Gambling: Sport

Part of the debate – in the House of Lords at 2:38 pm on 11 October 2007.

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Photo of Lord James of Blackheath Lord James of Blackheath Conservative 2:38, 11 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.