Motion made, and Question proposed, That this House do now adjourn. —[Mr. Heppell.]

Before I call Jim Sheridan, I ask those hon. Members who are not staying for the debate please to leave quickly and quietly.

I am extremely grateful to Mr. Speaker for granting me this Adjournment Debate, in which I want to call for a full review of the relationship between the football leagues and, in fact, all sports events and the betting operators offering sporting bets on those events.

As chair of the all-party Scottish football group, I am particularly concerned with the health of clubs in the Scottish Football League and, indeed, the Scottish premier league. Betting operators are taking what I can only describe as an opportunistic and parasitic approach to UK football. They are seeking to exploit to their maximum advantage the uncertainty created in the UK by some European Court judgments. While the game in the UK, particularly in the lower leagues, suffers severe financial hardship, betting operators are creating ever more profitable businesses and returning little to the sports that they use.

That has not always been the case. Betting businesses and the football industry enjoyed a clear and settled relationship for well over 40 years. In 1959, the leagues obtained a judgment in the High Court that said clearly and unambiguously that the leagues were entitled to be paid for the use of their fixtures by pools betting companies. Football had established a copyright under UK law. The two industries worked well together in a clear legal framework. Members will recall that until the advent of pay-TV in the late 1980s and early 1990s, betting revenues were the single biggest commercial income for football.

I am not a gambling man—in fact, I could not write out a betting slip—but, like many of my constituents, I believed that when someone placed a bet on a football match, some contribution went to football clubs. Does my hon. Friend agree that many of his constituents, like my constituents, will be unaware of the fact that, when they place a bet, none of that money goes to help football clubs throughout the UK?

I thank my hon. Friend for that helpful Intervention. He is absolutely right. I would hazard a guess that most people who bet in betting shops throughout the UK, on Saturdays or midweek, would expect that some of the money that they are investing would go to the sport of football that they are placing the bet on. There is a need to educate people that the money that they invest does not go to the sports that they think that they are investing in.

The contribution of pools money to the refurbishment of all-seating stadiums was vital. However, the clear legal relationship has become muddled by the combined effect of the European database directive—which was subsequently translated into UK law by regulations—and, most importantly, what seemed odd and unexpected judgments by the European Court of Justice, in complete Opposition to the judgment of our national courts. After the 1959 ruling, the leagues managed to build healthy developing businesses across the world, licensing their copyright to betting businesses. However, they were met by resolute opposition in Europe from state sports betting monopolies, which simply did not want to have to pay leagues in the UK for the use of their events. Members will know that we pretty much stand alone in the EU with our market approach to sports betting. Other nations adopt a view that betting can be run only by state operators—a view that I would question and which the UK quite rightly resolutely refused to adopt in the Gambling Act 2005.

The leagues brought actions against state operators in Sweden, Finland and Greece under the new database directive, which was supposed to enable European business to benefit from the global increase in the development of commercial databases. To the considerable surprise of the European Commission, author of the database directive, the European Court of Justice judgment went against the leagues and agreed with the arguments put by member states openly interested in protecting their own state betting operators. It is of some regret that the UK Government did not deem it correct to argue for their own football leagues against the combined strength of some 50 EU member state lawyers.

To add insult to that injury, UK betting businesses accepted that judgment as their cue to claim that they do not have to pay football, or indeed any other sport, for the use of their products. Those betting businesses say that their obligation under UK law has been swept away. Worse still, at that very time, those same companies have been busily expanding their football and general sporting betting businesses. Surely that was never the Government's intention and is not right.

Hon. Members will know that there is a similar background to another long-running issue: the financial health of horse racing, following a similar European Court of Justice judgment, which was delivered on the same day as the football cases judgment. There is a view that if the football cases had not arisen at the same time, the horse racing case would have followed the UK national court's ruling, and things would have gone the way of racing, and not of the betting businesses. Whatever the truth of that—and we will never know—the way forward for racing was clarified by the Minister in December. The levy has been extended, which I welcome, as do those involved in other sports.

The Minister's actions suggest that he agrees with the principle that betting businesses should contribute a fair return to the sports on which they offer bets. He has been advised that that is right by the independent European sport review, which he himself commissioned. He is rightly championing its findings in Europe, but I ask that he state for the record that he agrees with the principle that betting businesses should pay a fair return to sports.

I thank my hon. Friend for securing this important debate. The subject is equally important to lower-league clubs in England and the Scottish football league. Does he agree that if anyone can find a solution, it is this Minister for Sport? Is it not vital to stress to the Minister that the Department for Culture, Media and Sport, which has responsibility for both betting and football, must respond to the suggestions made by my hon. Friend?

I thank my hon. Friend for that contribution. The problem is certainly not just a Scottish football issue, but a UK football issue. She has worked hard on behalf of Stoke City to try to get a resolution to the problem.

I, too, thank my hon. Friend for securing the debate. Does he agree that the issue affects not just football, but all sporting events? For example, in my Constituency, golf plays a major role, and the problem may hamper what people are trying to do there.

My hon. Friend is absolutely right that golf is a big issue. Certainly, betting businesses make vast amounts of money from people who bet on golf tournaments, but the money does not go back in at grass-roots level as it should, so that we can encourage people who wish to play golf. She is absolutely right to mention that.

The next question is how we achieve a workable solution. The Minister has rightly called for a debate on issues arising from his announcement on the permanent extension of the horse racing levy. I will, of course, follow the matter with great interest. It is clear that adopting an equivalent statutory levy system is not a route that the Government can take to address the wrong for football and other sports. However, the Minister is known for his tenacity in finding a way to achieve what is deemed to be right. Does he not agree that there should be an open review, exploring the relationship between all sports events and the betting operators who use those events as their raw material?

We are talking about a national issue, and it is for us to deal with it in Parliament. Other EU member states have addressed the relationship and have gone one way or another; indeed, some have criminalised sports betting, but Britain has taken a different route. We all believed that there was a clear rights-based relationship between sport and betting, and that was the foundation for the original abolition of the horse racing levy. However, things are obviously not clear at all, and we need to recover legal certainty. As I have said, however, there is an international dimension. I firmly believe that if the UK addresses the issue first, it will enable the Minister to advocate the UK view on sports betting to other nations with even greater authority. In the long term, that will benefit both sport and betting businesses in this country.

I have dealt with the long-term situation and the principle that is at stake, but there are serious, pressing financial consequences for British clubs today. The league and the clubs face serious funding problems while UK betting operators take advantage of the situation. Scottish football's betting operator income has been reduced by 60 per cent. since the 2003-04 season. It is unacceptable that the Government should have allowed that to happen, as the development of grassroots football in the UK has been dealt another damaging blow. I have heard the spurious argument that because the highest level of football in England is successful at selling TV rights, we should not concern ourselves with those issues and we should release the betting companies from their obligation. I dread to think what state we would be in if we took that approach to all the issues that we face. It is a smokescreen put up by betting businesses to protect their profits.

The sports betting industry does not accept that it is under any obligation to provide a fair return to the sport, or that it should do all that it can to protect football's integrity from unscrupulous betting practices. Those betting businesses appear to be saying that they cannot be expected to provide that protection, even if they agree privately that they should do so, unless they are under an unambiguous legal obligation. That is why I am seeking a fundamental and open review of the relationship between the betting companies, football and, indeed, other sports. In conclusion, I thank the Minister for his outstanding contribution to developing sport in the UK and for his tireless work to create a world-leading framework for sports betting. It is now time to bring the two halves together to create clarity in the interests of both business sectors, and it is within his power to do so.

First, I congratulate my hon. Friend Jim Sheridan on his success in securing a debate on an interesting subject. Both the Secretary of State and I are aware, from correspondence with the Football Association and Football DataCo, that it is an issue of great concern to football clubs, both in England and north of the border, so I am grateful to my hon. Friend for giving the House an opportunity to discuss it.

As my hon. Friend explained, football's main concerns arise from a ruling by the European Court of Justice in 2005 that sports bodies cannot charge betting operators monopoly prices for data such as match fixture lists. As a result, Football DataCo, which passes its proceeds on to the Scottish and English leagues, can no longer sell data to pools companies and bookmakers. I accept that the directive has led to a loss of revenue for football, but that should not be exaggerated. To make progress and to help the Scottish clubs that have been particularly affected, we must secure more voluntary agreements between football and the betting industry, and urge football's governing bodies to look at the way in which any specific shortfalls can be met by other revenue streams. I shall address the specific points made by my hon. Friend to demonstrate why we must do so.

First, I wish to make it clear that a good case has not yet been made for the UK to reopen the issue of the database directive, and that the Government have no plans to do so. The directive was introduced with the reasonable intention of protecting the investment of database providers who have not just created data, but made a new and valuable product with that information. In 2005, the European Court of Justice clarified the distinction between two types of database—the protected and the non-protected—and it became clear that the database held by Football DataCo was not protected.

It is true that the decision of the European Court of Justice has meant that some sporting bodies are looking for alternative sources of funding as they are unable to license the data from their fixture lists, but the decision has also clarified what the law means. To re-open it now would cause a great deal of uncertainty for the database industries, at exactly the time when, finally, they have a clear understanding of the level of protection accorded to their databases. In any case, as my hon. Friend knows, any change would have to be based on a consensus between the other EU member states, which would be difficult to achieve, as I think he would accept.

I should be clear that the Government have no intention of creating a new intellectual property right to cover sport databases in order to give them a monopoly over the use of simple data such as fixture lists. Discussions with the Patent Office have confirmed that there are no grounds to amend our database regulations or to make special intellectual property rights in this case. I firmly believe that agreements between the sport and the betting industry are the right way forward.

That is why in February last year I brought together Ladbrokes and the premier league. I am pleased to say that the result of this meeting was that Ladbrokes, William Hill, Coral and a number of other bookmakers agreed to a five-year funding deal for football, through continuing voluntary payments for the use of data via Football DataCo. This year, their contributions amounted to just over £3 million, and I am grateful to Football DataCo for the excellent job it is doing in distributing this income to football clubs north and south of the border.

In particular, I am grateful for the contributions made to smaller clubs. As my hon. Friend knows, last year, over £500,000 of bookmakers' contributions went to Scottish football clubs, via Football DataCo. I realise that the company wants to increase that amount and I have some sympathy with that aim. That is why I give my full support and encouragement to continuing discussions with bookmakers who are not currently making voluntary contributions, with the aim of increasing the total income from betting to football.

The shortfall, once voluntary agreements have been factored in, is a little over £2 million. Although this may be small change in the overall scheme of things—the premier league's recent agreement on media and TV rights packages for the three years from the start of the 2007-08 season is £2.7 billion—it highlights what I believe is a golden opportunity for all involved in the game to think again about how grassroots football is supported, in the light of the wider debate triggered by the publication of the independent European sport review, to which my hon. Friend rightly referred.

In the short term, I am confident that, through further voluntary agreements and perhaps income from other sources, the effects of the loss of revenue can be minimised. I would encourage those involved in the game to explore longer-term and sustainable means of ensuring that the grassroots and smaller clubs on whom the future of the game depends are financially stable and are rewarded for the vital contribution that they make. The question for football is how it ensures that its unprecedented commercial success in recent years can be used to ensure its long-term success and stability through supporting the grassroots on which those depend.

It is understandable why a comparison is sometimes made between the situation in horse racing—this was central to my hon. Friend's argument—where we have recently announced the retention of the horse race betting levy on bookmakers, and other sports, where there is no such levy. Let me explain why there is no question of the Government establishing for football or any other sport a levy analogous to the horse race levy. First, horse racing still makes up about 50 to 60 per cent. of betting business in the UK. Although betting on football is increasing, it is not yet even close to that level. The horse race betting levy acknowledges the special relationship between horse racing and betting, and was established back in the 1960s on that basis.

Secondly, any new levy or sports betting right is likely to constitute illegal state aid from the point of view of the European Commission. Policy would have to be implemented at EU level to facilitate sports levies across all member states, and it would then be up to national Governments to implement them. The Government ultimately aim to replace the horse race betting levy with a more modern, sustainable and commercial arrangement between the bookmakers and horse racing. We do not perceive the levy as a model for the future funding of any other sport.

To sum up, I believe that, although that the effect of the European Court of Justice ruling on databases has had some effect on the financial contribution of gambling companies to football, it needs to be put into perspective in terms of the amounts and the directive's wider benefits. There is no convincing case to show that it has had a significantly negative effect on the overall financial position of the sport. I am confident that, given the determination and commitment of the football authorities, any losses can be recouped through further voluntary agreements between the industries. The Government's position is clear—it is up to the bookmakers and the football authorities, as two independent commercial interests, to come to further financial agreements. I will do all in my power to facilitate that and I encourage those bodies to come together and find a solution.

I believe that the actions that we have taken so far and future agreements between the two main parties will resolve the matter. If we can do that, football and, indeed, other sports, will be enhanced.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Eleven o'clock.