the facts for the House. In the year ending March 2012, bet365 took £12 billion in wagers, which was 45% up on the previous year. It made pre-tax profits of £116 million, which was up 22%. That is a record that most UK businesses can only envy in the current economic environment. Its total contribution to the UK Exchequer, including betting duty, VAT and £20 million corporation tax, was £130 million; and, importantly for our area in these difficult times, it recruited another 500 staff.

Bet365’s record is exemplary, and if it can be so successful there is no reason why the likes of William Hill, Coral or Ladbrokes—all the names, old and new, that we know so well—cannot be successful here too and contribute to the UK Exchequer. This is all about tax, and for the Government it is all about revenue. It would be helpful for us, and for the industry, if the Minister shed some light on any conversations that he has had with the Treasury on how its modelling of the tax take has progressed and on the discussions it has had with the industry on tax levels.

If tax is the nub of the argument for the industry, the core issue in the Bill is, as the hon. Lady has made clear, a special plea for the horse racing industry. I do not have the opportunity to indulge myself in racing as much as the hon. Member for Shipley does, but I enjoy the odd visit to the races and the odd flutter. We have Uttoxeter nearby in Staffordshire, and Chester races are just across the border.

I am not intrinsically against a special deal for the racing industry, because it is a reality that the racing levy is part of the landscape—the hon. Lady talked about grandfather rights—and it is a national lottery for the horse racing industry. However, I do not believe that she made the point as strongly as she might have done for Ministers to back the case for the racing industry and not to cave in to special pleading for, say, a football levy to help struggling clubs. An example of such a club is Port Vale, which is at the opposite end of the city from Stoke City FC—owned by bet365—and recently went into administration. If the hon. Lady would like to intervene on me, I would be interested to hear why she thinks the Minister should not listen to special pleading from other sports.

[Miss McIntosh]

It is for the simple reason that the levy was set up to help the racing industry but is now being circumvented in a very obvious way. Also, as I have said, at least 50% of the bets placed online—it is probably more in betting shops, but for the purposes of the debate we are concentrating on online betting—are attracted because of racing.

[Paul Farrelly]

I thank the hon. Lady for that response. As the day goes on, she will probably have to listen to the argument from the gambling industry that racing owes its success in large part to the ease of having a flutter at the races. The industry will argue that it already does enough. Similar arguments will be made about how racing has become less important because of the development of online gambling and of in-game betting alongside result betting. Those are arguments that she and the sponsors of the Bill will have to take on. I am sure that they will be presented again and again as the Government’s Bill proceeds and as the hon. Lady and others table amendments to it.

I conclude by returning to a point that I made in an intervention on the hon. Lady, and on which I hope the Minister will be able to comment. There is great merit in keeping this Bill simple and in dealing with racing separately. The Bill is the regulatory end of the changes to the taxation regime that will benefit everyone in the country through increased contributions to the Treasury coffers, and that will benefit operators who have remained here and face competition from organisations overseas that do not pay tax. The real danger is that a vexatious complaint could be made, causing delays because of the European Union angle. The Government’s approach has much to commend it, if they proceed with careful thought and simplicity, and if the racing element is dealt with separately.

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[James Duddridge]

I am not sure whether I might not still be on my feet at 1 o’clock, but perhaps if I rush through my comments I will find time to place a bet on behalf of myself and my hon. Friend.

Although the majority of operators currently targeting British consumers are subject to established and effective regulatory regimes, not all of them are, so we are suffering from those problems now. For example, some online operators have begun to target British consumers and very little is known about the level of their regulation or, indeed, consumer protection. There is concern about that issue and others when it comes to European operators and, in particular, operators beyond Europe without sufficient regulatory oversight. There has been some debate about light-touch regulation and what is sufficient, but there needs to be a level playing field. I will not go into details of my particular view on the level of regulation—that would be wrong and I do not think that it applies to this Bill.

Even where operators are subject to appropriate levels of overseas regulation, there are different regulatory standards and approaches. This lack of parity inevitably leads to British consumers receiving different levels of protection depending on which operator they use. I recall discussing case work with another Member of Parliament in the Tea Room. A constituent of his had lost £25,000, by which I mean that their online betting account, which had been very successful and had a balance of more than £25,000, was hacked into, a losing bet was made and that money was lost. They maintain that it was not they who made the bet and I am not sure—I was not privileged to sit in on the relevant debate—whether that online gambler was subject to online regulations.

We wander around and make decisions in the United Kingdom under the security of British law. Although there are exceptions when there are problems, largely we are very well protected as UK citizens when making purchases. It is clear that that is not always the case in the gambling arena and that the 2005 Act has not allowed for it. I welcome the exploration of how we can solve some of those problems, whether through the Offshore Gambling Bill or the draft Gambling (Licensing & Advertising) Bill.

My hon. Friend the Member for Thirsk and Malton referred initially to the remote gambling Bill. Perhaps that was the working title of the Government Bill. My hon. Friend nods in assent, for which I am grateful. I was somewhat confused when preparing for this debate, because I thought there was a third Bill in play, so I am grateful to find that that is not the case. It is difficult enough to deal with two Bills at one time.

Without specific requirements imposed by overseas jurisdictions, operators may not be compelled to report certain information, such as suspicious betting activity, to the Gambling Commission or relevant sports bodies, even when such an activity may involve a British sportsperson and/or British consumers. As such, there is a potential risk of match fixing. The hon. Member for Newcastle-under-Lyme used the term “in-match betting”, I think, which I was not familiar with, but I suspect it covers things such as how many times a bowler will stray away from the wicket during the course of one over. I understand from press reports that that is an increasingly popular sign of betting.

[Paul Farrelly]

The hon. Gentleman is right, but the not very technical term is “in-game betting”, as I understand it.

[James Duddridge]

I am grateful for that correction. One of the things emerging from this debate is that I need to spend some more time betting in order to be able to contribute more fully to debates such as this.

There is a potential risk of match fixing and suspicious betting practices taking place on overseas-licensed sites, including those that may have an impact on sports in Britain. The British authorities may not be notified, thereby placing individuals at much greater risk.

Some offshore operators do share information with the Gambling Commission, in addition to their home regulator, and they do so on a voluntary basis. I would be interested to hear more examples and details from the Minister. It is all very well to say that they share some information, but is it sufficient? I suspect there may be some smoke and mirrors regarding what is and what is not shared.

The detail is often insufficient for it to be used in an investigation. In fact, I cannot find many examples of investigations taking place. That limits the Gambling Commission’s ability to conduct thorough investigations when it does not have powers of jurisdiction. There have been instances when the commission has not received the relevant information and has been unable to obtain information from its overseas licensed operators or regulators. That is clearly not in anybody’s interest or in that of the market to work effectively. Let us face it: if the market is not robust, people simply will not place a bet. Why would they place a bet with an organisation—be it online or offline, onshore or offshore—if they thought that it would wriggle out of the contract? It is important to look at the benefits of bringing all this back to the UK for the sustainability of the industry.

In some cases, the Gambling Commission is told that the refusal to provide information is down to overseas data protection requirements. I would be interested to hear whether the Minister thinks that that is a legitimate concern or just a veil that these organisations are using. There is currently no way of ensuring that the protections of the gambling regulations framework, particularly those afforded to licence condition 15—for those who do not know, that is about the reporting requirements on restrictions of betting activity—are applied on a consistent basis to operators who transact with British consumers or are allowed to bet on British events.

With technological advancement, it is becoming increasingly difficult to identify the level of regulatory oversight of gambling service provision and where the key equipment is, which is important in relation to the legislation.