Paul Farrelly
Main Page: Paul Farrelly (Labour - Newcastle-under-Lyme)Gambling (Licensing and Advertising) Bill
Paul Farrelly Excerpts
Clive Efford
I have seen no evidence suggesting that any white-listed countries have a significantly lesser regulatory system. Indeed, the position appears to be quite the opposite when it comes to protecting vulnerable people. The Bill, however, opens the market to people who currently cannot operate within the United Kingdom, and that is one of the main points of concern. What steps does the Minister expect the Gambling Commission to take, and at what stage does she expect it to intervene if operators fail in their duty to monitor gambling activity?
There is widespread concern about pre-watershed gambling advertising. Although most gambling is not advertised before the watershed, there are exceptions for betting during sports fixtures that are televised before 9 pm. Can the Minister assure us, given the amount of concern about the issue, that she will consider reviewing that aspect of advertising regulation?
Although it is welcome that every gambling operator who advertises in the United Kingdom will be required to be licensed by the Gambling Commission, the Bill will open up the market to operators outside the European economic area and the white list. In her evidence to the Select Committee Jenny Williams, chief executive of the commission, said that
“the Gambling Commission received one or two reports per month from its online gambling licensees, who handled…20% of the market, but from the 80% licensed overseas the Commission had received a total of about ten since 2007. Ms Williams suggested it was implausible there were so few suspicious transactions.”
In that context, the Bill is a giant leap in the dark. What will be the demand on the commission’s resources? No one can say for certain what the scale of the problem may be. The Government have allowed themselves scope to regulate in the future, but given their reluctance so far to act to protect the consumer, we must insist on some indication from them of what they are prepared to tolerate before they will take such action. What will be their response if the commission says that it cannot cope with money from licence fees alone, and asks for extra resources? What if it needs extra powers with which to tackle the problems presented by the opening of our market to companies that are currently excluded? The Minister must explain what benchmarks the Government will set themselves, according to which we can hold them to account. It has taken so long for them to present the Bill that we cannot pass up the opportunity to secure from them clear guidelines explaining how they expect the market and the regulators to deal with these important issues.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
I do not by any means agree with everything that is said by the Remote Gambling Association, but I do believe that the enforcement issue needs to be explored further during the Bill’s subsequent stages. According to the RGA, not only is the lack of enforcement measures problematic for the licensing regime, but the Government may experience problems in collecting the revenue that it expects to receive as a result of the change in the system overall.
Clive Efford
There is a great deal of concern about the details of the Bill. It is easy to understand why it is desirable, and, as I have said, we support it, but its application may present problems. As my hon. Friend says, during its further consideration we need to look into exactly how it will be enforced.
Any company that is paying the licence fee and doing its best to operate according to the highest standards has a right to expect the integrity of the licensing system to be rigorously enforced. There should be a kitemark on the website of every UK licensed operator to indicate clearly to the public that the company is a registered, licensed operator that is overseen by the Gambling Commission. We need to see some evidence that the Government have thought that through. Does the commission have enough scope within its powers to take action to protect consumers? What does it mean when it says that the provision of a kitemark will effectively happen? What form will the kitemark take, will it be easy to recognise, and will it provide links to information and advice from the commission, particularly information about the dangers of using unlicensed sites?
According to the Select Committee’s report, when asked why the Bill did not include measures on enforcement, such as provision for financial blocking or the blocking of specific internet protocol sites, the Government assured the Committee that “most were already available”. What does that mean? Will the commission have the power to request financial blocking? Will it be able to request an internet service provider to block an IP address? We should be expecting matters to move on considerably as a consequence of the Bill. Why should we miss this opportunity to give the commission the full range of powers? Why should we risk being behind the game and having to wait again for time in which to legislate?
It is surprising that the Bill contains no measures to ensure that spread betting is licensed in the same way as other forms of betting. It rightly requires all betting operators, wherever they are based, to comply with Gambling Commission licence condition 15.1, which means that betting operators will have to share irregular betting patterns with the commission and with sports bodies. The licence condition will then be integrated across the industry, with one notable exception. Spread betting is regulated by the Financial Conduct Authority, but it currently has no licence condition 15.1, although compliance with that code is cited—rightly—as one of the main justifications for the Bill. Just today I looked at the Sporting Index site. It offers a range of sporting spread bets, including on shirt supremacy. The specific example I looked at involved the Tonga versus Cook Islands match in the rugby league world cup. For anyone who is unclear, I should explain that shirt supremacy bets are about the difference between the totals of the numbers on the shirts of the try scorers of each team. Unlike traditional bets where people can win or lose a set amount, spread betting allows potentially unlimited losses. If I place a bet on Tonga and it loses on shirt supremacy by 23 points, I will be liable for 23 times my stake money.
Action on spread betting is strongly urged by sports bodies including the English cricket board, the Football Association, the Premier League and the Rugby Football League. They are experts in this field and work together on sports betting. Will the Minister accept an amendment to the Bill to require those who offer spread betting and who advertise to comply with licence condition 15.1, or will she give a commitment to work with her ministerial colleagues at the Treasury, who have responsibility for the FCA, to get it to introduce its own version of licence condition 15.1 as soon as possible?
Mr John Whittingdale (Maldon) (Con)
May I begin by reminding the House of my entry in the register showing that I paid a visit to Gibraltar in September, at the invitation of the Gibraltar Betting and Gaming Association, to discuss the provisions of the Bill?
Mr Whittingdale
I am not sure that there is anything on that point, but I am happy to give way.
Paul Farrelly
Following the hon. Gentleman’s discussions over the summer with the Gibraltar-based companies, can he tell the House whether they are still minded to launch a last-minute legal action in Europe against these provisions? When he was there, did he discourage them from doing so?
Mr Whittingdale
The hon. Gentleman will have to ask the Gibraltar gaming authorities whether they intend to launch legal action. They have certainly expressed concern as to whether the Bill’s provisions are legal, and it is obviously up to them whether they take legal action. I made it clear to the authorities and the gaming associations that I supported the Bill, and that therefore I would certainly discourage them from doing so. They did raise some concerns, which I shall discuss in the course of my remarks.
I wish to make it clear that my Select Committee supports the Bill’s general provisions, as do I. The Committee has spent some time examining gambling. We carried out post-legislative scrutiny in 2011-12 of the entire Gambling Act 2005. Although we examined online gaming, which is obviously the most rapidly increasing form of gambling, inevitably the main focus on the 2005 Act related to casinos, the previous Government’s abortive attempt to introduce regional casinos—super-casinos—in the UK and the provisions relating to fixed odds betting terminals in betting shops. I do not propose to explore the latter issue at great length today, although it remains one of some controversy.
Hon. Members may recall that when that Gambling Bill became an Act, the then Secretary of State declared that one of its purposes was to make the UK the world centre for online gaming and that that would be of great benefit to the UK economy. Unfortunately, the then Chancellor of the Exchequer holed the then Secretary of State amidships by setting the tax rate at a level that led to almost every operator moving offshore. There is a single exception, which I am sure the hon. Member for Newcastle-under-Lyme (Paul Farrelly), my friend from the Select Committee, will mention: bet365 remains the last operator headquartered in the UK. Almost all the others have moved to offshore jurisdictions such as Gibraltar, Alderney and some European Union member states.
The system that existed at that time of operating a white list to recognise the regulatory authorities of different jurisdictions appears, in the main, to have worked reasonably well. The Government, in putting forward the arguments for this Bill, have raised one or two concerns about how the current regime works. In particular, they have said that there is some confusion about the different regimes in different jurisdictions, and that consumers may sometimes be confused as to where responsibility lies and where they should go with their complaints.
There are undoubtedly some differences between the rules applied in different jurisdictions. I agree with the Remote Gambling Association that, in general, the industry is reasonably well regulated in the white list countries. As CARE—Christian Action Research and Education—has pointed out, one or two jurisdictions, particularly Gibraltar, operate slightly stronger regulatory conditions than those in the UK. In particular, the Gibraltar rules governing the reporting of suspicion that individuals might have a problem with their gambling habits are slightly stronger. The UK Gambling Commission might want to consider whether it can tighten its licensing conditions, particularly on problem gambling, which is rightly a great concern to everybody who considers gambling and the policies governing it.
Mr Whittingdale
My hon. Friend has made his view known during the course of our debates and I shall reach a conclusion on that point very shortly. As I say, however, the Government have advanced the argument that the Bill will result in major gains in consumer protection.
Paul Farrelly
Does the Chair of the Select Committee agree that the example of Full Tilt Poker, which was licensed by Alderney but not, as we understood it, by Malta, demonstrates the scope for greater regulatory co-operation, particularly in Europe?
Mr Whittingdale
The hon. Gentleman anticipates the next two words on my notes, which read “Full Tilt”. He is, of course, correct. Something went badly wrong with Full Tilt Poker, which was regulated by the Alderney gambling control commission. It is right that there should be a review of how that happened and I understand that lessons will be learned. There have certainly been concerns about some incidents in white list countries, and for that reason there might be some advantages to consumer protection of bringing the entire remote gambling industry under the licensing rules of the UK Gambling Commission.
The hon. Member for Eltham (Clive Efford) spent some time on match fixing and licence condition 15.1. He is quite right that the Select Committee received evidence on that and there is no doubt that all the major sporting bodies support the Bill, because they have expressed concern that some of the other regulatory authorities outside the UK have not always been particularly good at reporting suspicious activities. Indeed, if we consider the statistics, we can see that there have been far more reports of potential suspicious gaming activity from UK-licensed operators than from offshore operators. If licence condition 15.1 is applied to all those offering online gambling facilities to UK customers, I hope that that will result in more attention being given to the issue.
I was also interested to hear the hon. Gentleman’s suggestion about spread betting. As my hon. Friend the Member for Shipley (Philip Davies) points out, there is difficulty in drawing a line between where sports betting stops and financial transactions begin. If it were possible for the Financial Conduct Authority to require suspicious activity to be reported to the relevant regulatory body, that would seem to be a sensible move.
Mr Whittingdale
The hon. Gentleman is almost certainly right. Obviously, people go to high-street betting shops to bet, but they also do so for other reasons. They form friendships and it becomes a social environment. None of that exists in online gambling; it is being done in bedrooms by gamblers on their own, and they will look for the site where they can get the best odds. Therefore we need to look at measures to ensure that they do not go into the black market.
Paul Farrelly
Before the Chairman of the Select Committee perhaps over-eggs fears of the black market, will he explain why, in the last year, the gambling revenues of bet365—he was right that I would mention bet365, and I will do so again later—have risen from £12 billion to £20 billion, when it operates in the UK and pays tax on its sports betting activities at 15%, rather than the near 1% in Gibraltar?
Mr Whittingdale
I am delighted to hear of the success of the company based in the hon. Gentleman’s constituency, but he will remember that when witnesses from bet365 gave evidence to the Committee they said that it was becoming increasingly difficult for them to remain in the UK, and unless something was done soon, they might very reluctantly have to follow the exodus. Happily, I hope the Bill will address that, but as I said earlier, it all comes back to the rate of tax that is levied. We want a rate of tax that is attractive to online operators, so that they license themselves in the UK, and does not drive people into the black market.
However, other measures are also required, and one or two of those who have made representations on the Bill have said that the Government must consider taking other measures to prevent illegal gambling online. There are several ways in which that could be done. They are not dissimilar to the measures that we have been looking at in order to tackle online piracy.
There are three potential ways forward. The first is to work with payment companies to ensure that unlicensed sites cannot use the payment facilities offered by credit card companies. The second is IP blocking—actually, URL blocking—preventing access via the internet to certain websites. That has technical difficulties but is certainly worth exploring. In the third, search engines have a role. I expect that my hon. Friend the Minister will be aware of the vigorous debates that have taken place with Google about the extent to which it is willing to take responsibility to ensure that illegal websites, or websites offering illegal products, do not appear at the top of their search engine results. That too is an area where more work could be done to make it harder for consumers to be tempted by illegal online operators once the new regime is in place. Those are genuine concerns, which I hope the Government will address in the course of debate.
I shall flag up one more issue. An anomaly was identified to the Select Committee, about which we had considerable sympathy. Casinos are among the safest places to gamble. They have strong measures in place to prevent money laundering, to identify those at risk of problem gambling and, if necessary, to exclude individuals and so on. They also have experienced, well trained staff on the premises. For all those reasons, a casino is one of the safer places to gamble—certainly considerably safer than in a bedroom alone, where people are able to gamble for lengthy periods without any controls and to lose a huge amount of money.
Philip Davies (Shipley) (Con)
I refer the House to my entry in the Register of Members’ Interests.
It is a pleasure to follow the hon. Member for Bradford South (Mr Sutcliffe), who was an excellent Minister in the Labour Government and is an excellent man. I am not saying that just because he is one of my constituents. I genuinely mean it. I do not think he votes for me, but I have not given up hope on him just yet. It is also a pleasure to follow my hon. Friend the Member for Maldon (Mr Whittingdale), who does a superb job chairing the Select Committee on Culture, Media and Sport and trying to bring a consensus to it, which is sometimes a challenge, but he does it with great skill.
I do not intend to divide the House on the Bill. I support its premise, but we are in a rather strange situation. The basis on which I support the Bill is not the one on which the Government are promoting it. It is the one basis on which the Government are desperate to pretend they are not introducing the Bill, even though it is clearly the case that the Bill is nothing to do with regulation; it is to do with taxation. I will deal with regulation in a moment.
We know what is behind the Bill and we do not need to guess: it is all about filling the Treasury’s coffers, although it probably will not fill them as much as the Treasury would like. The Chancellor made the objective clear in his Budget speech last year, when he said:
“One area where I am today making substantial changes is gambling duties. . . The current duty regime for remote gambling introduced by the last Government was levied on a ‘place of supply’ basis. This allowed overseas operators largely to avoid it, and much of the industry has, as a result, moved offshore. Ninety per cent. of online gambling consumed by our citizens is now supplied from outside the UK, and the remaining UK operations are under pressure to leave. This is clearly not fair—and not a sensible way to support jobs in Britain. So we intend to introduce a tax regime based on the place of consumption—where the customer is based, not the company—and, from this April, we will also introduce double taxation relief for remote gambling. These changes will create a more level playing field, and protect jobs here.” —[Official Report, 21 March 2012; Vol. 542, c. 803.]
It is perfectly clear what the Government are doing—the Chancellor could not have made it any clearer, and I fully support what he said. I thought there was a great deal of sense in it and I think most people here would agree with him.
The problem is that the Chancellor made no reference in his Budget speech to the need to introduce measures to improve player protection or to better regulate the gambling industry. I do not think that was accidental. It was perfectly obvious why. The Bill has nothing to do with regulating the gambling industry or improving player protection.
The Select Committee enjoyed hearing from the chief executive of the Gambling Commission and from the permanent secretary, struggling to think of any reasons why the current regime needed improving from a player protection perspective. I was slightly embarrassed for them. They were in a difficult position. They had come to argue the indefensible—that the Bill was all about regulation. When they were pressed to identify the issues that had caused all the problems and require new legislation, we did not get anything from them. The hon. Member for Newcastle-under-Lyme (Paul Farrelly) made the point about Full Tilt. If anybody can give an extensive list of all the problems that have been created by the current system of regulation, I would be very pleased to hear it, as would the other members of the Select Committee, I am sure. We did not hear much of it from the chief executive or from the permanent secretary.
Paul Farrelly
One of the main problems is the flight offshore. The hon. Gentleman referred to the 2012 Budget statement and the elimination of double taxation. Does he agree that that is extremely important if we are to encourage British firms based overseas to relocate here, because taxing their profits in Britain and elsewhere would make them uncompetitive?
Philip Davies
The hon. Gentleman is absolutely right. I intend to talk about taxation more widely a little later, because it plays a crucial role.
My understanding—I am sure that the Minister will correct me if I am wrong—is that the Bill is all about regulation because that is what is needed to satisfy the European Union and make it fit within its rules. Were the Government to admit that it is all about taxation, the European Union would be all over it like a rash and would rule that it is illegal because it interferes with tax competition and will upset other parts of the EU. That is why the Government have been desperately trying to pretend that the Bill is all about regulation, even though we know that it is not.
I am sure we all agree with what the Chancellor said in his Budget statement—I certainly do—but I am not entirely sure that it was particularly helpful to the Government more widely or to the Minister in this instance. The Chancellor talked about protecting jobs here, and I am sure that he had in mind the company that the hon. Member for Newcastle-under-Lyme represents, bet365. It should be commended not only for ensuring that it protects all the jobs in his area, but for the commitment it gives to the area more generally, because it sponsors the local football club and is involved in the local community. We should all congratulate bet365 on what it has done.
However, as my hon. Friend the Member for Maldon made clear, bet365’s representatives told the Select Committee in evidence that the company would be under pressure to leave if the current situation continued for much longer. Furthermore, they said that it was only really here because it was a privately owned company. They conceded that it would almost certainly have had to go offshore if it was a public limited company. The fact that it is a private company is what has allowed it to stay. Therefore, I do not necessarily think that we should criticise those that have gone offshore, because it was an inevitable consequence of the tax system and it would be naive to think otherwise.
I would prefer to try to allow bet365 to stay here, which of course we want, but it would be nice if our ambitions were a little grander. I would like to see some of the companies that are already offshore return to the UK, which is why the tax rate is so important. If we introduce a 15% tax rate, there is no chance of any of those firms returning. I encourage the Minister to encourage her Treasury colleagues to indulge in some negotiations with the betting companies to see what agreement can be reached, because I would much prefer us to set a tax rate that enabled them to come back or to bring back some of their operations. That would also mean an awful lot of jobs coming back here. That would be a much more sensible way forward, rather than seeing it as an immediate cash cow.
Philip Davies
I very much agree, Mr Speaker. My hon. Friend’s idleness is not to be commended. I will bear that in mind in future and give priority to those who can be bothered to stand up when intervening.
The 95% figure is my hypothesis. Nobody here appears to disagree with it. If the Gambling Commission wants to supply us with information following the debate to gainsay that, I will be happy to read it, but I do not believe that anybody is seriously arguing that at least 95% of gambling takes place with people who are properly licensed and registered. The Government seem to have got themselves into a bit of a muddle. As I said in an intervention on my hon. Friend the Chairman of the Select Committee, the Government have not made it clear what they think is currently bet with illegal sites, but they have made a very good stab at guessing what will be bet with illegal sites after this Bill has come to fruition. The Treasury, which obviously has pound signs in its eyes as it sees the Bill progressing through Parliament, has already made its forecasts for the revenue it expects to get from it. The assessment of remote gambling taxation in its 2012 Budget policy costings suggests that if a place-of-consumption tax is imposed at a 15% rate, about 20% of the UK market will be unlicensed, unregulated and therefore not paying tax.
Paul Farrelly
Does the hon. Gentleman think that the Treasury really knows what it is talking about in making that stab in the dark, or does it perhaps not wish to over-egg expectations of the revenue it is going to raise, so that if it ends up at 95% it will have exceeded expectations?
Philip Davies
The hon. Gentleman may have no faith in the Treasury. I am happy to go along with the Office for Budget Responsibility, which wants to look at this to see what revenue can be expected. In fact, I am happy to look at anybody’s genuine predictions.
This is a Government Bill that is supposed to be about increasing regulation and player protection. However, the Government themselves admit in their own Treasury forecast that it will result in our moving from a situation where probably fewer than 5% of people are betting with unlicensed and unregulated sites to one where about 20% of people are likely to be betting in that way. Does that sound like a sensible strategy for a Government who are introducing a Bill to improve player protection and the regulation of the gambling industry? It is complete nonsense and it is there for all to see. This has nothing to do with regulation or player protection; it is about taxation and tax rates, as the Treasury made abundantly clear in its forecast.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
It is always a pleasure to follow the hon. Member for Shipley (Philip Davies), who is knowledgeable and free-thinking. I usually do so on the Culture, Media and Sport Committee in order to ensure that he does not have the final word.
I broadly welcome the Bill. As my Select Committee colleague has said at length, it is clearly at the regulatory end of the welcome moves towards a major reform of the taxation system—to a point-of-consumption basis—so that companies pay tax on profits made from bets placed in the UK. The Bill is not about the appropriate level of that taxation. It focuses on other crucial aspects of the regime, namely, as it says on the tin, licensing and advertising of gambling. It is a crucial part of reforms of an industry that has hugely relocated, not only online, but offshore, principally to Gibraltar for most UK operators, and largely for tax reasons. I use the word “most” pointedly, because there is one huge and important exception, which is particularly important to my local area.
Paul Farrelly
It is bet365, which is the biggest UK operator and perhaps now the biggest operator worldwide. However, the Chair of the Select Committee will have to be patient, because I will speak about that company a little later.
Notwithstanding the delays to which my hon. Friend the Member for Eltham (Clive Efford) referred, I congratulate the Government on introducing the Bill and on sticking to the timetable that they set out in 2012 to bring the reforms into force, after careful consideration and consultation, by the close of next year.
A replication of that resolve would be welcome on the wider related issue of corporate tax avoidance by huge multinationals, both on and offline, which has gained a head of steam in these straitened times. Although gambling, both on and offline, is treated differently from general business because it has licensing regimes, the design of an effective point-of-contact consumption tax system holds lessons about what tax authorities can do for themselves, without passing the buck to the interminable renegotiation of international tax treaties, which may well take a lifetime.
The Bill and the issues to which it relates have been well scrutinised in this Parliament. The experience of the UK since the passing of the Gambling Act 2005 has been referred to at length. That was the subject of a DCMS consultation that started in 2009, before the last election, which recommended the current course. The Select Committee endorsed that approach in the report that we issued in July 2012. This April, the Committee published another report welcoming unanimously and on a cross-party basis—although perhaps for different reasons—the main thrust of the draft Bill following extensive pre-legislative scrutiny. In January, the House staged a precursor to this debate on the private Member’s Bill promoted by the hon. Member for West Suffolk (Matthew Hancock), which was introduced by the hon. Member for Thirsk and Malton (Miss McIntosh) following his move to the Government Front Bench. I recall that that Bill was intended as a parade ring for the gambling concerns of the Newmarket and Thirsk race courses, but it covered much of the same ground as this Bill.
I will be brief and will not run around the Select Committee circuit, as the hon. Member for Maldon (Mr Whittingdale) has done. Once again, he has proven himself to be Essex’s own latter day Seabreeze in the way that he has galloped around the track. However, it is worth re-emphasising the extent of the flight of most online gambling offshore and the resulting loss of tax to the Exchequer. The new regime should, if carefully designed, encourage a more level playing field for the online operators who have stayed and for the rest of the traditional sports gambling industry in the UK.
The Chair of the Select Committee has waited long enough. Chief among the online companies that continue to base their sports gaming operations in this country is bet365. It is, in many respects, a modest company with a great deal to be immodest about. It certainly does not seek the limelight, but I do my best for it.
Bet365 is based at Festival Park in Hanley in the constituency of my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt). In 1986, Festival Park was the site of Britain’s second national garden festival. The first was in Liverpool and the successive ones were in Glasgow, Gateshead and Ebbw Vale. They were a sort of biennial Olympics, or biennale as Boris would describe them, for Britain’s most deprived areas during the pain of the Thatcher era. Stoke was chosen after the closure of Shelton Bar steelworks in a north Staffordshire that was ravaged by the loss of its coal mines and many of its pottery makers.
Bet365 is a world-beating break from that legacy. It is one of the most phenomenal success stories in British business in the new millennium, having been started in 2000. With more than 2,000 highly skilled staff, it is now the largest private sector employer in north Staffordshire. It has led the local regeneration without a hand up or a handout from Government. In the last year, in a highly competitive industry, it has increased its pre-tax profits from online gaming by more than 50% to about £180 million. It has done that in just 13 years. As I have said before, £20 billion was wagered with bet365 in 2012-13, which is a 57% rise. That has happened because it is one of the industry’s most innovative and trusted players.
Unlike its online competitors in the UK, bet365 paid £31 million in corporation tax to the Exchequer last year. With betting duties and VAT, over the years it has paid hundreds of millions of pounds more. It also pumps a fortune into the local premiership football team, Stoke City, which is another source of pride and a sign of its commitment to the local area. Charities and good causes benefit from the Bet365 Foundation, the Stoke City Foundation and the Coates family themselves.
The reason bet365 remains in this country is not just that it is privately owned. It is because the Coates family—Peter, the Stoke City chairman, his daughter Denise, who was the founding force of the company, and her brother John, the joint managing director—believe in creating employment where they come from and in paying their fair share of tax.
The firm is a leading member of the UK’s Remote Gambling Association, which John Coates has chaired and which does much to promote responsible gambling and the industry overseas. However, unlike other leading members, including household names such as Ladbrokes and William Hill, bet365 supports the changes in this Bill because it is mainly based here and not offshore. If it is so successful while paying taxation, why should its competitors not do so too? I do not think that the UK’s legislative framework should discriminate between a private company and a publicly quoted company, even if publicly quoted companies are motivated by profit maximisation.
I sympathise with some of the arguments that have been made by bet365’s competitors and by the RGA during the gestation of the Bill, which we have heard about today from the hon. Member for Shipley. I also welcome the change of tone from the RGA towards these reforms, which will surely happen. I hope that there is no challenge from the Gibraltar-based companies in Europe, because that would be a delaying tactic that is all about taxation.
In Committee and in the subsequent stages of the Bill’s passage, we must have the best possible scrutiny to get the legislation right. The success of the regime will depend on British consumers choosing to gamble with licensees who have chosen to go with the Gambling Commission. There will have to be effective enforcement to deter non-licensed companies from muddying the waters with a grey or black market. There are outstanding licensing issues on which the industry is being consulted. We must remember that this is an international industry in which operators hold licences overseas in reputable jurisdictions. As the RGA says, it is in everyone’s interests that the regulators work together.
As we have heard, it is crucial that we get the level of taxation right. It is also important to get the definition of what is to be taxed right. I hope that the Treasury is listening to the arguments from the industry for a gross profits tax, rather than a wider gross gaming revenue definition, which rather moves the goalposts from what the operators were expecting.
In listening to the industry, we must recognise that other jurisdictions, notably in Europe, have successfully introduced similar licensing systems and taxation on a point-of-consumption basis. That is reaping revenue for their Exchequers. One of the most recent countries to do so was Denmark. The duty there is 20%, which is higher than the 15% gross profits tax in this country. None of the major operators—all responsible members of the RGA—have seriously suggested to the Select Committee or to anyone else that they would not apply for a licence under the new regime established by the Bill, but instead join an unlicensed or grey market. They have not done so in Denmark, Germany, Greece or Spain. Frankly, the UK is too important a market and their reputations are too important for them to do so here. I repeat: if bet365 can be so successful and supportive of these changes, that also shows what the competition is capable of doing.
To conclude, once we implement this new system—by the close of 2014, I hope, and following parallel moves by other European countries—UK operators, including bet365, will not only have a greater degree of certainty for their future investment and growth, but in co-operating with, rather than resisting, the new British system, all those who claim to be a reputable UK company will be better placed to argue, particularly at European level, for fairer access to other major markets such as France and Italy, and to ask the UK Government to help support the industry in Europe and worldwide.