Gambling: Sport

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

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Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Labour 2:27, 11 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.