Offshore Gambling Bill

Part of the debate – in the House of Commons at 1:23 pm on 25 January 2013.

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Photo of Philip Davies Philip Davies Conservative, Shipley 1:23, 25 January 2013

I do. Rachel Hood is the wife of John Gosden, one of the top trainers in the country. She is also, I believe, a lawyer by profession. She is an extremely talented person, and the Racehorse Owners Association is lucky to have her representing it. She is a formidable character, and we do not always see eye to eye, but my hon. Friend was right to quote her. She also said:

“British racing’s funding model has changed so much in recent years and while there remains a lack of total transparency around the issue of media rights, to its credit the Racecourse Association has recently confirmed that by 2013 racecourses will be receiving media rights of at least £84m, nearly £30m more than in 2010.”

She herself has identified the fact that the race courses are receiving a windfall from the media rights that the bookmakers are paying. She may also have cottoned on to the fact that there may well be more mileage for the owners in trying to pass some of it on in prize money.

I am well aware, Mr Deputy Speaker, that time is passing, and it is a shame when there is so much to say about such a big subject and so little time in which to say it—unfortunately, I seem to encounter that problem regularly, and on Fridays in particular. However, I want to talk about regulation because, as I said at the start of my remarks, this will help the Government to a certain extent; they want us to get on to discuss regulation because as far as they are concerned that is what they are all about. That is probably about as helpful as I am going to get for the Government, but I thought I would help in that respect.

The Minister is on the horns of a dilemma, because he has to say that this issue is about regulation. The problem is that I do not see, and neither did our Select Committee when we took evidence, a great deal of evidence of a massive problem with the regulation of the betting industry in this country. If anybody has any evidence of the failures of regulation, the Select Committee would love to see it because we genuinely did not see any. If we are to take the Government’s word on what this is all about, the Bill seems to be the perfect example of a solution looking for a problem. I am not aware of what the problem is, but it will be for the Government, either today or at a later date, to spell out what the particular issue is. I do not know whether the Minister sees the Bill as an irritant—perhaps he will be able to tell us. Some aspects of the Bill are superfluous, because the Treasury and the Department for Culture, Media and Sport have already indicated that they are going to carry out much of what is in it, and some of it may be illegal.

Let me discuss some of the particular regulation issues. At the moment, we have a white list, which is based on the view that the regulation in the other regimes involved is just as rigorous and onerous as it is in this country, and we are satisfied as a country that those regimes are just as good. So the principle goes: given that we are happy with the regulatory regime in those jurisdictions, we are happy to accept the licences that they issue. If we are simply looking at this in terms of regulation, the model of regulation seems to be sensible. So if we are happy with the overall standard of regulation, why do we need to get bogged down in issuing each individual operator a licence, given that they have already been given a licence in a regime that we think is good enough? That is the basis on which we have operated our regulation in this country and it has worked particularly well.

This country has a very small number of people who bet with illegal operators, although, again, I am happy to listen to evidence to the contrary on that and I will certainly accept it if it exists. In other countries, particularly those in the European Union, illegal betting is a massive problem. These countries give licences to a very small number of people on different bases. In Belgium, someone has to have shops—they have to have a physical presence in the country—in order to be given an online licence. There are all sorts of rules like that. The inevitable consequence is that a massive amount of illegal gambling goes on, in the sense that people bet with operators abroad who have no licence in their home jurisdiction.

All sorts of mechanisms are put in place to try to prevent such betting from happening, such as the site blocking that some countries put in place to try to stop people betting on illegal sites. That has not worked and we know why: modern technology means that as soon as one site is closed down, another one opens up within five minutes and by the time people get round to closing that one down, another one opens up within five minutes flat; you are for ever chasing your tail and you never deal with the problem.

Some jurisdictions therefore have a block on payments, whereby the Government come to an agreement with the banks and the credit card companies that they will not allow any transactions to take place with the unlicensed operators abroad. Of course, that can have more success than site blocking. I am a luddite, as you know, Mr Deputy Speaker, so I am probably not the best person to go through all the ways that people get around such restrictions. As I understand it—hon. Members who know more about it than I do will be able to correct me—operations such as PayPal enable people to get around those restrictions, so they are not totally successful.

The problem is that in every jurisdiction that has tried to restrict the licences it issues and whom it allows people to bet with, that approach has never worked. I do not see why we think we will solve a problem that no other country appears to have solved. It seems to me that the only possible consequence is that the levels of betting with illegal operators or operators without a licence will go up. Given that we have virtually none of that at the moment, which must be good for regulation and player protection, how can it improve regulation to set up a regime when the only possible consequence is that people will go into the grey market and will not get a licence but will still operate? How will we stop people betting with those operators? They will be able to offer better prices as they will have lower costs and lower tax liabilities, so in many respects we will be in danger of setting up a regime that actively encourages people to go to unlicensed operators abroad who do not contribute anything in this country.

We treat the online industry as if it contributes nothing to racing or to the Exchequer. Some of the big online companies are Ladbrokes and William Hill. They have thousands of shops in the UK and are massive employers. They do not contribute nothing to the British economy; they contribute an awful lot. The danger is that in the online world, fewer people will bet with the companies such as Ladbrokes and William Hill that make a contribution, if not on an online basis but though their shops, and instead will go to operators that contribute nothing to the UK economy.

We will set up a system that inadvertently pushes people to such operators and I do not see how that is a triumph for regulation or for player protection. We should be grateful that we do not have the problems that other counties do, but we would be in danger of creating them. If this is about regulation, as the Minister would like us to believe, he must explain where the big problem is and why regulation is necessary to solve it.

The white listing system means that the Gambling Commission can accept regulation from other jurisdictions and can trust it in the knowledge that those jurisdictions have as tough a regulatory system as we do—one in which we can have faith. That means the commission can accept such operators in the same way as it would one from the UK. The problem with the Bill and the Government’s draft Bill is that the Gambling Commission will have to issue individual licences to Lord knows how many gambling companies. On what basis will it do that? On what basis will it assess the abilities of betting companies in foreign lands? How will it decide whether they are legitimate, whether they can pay out to punters and whether they are ring-fencing the punters’ stake rather than putting it all in a pot? How will it do that when companies are in far-flung jurisdictions? Will all the Gambling Commission staff be off on permanent jollies, going around and looking at all those industries? Who will issue all the licences? How many more people will the commission need?

I bet the commission thinks that this is the best thing since sliced bread. Quangos love empire building; we have seen it time and time again. The commission must think all its Christmases have come at once. Instead of having to accept the licences issued by jurisdictions whose regulatory regimes we are perfectly happy with, it will have to consider every company individually. That seems to me to be what my hon. Friend the Member for Thirsk and Malton and the Minister are proposing. Great stuff if you work for the Gambling Commission, but probably not so great for anyone else. Will those companies, including UK companies, that employ many people in the UK have to get an individual licence in every jurisdiction in which they operate? That is unnecessary, as we could just recognise regulatory regimes elsewhere. It is bureaucracy gone mad, and I hope that the Government can make a good case for why that should happen.

I am sure that we are all anxious to hear what the Front-Bench spokesmen have to say about the matter, but I am sorry that we have been short of time for this debate, because there is a lot more stuff that I wanted to mention. The revenue raised by the measure is not all a net benefit to the Exchequer, as there is a negative side too. There are gambling companies such as tombola—Members might have seen it advertise its product before “Emmerdale” on television—and it is a fairly new company that has enjoyed massive growth. I apologise if this is not true, but I believe that it is based offshore, so it does not contribute the taxation that people would like, and that is the problem the Bill is designed to tackle. Tombola employs an awful lot of people in the UK to work on things such as its marketing and advertising strategies. If we imposed extra taxation on such companies, which is difficult to justify given their margins, they will reduce their marketing spend—we do not have to be great geniuses to work that out—because they will not be able to afford to spend as much on it. Ultimately, therefore, they will employ fewer people in the UK to work on marketing.

We should think through the consequences of what we are doing. The Government seem to have pound signs in their eyes, thinking that this is an easy way to make money: there is no downside, it is all upside. Life is never quite as simple as that. There are no painless panaceas, and there may well be some unintended consequences, including the fact that fewer people will be employed in these industries in the UK. I am sure that none of us, whatever our view of the Bill—again, I have no problem with it in principle—want to see unintended consequences that result in people losing their jobs in this country and in the economy losing money. We want a regime that increases revenue for the Government and increases the number of jobs. The Government can do that, but they need to be rather more careful than they have been, and rather more careful than has been the case with this Bill. However, I commend my hon. Friends the Members for Thirsk and Malton and for West Suffolk (Matthew Hancock) on introducing the Bill, because it has allowed us to have a very good debate and informed discussion. We should all be grateful for that.