Gambling: Sport

– in the House of Lords at 2:27 pm on 11th October 2007.

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Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Labour 2:27 pm, 11th October 2007

asked Her Majesty's Government what guidance they are giving to the Gambling Commission to ensure that the integrity of sport is not compromised by the growth of the betting industry

My Lords, I express my appreciation to noble Lords who have put down their names to speak in this short debate, particularly the noble Viscount, Lord Falkland, and my noble friend Lady Golding, both of whom were valued members of the Betting and Gaming All-Party Group inquiry into the effects of betting on sport, which I chaired nearly three years ago. I have two interests to declare, one as an adviser to the football pools business, which goes back more than 30 years, and the other as an adviser to the Alderney Gambling Control Commission.

I do not have time today to describe all the alleged incidents of improper or corrupt betting practices about which our inquiry team heard evidence. Generally they involved an expected sporting outcome not happening, such as a favourite in a horserace losing as a result of unexplained behaviour by the jockey. I do not intend to say more about that because a criminal trial is currently under way in which exactly that allegation is at the heart of the prosecution's case.

We heard a lot about the improper use of inside information that is not available to the normal punter, such as in cricket matches where large sums were won by punters who correctly forecast bizarre events like the number of fielders who wore sun glasses or the number of times the bails were removed in the course of a morning's play. The noble Lord, Lord Condon, was a particularly valuable witness in this area. He has sent me his apologies for not being here today but welcomes this debate. We also took evidence about a Rugby League match where the winning margin was predicted with great accuracy by two players from one of the teams, who knew that their team was fielding a weakened side.

Some of these incidents may involve straightforward corruption. A football match where it can be proved that a player was bribed to ensure that his team lost or one in which it can be proved that the referee was bribed to produce a particular outcome both involve a clear case of cheating, which could lead to a conviction and prison sentence. But what about the use of inside information? There was a great difference of view between the Jockey Club, which was against the use of inside information for gain, and the bookmakers, who described it in their evidence to us as,

"the commerce of the racecourse".

We asked the Financial Services Authority how it defined inside information in the context of investment in financial services. It told us that, if its market abuse regime were to be applied to the betting and gaming industry, a large part of the information made selectively available to bookmakers and chosen punters would be inadmissible and subject to both the criminal law and the civil law regime set out in the Financial Services and Markets Act 2000.

The most important way of tackling the unfair and potentially corrupt use of inside information is to have information exchange agreements between betting operators and the sports on which they take bets. Here, the betting exchanges have led the way. The Jockey Club told us that it was very keen on them and said that it uses them almost daily because the audit trail that they provide is excellent. Its spokesman told the Racing Post:

"The access we get to jockeys' and trainers' telephone accounts has given us powers of investigation we didn't have before".

These responsibilities now lie with the British Horseracing Authority, which I visited on Monday to watch its regulatory unit at work—and very impressive it is. It has been given a budget approaching £3 million to do this and is demonstrating a capability to monitor all major online sports betting. Indeed, over the summer the BHA was called in by the Association of Tennis Professionals to investigate allegations of corruption relating to a tennis match in August in the Poland Open tournament, on which Betfair reported that bets totalling $7.3 million had been matched. The favourite, ranked world No. 4, was backed to lose to a player ranked 87th. Despite losing the first set to the favourite, the underdog was still being backed during the second set, which he won. Following that, the favourite suddenly withdrew from the match with a foot injury. There was something wrong there. Betfair very wisely voided all bets and the anti-corruption inquiry continues.

Our report contained a total of 15 recommendations. Some were directed at the Government, a number at the betting industry, several at the sports governing bodies and the most important at the Gambling Commission. What has happened since we published our report? Quite a lot, I am pleased to say. The Gambling Commission has been consulting widely on information sharing, which it rightly regards as being a central element in achieving integrity in sports betting. It has published some helpful papers, one of which contains strong guidance that betting organisations should sign information exchange agreements with sports governing bodies so that irregular betting patterns can be fully investigated. It also agrees with our recommendation that sports governing bodies should be consulted on what sort of bets should be permitted. I take the simple view that no bet should be allowed on the outcome of a sporting event that depends for its success on inside information or on an action or influence by a small number of people.

A central recommendation from our inquiry was that there must be proper rules on who may and may not bet on competitions or events in which they are involved. For example, the Football Association has a rule—Rule E8—that no one involved with a club, as manager, director, player or even office staff, may bet on any match in the same competition. It is difficult for the FA to enforce that without assistance from the betting industry. Press reports appeared a year ago alleging that some Premiership managers were placing enormous bets with bookmakers Victor Chandler contrary to Rule E8.

If there were transparency and openness in the relationship between a sports governing body and betting organisations, based on a proper information exchange agreement, the FA would be able to ask bookmakers for details of the bets and the identity of their clients. I believe that, as far as the onshore betting industry is concerned, this will come, because the Gambling Commission is determined that it should. Indeed, the major sports organisations are working with the commission to ensure that the betting industry understands what the various sports' rules are and that it is the betting industry's responsibility to report irregular patterns of betting behaviour. This is central to the integrity of sports betting.

There is obviously a difficulty when it comes to offshore betting organisations, particularly those licensed by more relaxed regulators. Certainly I see little sign yet that Gibraltar, which is where Victor Chandler operates from, is minded to impose the same sort of tough regime that the Gambling Commission is introducing here. The FA has asked this company to give it the opportunity to see the systems that it operates to ensure integrity in sports betting and to explore the signing of an information exchange agreement; the FA is still waiting for a proper reply. The Gambling Commission is moving in the right direction, although I wish that it were more ready to make these additional safeguards a requirement of its licensing conditions.

The Government should continue to give every encouragement to these developments, as I hope that they will. But they must also be prepared to take a much tougher line with foreign jurisdictions that license betting operations aimed at British clients. At the very least, they should insist that Gibraltar and Malta apply the same sorts of standards as those that they have required of the newly white-listed jurisdictions of the Isle of Man and Alderney.

We said in the conclusion to our inquiry that we accepted that the greater part of sports betting is neither corrupt nor unfair to punters. But the growth of the betting exchanges, because they give punters the facility to bet against a result, has increased the potential for corruption.

It would of course be nonsense to argue that no improprieties took place before the advent of the exchanges. This dates back to the early Olympics, with allegations of athletes accepting bribes to lose a competition and city states trying to manipulate the outcome with large amounts of money. I understand that it was also very popular in chariot racing. In more recent times, the betting practices present in cricket in Asia and South Africa, as described to our inquiry by the ICC, had little to do with the exchanges, and the history of a variety of sports in the UK and elsewhere in Europe over the past century is littered with incidents, allegations and, in a few cases, criminal convictions.

However, the advent of the exchanges has brought with it new challenges to sports governing bodies, gambling regulators and government. If the betting industry rises to these challenges, the integrity of sports betting could be improved by the greater transparency and disclosure that the adoption of demanding and meaningful information exchange agreements can create. However, it is necessary for all these arrangements to be tightened up and significantly improved and for risk assessments to be conducted on particular sports betting. I hope to hear from my noble friend today that the Government are encouraging the Gambling Commission to do exactly that.

Photo of Lord James of Blackheath Lord James of Blackheath Conservative 2:38 pm, 11th October 2007

My Lords, I should declare interests in this. I have in the past run casinos, although not in this country, on behalf of a British bookmaker. Secondly, I was until recently executive chairman of the Jockey Club racecourses and was therefore responsible for the running of the races at Aintree, at Epsom for the Derby and at Cheltenham.

I welcome this initiative. A number of concerns have arisen as a result of the Gambling Act and they deserve close consideration. I have three principal concerns to raise with your Lordships. The first is, like the others, an unintended consequence of the Gambling Act. There is a rapid and tangible drift to the conversion by the bookmakers of the 10,000 or so betting shops into mini-casinos. That trend carries a real moral hazard, about which we should all be concerned. It is not so many weeks ago since we debated in this Chamber the issue of the super-casino for Manchester. Noble Lords will recall that we were concerned about the definition of a "destination casino" and the extent to which it represented a bigger hazard. However, the moral hazard presented by the spread of the virus of 10,000 immediately available local casinos to the midst of our local communities is immeasurable.

I do not suppose that a great many noble Lords are in the habit of visiting betting shops, so I shall take them on an imaginary tour of what is going on in them. Every casino is allowed to have four FOBTs—that is, fixed-odds betting terminals. Until eight days ago, they were confined principally to roulette, blackjack and stud poker, but they have now been expanded to include direct access to virtual reality racing, to which I shall return shortly.

The FOBTs are the subject of a series of control orders recently issued by the DCMS which I regard as a disastrous gathering of the inadequate and incompetent assessment of the controls to be imposed on the betting shops. They fail in almost every major respect to address the critical issues; for example, they open up the scope for immediate and repeated betting by touching one knob to repeat the bet that one has made previously. You can therefore bet virtually unlimited sums. You have to put real, folding money into the machine. It will then register you as having a number of stakes available according to the number of pounds that you have put in—you can diminish it to a fraction of a pound. You can then touch any number of numbers on the roulette keypad, so that you could bet, let us say, 20 separate numbers for £1 each. However, according to the control orders, which do not foresee that risk, you can press each number 10 times. So you could have £200 on a single spin and press one number to repeat that bet as many times as you had stakes left in the machine. There is no separation of your original stake from the winnings, and therefore no opportunity to remove your stake and bet just with the winnings.

The risk was summed up beautifully yesterday by a senior bookmaker who said to me, "Do you know, our betting shops are empty in the afternoon now; there's nobody there". "Why is that?", I asked. He said, "Because our machines are so efficient that we have stripped all the money out by lunchtime and everybody's had to go home. There's no money left in anybody's pocket". Moral hazard is rampant there.

Virtually reality racing has concerned me for a huge time. For those who are unfamiliar with it, I say that it is a technique which has been developed by the bookmakers whereby they are able to represent with a computerised software programme an imaginary race run by images of horses, with jockeys on top. It is known in the business as cartoon racing. In theory, each of the 12 horses in a race has an identical chance, with odds of 11-1. However, the bookmakers want to encourage people to bet on them, so they put up on a separate screen the imaginary odds for three or four of the horses to imply that they are favoured. The Select Committee on Merits of Statutory Instruments, of which I am a member, asked the DCMS whether the odds were being in any way manipulated. We were told that they were not, that the bookmakers were at arm's length from the software systems and that the software system was sacrosanct and never interfered with.

When we then asked why they were able to offer odds of 3-1 on a horse in a 12-horse field, the startling answer was that they were giving the chosen horses a 20 per cent loading of having a better chance. The bookmakers were thereby admitting that they were lying; they were intercepting the system. One would expect in those circumstances to see the incidence of winning favourites to match the 20 per cent or so which applies to live, breathing racehorses in proper races. In fact, it comes out at 16 per cent; that is, nearly four points below the average for living racehorses. It is even more remarkable that the clear favourite, if it is winning only 16 per cent of the races, is coming second in 17 or 18 per cent of them. God forbid that I should be accused of being a cynic, but if I were, I would say that the bookmakers are getting it both ways. They are encouraging bets to be laid and then avoiding the necessity of having to pay out on the horse that is the favourite because the software system is in some way stopping it winning. That is as much a corrupt process as slipping dope to a horse or getting a jockey to pull it. What on earth are the bookmakers doing? It is a question of integrity in racing, but one that comes from a different direction.

The bookmakers claim that because they now offer these wonderful betting methods, they should no longer contribute to the betting levy which has been the lifeblood of British horse racing and the thoroughbred racing industry. As a result, the industry is now bereft of £90 million. The Government should do three things immediately.

Photo of Baroness Crawley Baroness Crawley Government Whip, Baroness in Waiting (HM Household) (Whip)

My Lords, the noble Lord is into his eighth minute.

Photo of Lord James of Blackheath Lord James of Blackheath Conservative

My Lords, I shall list those three things and finish. First, the Government should adopt the recommendations of the excellent committee of the noble Lord, Lord Donoughue, and impose on the betting industry the restoration of the levy at a reasonable level. Secondly, as the noble Lord, Lord Faulkner, said, they should immediately require offshore bookmakers to abandon advertising in Britain or to comply with the usual regulations. Thirdly, the DCMS should revise all its controls on betting shops to stop them becoming mini-casinos. It is an outrageous state of affairs and needs immediate correction.

Photo of Viscount Falkland Viscount Falkland Liberal Democrat 2:46 pm, 11th October 2007

My Lords, we have reason to thank the noble Lord, Lord Faulkner, not only for introducing the debate but for the incredible amount of work that he has done to try to generate understanding of betting today, with its new technologies and the difficulties linked to human fallibility and criminality which they have created. I am surprised that the Government have not sought to counter the view put forward in the press that there has been a new development in our society and that people have suddenly become dishonest and seek to influence the results of races and other sporting events. That is not the case: there has always been dishonesty in sporting events.

It is in fact more difficult today to be dishonest in sporting events and to alter results. We can take pride in the new technologies for that. You have to be a very clever criminal to get past the close examination that takes place, but, as with all other classes of person, there are good, indifferent and bad criminals. As with car theft, only a good criminal nowadays can steal a modern car; only a good criminal today can get to the bottom of the challenge of influencing results to create fortunes for themselves. An attack on the new technologies, therefore, on grounds that they have generated new vice in our society, is quite misplaced.

The noble Lord, Lord Faulkner, must have been a little ironic in asking the Government what guidance they will give to the commission. I do not expect him to be as vituperative as me or the noble Lord, Lord James, but there is nothing to make us believe that the Government will be able to lead; it is rather like expecting the blind to lead the partially sighted. The Government's record on gambling and betting has been disastrous. The noble Lord, Lord James, gave us the example of the FOBTs, which are dishonest in themselves because they are gaming machines. People ask, "FOBTs? What's that? They must be all right—it sounds complicated". He explained that phenomenon well.

The noble Lord, Lord Faulkner, and I, together with the noble Lord, Lord Donoughue, who is in the Chamber, and the noble Baroness, Lady Golding, who will speak later, went to a great deal of effort of which we should be proud. However, the Government's response was disastrous and a bad Bill appeared on the statute book. Many questions will have to be answered at a later stage. The Government completely failed to understand how regeneration could be achieved through casinos. They never even bothered to look at it. The whole idea of regeneration was knocked on the head—although very few people remarked on it—just before we had the famous vote in this House which was narrowly won by the Minister, whom I always admire for his tenacity in some of the briefs he is given and for the agreeable way in which he carries out his job. The Chancellor of the Exchequer, as he then was, suddenly put a 50 per cent tax on casinos, which really meant that regeneration was out of the window.

The question of dishonesty or cheating in sport was something that we discussed at length in the pre-legislative committee. We failed absolutely to come to satisfactory conclusions on that, although the noble Lord, Lord Faulkner, moved us a long way forward in his deliberations and the meetings that he set up.

I shall conclude my remarks on the subject of racing. The case of Fallon and the other jockeys is a disgraceful case that should never have been brought. I would not bet on it, but in my view he is bound not be convicted. It has been a long and disgraceful proceeding in which a lot of people have had to wait around with loss of earnings and the distresses that have resulted, going right back to jockeys being arrested in the middle of the night.

Fallon is one of the best jockeys of the past 50 years. Jockeys are a particular type of person. They are very vulnerable, although they are strong little men who have a talent for moving half a ton of horse flesh in tough races, day in and day out. They do not have much time to get involved with criminals, but criminals get in touch with them. I think that what happened with these jockeys is that criminals got in touch with them and they allowed themselves to get into contact with them, and then they found it very difficult to disengage. Criminal elements are extremely adhesive once you get involved with them.

When Fallon was riding in France, when I was over in Deauville in August, he had a look of joy about him, even with the sword of Damocles hanging over him. Presumably he was not getting calls all the time asking why that was, because during the period when he was supposed to be fixing races his percentage of winners went up from 19 per cent to 28 per cent—so there must have been some very disappointed criminals about. I foresee a result there that will surprise some people.

The sporting bodies are the ones that must deal with this. I hope that we will return with another debate on this, because there are many things to say. The Government will not be able to give any guidance, so let the sporting bodies do it along with the Gambling Commission and we might get somewhere.

Photo of Baroness Coussins Baroness Coussins Crossbench 2:52 pm, 11th October 2007

My Lords, I shall draw attention to the role played by the organisation Business in Sport and Leisure, or BISL, in promoting the commitment of the gambling industry to corporate social responsibility. BISL represents more than 100 private sector companies, including those from all major sectors of the gambling industry. I should like to see the Gambling Commission encourage BISL to seek further improvements in the communication and co-operation between betting companies and sports bodies, in the interests of integrity and of consumer confidence.

The role played by BISL is similar to the Portman Group's in relation to the drinks industry. At the Portman Group, I helped to develop mechanisms for effective self-regulation and educational tools to tackle problem drinking. Some of those devices are now being used as models for similar initiatives in the gambling industry.

I should declare two other interests. I sit on the Advertising Standards Authority, which from September this year has responsibility for regulating gambling advertising on television for the first time. My personal interest in sport—although I am aware that some might regard this as a dark confession rather than a declaration of interest—is that I am a lifelong supporter and season ticket holder of Fulham Football Club.

Behind this debate is the genuine worry that the relatively new form of gambling, betting exchanges, may compromise the integrity of sport by inviting corrupt practices. This is self-evidently in the interests of neither the gambling industry nor the sports bodies, but innovation in any sector will often expose gaps in the regulatory framework. The invention of so-called alcopops in 1995 did exactly that in the drinks industry. Existing legislation and codes of practice on advertising and retailing did not address the new and particular problem of certain alcopops, which was that their naming and packaging were irresponsible by appealing to children. So a new code was devised to tackle this new dimension of marketing.

In the same way, betting exchanges have opened up new territory which must be patrolled and policed. The question is how and by whom? The answers depend first on assessing the extent of the problem. Warning bells were clearly sounded in the report produced by the noble Lord, Lord Faulkner of Worcester. More recently, the Gambling Prevalence Survey revealed that although the overall level of problem gambling has remained low at 0.6 per cent of the whole population, for the 1 per cent of the population who participate in betting exchanges that figure rises to 9.8 per cent. But evidence submitted to the Gambling Commission's consultation on integrity in sports betting suggests that the incidence of corrupt practice is very small. So there is certainly a need for educational initiatives on problem gambling—and this is one facet of how the relationship between sports and betting can give rise to a loss of integrity, by tainting the image of both with the association of harm and dependence. The industry's leading companies pay a voluntary levy to fund the Responsibility in Gambling Trust, but there is plenty of scope for more companies to contribute, which should be a priority for the betting exchanges in particular.

The need for centrally-funded action to address the facet of integrity concerned with corruption is less obvious. The industry is already obliged under the new statutory code to share information about any unusual betting activity which should trigger an investigation within the sport involved. The question of cost has been raised, predictably, with the sports bodies looking to the industry to provide funding, perhaps through another levy. It seems to me, however, that this would be a step too far in being proactive, and that the right note to strike is to concentrate on sport and industry continuing to share information as required by the code, with individual sports governing bodies taking responsibility for following up in the right way for them.

The recent policy announcement by the Gambling Commission judged the situation fairly and accurately. It is more important to have consistency in the principles involved in investigating and rooting out corruption than to have an artificial consistency of process or a uniform funding arrangement. Heavy-handed intervention by a government agency would be disproportionate. If the Gambling Commission, the Government and ultimately the public are to be content for self-regulation to prevail, then the basic principles behind the process must be transparency, independence of decision-making and accountability, backed up with realistic sanctions if malpractice is uncovered. The expertise of bodies such as BISL and the Central Council for Physical Recreation could be drawn on to help. The BISL has already developed a training standard which Gambling Commission inspectors use as the basis for their work. And the CCPR is commissioning more detailed research on the scale and nature of sports betting which should help to shape evidence-based measures in future.

This debate has been framed in terms of possible loss of integrity to sport. I would suggest that growth or innovation in betting exchanges and betting companies would stand just as much chance of provoking loss of integrity to the industry unless it rigorously observes the high standards in the voluntary code brokered by BISL and the statutory code which forms part of the new licensing regime. Enlightened self-interest means staying a step ahead of any problems associated with its products—and this is what the industry must do if it wants to retain its commercial freedoms and consent to self-regulation.

Photo of Baroness Golding Baroness Golding Labour 2:59 pm, 11th October 2007

My Lords, I apologise for my husky voice, but with any luck it will last six minutes. I congratulate my noble friend for instigating this very important short debate. I have first of all to declare a number of interests. I am treasurer of the All-Party Racing and Bloodstock Group, treasurer of the All-Party Greyhound Group, chairman of the All-Party Betting and Gaming Group—and I am an administrative steward and director of the British Boxing Board of Control, to which I intend to limit my remarks.

One of the many positive things that came out of the Government's decision to present a new Gambling Bill was the obvious need for sports to work together to prevent fraud and to protect gamblers and the good name of sport. Having spent very many long hours on the pre-legislative scrutiny of the draft Bill, noble Lords, together with MPs, decided to set up the inquiry mentioned by the noble Lord, Lord Faulkner, and so very ably chaired by him.

One of the sporting bodies that gave evidence was boxing. Because it is perceived as a dangerous sport, it is one of the most tightly controlled, with inspectors and representatives at every level and a reporting system in place. The British Boxing Board of Control is the regulatory and licensing authority for professional boxing and as such its members are not allowed to have any financial interest in boxing. Further, our rules do not allow professional boxing to take place in a venue where there are betting facilities. So although betting companies sponsor boxing, the board has no relationship with bookmakers at all. But that is not to say that people involved with boxing are not allowed to bet; they are. Indeed, I myself am known to have a few bets—in fact, quite often—but I have never as yet bet on a boxing match and most of my friends with whom I discuss boxing do not either.

At the moment gambling is not a big issue for boxing, but that does not mean that it can be ignored. With the growth of exchanges and spread betting and more and more venues having agreements with bookmakers, boxing, like other sports, needs to look again. New regulations need to be put in place. We would not, for example, want to see betting facilities in the auditorium or betting after the boxers leave their dressing rooms. We also wish to consider who of those taking part would not be allowed to place bets and how far the board would be involved with the bookmakers. We have been fortunate in having the advice of Tom Kelly, the chief executive of the Association of British Bookmakers, because much of this is new ground for all of us.

The protection of the boxing board's good name is very important to us. Following our efforts we were pleased to be recognised by the Government and the Gambling Commission and registered on the list of sports governing bodies in the Gambling Act. For boxing this is an important time. We intend to move forward and in doing so will work closely with the Gambling Commission and the bookmakers to protect the integrity of all sports. In saying that I gently remind the Gambling Commission that those who have spent years running both sports and gambling know how they need to be run. The Gambling Commission should listen to the regulatory bodies and not spread its wings too wide.

Photo of Lord Addington Lord Addington Spokesperson in the Lords (Disability), Work & Pensions, Deputy Chief Whip, Spokesperson in the Lords (Sport), Culture, Media & Sport, Spokesperson in the Lords, Defence 3:03 pm, 11th October 2007

My Lords, this is an important debate about the integrity of sport. Many noble Lords will have heard me wax lyrical about the importance of sport and inspiring people to take part in it, as getting people to take exercise is the answer to many health problems. People need an icon to live up to. I do not care very much about gambling. It does nothing for me but it is capable of removing the romance from sport, which means that people in our increasingly sedentary society will move away from it.

Even if we do not care whether people are swindled when betting we should look at what is going on in the worlds of betting and sport, because gambling is capable of damaging something which is taking on an increasingly important healthcare and social function in people's lives. Will the Government take every step they can to protect this part of our lives? It should not be a case of saying, "It does not matter what you do. We already know the outcome. Don't bother taking part. Let's do something more passive. I can't be bothered". That reason for addressing this question is at least as important as the idea that somebody might be swindled when they make a bet, if not more so.

Having worn my hair shirt, I ask what can be done here? If we are to control gambling and the effects it has on sport, we need to have as much openness and transparency about the process as possible. As we all know, corruption succeeds best when it takes place in dark corners when people are not watching. How can we get this out into the open? The internet with its online gambling may expose corrupt practice. I hope that this will be reflected in the way things are regulated. Who do we look to in order to ensure that we are getting a fair result and protecting the integrity of sport?

The horse racing authority probably has the greatest expertise because it has probably had to deal with this problem longer than anyone else. I do not suggest that racing is particularly corrupt; that is probably not the case because it is subject to scrutiny. However, one should look at what has happened historically. The noble Lord, Lord Faulkner, mentioned the ancient Greek games. It was not just the ancient Olympics; all their games were subject to corruption. However, the anecdote that I like best concerns the state of cricket in the late 18th and early 19th centuries. Much more money was bet on it than on horse racing and it was infinitely more corrupt. We can corrupt just about anything. Please can we make sure that we open up the whole process?

In the briefing I received for this debate it was suggested that if we can try to get away from betting shops recording who places bets in the form of a paper ticket and cash, we would have a far better tool to control this process. We should make sure that people record where bets come from and know where the flows of money come from and where the corruption is. I am sure that the betting industry will not like that suggestion and may view it as an intrusion, but the information would not have to be shared with anybody other than the two bodies involved in the transaction unless corruption was at issue. Certainly, there is no reason why a wife or husband should find out whether their spouse is placing bets, unless the latter is corrupt and gets caught. Surely such a process would be a way forward.

I reiterate that it is not the case that betting itself needs to be protected, rather it is the things which are attached to it. If we corrupt the ideology behind sport, we damage a social good. I hope that the Government will encourage the Gambling Commission to look at best practice where it exists and to take this problem seriously. The concept of corruption has always existed, as has the temptation. The only thing that changes is the way that we deal with it and ensuring that it is dealt with appropriately.

Photo of Lord Howard of Rising Lord Howard of Rising Shadow Minister, Culture, Media & Sport 3:08 pm, 11th October 2007

My Lords, I join in thanking the noble Lord, Lord Faulkner, for introducing the debate.

The Government's gambling policy was rushed through your Lordships' House just before the 2005 election—and it shows. Many problems that have arisen could have been avoided by a proper examination in this House, although if gambling is promoted as it has been by this Government, it is inevitable that problems will arise.

To me it is inconceivable that a Government aspiring to be honest or responsible should seek to benefit from human weakness, as this Government are doing by trying to make Britain the gambling capital of the world, but that is not what we are debating today. The report has many sensible suggestions which will make cheating more difficult. As noble Lords have pointed out, much can be done by sport's governing bodies to eliminate undesirable betting practices. If there is gambling on any scale on sporting events, there will be those who try to alter the odds in their favour. It is a fact of life.

Any bet requires two parties to the transaction. Historically, betting on sport has been controlled by constant and rigorous monitoring of those accepting bets, such as bookmakers, and the monitoring of the sports themselves. With more gambling and more diverse forms of betting, control becomes increasingly difficult. Internet betting, with the ability to make contact with huge numbers of inexperienced punters, makes the possibilities for foul play virtually limitless. No longer will those seeking to gain an unfair advantage be betting against professionals such as bookmakers and casino operators who have the knowledge and ability to detect misdoing; they will be betting against members of the public who will be considerably more gullible and will rarely have the resources to retaliate if they have been taken advantage of. Taking advantage when betting on sport is easy and, unless large sums of money are involved, virtually undetectable. The noble Lord, Lord Faulkner, gave several examples, such as the number of cricketers wearing sunglasses.

One step that has not been mentioned would make a significant difference: curtailing severely online betting. This could be achieved by forbidding the use of credit cards to pay for internet gambling. There would be ways around this, but, generally speaking, only seasoned gamblers would bother. If the ability to contact other gamblers on a large scale is limited by pushing the public towards gambling on sport through licensed operators, then policing the sport becomes considerably easier. The limited number of licence holders would make it easier to monitor one side of the betting transaction; the other half of the transaction would be monitored by the licence holders by looking at and adjusting the odds of the bets placed with them on a minute-by-minute basis to protect themselves from being stung. That would be a rapid and flexible method of detecting wrongdoing.

As well as the many good ideas in this excellent report, I suggest that preventing rogues getting instant contact with large numbers of inexperienced and gullible gamblers would be the single most effective way of limiting corruption on sports betting.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 3:13 pm, 11th October 2007

My Lords, I agree with the House that my noble friend Lord Faulkner has introduced an important topic on the basis of his considerable expertise in this area. We recognise his work in developing the gambling legislation that he is now addressing and asking that we should utilise to provide solutions to some of these problems. The whole House is at one in agreeing that the integrity of sport could be threatened by illegitimate gambling and that it presents a real danger to every sport as well as to the ordinary individual who, as the noble Lord, Lord Howard, indicated, can be vulnerable to rogues who take advantage of the gullible.

The problem with gambling is that that the gambler, with the exception of a few professionals, always has an element of gullibility. That inevitable element is in the nature of taking on odds that others have presented for them. Both noble Lords from the Liberal Benches presented a strong argument on the need for integrity in sport. I know just how much the noble Lord, Lord Addington, values sport. The noble Viscount, Lord Falkland, demonstrated his enthusiasm for horse racing. Although I accept their strong representations and wish to show how the Government are responding to them, I reject the contention of the noble Viscount, Lord Falkland, that the Government's gambling policy has been disastrous. Far from it. He quoted the casinos issue; but we all know the history of that, which is scarcely relevant to this debate, anyway, and I am certainly not going to reiterate it. We all know why the casinos were presented as a problem in the rushed-through legislation just before the completion of the 2004-05 Parliament.

However, that legislation provided for the establishment of the Gambling Commission. As my noble and well informed friend Lord Faulkner, said, the Gambling Commission holds the key to ensuring integrity in sport and proper control of gambling. I reassure the noble Viscount that not only have the Government created and been responsible for a piece of legislation that gives us the instruments for controlling illegal gambling acts, but we are using it.

That is very important, because, even if there were no expansion of casinos and the Government stood idly by—and the Government do not have much to do with the free market of gambling, anyway—gambling is increasing, not just in the United Kingdom, but across all developed countries where disposable income is increasing. It is a corollary of increased resources and private wealth, because it is a luxury good. It is not essential, but it certainly attracts people's extra resources, because they find it an attractive leisure pursuit. Although at times, as the noble Lord, Lord James, was keen to emphasise, some of this activity takes place in bookmakers, which scarcely look like leisure centres, at this stage I cannot accept that bookmakers are becoming mini-casinos. I am prepared to accept that one or two enterprising ones might increase the number of fixed-odds betting terminals in their shops, but I do not think that we have abuse on the scale that the noble Lord mentioned.

I assure the noble Lord that the Gambling Commission will take the keenest interest in his suggestion that virtual racing may lead to rigged odds and corruption. That is what he described. It is an important point and he has done nothing but good in highlighting the issue in this debate, but I reassure him that the Gambling Commission is responsible for the proper conduct of bookmakers. That is an important dimension of its work, and he may have highlighted something to which the commission should direct its attention.

The crucial point put forward by all noble Lords in the debate and emphasised in the opening remarks of my noble friend Lord Faulkner is the need for co-operation and effective liaison between the sports bodies and betting organisations. The betting organisations know what is going on when they see clear irregularities and the sporting bodies are all too well aware of the way in which potential corruption can occur, so the link of information between those bodies is of the greatest significance. We created the Gambling Commission to fulfil that role, and I reassure my noble friend that it is a condition of the bookmakers' licence that they provide such a link with the sporting organisations. He has canvassed for that for a number of years and our legislation makes its realisation possible.

Tough new rules in the Gambling Act mean that decisive action can be taken against those who cheat. That is the basis of integrity in sport—a point that has been reflected in every contribution to this debate. A sport which loses its integrity loses the very concept of sport, and that is why cheating must be stamped out. Of course, cheating is reflected in illegal gambling where sporting endeavour is rigged.

The Government have not only been active with regard to the Gambling Act and are not just concerned that the Gambling Commission should fulfil its role. In 2005, the former Minister for Sport, Richard Caborn, established a 10-point plan to help uphold integrity in sports betting. The crucial themes underlying all those points is the important role of sports governing bodies, their relationship to bookmakers and the effective exchange of information.

The growth of online and offshore betting, which raises particular problems, was also identified. Of course, there are limitations on effective government action in relation to offshore betting that lies outside our jurisdiction. However, we regulate online betting in this country and, if punters bet with an online betting firm here, it is guaranteed to be subject to our regulation.

We are seeking to ensure that offshore betting meets the same standards as we set in the United Kingdom, although that is easier said than done. Some international jurisdictions clearly respond to this. States within the European Community play their part in ensuring such integrity, but we also know of locations where offshore betting can take place through online activity, and that is much more difficult to regulate. We are keeping a close eye on developments in that regard. The noble Lord, Lord James, indicated that control over advertising may be the key, and there is certainly potential for that. The Gambling Commission and the Government will look carefully at that if we think that the abuses justify it.

The betting industry is growing but, nevertheless, this country has the highest-developed sense of sporting ethics in the world. This country will not tolerate cheating, wherever it manifests itself. It has been necessary, through the gambling legislation, to ensure that there are effective channels between bookmakers, who are vulnerable to such cheating, and the organisations in sport which would be ruined if cheating became rife. They must work together to ensure that we have the necessary controls.

None of us can be complacent. That is why my noble friend introduced this debate today and why there have been such impassioned contributions from all sides of the House about the importance of the integrity of sport. Nevertheless, I emphasise that the Government take this issue very seriously. They have the weapons and the mechanisms for guaranteeing that we protect the high standards of sport and the high standards of the betting industry in this country.

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Government Whip

My Lords, I beg to move that the House do now adjourn during pleasure until 3.28 pm.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 3.25 to 3.28 pm.]