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Report

Gambling (Licensing and Advertising) Bill – in the House of Lords at 6:30 pm on 4th March 2014.

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Votes in this debate

Amendment 1

Moved by Baroness Howe of Idlicote

1: Clause 1, page 1, line 6, at end insert—

“(b) after subsection (5) insert—

“(6) The Commission may give a direction under this subsection if the Commission reasonably believe that a person or organisation who does not hold a remote gambling licence is providing remote gambling services in the United Kingdom.

(7) A direction under subsection (6) may be given to—

(a) a particular person operating in the financial sector,

(b) any description of persons operating in that sector, or

(c) all persons operating in that sector.

(8) A direction under subsection (6) may require a relevant person not to enter into or continue to participate in—

(a) a specified transaction or business relationship with a designated person,

(b) a specified description of transactions or business relationships with a designated person, or

(c) any transaction or business relationship with a designated person.

(9) Any reference in this section to a person operating in the financial sector is to a credit or financial institution that—

(a) is a United Kingdom person, or

(b) is acting in the course of a business carried on by it in the United Kingdom.

(10) In this section—

“credit institution” and “financial institution” have the meanings given in paragraph 5 of Schedule 7 to the Counter-Terrorism Act 2008;

“designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given;

“relevant person”, in relation to a direction, means any of the persons to whom the direction is given.””

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench 6:42 pm, 4th March 2014

My Lords, Amendment 1 is in my name and that of the noble Lord, Lord Stevenson. It would give the Gambling Commission a discretionary power to block financial transactions between people living in the UK and online gambling websites that have not secured a UK Gambling Commission licence. The aim is to prevent funds being transferred to illegal operators, thereby creating a disincentive both to the company to operate illegally and to UK gamblers, who will find it much easier to go to the many licensed operators available.

The Government have argued that this Bill is about consumer protection. On 19 November the Minister, Helen Grant, said that the new licensing proposals address,

“the fundamental purpose of the Bill, which is to enhance consumer protection by ensuring that all operators offering remote gambling in Britain are regulated by the Gambling Commission, whether they are based in Britain or overseas”.—[ Official Report , Commons, Gambling (Licensing and Advertising) Bill Committee, 19/11/13; col. 74.]

At first glance, this seems absolutely right because the Bill, for the very first time, requires all online gambling providers based outside the UK who want to access the UK market to get a UK Gambling Commission licence. For this to constitute a meaningful bid for greater protection, however, it must be connected to a parallel provision preventing those providers which do not have a licence from selling to UK consumers. The Bill before us contains no such provision. In the absence of a credible enforcement mechanism, the primary implications of the Bill are twofold.

First, there would be significant liberalisation of online gambling advertising. At present, only providers located in a limited number of whitelisted and European Economic Area jurisdictions can advertise in the UK. However, under the Bill any provider based anywhere in the UK will be able to advertise in the UK, so long as they get a UK Gambling Commission licence. This significantly widens the scope for online gambling advertising. Not only that: it would be advertising liberalisation for a form of gambling which is associated with a significantly higher problem prevalence figure than gambling generally. The 2010 general problem prevalence figure was 0.9% but it was more than 9% for online on an annual basis and more than 17% on a monthly basis.

The second implication is that of providing a framework for increasing the tax take in co-operation with the 2014 Finance Bill. The 2005 Act created a tax loophole by allowing providers based in EEA or whitelisted jurisdictions still to advertise in the UK. All but one moved to whitelisted jurisdictions under more generous regimes. The Bill corrects this loophole by providing the Treasury with a framework to address the problem. It requires all providers accessing the UK market to get a licence, while the Finance Bill requires all online gambling providers with a UK licence to pay UK tax. It will come as no surprise to your Lordships that, as the wife of a former Chancellor of the Exchequer, I have absolutely no problem with seeking to close a tax loophole. However, the good news is that that tax loophole can be closed at the same time as providing a robust enforcement regime that upholds the consumer protection objective set out by Helen Grant. We do not have to choose between one and the other.

The Government have of course sought to argue that they have the necessary enforcement mechanism. At Second Reading, the Minister said:

“Where illegal operators attempt to target British consumers, the Government and the Gambling Commission are confident that action can be taken through existing enforcement mechanisms to disrupt and stop unlawful gambling. These include action on illegal advertising, player education and, ultimately, prosecution”.—[Hansard, 17/12/13; col. 1252.]

The problem with this is that neither clamping down on illegal advertising nor better player protection will prevent illegal operators accessing the UK market. That leaves prosecution but the truth is that the DCMS has already recognised in its remote gambling consultation that prosecution has no teeth. The DCMS said that,

“we recognise that without extra-territorial extent, it will be difficult to actually pursue the offence through the Courts if the operator is located outside Britain”.

Given the clear problems with the enforcement mechanisms highlighted by the Government, it has been clear to me since the first day when the Bill appeared that it is crying out for a proper enforcement mechanism. In this context, as I have said previously, Amendment 1, which gives the Gambling Commission discretionary financial transaction blocking powers to protect UK consumers from transacting with illegal providers, crucially restores integrity to the Bill. Far from being a curious add-on my amendment, in providing a credible enforcement mechanism, is central to the main purpose of the Bill.

When pressed on this point the Government have, until now, always rejected financial transaction blocking on the basis that the evidence is mixed.

Although I readily admit that financial transaction blocking is not 100% successful—very few public policy solutions are—it is my contention that it is the best available enforcement mechanism, and one that would greatly enhance the Bill. In making this case, I want to make some points. First, I shall briefly consider the experiences of other jurisdictions. In the USA, the Unlawful Internet Gambling Enforcement Act 2006 prohibits any person, including a business, engaged in the business of betting or wagering from knowingly accepting payments in connection with the participation of another person in illegal remote gambling. In practice, this means that credit and debit cards and banks do not allow their services to be used in relation to a merchant code associated with remote gambling. This means that if a person tries to gamble on an illegal or unregulated website, they will not be able to transfer funds directly into their gambling account. These merchant codes are used as a matter of course and as part of agreements made between gambling entities and the financial sector.

My conversations with online gambling providers suggest that, while this approach has not been perfect, it has made a very significant positive difference. Indeed, such is its success that other countries have since followed its lead; in Europe the most notable is Norway, as well as France, Belgium and Estonia. Other jurisdictions have also implemented policies that reflect the blocking of the financial flow to illegal websites—for example, in Israel, Turkey, Singapore and Malaysia.

Secondly, having looked at the experience of other jurisdictions, I want to reflect on the appropriateness of financial transaction blocking in a British context. In considering all the jurisdictions that have implemented FTB, it is vital to appreciate that they operate closed or relatively closed markets. For example, the US does not allow remote gambling across state borders or from overseas. Norway, meanwhile, operates an even more restrictive market.

If one operates a closed or relatively closed market, one faces two challenges. First, one has to block lots of transactions. That would not be the case in the UK, where we operate an open market. Then there is a greater incentive in closed or relatively closed markets for punters to seek to evade the blocks than in an open market, where the available odds should be relatively competitive. In a market like the UK, where there is a need for less blocking and where—on the occasions when it is used—financial transaction blocking is more likely to be effective, FTB is likely to be more successful than in the jurisdictions where it has been employed thus far.

Thirdly, mindful of the above, I want to reflect on the huge irony of the position that the Government have adopted. They have rejected financial transaction blocking on the basis that the results are “mixed”, citing instead their preference for prosecution. Given that, while not perfect, FTB has encountered some considerable success, and given that it is more likely to be successful in the UK than in any other jurisdiction where it has been used, I find it a little extraordinary that the Government should reject it in favour of prosecution on the basis that FTB is not perfect. Prosecution is far less likely to be successful than FTB. As we have seen by the Government’s own admission, prosecution does not work. The idea that the UK Government can afford to chase multiple small online providers through the courts of multiple jurisdictions is, surely, fanciful. The providers in question know that the chances of their ever being successfully prosecuted are tiny, a calculated risk that they can afford to take. By contrast, FTB is likely to have a significant deterrent effect on small illegal providers, as the experience of Norway has demonstrated.

Yesterday many noble Lords will have received a letter from the Minister, the noble Lord, Lord Gardiner, that addresses enforcement. The letter says:

“I am pleased to confirm that the Gambling Commission has reached agreement with a number of major payment systems organisations to work together to block financial transactions with unlicensed operators”.

I very much welcome this announcement. It really is quite a turnaround from the suggestion during the earlier stages of the Bill that its enforcement provisions were sufficient. However, just as I highlighted deficiencies in what the Government said during those stages, I feel compelled to do so again today, because while I warmly welcome the announcement I do not believe that it constitutes a credible alternative solution.

The problem is that it pertains to only three payment processes and is voluntary. Of course Visa is a very big player and covers a large part of the financial transaction market, so you might be tempted to conclude that this solution would address a large part of the problem. In reality, though, the market is dynamic, and experience from abroad demonstrates that alternative payment mechanisms spring up to do the job in place of the big names that are persuaded in the name of social responsibility to adopt a different approach on a self-regulatory basis. Thus I am firmly of the opinion that we need the statutory approach of Amendment 1, which applies to all payment mechanisms.

I have heard it said that the Government do not want to accept amendments to the Bill. They contend that it is a simple Bill, with a sharp focus that amendments would only distract from. Far from being a distraction from the main purpose of the Bill, my Amendment 1, by providing a credible enforcement mechanism, is absolutely key to that central purpose. Rather than placing the simple integrity of the Bill in jeopardy, the amendment’s key mission is actually to complete that integrity—to ensure that rather than being half a Bill, alienated from an enforcement mechanism, it is in fact a whole Bill, very much at one with its enforcement mechanism. My modest discretionary financial transaction blocking amendment would restore integrity to the Bill, in my view, something that is urgently needed. I hope that in due course the Government will agree, and I beg to move.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport)

My Lords, I pay tribute to the noble Baroness for her campaigning on this and many other issues, and particularly on the tenacity with which she is pursuing this topic. I place on the record that we on this side of the House support her in this amendment. Do the Government? We have seen reports over the weekend, amid the most extraordinary amount of material that has been released through papers and articles and by people talking directly to the press, about how keen the Government are to make progress in this area, how shocked they were to discover some of the points that have been made in the noble Baroness’s speech—but had also been raised before in Committee—and how important it was that they should be seen to be taking action. However, talk is not going to get us to where we want to go on this issue, as the noble Baroness has said.

The Bill lacks the capacity to deliver the means to achieve the ends that it sets out very clearly, and with which we agree. There have been very clear calls for strong enforcement measures to accompany the Bill. The Bill may be modest in terms of what it does, but it will be even less effective if it does not have these additional measures. In addition to the points made by the noble Baroness, which I do not wish to repeat because she made a very positive and clear endorsement of the position that she is trying to adopt, we have to have regard to the fact that there will be people inside the industry who will hold licences who deserve to be supported, who are trying to do the right thing and who need to be given a clear endorsement in the Bill that those who are not doing the right thing by the Bill will be prosecuted but will also be made unable to operate by removing their financial support and by ensuring that they cannot connect through the internet.

These are issues that come up in other places. There is obviously a read-across to the field of the protection of children, and therefore it is important that we should begin to think hard about how we work in this world of new technology. As the noble Baroness said, the amendment complements the Bill. Voluntary arrangements, although welcome, will not achieve what we want. They are a step in the right direction, but they are not sufficient. The very idea of relying simply upon prosecution in offshore, foreign territories is absolutely bizarre. If the noble Baroness wants to test the opinion of the House, we will support her.

Photo of Viscount Astor Viscount Astor Conservative 7:00 pm, 4th March 2014

When my noble friend the Minister replies, will he address two issues that concern me about the amendment? The first is the ability to control what the noble Baroness referred to as illegal websites. It seems to me that websites spring up and have an almost infinite ability to replicate themselves. I am not sure how the Government could control them, even if they wanted to. Secondly, there seems to be evidence in other countries that financial transaction blocking has not been terribly successful. Will the Minister comment on whether that is the case? If we were to have this amendment, it is important that it is workable and would achieve its purpose. Otherwise, we have to look at other alternatives to achieve the same outcome.

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP

My Lords, I am very pleased to speak in support of Amendment 1 because it is of fundamental importance. If this Bill is not endowed with a credible form of enforcement so that unlicensed operators are prevented from accessing the UK market then, as the noble Baroness, Lady Howe, has explained, the notion that this Bill is about consumer protection breaks down. Its primary impact will instead be a truly dramatic change to online gambling advertising in the UK.

I am particularly grateful to the noble Baroness for raising this issue throughout the passage of the Bill and particularly for the excellent seminar that she hosted for Peers last week, which was fascinating. It comprised two central presentations, one from the online gambling provider Paddy Power explaining why, from the perspective of online gambling providers, the provision of proper enforcement is absolutely key, and a second presentation from a charity, CARE, whose prime concern is the care of problem gamblers, which also argued passionately for the provision of credible enforcement.

In managing to create a coalition between the online gambling industry and problem gambler charities, the Government have really accomplished quite a feat. On a more serious note, it seems to me that if such disparate groups with such disparate aims and objectives are prepared to come together to present basically the same argument, the Government need to pause and take note. Paddy Power made it very clear that the online gambling industry is growing very quickly right across the world and that there are lots of small providers which will be tempted to access the United Kingdom market without getting a licence. The point was made very powerfully that the Government cannot possibly hope to chase these multiple small providers through the courts of multiple jurisdictions. It would cost far too much and take far too long. The small providers know that the chances of them being prosecuted, let alone convicted, are absolutely tiny and that it is a risk well worth taking.

In this context, the online gambling industry and the charity sector are very clear that financial transaction blocking is the best way forward. The Government, of course, have resisted this argument, claiming that the evidence for FTB is mixed. If by this they mean that it is not 100% successful, then I agree with them, but the notion that in order to be suitable an enforcement mechanism must be 100% effective is problematic for two reasons. First, in my experience, very few public policy solutions can make that claim. Secondly, the enforcement mechanism promoted by the Government—prosecution—is far less likely to be successful than FTB. Of course, I read with interest the letter from the Minister yesterday announcing that, despite earlier statements, the Government have now consented to a self-regulatory approach to prohibiting payments with three providers. That is a very welcome turnaround, but it is not a credible solution. The integrity of this Bill clearly requires a statutory solution that covers all providers.

This Bill has so far travelled from DCMS to the Commons and now through the Lords to Report stage without a single amendment. As a revising Chamber, we are here to detect problems and put them right.

The noble Baroness, Lady Howe, has spotted a fundamental problem. I do not believe that we should allow this Bill to complete its passage through your Lordships’ House without the insertion of the clear enforcement mechanism presented by Amendment 1. I strongly urge noble Lords to support this very important, seminal amendment.

Photo of The Bishop of Chester The Bishop of Chester Bishop

My Lords, I want to associate myself fully with the remarks just made by the noble Lord, Lord Browne, and with the powerful and comprehensive speech made by the noble Baroness, Lady Howe, in introducing the amendment. I do not intend to repeat the points they made so powerfully, but I shall add a general consideration. With the introduction of the internet, we are living through a revolution that is probably more powerful than the invention of steam power or the internal combustion engine. One does not want to be critical of the many benefits that flow from the internet revolution but it brings with it, at every point, corresponding dangers of which the Government need to be very aware. If in doubt, I would say that the balance of the argument comes down on putting in place powers to regulate and prevent the abuses that the internet can open up. I hope that general consideration will support the specific points so powerfully made in the debate so far.

Photo of Baroness Jolly Baroness Jolly Baroness in Waiting (HM Household) (Whip)

My Lords, I thank noble Lords for a wide-ranging and constructive series of discussions as the Bill has progressed to this stage. As we said earlier, this is a small, five-clause Bill focusing on consumer protection. As a result of it, all overseas operators selling to British consumers—around 85% of the market—will be required to hold a British Gambling Commission licence. That will mean that those operators will be subject to robust and consistent regulation and that will increase protection for consumers.

Although it had been introduced with a distinct focus on new licensing and advertising arrangements for remote gambling activities, we have collectively explored a fuller set of related gambling considerations. Noble Lords will have seen some of them announced by the Secretary of State over the weekend. Work which had been ongoing has been catalysed by these debates, in which some very important matters arose, while ensuring that the core of the Bill, which I think I can say is widely supported, can pass into law.

One such issue is in relation to enforcement and I thank the noble Baroness, Lady Howe, for her amendment. It would enable the Gambling Commission to give direction to financial institutions to stop financial transactions with operators which do not hold a Gambling Commission licence. This is known as financial transaction blocking. The Government share the overall objective articulated so clearly by noble Lords, which is at the centre of this amendment, but the Bill must be enforceable. That is central to achieving the consumer protection purposes that lie at the heart of the Bill, which will extend the existing enforcement provisions to offshore operators selling or advertising into the GB market.

The Bill includes three important tools. First, the Gambling Commission can take action against illegal advertising. That is important as advertising is the lifeblood of so many operators. The Bill will make it easier for advertisers to identify what can and what cannot be advertised into the UK. Only lawful gambling may be advertised. Secondly, player education is another important tool. The current system makes it impossible for the Gambling Commission to advise consumers to buy from commission-licensed operators, as operators from anywhere in the world, subject to a range of different regulatory regimes, can transact with consumers in Great Britain. Thirdly, the Gambling Commission has powers to prosecute, so the commission will have the legal powers to pursue any unlicensed operators, wherever they are based. It is also worth noting that, although the collection of tax is a matter for HMRC, it has extensive powers of its own that may be deployed in the case of unlicensed operators, where this is appropriate.

However, alongside this, I can announce a further mechanism. I am pleased to confirm that the Gambling Commission has reached agreement with major payment systems organisations—notably MasterCard, PayPal and Visa Europe—to work together to block financial transactions with unlicensed operators which seek to use these payment systems for illegal purposes. What does this actually mean in practice? It means that when a consumer uses payment facilities for illegal gambling this may amount to a breach of the payment system’s terms and conditions. These require that all transactions must be legal in all applicable jurisdictions. Such a breach may result in the operator having its payment facilities withdrawn by the payment system. This process will disrupt revenue to unlicensed gambling operators selling into our British market.

We have heard the arguments in detail throughout the passage of the Bill as to the effectiveness of financial transaction blocking. We believe that the approach I have just outlined is a good way to test and evaluate this mechanism. The mechanism provides an efficient way of achieving blocking in a single case, which is mostly where we expect this approach will be used. The reason this approach is efficient is that the Gambling Commission has a direct route to the payment organisations and does not need to go through a potentially lengthy and expensive court process.

However, as we have all agreed in this debate, the landscape can change quickly. Technology moves faster than legislation. The nature of these arrangements is such that they will be adaptable and can respond to the very latest developments. That is why the Government believe this is the most appropriate way to proceed: working in partnership with these organisations that share our determination to tackle illegal activity. We want to ensure that the enforcement arrangements continue to be effective and have asked the commission to report on its enforcement activities in relation to remote gambling. The Gambling Commission will provide an assessment of the effectiveness of these arrangements in enforcing the Bill in its annual report to Parliament. The Government and Gambling Commission will use this to assess the success of this approach and monitor the implementation of the new regime. This will enable the Government to ensure that the Gambling Commission continues to have all the enforcement tools it needs.

I thank the noble Baroness for bringing this issue forward and all noble Lords who took part in the debate. I hope that I have assured the House that the Government’s approach is the most appropriate way to achieve the objectives behind the amendment and does not require legislative change. I therefore ask the noble Baroness to withdraw her amendment.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench

My Lords, I am grateful to all noble Lords who have participated in this important debate. I also thank the Minister, the noble Baroness, Lady Jolly, who kindly met me yesterday to outline the steps that the Government have now taken to begin to address this problem. I very much welcome, too, the fact that rather than saying that there already are adequate enforcement mechanisms, the Government are now bringing forward, somewhat belatedly, the measures that have been outlined to us today.

However, this really is a classic example of too little, too late. The online gambling providers we have consulted have been clear that, even if you target big transaction-processing companies that currently service the market but do not adopt a more statutory approach that relates to all such companies, gambling transactions will simply migrate to other or new providers. I still believe that the Bill is flawed because of this lack of an enforcement mechanism and because of self-regulatory measures, especially those which relate only to three providers, with no compensation for this. Separated from a proper means of enforcement, the Gambling (Licensing and Advertising) Bill is still very much half a Bill.

As other speakers have noted, to date the Bill has passed unamended through the Commons and also until Report stage in the Lords. Increasingly, everyone acknowledges that we are here as a revising Chamber to spot problems and to try and put them right. I would argue that we have identified a significant problem here that cannot be addressed by a voluntary agreement between just these three providers, which may or may not at some future stage give rise to litigation.

We have today the opportunity to address this shortfall. Although I hope very much that the Government will accept other amendments today, I want to take this opportunity to test the opinion of the House.

Division on Amendment 1

Contents 171; Not-Contents 185.

Amendment 1 disagreed.

Division number 1 Gambling (Licensing and Advertising) Bill — Report

Aye: 169 Members of the House of Lords

No: 183 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Amendment 2

Moved by Lord Stevenson of Balmacara

2: After Clause 1, insert the following new Clause—

“Licence compliance, stipulations and control

(1) Notwithstanding the regulation of spread betting by the Financial Conduct Authority, operators licensed for remote gambling by the Gambling Commission shall, to ensure their continued fitness as such, be obliged to comply with Condition 15.1 of the Consolidated Licensing Conditions and Codes of Practice 2011 (or its equivalent from time to time) in relation to all areas of their gambling operations, including spread betting and any other operations not within the jurisdiction of the Gambling Commission.

(2) In the event of any breach of subsection (1) which the Gambling Commission believes calls into question the fitness of the relevant operator, the Gambling Commission may require the operator to provide an explanation of such breach within one month and may, if not satisfied with such explanation, revoke the operator’s licence.”

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 7:28 pm, 4th March 2014

My Lords, the promotion and upholding of integrity is one of the key functions of all sports governing bodies and event organisers. The whole concept of sport is based on what is described as fair competition between participants under agreed rules. A vital principle for any sport is that all its participants are competing to win and that its officials are honest, and are seen to be so.

This amendment deals with a situation which could not have been forecast when the Gambling Act 2005 passed through this House and into law. At that time, the idea that people would somehow be able to vote without ever being close to or involved in a game was not thought of as likely to happen, and we certainly did not see, or have evidence to suggest that we had seen, any ideas that people involved in the betting industry—not the industry as a whole—might seek to use means to try to fix matches. The situation that emerged out of the 2005 Act is not one that we could have predicted; times have moved on. Therefore, we need to think hard about how to protect sports integrity as we move forward. Those who seek to influence the outcome or progress of sports events to secure rewards through betting undermine the very principles that I have been talking about. Worse than that, any suspicion that that is happening is almost as bad as the event itself happening. So some action needs to be taken.

The Government have been working with the Gambling Commission—and I give them credit for this—on how best to ensure that information flow is made available to those with responsibilities in this area. As a result, there is a series of regulations that operate, particularly licence condition 15.1, which ensures that information about practices that might be redolent of an event that has been fixed are brought quickly to the attention of the sports governing bodies and authorities so that action, if necessary, can be taken.

During the passage of the Bill in another place, my colleague in the Commons, Mr Clive Efford, spotted a gap in the overall approach being taken here, which is that the responsibility for spread betting is and continues to be with the FCA, which does not have the licence conditions—including licence condition 15.1—that apply to those organisations registered through the Gambling Commission itself. However, in the period since then there have been meetings and discussions, and I am very pleased that we have now got to a situation where, in respect of those bodies that are involved in regulating sports events, which include spread betting operated under the auspices of the FCA, the effect will be that licence condition 15.1 will apply, so that all information can be channelled to those who require it in a way that will allow them quickly to take action if required. This is terrific—and, if I am going to hear that from the other side, we will welcome it. It may influence how we take forward this amendment.

However, in closing I make one point. The situation that we will find ourselves in if what I hope is the case comes through is that those in scope to the Gambling Commission will have the effect of licence condition 15.1 applied to them. But if there were a situation in which a spread betting organisation were to start taking bets on gambling activity but was not in scope to the Gambling Commission, the information flows would be interrupted. Can the Minister reflect on that point and give us some information, if he has it, on that issue? Subject to hearing more about that, I am very happy to move this amendment and look forward to hearing what the Minister has to say in response.

Photo of Baroness Heyhoe Flint Baroness Heyhoe Flint Conservative

My Lords, this amendment returns us to an issue that has already received considerable scrutiny. As we have heard, it is vital that national sports governing bodies receive information and intelligence about any untoward betting patterns as a matter of urgency so that they have the greatest opportunity to prevent corrupt activities and behaviour. Spread betting needs to be regulated just as effectively as fixed odds betting. Yesterday, the Minister informed noble Lords that the Gambling Commission is to extend the remit of its licensing code 15.1 to include spread betting in its information reporting requirements, as is placed on those who have a fixed odds betting licence. I commend this remit, because it will address most of the issues that sports bodies have raised. Presently, the two companies that offer spread betting also offer fixed betting and thus have Gambling Commission licences. Could my noble friend tell me when the Gambling Commission will introduce this new licensing code?

I am also pleased that in recent weeks the FCA has finally agreed to take responsibility on this issue, no doubt following pressure generated by noble Lords—

I say, immodestly. It has come forward with proposals for its own industry guidance for spread betting companies that take bets on sport. This guidance will be broadly similar to that issued by the Gambling Commission, but there are two main areas where it will be deficient in comparison and concerns remain.

The first is that the guidance will not be made public. I find that somewhat curious. Surely, regulatory requirements set by public bodies should be open, transparent and accountable. How is the sports sector to have confidence in a regulation if it does not know what it says? How can it be used as educational material or act as a deterrent in the sporting world if we cannot show people the actual guidance? Can the Minister give an assurance that a way will be found to make sure that this guidance is made publicly available to those in the sports sector?

Secondly, the industry guidance issued by the FCA will not require as a statutory requirement that the spread betting company must share any information that it has, not just with the FCA but, most importantly, with sports governing bodies. Sports bodies understandably have ongoing concerns about the quality of information that they might eventually receive and the speed at which it will be made available. I gather that the reason for this is that the FCA says that its own statutes do not allow it to instruct spread betting companies to share information directly with sports governing bodies. That would be a major anomaly and a threat to sports integrity, should a spread betting firm operate without having a fixed betting arm. That means that it would not fall under the regime being proposed by the Gambling Commission. Can the Minister tell me what action the Government are taking to ensure that any future spread betting company that is established and does not have a fixed betting operator licence will still be subject to the same requirements that the Gambling Commission is introducing?

The easiest way in which to guarantee a level regulatory playing field between traditional and spread betting companies would be to transfer responsibility for sports spread betting from the FCA to the Gambling Commission, as the amendment would seek to do. I understand that there are powers contained in a Treasury-regulated activities order that would enable the transfer of sports spread betting from the FCA to the Gambling Commission, which may be a more suitable route to address the issue than in this Bill. Could the Minister give a commitment that that option will be further explored as a matter of urgency, and that, should there be any development of standalone spread betting companies setting up, we could expect to see the application of a transfer of sports spread betting from the FCA to the Gambling Commission using that Treasury-regulated activities order? That would ensure that sports integrity continues to be upheld.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble Lords Spokesperson (Department for Culture, Media and Sport), Lord in Waiting (HM Household) (Whip)

My Lords, I thank the noble Lord, Lord Stevenson, for tabling his amendment, which seeks to ensure that spread betting operators who hold a remote gambling licence from the Gambling Commission are required to report suspicious betting patterns to both the regulator and sports governing bodies under licence condition 15.1. Your Lordships have heard that my noble friend has tabled an amendment on that issue.

First, I acknowledge the determination with which Members of both Houses have pursued this matter—and the noble Lord, Lord Stevenson, mentioned one of his colleagues in the other place. The point about our deliberations is that it has undoubtedly led to more speedy progress.

As I said in Grand Committee, the Government take the issue of ensuring the integrity of sport very seriously. People must be able to trust that the sport that they are watching is fair and uncorrupted by cheating. The effect of this Bill will be that this will apply to all operators who offer remote gambling in the British market, regardless of where they are based, and information is at the very heart of the detection and disruption of any such corruption by regulators and sports governing bodies. But the Government believe that the following two-pronged approach achieves the objectives that noble Lords seek. This approach will ensure greater consistency in how suspicious activity is reported, and in a way that can be effectively enforced.

First, the Gambling Commission will soon be publishing its revised licensing conditions and codes of practice, which will include a change to licensing condition 15.1. This will make it clearer that, when a sports spread betting firm holds an operating licence with the Gambling Commission for its fixed odds activity, it will be required to report suspicious activity arising in relation to its sports spread betting activity. The revised licensing conditions will be published by the end of this month, and I say to my noble friend Lady Heyhoe Flint that the revised 15.1 will take effect in June.

Secondly, noble Lords will be aware of the FCA’s commitment to issue guidance for sports spread betting operators. The guidance will be issued under FCA Rule 15.3.17, which relates to the types of fraud and irregularities that must be reported to the FCA. The guidance will make it clear that the fraud and irregularities that will need to be reported by sports spread betting firms include suspicious sports betting. The FCA is also in discussion with the firms to put in place a mechanism by which information received by the FCA can be notified to the Gambling Commission and the relevant sports governing body. The finer details of the guidance are in the process of being finalised with the individual firms. However, I should make it clear that the underlying FCA Rule 15.3.17 is in place now.

I should say to the noble Lord, Lord Stevenson, and my noble friend Lady Heyhoe Flint that where a spread betting firm does not have a Gambling Commission licence, it will be bound by the updated FCA guidance, which will, of course, be mandatory.

We believe that the approach we are taking will work and will facilitate the appropriate sharing of information —the noble Lord, Lord Stevenson, particularly emphasised sharing of information, which is absolutely key to success—and it ensures that the licensing conditions, be it the expanded licence condition 15.1 adopted by the Gambling Commission, or the guidance issued by the FCA under the FCA rules, have a clear route back to the relevant regulator. Any failure to comply by an operator will be enforceable by the relevant regulator.

My noble friend Lady Heyhoe Flint asked a number of questions, seeking confirmation. As regards publishing the FCA’s guidance, as this is individual guidance it would not normally be made public. However, I will ask the two spread betting firms if they would be content to publish this individual guidance, once it is finalised. I should also mention that the first draft of the guidance was shared with the Gambling Commission, for its consideration and comment.

On best practice in information sharing—another point raised by my noble friend—I can confirm that the commission established the tripartite forum, involving betting operators and representatives of sports governing bodies. That forum continues to provide a space for debating these kinds of issues, which, again, is very important.

As regards future changes to the regulation of sports spread betting, I understand that there has been recent discussion between the FCA and the Gambling Commission as to whether the question of transfer needs to be revisited. Indeed, this matter remains very much alive. However, it is a very complex issue, and there was a deliberate decision at the time of the 2005 Act that it remain within the regulatory purview of the FCA as a financial services product. However, I can confirm that the mechanism for transferring the regulation from the FCA to the Gambling Commission is by amending the regulated activities order by statutory instrument. That issue was raised by my noble friend.

I hope that I have been able to reassure noble Lords that action has, and is being, taken on this important issue to ensure greater consistency in the way that suspicious activity is reported, and how this can achieved. The Government take this issue extremely seriously as the work currently going on around sports integrity and match fixing illustrates. We believe that the steps we are taking, and what noble Lords seek, is the right path. Indeed, we think that our approach goes somewhat further than what is sought in the amendments in so far as the new FCA guidance complementing an enhanced 15.1 provision is concerned. On that basis, I very much hope that the noble Lord will feel able to withdraw the amendment.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport)

I thank the noble Baroness, Lady Heyhoe Flint, for her amendment and for speaking to it so excellently and, indeed, adding a number of questions which have provoked the Minister to take us further down this route, which makes us better understand the process that we are going through.

I also thank the Minister for acknowledging that this has been a co-operative team effort. He said that our deliberations had resulted in speedier progress. However, I think that they made the measure a bit better; I think he is being a bit mean in his praise. We were able to get together around some common themes that emerged as a result of the discussions on Second Reading and at the beginning of Committee, and, with others present today, we looked hard at what was being attempted here. In the sure and certain knowledge that gambling (licensing and advertising) Bills do not come before your Lordships’ House very often, we decided to try to hook a lift on one or two paragraphs in order to make improvements, which I hope will be long lasting and effective in terms of improving the situation for the sports governing bodies, the regulators and, indeed, of course, the consumers, who are, after all, what this is all about. That is my rant over.

I am not very experienced in matters to do with legislation, having been a mere three or four years in your Lordships’ House, but this is a model that we might try to export and use again in some future circumstances. I am certainly up for that. I am very pleased that the Minister was able to spell out in a bit more detail some of the additional regulatory framework that exists. It is important that the FCA and the Gambling Commission are in discussion. As mentioned by the noble Baroness, Lady Heyhoe Flint, there probably is a case for transfer of, if not all the functions, at least some of them because it seems to me that the regulatory functions relating to gambling will get more complex and will be challenged by the new technologies, and I am sure that the FCA has other issues on which to focus.

We will return to match fixing in later debates this evening so I will not delay the House further on that point. In the interim, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Amendment 3

Moved by Baroness Jones of Whitchurch

3: After Clause 1, insert the following new Clause—

“Consultation on remote gambling advertising

The Secretary of State shall consult on the current regulatory position concerning advertising of remote gambling and other forms of online gaming activity where it is likely to be seen by, or influence, a child or children and shall lay a report of the findings before both Houses of Parliament not later than the final day of 2014.”

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Education) 7:45 pm, 4th March 2014

My Lords, Amendment 3 calls for a review of the effects of online gambling adverts shown to children before the 9 pm watershed. Our amendment calls on the Secretary of State to conduct an investigation into whether there are sufficient controls, and report back to Parliament.

Our amendment recognises that the world of gambling adverts has changed dramatically since the 2005 Act, which gave exemptions to adverts for betting on televised sporting events and for bingo. Since then, televised sports coverage has multiplied so that it is now possible to watch sports programmes 24 hours a day, seven days a week. This has coincided with the massive growth in online gambling, so rather than place a bet in a betting shop on the outcome of a race or a match, gambling is now carried out at home. It is instant, compulsive and has become more complex. It is no longer enough to bet on the outcome of a game, you are now encouraged to bet on the first no-ball, the first corner, the first goal scorer and so on. This has been fuelled by the growth of spread betting with high stakes and winnings, but also potentially high losses.

As we have already identified, these days, viewers of televised sporting events are bombarded with betting adverts in the commercial breaks, with all kinds of tempting, and often misleading, offers for correctly predicting the run of play and the outcome. They capitalise on viewers’ excitement and emotion in the moment.

Equally, in 2005, I do not think that anyone predicted the rise of online bingo. In its original form, bingo had a strong social aspect, providing a safe community activity, particularly for women, in predominantly working-class areas. However, online bingo has none of these attributes: it is solitary, repetitive and addictive. It is not surprising to discover that most online bingo adverts are on daytime TV, targeting those who are home alone.

There is a third development which was also not anticipated, which is the rise of gambling adverts throughout the day on social media and music websites, which by their very nature are targeting a younger audience. We know that gambling adverts are profitable and increasingly prolific. For example, between 2005 and 2012, while the total number of TV adverts almost doubled, over the same period the number of gambling adverts increased eightfold to more than 4% of the total adverts shown. It may be that a more general review of the regulation of these adverts is necessary, but our amendment seeks to address one aspect of particular concern, which is the exposure of children to these ads before the 9 pm watershed.

Of course, these adverts are not specifically targeted at children, and there are codes of practice that prevent adverts seeking to exploit young people or appealing to children. However, this is not the point. The fact is that children are being increasingly exposed to remote gambling adverts as they watch TV sport or daytime TV, or listen to music channels. We know that children will often be accessing these programmes without their parents being present, and we know that children are more computer savvy than their parents and can therefore be tempted to find ways to participate in these betting opportunities. We also know from other studies how susceptible children can be to adverts, which is why there are already restrictions on other adverts before 9 pm.

Following Committee, the Minister wrote to us on this issue and I am grateful to him for the letter. He referred us to an Ofcom report published in November last year and went on to say that its research suggests that the current arrangements are working well. I have to say to the Minister that I have looked at the report and it was far from reassuring. Instead, it showed that since 2005 children’s exposure to gambling ads has increased by 272%, whereby in 2012 there were 1.8 billion views of these ads by children. Moreover, in 2012 children were exposed to more than 8% of all the lottery and scratchcard ads on music channels. I could quote more examples but the point is that I do not see anything in that Ofcom report that suggests that these statistics are acceptable.

The truth is that we do not know the extent to which children are influenced by these ads but we know that sports, bingo and social media ads are multiplying and becoming more sophisticated. This is why our amendment calls on the Secretary of State to initiate an investigation into the impact of these adverts on children and report to Parliament on her findings. We were therefore pleased to read at the weekend that the Secretary of State has now accepted the need to look again at the regulation of gambling advertising with the aim of providing better protection for children and the vulnerable. We were also pleased to receive yesterday a letter from the Minister confirming that an independent review will now be carried out, with the aim of implementing any changes in the autumn of this year.

It would therefore be helpful if the noble Lord could confirm today who will be involved in this review and who will make the ultimate recommendations to the Secretary of State. Can he also confirm whether the review will be underpinned by an open consultation? Can he reassure the House that Parliament will have the ultimate say on the proposals? Can he confirm the projected timetable for this review if it is anticipated that the changes will be implemented in the autumn?

It is in all our interests that we understand, while there is still time to act, whether these ads are encouraging a gambling culture among children. I hope that the noble Lord is able to reassure us that the Government are now prepared to take this issue seriously and have a robust and accountable review process in place. I look forward to his response on this matter.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

My Lords, my motives in speaking to this amendment are entirely about probing further. I appreciated much of what the noble Baroness had to say about the opposition amendment and I am massively impressed by the growing consensus between the two Front Benches as the evening draws on.

However, the nature of the amendment is much narrower in scope than the review that the Secretary of State has promised. I am a little concerned about the sudden switch that has taken place. The noble Baroness referred to the letter of 22 January from my noble friend, as compared to the most recent letter of 3 March. There has been quite a turnaround, and we had the article from the Secretary of State in the Sunday Times last weekend. What concerns me is that this or any inquiry has to be firmly rooted in the evidence. I absolutely share what the noble Baroness had to say about the importance of child protection and the exposure of children to these gambling adverts but I do not want us to engage in some kind of moral panic when it comes to advertising to adults.

Gambling and the activities that take place, whether in casinos or remotely, are legitimate and it is legitimate to advertise them. Unless there a clearly established connection between advertising and problem gambling—from the research so far, it does not appear to be a major factor—I hope that this debate will be devoted largely to looking at the impact on children. There probably are conflicting views on the nature of the Ofcom evidence: the Advertising Association seems to be saying that only 42 seconds of advertising out of nearly 17 hours spent watching television each week is seen by 10 to 15 year-olds. I do not know whether that is the case or whether the figures that the noble Baroness,

Lady Jones, cited are correct. If there is an issue here, we should definitely explore it. From his letter, I know that the Minister will clearly respond positively.

However, I am concerned, particularly when the Secretary of State makes a statement referring to a 600% increase in gambling advertising. I am not a mathematician; in fact, I am virtually innumerate but I know that if you use percentages such as that it can sometimes be from a very low base. Let us face it, between 2006 and now, remote gambling of the kind that is advertised so heavily has grown hugely as an industry, and it is hardly surprising that gambling advertising of that nature has increased in that period.

All that I am saying is that I hope that when the Secretary of State commissions this inquiry, questions of the kind being asked by the noble Baroness will be answered. I also hope that those answers will be firmly rooted in evidence and that we do not just rush to condemn gambling advertising per se, when what we are really after is the impact on the under-18s.

Photo of Lord Mancroft Lord Mancroft Conservative

My Lords, I had not intended to intervene in this short debate but, after listening to my noble friend Lord Clement-Jones, I cannot resist doing do.

Looking around your Lordships’ rather empty House at this late hour, I see that I am the only Member who sat on the joint scrutiny committee on the 2003-04 Bill, which became the 2005 Act. I remember the tortuous hours of evidence that we heard about the effects that this new phenomenon of gambling advertising would have. I do not make this as a party-political point but as a general political point: the Government of the day swept that aside. I heard my noble friend give a figure of a 600% increase but that was of course from a low base, which was zero; there was no advertising of this sort at that time. It was introduced under the 2005 Act, amid a lot of people—some sensible and some not so sensible—saying that it would cause awful mayhem. Of course, there is no mayhem and nightmare because the background is that we were also advised that we should take into account what is now called evidence-based policy, which is introduced on expert advice and allows the Minister of the day to avoid exercising his political judgment—probably the reason for which he was elected, but that is neither here nor there.

However, the reality is that this debate is the child of the 2005 Act, which was put through far too fast, not thought through and not based on evidence. Now we are in this Bill having in part to clean up some of the mess that the Act created—quite rightly, because that is what Parliament does from time to time. However, that is the history and everyone has to recognise that that is what happens when you legislate in haste.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench

My Lords, I add my support for the amendment in the names of the noble Baroness, Lady Jones, and the noble Lord, Lord Stevenson. Having listened to everybody’s contributions, I think that what is really important here is the effect on children of this increased access to advertising. It provides an early start to children getting gambling problems, which then have to be sorted out, and that is what my amendment was seeking to address. I do not feel one way or the other about what other noble Lords have said but I think that the age of the children being exposed to this advertising is important. A 10 o’clock watershed would be ideal if only it could be applied to online activity, although we all know that it cannot. Nevertheless, other ways of checking this should certainly be looked at in detail.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble Lords Spokesperson (Department for Culture, Media and Sport), Lord in Waiting (HM Household) (Whip) 8:00 pm, 4th March 2014

My Lords, I thank the noble Baroness for tabling this amendment in respect of gambling advertising, particularly because, as noble Lords have said, there have been some recent developments in this important area.

The Government recognise that the relaxation of restrictions on gambling advertising following the implementation of the Gambling Act in 2007 has led to a significantly greater volume of gambling advertising on television and in other media. Indeed, over the weekend my right honourable friend the Secretary of State expressed concern about some of these developments and outlined some of the actions that will be taken.

Although the nine o’clock television watershed arrangements—I think that the noble Baroness, Lady Howe, mentioned 10 o’clock but my understanding is that the watershed arrangements are from nine o’clock at night—have limited the exposure of children to such advertising compared with adults, children still see considerably more gambling advertising on television than ever before.

In addition, we have seen significant innovation in the gambling industry since the current regulatory controls were established in 2007. The codes, including the industry voluntary code, which govern gambling advertising are now applied across a much changed gambling landscape with the availability and promotion of new products which were not anticipated when the codes were devised. These technological developments have led to intense competition in remote gambling advertising, which has coincided with an increase in complaints about gambling advertising to the Advertising Standards Authority. It is timely, therefore, that the codes are re-examined to ensure that existing controls keep pace with developments in the market and that they remain consistent with public expectations about gambling advertising.

Noble Lords may be aware that the Government have been working for over six months with the organisations responsible for regulating gambling advertising to monitor the impact of developments and to consider whether the current controls remain adequate. In particular, I reassure the noble Baroness, Lady Jones, that this work includes both remote gambling advertising and other forms of online gaming activity, including online bingo. As a result of these discussions, I am now in a position to explain the four strands of work being undertaken, and to what timetable, to ensure that the regulatory controls on gambling advertising are properly examined, especially in relation to children and the most vulnerable. The Secretary of State particularly mentioned children and the most vulnerable.

I say to my noble friends Lord Clement-Jones and Lord Mancroft that it is absolutely key that this work is rooted in evidence and that there is a thorough review. Therefore, the first of the four strands is that the Government have asked the Remote Gambling Association to co-ordinate an industry-led review of the voluntary Gambling Industry Code for Socially Responsible Gambling. As noble Lords will be aware, this code supplements the principal regulations on gambling advertising by providing industry standards in certain areas, including educational messaging and the 9 pm watershed arrangements for television advertising. The Remote Gambling Association has agreed to complete its review with a view to coming forward with any proposed revisions by the summer of this year.

Secondly, the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice have committed to evaluate the findings of a new report into gambling advertising to consider what regulatory implications arise as a result. This report will be published by the Responsible Gambling Trust this month and will examine the available evidence on gambling advertising and its relationship with problem gambling. The committees will publish their findings on completion of this work, which could lead to changes in the principal codes controlling gambling advertising. The findings are expected by the autumn of this year.

Thirdly, the Advertising Standards Authority will undertake a review of its enforcement action on the gambling rules, taking into account internal intelligence, complaints statistics and trends to ensure that it is enforcing the rules proportionately and consistently. The ASA will communicate the outcome publically by the autumn of this year.

Finally, the Gambling Commission will consider what revisions might be necessary to the licence conditions and codes of practice to ensure that all gambling advertising continues to comply with the licensing objectives of the Gambling Act. This work will be principally focused on ensuring that free bets and bonus offers are marketed in a fair and open way by the gambling industry.

I hope that that provides noble Lords with the reassurance that significant activity, which can have a real impact, is in hand. To my noble friends in particular, I emphasise that this will be rooted in evidence, and there are four strands to it. The terms of reference for the reviews are currently being defined and will be made public by the spring.

I am confident that the multi-agency approach will provide the comprehensive and robust examination that is necessary. As regards the point made by the noble Baroness, Lady Jones, about consultation, the Government intend to involve all relevant stakeholders during the review. Any statutory regulations would be preceded by consultation and the Government will confirm their position by the end of this year. They will consider the findings of the review before determining what further action may be necessary and will confirm their position by the end of the year. I will arrange for a summary of the findings of the reviews and the Government’s response to be placed in the Libraries of both Houses as soon as they are available but definitely by the end of this year. I very much thank all noble Lords for contributing to the debate. On this basis, I hope that the noble Baroness will feel able to withdraw her amendment.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Education)

My Lords, I thank very much noble Lords who have spoken in this debate and the Minister for his reply. I echo his view that of course any proposed changes should be based on evidence and empirical research, which has been somewhat lacking in the past. Therefore, there is a rather urgent need to address that issue. Nevertheless, I welcome the change in mood and position from the Secretary of State and the Minister over the past couple of months. It has been a very welcome conversion on the road to Damascus. I also welcome the detail that the Minister has spelt out in terms of the steps that will now be taken. I suppose I have a remaining concern that, although the Minister described them as four strands, there very much is a need to pull those four strands together and to pull them into an ultimate set of recommendations. I am taking him on slight trust that that certainly is the intention of the Secretary of State and that we will end up with one set of recommendations regardless of the four pieces of work that are taking place. I very much welcome the commitments that the Minister is now able to give.

When a Bill is over, there is a tendency sometimes in this House for it to be out of sight and out of mind but in this case we will pursue the Government as regards the work that is taking place over the coming months and try to hold them to account for the commitments that they have given. In the spirit of co-operation and working on the basis of trust, I take the Minister’s good word on this matter. Therefore, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Amendment 4 not moved.

Amendment 5

Moved by Viscount Astor

5: After Clause 1, insert the following new Clause—

“Power to extend the horserace betting levy to overseas bookmakers

(1) The Secretary of State may by regulations amend any provision or provisions of the Betting, Gaming and Lotteries Act 1963 (at a time when the provisions listed in section 15(1)(a) to (c) of the Horserace Betting and Olympic Lottery Act 2004 (horserace betting levy system) have not been entirely repealed by order under that section), the Gambling Act 2005 and/or the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159 for the purposes of ensuring that each person who holds an operating licence under the Gambling Act 2005 which authorises that person to provide facilities for betting shall be—

(a) liable to pay the bookmakers’ levy payable under section 27 of the Betting, Gaming and Lotteries Act 1963; and

(b) subject to the provisions of section 120 of the Gambling Act 2005 (as modified in accordance with the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159) if that person is in default of such bookmakers’ levy.

(2) Regulations under this section must be made by statutory instrument.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

Photo of Viscount Astor Viscount Astor Conservative

My Lords, I should start by thanking my noble friend Lord Clement-Jones, and the noble Viscount, Lord Falkland, for moving this amendment in Committee. I also thank the noble

Lord, Lord Collins of Highbury, for his support for the amendment. I should apologise for missing Committee but after joining the Prime Minister on his trip to China in December, I was called back to Beijing in January and so missed that stage.

My amendment produced an informed and generally supportive debate. The Minister concentrated his response by saying that now was not the right time to replace the levy and that a reform was needed to be considered across the whole system. I absolutely agree but my amendment does not seek to reform the levy. I agree that there should be a major reform that takes in all aspects of the issues that surround racing, whether it is on-course betting, off-course betting, offshore or onshore betting, betting exchanges, media rights or issues of state aid.

My amendment is simple. It allows the Secretary of State to bring in legislation to encompass offshore bookmakers who do not presently pay the levy. Racing is losing about £10 million a year that it is entitled to. That word “entitled” raises the question of why. There is a simple analogy. If the Government are going to regulate those based overseas on areas such as problem gambling and integrity on bets on UK sports, that shows that there is already that reach and the entitlement. My amendment does not force the Government to do anything but if they want to support racing they could use it. It does not cost any money and, in fact, it would provide an addition to the Treasury coffers. The reason it is important for racing is that we know that there is no time to legislate this Session. Therefore, the earliest time will probably be half way through the next Session of Parliament, by which time racing will have lost out on nearly £100 million of income.

I read carefully the Minister’s response in Grand Committee. He said that my amendment was too narrow in its scope. That may be so, so I look forward to the Government widening and improving it. The Minister said that the levy is regarded as state aid by the EU. I think we all agree with that. However, my amendment does not change anything. It just allows the levy to be collected as it used to be from all bookmakers. It is not necessarily a substantive change to the existing system as some have claimed. If permission is required from the European Parliament, the Government can ask for clarity before they proceed. After all, that is what the French did and it worked. If accepted, the amendment would allow the Government to continue their discussions with the European Commission.

My amendment supports the racing industry. Following the very useful discussions I have had with the Minister of Sport, Helen Grant, I understand that my noble friend might be able to reconsider his earlier response. I look forward to his reply. My amendment would put bookmakers based in the UK on an equal footing with those based abroad. It would allow the Government, if they wish, to remove the unfair competition that those based abroad currently enjoy and which benefits racing. I beg to move.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

My Lords, I rise briefly to support the principle of my noble friend’s amendment. It would be especially suitable for the Minister to take heed of it as it is the Chinese year of the horse. My noble friend spent some time in Beijing, so clearly he was inspired by the horse to put forward the amendment.

The question is whether we are going to miss the boat. The opportunity has been taken to hang off the architecture of the Bill a number of amendments that do not necessarily relate to remote gambling. It is incumbent on the Minister, if he is going to avoid further and perhaps unwanted amendments, to reassure those of us who see a boat going by without the opportunity to make desirable amendments, because we know that there will not be another gambling Bill for another five years or so. This is one of the issues that we face. I hope that the Minister will be able to give us an assurance on the ability of the Government—or any Government—to institute a new, improved form of levy that safeguards the future of the industry, without it being incorporated in the Bill. Otherwise, it will make reserved powers very attractive as a mechanism for introducing a future form of levy. That is a dilemma.

This evening, the Minister very adroitly proceeded by way of voluntary agreements and assurances in a number of areas, or by actions that do not require primary legislation. I hope that this will be another such instance. However, it is a subject of considerable anxiety in the racing industry and I very much hope that the Minister will be able to satisfy all those who want to see some action going forward in this case.

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (International Development) 8:15 pm, 4th March 2014

My Lords, I am very pleased to associate myself with this amendment. I hope that my new alliance with the noble Viscount will produce positive results tonight. Perhaps it is a sign of things to come and we can co-operate on other issues.

What the noble Lord said reminded me that, in the Chinese zodiac, I am in fact a horse. However, that does not mean that I support the amendment simply from a vested interest point of view. Many people have placed a bet on a horserace at one time or another, but I suspect that few realise that racing is the second largest sporting employer, supporting a predominantly rural industry that makes a significant contribution to the UK economy.

As we have heard, the purpose of the amendment is to capture the revenue that should be paid, as Parliament has already determined, from all betting operators that take online and telephone bets on racing in Britain, wherever they are located. I pay tribute to my honourable friend Clive Efford in the other place, who has consistently raised this issue. The change, as we have heard, could be worth up to £20 million a year to British horseracing, and would undoubtedly lead to a healthier sport, and to more investment, growth and jobs.

Too often, people focus just on the prize money and do not see the work of the board and the training, education and employment initiatives that the levy supports, year in and year out. Nor do they see the broader picture of how the industry has a direct link to building sustainable rural economies. Why should offshore betting operators and those in betting shops pay the full levy while others who are based overseas and do not have a voluntary agreement pay nothing?

In Committee, we heard the argument that any reform of the levy to capture revenues under a point of consumption licensing regime would constitute state aid. As the noble Viscount pointed out, that interpretation is not accepted by the British horseracing industry—and nor, following the ruling of the European Commission, is it one that we need to accept. The French raised the issue and we have had a decision on it.

This sets a precedent that I understand is being reviewed by the department’s lawyers. Clearly it is better that we should rely on new legislation rather than just have another round of disputes following messy court cases. I agree with the comment that in the long term, the Government may want to consider a more modern and commercial framework for the levy. That is something that I know the industry would support. However, with the best will in the world, the sport will be waiting several more years for that, all the while losing out on a vital source of income. Action has long been required and Ministers must not simply allow this once-in-a-Parliament opportunity for primary legislation to pass.

Clearly, there is a strong argument for further consultation and assessment of the implications of the European Commission’s warning on state aid. However, I would ask the Minister to begin consultation on levy reform as soon as possible and to include all options, particularly the option for a “horseracing right”. As the noble Viscount said, the amendment is about the reserve power to allow that to happen, giving the Government the opportunity to consult the Commission and, if that route of action is considered the right one, the power to act. I look forward to hearing the Minister’s response.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble Lords Spokesperson (Department for Culture, Media and Sport), Lord in Waiting (HM Household) (Whip)

My Lords, my noble friend’s amendment seeks to give the Secretary of State reserved power to extend liability to pay the horserace betting levy to offshore remote gambling operators. We have had some useful discussions about the future of the levy at all stages of the Bill, including some particularly interesting ones in Committee. They have been extremely valuable and I want to reassure your Lordships that the Government have been listening. I am grateful to all noble Lords for the constructive discussions we have had.

We agree with the view that while we still have a statutory levy, it should be fairly applied. Furthermore, we are persuaded that including a clause about extending the levy to offshore remote operators is fully in keeping with the context and purpose of the Bill. We will therefore bring forward a government amendment at Third Reading which will remedy your Lordships’ concerns about ensuring a level playing field between onshore and offshore betting operators in terms of the levy. With the consent of the House, this amendment will give the Secretary of State power to use secondary legislation to secure extension of the levy to offshore remote operators. I shall ensure that all noble Lords who have expressed an interest in this matter during the Bill’s passage are invited to a briefing on the detail of the amendment before Third Reading. Bringing forward a government amendment will complement the work which, as I mentioned to your Lordships, is already under way to seek clarity on the state aid issues from the European Commission. The Government will consult on implementing an extension before any secondary legislation is brought before Parliament.

The Government want British racing to continue to thrive. I know from my own experience just how important racing is to so many in the countryside and of course in all communities—not only its economic impact but the pleasure it gives to so many millions of people. Extending the levy to offshore remote operators will help achieve the objective we all share. I want to say particularly to the noble Lord, Lord Collins of Highbury, that bringing forward a government amendment about extending the levy in the way that I have described does not of course close down options for wider levy reform or replacement. This is very much work in progress.

The Government have committed to bringing forward an amendment at Third Reading which will achieve the outcomes being sought tonight. Consequently, I ask my noble friend whether he will withdraw his amendment.

Photo of Viscount Astor Viscount Astor Conservative

My Lords, I am particularly grateful to my noble friend for his response and I thank him for all the help that he has given me. I also thank the officials in his department for all the help that they have given on this issue. It has been extremely useful and we have come to a very satisfactory conclusion.

I think that all noble Lords agree that we want a commercial relationship between all the entities that comprise the racing industry. However, we need the Government to take a lead. If they do not, I am afraid that the industry will not come up with a solution itself, as there are too many vested commercial interests at play. I hope that the Government will consider setting up a consultation process with all involved in the racing industry to consider how best to put this new commercial relationship in place to replace the levy at a point in the future.

I should have declared an interest in that I own one and a third legs of a three year-old. I have to say that, on its current form running as a two year-old, I do not think it will be contributing to the levy or indeed benefiting from it. However, I am ever hopeful, and if your Lordships are interested in contributing to the levy, it is called Squaw King—it is trained by Eve Johnson Houghton and I very much hope it will run in May. In the mean time, I thank all those who spoke in this debate, particularly my noble friend and the noble Lord opposite. I thank the Minister and beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6

Moved by Lord Clement-Jones

6: After Clause 1, insert the following new Clause—

“Facilities for remote gambling

(1) Section 235 of the Gambling Act 2005 (gaming machine) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (h)(ii), leave out “and”, and

(b) in paragraph (i)(iii), at the end insert “, and

“(j) a machine is not a gaming machine by reason only of the fact that it is remote gambling equipment (within the meaning of section 36) which is made available for use in a casino”.

(3) After subsection (2) insert—

“(2A) The Secretary of State may make regulations providing for the nature of, and circumstances in which, remote gambling equipment to which subsection (2)(j) applies (a “casino remote terminal”) may be made available for use in a casino.

(2B) Regulations under subsection (2A) may, in particular, provide for—

(a) a casino remote terminal to be constructed or adapted so as to—

(i) only permit users to gain access to remote gambling facilities; and

(ii) not be capable of accepting or processing any form of payment; (other than any payment made by the user via an online account to the provider of the remote gambling facilities),

(b) the maximum number of casino remote terminals which may be made available in a casino,

(c) the location within a casino where, and circumstances under which, a casino remote terminal may be used,

(d) any other matter.””

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

My Lords, as I pointed out in Grand Committee, during pre-legislative scrutiny of the Bill, the Culture, Media and Sport Select Committee made a cross-party recommendation to the Government to amend the Bill to allow British bricks-and-mortar casinos to offer their online gaming products within their own premises.

Currently a regulatory anomaly means that people can play on remote internet sites using their own mobile phones, tablets or laptops, whether in their homes, on the move or in any public or private place, including inside a casino. However, while under existing regulations onshore casino operators can and do hold remote licences which permit them to advertise their online products in their casinos, these licences do not allow operators to indicate that the product is available from any internet-linked computer within their casinos or advertise their online sites on or around an actual computer with internet access supplied by the operator. In other words, it is currently illegal for a casino to offer a customer access to their own legitimate online business if the customer is inside their bricks-and-mortar business.

It seems commercially illogical that the most rigorously controlled premises, intended by statute to be at the top of the regulatory pyramid, are not permitted the most up-to-date technological products. This amendment would simply provide a synergy between the casino’s online and land-based products, already recognisable to casino customers, in a similar way to land-based bricks-and-mortar retailers, such as John Lewis, which offers its products in store and via an online facility inside its land-based stores.

More importantly, it is also a missed opportunity to undertake research and player protection in that the product itself will not be available in terrestrial casinos, which are required by law to have the most rigorous control measures. All casino gaming staff are licensed by the Gambling Commission; all staff, including all food and drink and administrative personnel, are trained annually in responsible gambling practices; and effective policies are in place to protect the young and vulnerable. UK terrestrial casinos already provide their customers with laptops, iPads and computers, which are available in their business-style lounges, and the products that could be offered through this amendment are not slot machines.

The Government’s intention appears to be to continue to categorise internet terminals supplied by operators in casinos as gaming machines—probably category A machines—while allowing the use of precisely the same devices owned by customers in those casinos without restriction. The idea that consumers accessing their own accounts on a gambling website should have the content controlled simply because it is in a different area of the same building and on something called a category A gaming machine provided by the operator rather than on their own internet access device adds nothing to player protection and is confusing for the consumer.

In Grand Committee the Minister raised a number of concerns, notably around the perceived lack of controls over how remote terminals might develop. This new amendment seeks to respond to all those concerns. It defines the exact nature of a remote gaming device and addresses the concerns raised by the Minister by placing the responsibility for all associated decisions solely with the Secretary of State. It provides the Secretary of State with the power to stipulate not only the maximum number of remote terminals within a casino but the location where and the circumstances in which a remote terminal may be used, as well as a remote terminal’s specific use and appearance and the fact that these machines would not be capable of accepting or processing any form of payment. To go one step further, the revised amendments would even enable the Secretary of State to provide for any other matter. I really believe that this new amendment would provide DCMS with all the safeguards it requires.

These proposals can realistically be achieved only through primary legislation. I noted what the Minister said in his letter and understand that he still says that the changes the industry desires to allow remote devices in casinos can be achieved by the secondary legislation route. However, that is very much not the preferred route of the industry. As I said, it leads to all the complications of designating these machines as category A. I believe that that position has been repeated to the National Casino Forum by officials and the department’s lawyers, but without any detail given about how secondary legislation could be effective. There are considerable uncertainties about this route. Surely trying to do this via just secondary legislation would add an unnecessary layer of complexity and uncertainty, whereas this amendment would give clear definition to the changes.

I very much hope that my noble friend will agree that this amendment offers and provides all the necessary safeguards, including going further with the provision for the Secretary of State to regulate on any other matter. In conversation, the Minister used the phrase “unforeseen consequences”. However, as an enabling piece of legislation that does not necessarily need to be brought into effect, it is simply there for use if it is decided that that is the way forward. That would seem to cater for all unforeseen circumstances. In many items of government legislation—I think of the Digital Economy Act as merely one—quite often sections are not brought into effect where the Government, on mature reflection, believe it is right to not do so. I very much hope that the Government will accept this amendment on the basis that it is perfectly possible to have a clause in the Bill and then maturely reflect on whether it is the right way of dealing with an issue. I believe that it is. Eventually, if the Government incorporated it, it would be a sensible addition to the remote gambling provisions. I beg to move.

Photo of Viscount Astor Viscount Astor Conservative 8:30 pm, 4th March 2014

My Lords, my name is attached to this amendment as I fully understand the arguments made by the casinos sector. It is in what one might call an unfair position at the moment. I understand that my noble friend the Minister is not unsympathetic to those arguments.

As I understand it, the difficulty is that the department, while having what one might call fruitful discussions on the issue, believes that the solution can be progressed safely and satisfactorily through secondary legislation. Of course, it would be helpful if the outline of that secondary legislation could be agreed before we get to Third Reading but I accept that this is a complicated area—the more so as one looks at it and realises what can be accessed online, whether with one’s own machine or one provided by a casino. I understand that the Government want to get this right.

I presume that my noble friend the Minister will want to come back again and say that secondary legislation is the right way to proceed with this issue. I will accept his assurance provided that he can give one bit of comfort to us: that, once this Bill has completed its passage through the House, the issue will not be kicked into the long grass and forgotten but will still be dealt with. It should be looked at carefully and as speedily as possible. I am sure that it will be, so that we can have a solution that is satisfactory to all those concerned.

Photo of Lord Mancroft Lord Mancroft Conservative

My Lords, I, too, put my name to the amendment in Grand Committee. Amazing though it may sound to your Lordships, the Prime Minister manages to travel the world without my company so, unlike my noble friend Lord Astor, I cannot claim that I was in China. I cannot actually remember where I was, but it was not in China.

There is no need to explain the background: my noble friend Lord Clement-Jones has done that adequately. Reading the Hansard of Committee stage to prepare for this evening, I noticed that my noble friend Lord Flight—who, sadly, is not in his place this evening—described the anomaly that my noble friend Lord Clement-Jones talked about and which the amendment is intended to address as a silly anomaly. Nonsense, he called it. He said that the amendment in its previous incarnation was straightforward and common sense. That was quite right. He also described the Government’s position at the time as pretty silly, and he was quite right about that too.

In Committee, the Minister talked about basing remote gaming around existing machine rules—I think I have quoted him correctly on that. It was that which really drew my attention to this, because I have history on legislation in gambling regulation. That is the sort of thing that leads to ineffective and bad regulation. That is exactly what the previous Government tried to do when a new class of gaming machine came out. That is the problem that we now have with what are called fixed-odds betting terminals, which are not betting terminals at all: they are gaming machines. It is really important when new machines and new forms of gambling appear that we regulate them correctly and do not try to fit them into boxes that are not really there. That is what I would call the DCMS’s attempt at the King Canute style of regulation, holding back the waves of new technology. That is what we did before and we must be very careful not to do it again in this case. My noble friend Lord Clement-Jones’s amendment is an attempt to address that.

In truth, I think that the Government have now accepted the principle of what my noble friend’s amendment is intended to do; I hope that they have. The debate before us this evening is really about whether it is better to put it in primary or secondary legislation. I know that, originally, the Government’s view was that this was not the right legislative vehicle. I have heard that before so many times. I am not quite sure what the right legislative vehicle is, but I am absolutely certain that the general public do not care; they just want it done. As my noble friend Lord Astor said, the right legislative vehicle—any legislative vehicle—does not come along very often, so when one comes along, you want to grab it.

If the amendment is to be withdrawn and the Government are to move forward in a different direction, the Minister should give your Lordships a commitment on a timetable, so that this does not just drag on and on, as issues have before. The problem with secondary legislation is that it is impossible to amend. If that is the route that the Government are determined to go down, my understanding is that the industry is not happy with it and would much prefer primary legislation but, obviously, like any industry, it will take what it can get. It seems to the industry, and it certainly seems to me, that primary legislation is the right vehicle for this. Unless the Minister can give us a very good reason why it is not, that is what we should do. There is quite enough flexibility in the provision. I think that your Lordships deserve the Government’s commitment to a timetable and to flexibility for the industry to make sure that we get this right. Unless we have those commitments, I see no reason not to take the view of my noble friend Lord Clement-Jones and pass the amendment. I look forward to hearing the Minister’s response.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble Lords Spokesperson (Department for Culture, Media and Sport), Lord in Waiting (HM Household) (Whip)

My Lords, first, I thank my noble friend for his amendment and all my noble friends who have spoken to it. It is intended to allow the casino sector to introduce its specific remote gambling product into casino premises. As I said in Grand Committee, the Government are not opposed in principle to that, provided that appropriate player protections are put in place. We remain concerned that any changes should be effected within existing machine regulations so that appropriate controls can be put in place, rather than outside them in primary legislation, which this amendment would cause.

I have looked into this issue carefully and particularly because, on the face of it, this seems like a simple change to current arrangements by allowing casinos merely to promote their own online games within their premises. On further reflection and in reality, however, this is a more complex change that would introduce credit card play into the casino environment for the first time and permit far broader sports betting. It could also allow casinos to develop even more sophisticated remote gaming machines without the proper controls afforded by machine regulations.

Casinos are already able to offer remote gaming devices in their premises within existing machine controls. Those regulations create a carefully crafted hierarchy to ensure that machine-based play can be offered only with appropriate player protections in place. Player protections are a key part of this; they include restrictions on the number of machines, their location and the circumstances under which they can be used. I acknowledge that my noble friend Lord Clement-Jones is absolutely right to say that casinos are at the top of the regulatory pyramid. However, I also hope that noble Lords will agree that it is incumbent on the Government—indeed, that the Government have a responsibility—to consider carefully the impact of any new gambling arrangements, to ensure the avoidance of unintended consequences and an increase in problem gambling. My noble friend Lord Mancroft mentioned the way in which developments can take us and given the pace with which gaming technology develops, this is not merely a theoretical risk.

The casino industry recognises that any changes need to be made subject to appropriate player protections. We welcome this, as it reflects the very constructive dialogue that officials have had with the industry to date on this issue. This is also acknowledged in my noble friends’ amendment, which gives the Secretary of State power to make regulations for the nature and circumstances in which remote gaming machines can be used in casinos. This brings us much closer to the current regulatory structure and, in our view, it is difficult to see the need for primary legislation. Indeed, there would be a real risk of introducing regulatory anomalies in the existing primary legislation route.

For these reasons, the Government do not think that taking remote devices outside existing regulation is the right route to tackling this issue. The Government consider that this issue is best progressed instead through the ongoing and very constructive discussions with industry, and that any changes implemented can be done through secondary legislation. I emphasise that the Government are actively engaged in constructive discussion with the casino industry and the Gambling Commission to consider the appropriate legislative and regulatory tools that would need to be put in place. I understand entirely that the industry would like to have primary legislation as its first objective but it has acknowledged that secondary legislation is a viable option to pursue these proposals.

My noble friends Lord Astor, Lord Mancroft and Lord Clement-Jones quite rightly asked for some assurances. The discussions are scheduled to conclude at the end of this month and Ministers will then consider the outcomes. This is very much a live discussion and I give those reassurances to my noble friends. I also emphasise to your Lordships that the Government are not ruling out change but that we think we need to approach this in the right manner and ensure that such changes are made through an existing regulatory framework that applies to gaming machines while bringing proper scrutiny, assessment, consultation and—this is paramount—consumer protections. It is for these reasons and because I think that there is another route for this that, while I understand what my noble friend would prefer, I ask him whether he might withdraw this amendment.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat 8:45 pm, 4th March 2014

My Lords, I thank the Minister for that response, albeit that it was somewhat disappointing in the circumstances. It was somewhat circular, in that he said that we must have appropriate player protection and the appropriate protection is that provided by secondary legislation, so we go around the loop that says that secondary legislation must be the way forward. Yet the Minister almost admitted himself that the amendment reflects a lot—in fact, most if not all—of what could be reflected in secondary legislation.

The Minister described the discussions taking place with the industry as ongoing and constructive, but to date the industry itself has found them to be ongoing but frustrating because of the insistence on bringing the whole issue within secondary legislation and categorising these terminals as machines subject to all the existing secondary legislation, rather than finding a new and more flexible way of dealing with them. However, it is not incumbent on me to keep bashing my head against a brick wall. I very much hope that the Minister’s discussions will be rather more fruitful than they have been to date. From the timescale, I fear that we will have had Third Reading in this House by the time that his discussions come to a conclusion.

The Minister said that it is incumbent on the Government to consider the consequences of any new arrangements and that there are complexities surrounding these issues. I must be very simple-minded because I cannot see that the matters are quite so complex. I feel that the Minister is busy building the barricades as we speak. In fact, the barricades seem to be much higher on Report than they were in Committee; I was rather more impressed by his reply then than I have been on Report. I live in hope, though, and, in the mean time, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendment 7

Moved by Lord Browne of Belmont

7: After Clause 1, insert the following new Clause—

“Remote operating licence

(1) Section 89 of the Gambling Act 2005 (remote operating licence) is amended as follows.

(2) After subsection (1) insert—

“(1A) The Commission shall hold a list of persons who have registered to be excluded from access to remote gambling websites.

(1B) It shall be a condition of a remote operating licence that an operator must exclude any person access who has registered for self-exclusion with the Commission under subsection (1A).””

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP

My Lords, the Government have been very clear that this Bill is about consumer protection. As others have noted, this was made very clear by the Minister, Helen Grant MP, in another place when she said that the new licensing proposals address,

“the fundamental purpose of the Bill, which is to enhance consumer protection by ensuring that all operators offering remote gambling in Britain are regulated by the Gambling Commission, whether they are based in Britain or overseas”.—[ Official Report , Commons, Gambling (Licensing and Advertising) Bill Committee, 19/11/13; col. 75.]

As has also been pointed out, though, that statement makes sense only if the new requirement for all online gambling providers based beyond the UK to obtain a UK gambling commission licence is backed by a parallel provision preventing those that do not have a licence from accessing the UK market.

In that context, the main effect of the Bill, far from enhancing consumer protection, is actually to place it under greater pressure by dramatically widening the scope for online gambling advertising in the UK. Rather than enhancing consumer protection, the Bill’s principal implication will consequently be to make the British people more aware of gambling opportunities, and not just any such opportunities but opportunities associated with a far higher problem gambling prevalence figure than gambling generally. While the basic 2010 problem prevalence figure was 0.9% for online, it was over 9% on an annual basis and over 17% on a monthly basis.

Mindful of that, I find the intervention of the Secretary of State over the weekend rather odd. She has said that she wants to clamp down on gambling advertising, yet her department is at the same time introducing dramatic online gambling licensing liberalisation. I am genuinely at a loss to know how these two commitments fit together. Estimates differ, but it is widely recognised that the UK embraces about 450,000 problem gamblers. That may not seem very many as a proportion of the total population, but it is a very significant number of people in absolute terms. We rightly devote very considerable care and attention to other social challenges that affect similar numbers of people, yet we do not seem to accord problem gambling the same level of concern or attention.

Problem gambling is a very debilitating condition that takes over people’s lives and destroys them. Last week, I was privileged to hold a briefing on this amendment in the Palace of Westminster that was addressed by two recovering problem gamblers who bravely shared their stories. Justyn, aged 45, and Dino, aged 36, developed gambling problems relatively recently, within the past four years or so. Of particular interest for the purposes of the Bill, which liberalises online gambling advertising, is that they both began online gambling in response to adverts they had seen promoting free bets. In one case, the advertising was at a sporting event; in the other, it was on a bus. The destructive impact of problem gambling on both was remarkably similar. They got into difficulty relatively quickly and ended up losing their jobs and families and became hugely involved in debt.

They both said that one of the problems with online gambling is the fact that it is available 24/7 with no natural barriers, such as those pertaining to a betting shop. You do not have to leave the house to gamble, and there is no closing time. They also highlighted that it is an enormously solitary experience without any kind of accountability to fellow humans. One of them even ended up selling his son’s christening presents to raise funds to feed his habit. It is a matter of great concern to me that this Bill, which is supposed to be about consumer protection, not only proposes making life much more difficult for problem gamblers, such as Justin and Dino, but completely fails to take any balancing or compensating steps to help them.

In this regard, the failure to do so is further compounded by the fact that online gamblers are already seriously disadvantaged in terms of the support available to them when compared with terrestrial gamblers. One of the key mechanisms for helping problem gamblers is self-exclusion. Problem gamblers, like other addicts, experience days when they are stronger and days when they are weaker. On a stronger day, a problem gambler can get around the five betting shops in his town and self-exclude for a fixed period—say, six months—and thereby cut himself off from local gambling opportunities for the period in question, during which time he can seek help and try to put his life back together again. Crucially, however, the same provision does not have the same effect for online problem gamblers. On a strong day, the online problem gambler can self-exclude from five online gambling providers, but he cannot cut himself off from all locally available online gambling opportunities because there will still be hundreds, if not thousands, of online gambling providers that remain equally accessible from his bedroom.

Not only do online problem gamblers have to exclude themselves far more times to cut themselves off from locally available gambling opportunities, they would have to self-exclude to an extent that is physically impossible. Mindful of the fact that self-excluding once is a difficult step for a problem gambler to take, the idea of doing it hundreds, if not thousands of times, simply is not credible.

Given this problem, it is my firm belief that we should provide online problem gamblers with the credible form of self-exclusion promoted by my amendment. Amendment 7 proposes that instead of trying to self-exclude from multiple online gambling websites, online problem gamblers should have the option of self-excluding just once to the Gambling Commission. The Gambling Commission would then relay the self-exclusion to all online providers with Gambling Commission licences and all such providers would be required to honour the terms of the self-exclusion as a condition of their licence.

The need for a one-stop shop online self-exclusion mechanism was demonstrated clearly through the testimony of the online problem gamblers who came to Parliament last week. Justyn Larcombe said that had a one-stop shop self-exclusion mechanism been in place in 2012 it could have saved his marriage. Justyn, with the support of his wife, made the difficult decision to self-exclude from the online gambling site he had been using. The reality of his self-exclusion provided both Justyn and his wife with a real sense of security. It was, however, only a matter of time before he saw adverts for other online gambling websites and, three months on, he had been fully set back into using alternative sites. When his long-suffering wife found out, that was it; she left him.

Dino Panayi, meanwhile, explained how he had managed to self-exclude from 25 websites but, in words that all too eloquently sum up the problem, he said:

“The problem is, there is always another website”.

Again, he was adamant that a one-stop shop self-exclusion mechanism would make a real and practical difference to their lives. Of course, neither was suggesting that the one-stop shop was a magic wand that would liberate them from their problem, but they were both very clear that it was one relatively simple step that could be taken and would make a clear, positive impact on their lives. They could not understand why the Government had not already intervened to introduce a one-stop shop, and were shocked that the Government had whipped against an amendment proposing this change in the Commons.

I find it extraordinary that the Government should introduce what is, in effect, our first Bill specially on online gambling without seizing the opportunity it presents for dealing with the long-term disadvantaging of online problem gamblers. I find it even more extraordinary that the Government should instead use the Bill to make life much more difficult than is already the case for online problem gamblers in the United Kingdom by introducing far-reaching online gambling liberalisation, so that any provider anywhere in the world can now advertise so long as they get a Gambling Commission licence.

Amendment 7 presents your Lordships’ House with the opportunity of ensuring that this, the very first piece of legislation specifically on online gambling, seizes the opportunity to address the historic disadvantage of online problem gamblers. Amendment 7 also provides a means of balancing the online gambling advertising provision in the Bill, which will make life much more difficult for online gamblers, with a provision that would at least provide some assistance. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Liberal Democrat

My Lords, I support the amendment. Gambling is an extraordinary business, and it is never more so than when otherwise sensible, able people become addicted to it. I was present at the meeting kindly organised by the noble Lord, Lord Browne, and I was very moved by the testimony of the two men there who had fallen prey to this addiction. One was a Regular Army officer who was thereafter a senior figure and shareholder in a City business; the other was an engineer who had been a broadcast disc jockey. Listening to those two men—who were being extraordinarily brave, forthright and frank—drove home to me the sheer loneliness and social isolation that goes with the addiction to gambling and what an awful business it is.

I then read Section 1 of the Gambling Act 2005, which is substantially amended by the Bill. This section —in Part 1 of the Act, which is headed “Interpretation of Key Concepts”—under “Principal concepts”, says:

“In this Act a reference to the licensing objectives is a reference to the objectives of”— the third of which is:

“protecting children and other vulnerable persons from being harmed or exploited by gambling”.

The people we are talking about in this amendment are “other vulnerable persons”, and they are harmed and exploited by gambling and exploited by the companies that run these betting opportunities. They are ruthless in the way that they advertise. They go straight for the jugular. They care not what happens as long as their betting odds come piling in.

I do not see what objection there can be against a one-stop shop as described by those two gamblers. It is an opportunity, by a single voluntary act of self-exclusion, to be safe from all the gambling outlets. That, of course, overcame the reservation that I first felt about this amendment and which others may feel about it—namely that it tinkers with the freedom of the subject. It does no such thing because the subject—the addict—has to self-exclude. Nobody is forcing it on the addict. Surely we must help the addict self-exclude where they want to do so, and not leave a vast vista of opportunities unchecked for the reasons so well explained by the noble Lord, Lord Browne.

I hope the Government will accept this amendment, because to leave it for further consideration, deliberation or consultation is not good enough. The incidence of addiction gambling is growing. Its consequences do not just affect the addicts but, of course, directly affect their families and their creditors. I therefore hope very much that the Government will listen.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench 9:00 pm, 4th March 2014

My Lords, I also support the amendment in the name of the noble Lord, Lord Browne. He put the case so clearly, as did the noble Lord, Lord Phillips, that I find it very difficult to think of any further reasons at all for not accepting it. He and the noble Lord, Lord Phillips, were present at that gathering where we heard, as has been said, these incredible addicts talk extremely frankly about their own addiction and what situations it had caused for them and their families and about the total horror of all that. I therefore hope the Government will realise that there is a role for what is proposed in the amendment and take on board just how important it is to make certain that it is included in the Bill.

Photo of The Bishop of Chester The Bishop of Chester Bishop

My Lords, I associate myself very closely with the speech of the noble Lord, Lord Browne, and that of the noble Lord, Lord Phillips, so I will not repeat the points they made. Noble Lords will realise that it is quite rare for Members from this Bench to quote the scriptures. For understandable reasons we are a bit coy about doing that. However, I cannot avoid going to a verse from the First Epistle to Timothy, which says that,

“the love of money is the root of all evil”.

There is great truth in that. The lure and attraction of wealth so often lies behind the person who turns gambling from an innocent pastime into an obsession, an addiction or whatever. A responsible society has to do what it can to protect people against these false gods and false goals. When you get into the digital world, you simply raise the stakes, to use a gambling analogy. If I am a problem gambler and I have to walk down to the betting shop in Chester, there is a natural restraint—there may be only two or three people there and they will wonder what I am doing when I walk through the door. But if those restraints are taken away, you have to be cognisant of the potential dangers.

I often think that we are now, in the digital age, in a digital version of the wild west, where there was all the excitement and discovery and all the positive aspects in America when it opened up, but the reality of law and order had to come in later. We must provide proper protection to people in the online world.

I shall briefly refer to a completely different area that concerns me very greatly—the way in which the internet is used in relation to pornography. The noble Baroness, Lady Howe, has talked about this on previous occasions. I have had a particular problem with two or three clergy in my diocese who have innocently thought that accessing child pornography on the internet was somehow not as serious as interfering directly with an actual human being. Of course, the law quite properly says that accessing child pornography on the internet is to be complicit in the actual original abuse. People have that sort of innocent view of the internet so often. The more checks and balances that we can introduce, the better.

If the net effect of this Bill is that the advertising of online gambling is much more in our face and much more prevalent, it behoves us to put in place what protections we can. I warmly support the amendment.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport)

My Lords, I thank the noble Lord, Lord Browne, for introducing the amendment. We are also signed up to it. The noble Lord spoke at length about the issues that he wanted to raise, building on the meeting that he kindly organised, at which I was also present. I endorse what has been said by other noble Lords who were there, including the noble Lord, Lord Phillips.

The interesting thing about gambling, to me, coming to it relatively unskilled in this area, is that it is one of those areas about which we make a set of assumptions when we approach it, then we discover as we get closer to it that they do not stand up. For example, one thinks of addiction very much in terms of what substance people are taking that has a chemical effect on their body which makes them addicted. But with gambling, all the signs, evidence and research suggest that we are dealing with addictive activity, but there is no physical substance. Of course, it may well be, as the right reverend Prelate was saying, that something about the internet has a way of interacting with our neurons and has an effect that we do not yet fully understand. There is absolutely no doubt, from the reading that I have done for these debates, and from the evidence that we heard at that powerful meeting, that we are talking about something really rather serious and deep-seated worries should flow from that. It is not that the problem is extremely widespread—it is not—but the numbers are still significant. If we are talking about 450,000 people in our society, of course, we as a responsible society should take action to try to help them.

The situation, as I understand it, is that the regulatory position is very clear. There has to be a process for self-exclusion, because it is recognised that it is a helpful way to do it. It may not be the only way to get people away from gambling and it may not be sufficient on its own, but at least—as long as the evidence is there that it is helpful—we must make sure that the regulatory framework supports it. It is obviously right that, for those who obtain a licence to operate in current systems, and in future systems envisaged by this Bill, we need to see the self-exclusion procedures in place. I do not think any of us would be against that, but I have a problem in understanding why it is sufficient for the Government to argue that simply having a voluntary scheme operated by those who perpetrate the harm is sufficient in this case. The evidence that we have—and the very moving testimony that we have heard from the noble Lord, Lord Browne—suggests that those affected by this, those who are addicted and those who are trying to help, say that simply having the mechanism available on a case-by-case basis, on every website that they go to, as it may be regulated in future, and therefore having available the ability to self-exclude, is not sufficient.

If it is not sufficient, what system can we put in place to make sure that it works? Again, the evidence shows that the detailed proposal of the noble Lord, Lord Browne, seems to work for those with whom we have been in touch. Therefore, it seems to me a bit perverse for the Government to continue to say that they do not think that any further action is required in this regard. But what are they saying? I hope that when the noble Baroness responds, she will try to tease out the wording in the letter that we received yesterday from the Minister, which states:

“But this issue is not standing still: the Gambling Commission has indicated that it will be reviewing the self-exclusion provisions as part of a wider exercise to strengthen player protection, with the aim of significant progress within six months towards the establishment of a national remote gambling exclusion scheme”.

That text is not in capitals; I capitalised it as I said it.

That seems to suggest that there is at least the option of having something that will meet the criterion emerging from this evening’s debate—namely, that there must be something that will work for those people who are addicted. It must be something that does not mean they are constantly coming across additional websites which are not part of the scheme. It should, if possible, work with areas that are not yet regulated, although I understand that will be difficult. Certainly, if it were possible to keep open the proposal of the noble Lord, Lord Browne, until such time as the review is completed, that would help us a lot in dealing with the issue behind this amendment.

We are not saying that that is the only way in which this issue can be tackled. However, given what we have heard today and at meetings, I am certainly persuaded that this is something which works. Therefore, if it does the trick, we should keep it in play until such time as all the evidence is available.

It is becoming a theme of our discussions today that we are offering the Minister the chance to get this right at the next pass. My noble friend Lady Jones was a bit nervous about the issue of the watershed and I have my concerns about this big and important matter. As a responsible society, we should take action in this regard. The noble Baroness will say, when she responds, that there is a review and will ask why we should anticipate it. I understand that, but I hope she will recognise that we will want to come back to this issue if satisfactory progress is not made. I support the amendment of the noble Lord, Lord Browne, and the very powerful speeches made tonight on this matter. I hope to hear some good news from the noble Baroness when she responds.

Photo of Baroness Jolly Baroness Jolly Baroness in Waiting (HM Household) (Whip)

I start by thanking the noble Lord, Lord Browne of Belmont, for his amendment, which seeks to create a centralised self-exclusion scheme. I seek to reassure him with regard to the Secretary of State’s letter and with regard to the noble Lord’s suggestion that gambling is being liberalised. The Government do not see this as a liberalising Bill. It ensures that all operators who currently advertise in Britain, and wish to do so in the future, are required to have a Gambling Commission licence. This is consistent with what the Secretary of State was saying.

Problem gambling is debilitating and I reassure noble Lords that the Government take this extremely seriously. I am in absolutely no doubt about the commitment of the noble Lord, Lord Browne, to this. Problem gambling is not only debilitating for the gambler himself or herself, but creates a heavy burden on their families and on society at large. I was not at the relevant presentation but I have heard that it was very powerful. Strategies to prevent and address problem gambling are key aspects of the social responsibility obligations set out in the Gambling Commission’s licence conditions and a priority within the Government’s approach to gambling more generally. Self-exclusion is a very important tool to assist those who are experiencing problem gambling or wish to exclude themselves to prevent it.

Under the Gambling Commission’s existing licence conditions, all licensed operators are required to have effective procedures in place to allow consumers to self-exclude. Therefore, once the Bill is enacted, all remote gambling operators licensed by the Gambling Commission will be required to offer self-exclusion to their customers.This marks a real step forward in increasing player protection for British consumers and will mean that future improvements in this area by the Gambling Commission will apply to all operators selling into the British market.

We fully agree with the spirit of what the amendment seeks to achieve but believe that it may be detrimental to achieving that goal by being too specific and embedding only one potential solution in primary legislation—that of a Gambling Commission central list. Over the next few months we will learn far more about how to achieve the end goal of allowing consumers to exclude across multiple remote sites, which may or may not include the Gambling Commission holding a central list itself.

Therefore, while there are practical and legal difficulties associated with the creation of a one-stop shop for self-exclusion, work is progressing in two ways to explore how these might be overcome and delivered appropriately. First, the Gambling Commission will be reviewing the self-exclusion provisions as part of a wider exercise to strengthen player protection, with the aim of making significant progress within six months towards the establishment of a national remote gambling exclusion scheme. This review will consider with the industry and other stakeholders how to solve the various practical and legal impediments, for example in relation to data protection and identity checking. Further, it will bring together learning from the remote and non-remote sectors to expand participation across types of operators and products where necessary.

Secondly, the Responsible Gambling Trust is reviewing the effectiveness of the current self-exclusion provisions. The Responsible Gambling Strategy Board, in its 2013-14 strategy, identified self-exclusion as requiring further research—in particular, on how effective it is and on what changes could improve its usefulness to those who wish to control their gambling. The Responsible Gambling Trust is expected to report in May 2014. This work will provide an analysis of the effectiveness of self-exclusion, its limitations and the challenges to creating enhanced systems. It will also review experiences in other jurisdictions. We welcome the Remote Gambling Association’s announcement this week on its willingness to do more in respect of making existing self-exclusion mechanisms as accessible and easy to use as possible, and making arrangements with GamCare and providers of treatment for problem gamblers to self-exclude at the same time as seeking treatment.

The Government are not sitting back. They are driving the agenda forward on self-exclusion more generally. For example, the Secretary of State made clear last weekend that the Government want a system to be developed within six months that allows customers to exclude themselves from betting shops on a national basis. Put simply, a customer need ask only once in their local betting shop, and their exclusion would apply to all shops in that chain and all other chains within the UK. We are therefore confident that all this work will result in real progress on allowing consumers to exclude across multiple online sites—which is what the noble Lord is looking for; the concept of a one-stop shop, as is it often described—and help deliver this important tool to assist problem gamblers to get control back into their lives.

I hope that I have persuaded noble Lords that it is better for us to await the outcome of this critical work to advance the best means of achieving a national remote self-exclusion scheme, rather than enshrine in primary legislation a potential solution that may not be the most effective approach. Of course, that option remains open, and if it is found to be the best route forward it will be pursued without the need for primary legislation. For those reasons, I ask the noble Lord to consider withdrawing his amendment.

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP 9:15 pm, 4th March 2014

My Lords, I am very grateful to everyone who has spoken in this debate and I have listened carefully to what the Minister has had to say. I very much welcome the fact that the Government have moved a long way on one-stop shop self-exclusion since the beginning of the passage of this Bill in another place—from clear opposition in the Commons to commending research in the Lords—and they now talk of making significant progress in the next six months towards creating a one-stop shop self-exclusion mechanism.

I have a number of questions for the Minister. First, can she clarify that it is the clear and deliberate intention of the Government to establish a national self-exclusion scheme for remote gamblers? Can she confirm that it will happen? Secondly, can she provide a little more detail on the timing? In the letter from the Minister, the noble Lord, Lord Gardiner, reference was made to making significant progress in the next six months but there was no reference to when the Government hope that the arrangement might be in place. Finally, can she confirm that the new arrangement will be statutory in the sense that it will be achieved under the Gambling Commission licensing conditions that are upheld by the 2005 Act?

Photo of Baroness Jolly Baroness Jolly Baroness in Waiting (HM Household) (Whip)

I am sorry. Would the noble Lord mind repeating his third question to me?

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP

Can the Minister confirm that the new arrangement will be statutory in the sense that it will be achieved under the Gambling Commission licensing conditions that are upheld by the 2005 Act?

Photo of Baroness Jolly Baroness Jolly Baroness in Waiting (HM Household) (Whip)

That was really fast work by those in the Box, for which I thank them. The report is due in May 2014. Having made a decision, we will then need to move as fast as is practically and technically possible, because this is not the sort of thing that we can just turn to in the morning and switch on. We need to decide what we are going to do. That is our intention, if it is practical and possible to do so, and it will form part of the licence conditions.

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP

I am very grateful for the Minster’s reply. Perhaps I may ask just one further question and I do not think that there will be a problem with this. Will the Minister undertake to meet me and online problem gamblers to listen to their stories and to allow their experience to feed through into the development of the one-stop shop?

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Liberal Democrat

Perhaps I may interject and ask the Minister for clarification arising out of the answer that she gave. I simply want to be sure that the scheme that she talked of will be comprehensive and compulsory.

Photo of Baroness Jolly Baroness Jolly Baroness in Waiting (HM Household) (Whip)

We need to make a decision when we have seen what the report says. There is no point in having something that is not comprehensive. I have explained that it is part of the Gambling Commission licence so it will therefore be compulsory.

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP

My Lords, on the basis of the Minister’s replies to my questions, I congratulate the Government on the significant steps that they have taken to date. Since the Bill entered the Commons, they have moved forward in relation to self-exclusion and I hope that we will be able to make more progress as time goes on. I beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Amendment 8

Moved by Baroness Heyhoe Flint

8: After Clause 4, insert the following new Clause—

“Cheating at gambling

Cheating at gambling: amendments to section 42 of the Gambling Act 2005

(1) In section 42 of the Gambling Act 2005, in paragraph (a) of subsection (4), for the words “two years” substitute “ten years”.

(2) In section 42 of the Gambling Act 2005, after subsection (3) insert—

“(3A) Without prejudice to the generality of subsection (1), cheating at gambling may, in particular, consist of—

(a) a person engaging in conduct that corrupts or would corrupt a betting outcome of an event or event contingency—

(i) knowing that, or being reckless as to whether, the conduct corrupts or would corrupt a betting outcome of the event or the event contingency, and

(ii) intending to obtain a financial advantage, or to cause a financial disadvantage, in connection with any betting on the event or the event contingency (whether or not a financial advantage was actually obtained or a financial disadvantage was actually caused),

(b) a person offering to engage in, or encouraging another person to engage in, conduct that corrupts or would corrupt a betting outcome of an event or event contingency—

(i) knowing that, or being reckless as to whether, the conduct corrupts or would corrupt a betting outcome of the event or event contingency, and

(ii) intending to obtain a financial advantage, or to cause a financial disadvantage, in connection with any betting on the event or the event contingency (whether or not a financial advantage was actually obtained or a financial disadvantage was actually caused),

(c) a person entering into an agreement or arrangement in respect of conduct that corrupts or would corrupt a betting outcome of an event or event contingency—

(i) knowing that, or being reckless as to whether, the conduct the subject of the agreement or arrangement corrupts or would corrupt a betting outcome of the event or event contingency, and

(ii) intending to obtain a financial advantage, or to cause a financial disadvantage, in connection with any betting on the event or the event contingency (whether or not a financial advantage was actually obtained or a financial disadvantage was actually caused),

(d) a person encouraging another person to conceal from a relevant authority conduct, or an agreement or arrangement in respect of conduct, that corrupts or would corrupt a betting outcome of an event or event contingency—

(i) knowing that, or being reckless as to whether, the conduct corrupts or would corrupt a betting outcome of the event or event contingency, and

(ii) intending to obtain a financial advantage, or cause a financial disadvantage, in connection with any betting on the event or event contingency (whether or not a financial advantage was actually obtained or a financial disadvantage was actually caused),

(e) a relevant person—in each case, where the relevant information possessed by that relevant person is relevant to the bet concerned.

(i) betting on an event or event contingency, or

(ii) encouraging another person to bet on an event or event contingency in a particular way (whether or not that other person actually bet on the event or event contingency concerned), or

(iii) communicating the relevant information possessed by that relevant person, or causing that relevant information to be communicated, to another person who the first person knows or ought reasonably to know would, or would be likely to, bet on the event or event contingency (whether or not that other person actually bet on the event or event contingency concerned), in each case, where the relevant information possessed by that relevant person is relevant to the bet concerned.

(3B) In subsection (3A)—

“bet” and “betting” includes (without prejudice to the generality of section 9)—

(a) placing, accepting or withdrawing a bet, and

(b) causing a bet to be placed, accepted or withdrawn, but, for the purposes of subsection (3A) only, shall be limited to bets placed, accepted or withdrawn by means of remote communication,

“causing a financial disadvantage” includes—

(a) causing a financial disadvantage to another person, and

(b) inducing a third person to do something that results in another person suffering a financial disadvantage— whether the financial disadvantage is permanent or temporary,

“conduct” means an act or omission to do an act,

“conduct that corrupts or would corrupt a betting outcome of an event or an event contingency” means conduct that—

(a) affects or, if engaged in, would or would be likely to affect the outcome of any type of betting on the event or event contingency, and

(b) is contrary to the standards of integrity that a reasonable person would expect of persons in a position to affect the outcome of any type of betting on the event or event contingency,

“encouraging” includes inciting, inducing, persuading, urging, threatening or pressurising,

“engaging in conduct” means—

(a) doing an act, or

(b) omitting to do an act,

“event contingency” means a contingency connected to an event,

“obtaining a financial advantage” includes—

(a) obtaining a financial advantage for oneself or another person, and

(b) inducing a third person to do something that results in obtaining a financial advantage for oneself or for another person, and

(c) retaining a financial advantage that one has, whether the financial advantage is permanent or temporary,

“relevant authority” means—

(a) a member of a police force, or

(b) the Commission, or

(c) any person or body listed in Schedule 6, or

(d) any other authority of a kind as may be prescribed by the Secretary of State by order,

“relevant information” means information in connection with an event or event contingency about conduct that corrupts or would corrupt a betting outcome of the event or event contingency,

“relevant person” means a person who possesses relevant information and knows that, or is reckless as to whether, that relevant information is about conduct that corrupts or would corrupt a betting outcome of the event or event contingency.

(3C) A person will be taken to have intended to obtain a financial advantage, or cause a financial disadvantage, if, and only if, that person—

(a) intended to obtain a financial advantage, or to cause a financial disadvantage, in connection with betting on an event or event contingency, or

(b) was aware that another person intended to obtain a financial advantage, or to cause a financial disadvantage, in connection with betting on an event or event contingency as a result of the conduct concerned.””

Photo of Baroness Heyhoe Flint Baroness Heyhoe Flint Conservative

My Lords, I move this amendment because I believe passionately in the power of sport, which does so much good in society. I believe that we have a duty to protect sport from those who seek to interfere with its integrity for financial gain by match fixing.

We recently had an excellent debate in Grand Committee about the importance of competitive sport—the skills, health benefits and pleasure that it brings to millions who take part in it. Sport, whether people take part in it or watch it, has the power to unite a nation and thrill the billions who watch across the world. All this is threatened by match fixing. If supporters cannot trust an event to be genuinely clean and fair and an honest competition, it will diminish in value and all belief in its authenticity will be lost.

I am very sorry that my noble friend Lord Moynihan cannot be with us. He was intending to lead this amendment on cheating in gambling and he is of course an expert on the problems of this subject, having been Minister for Sport and, more recently, chairman of the British Olympic Association. He backs wholeheartedly this amendment and has in recent years been on working groups at the International Olympic Committee on match fixing. Perhaps I may remind this House that in the run-up to the Olympic Games in London 2012 it was interesting that the president of the International Olympic Committee at that time, Jacques Rogge, opined that the greatest threat to the Games in London was illegal gambling activity.

My noble friend Lord Moynihan wishes me to convey his apologies to noble Lords for not being present. Urgent business has taken him overseas. He asked me to relay just how important he sees the fight against the match fixers. He describes this amendment as vital. To use his words:

“Going right to the heart of integrity in sport and the fight against irregular and illegal betting is critical if we are to maintain the integrity of sport on which all international sport and, indeed, all sport depend. In my work at the International Olympic Committee, which has sought to define a common approach in the fight against irregular and illegal betting, we identified one of the most important things that can be done: to get nation states to strengthen their offences of cheating at gambling to influence sporting events”.

In Committee, several noble Lords urged the Government to look more widely at the legislative framework for gambling. Many of those who administer sport feel that there is now a need for clear and specific laws against match fixing to cover all activities which fixers might engage in around a sporting event, with clear definitions, including match fixing, spot fixing and the passing on of inside information. This would improve considerably the current Gambling Act which does not, as such, provide any specific definitions. They also want to introduce stricter penalties by increasing the current maximum sentence of two years to 10 years in line with the penalties applied to serious fraud offences. We are told that the low level of penalty in the Gambling Act is one reason why prosecutors may not seek to use this measure.

The measure would create a strong deterrent effect as sports bodies will be able to point to this legislation to warn and educate participants about the risks associated with being caught cheating. If the United Kingdom were to strengthen the legislative framework, it would become an exemplar nation on this issue and would catch up with the advances in such legislation in Australia. Perhaps it might catch up in cricket a little later as well. As an example, the England and Wales Cricket Board would like to see more effective measures taken against match fixing in other countries where cricket is played. It would be an advantage to be able to point to effective measures in our UK market before calling for improvement in other countries. In the absence of adequate legislation, the burden falls on sports governing bodies to prosecute offenders under their own disciplinary charges in circumstances where the sport does not have the same recourse to investigate as the police and other relevant bodies and does not possess the same deterrent penalties as with legislation.

The current offence of cheating is to be found under Section 42 of the Gambling Act 2005. It states:

“A person commits an offence if he … (a) cheats at gambling, or (b) does anything for the purpose of enabling or assisting another person to cheat at gambling”.

Noble Lords will immediately note that this is a very general clause which does not specifically criminalise the acts of fixing—either match fixing or the more common and harder to detect form of spot fixing. It simply is not designed to protect the integrity of sport. I believe that there has been only one prosecution under the Gambling Act in several years. Prosecutors instead use the fraud and conspiracy offences which were designed for different purposes and are now being used where possible to shoehorn in charges to fit a sports corruption context. It is of course worth reminding ourselves that we are not replacing any offences here. We are merely adding further strength to the fight against fixing which must equal best practice. As mentioned, there has been a dearth of criminal prosecutions under the Act for fixing offences in sport and I wonder whether that in part is reflective of the fact that the existing statutes were fundamentally flawed.

The Department for Culture, Media and Sport commissioned a report in 2010 into the integrity of sport. Its primary recommendation for government was that the definition of “cheating” in the Gambling Act 2005 should be reviewed and given greater clarity— as this amendment does. Will the Minister consider establishing a review into the most appropriate way to address the offence of cheating, as recommended by the DCMS Parry commission’s report in 2010?

Integrity in sport is a challenge for every Government and for every sports governing body in the world. It is our duty and responsibility to make sure that our domestic market is regulated as effectively as possible. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative 9:30 pm, 4th March 2014

My Lords, I have taken no part in proceedings on the Bill so far, but I will take the opportunity tonight to say a few words in support of what I consider to be an important and significant amendment. My noble friend Lady Heyhoe Flint ran through the technicalities with great precision and the hour is late, so I will not repeat her arguments but will restrict myself to three separate points.

I asked myself why people consider a couple of years’ imprisonment a relatively light punishment and not a serious deterrent for a serious match fixer. For many people, it seems a victimless crime—except, perhaps, for the bookmakers, who as a group do not command much public sympathy. When I began my career in the City, there was another victimless crime—or rather, a crime that was believed to be victimless—which was insider dealing. In my generation it was perhaps not as widespread as in the previous generation, when you were not paid much money because it was expected that you would trade inside in order to make good your rather inadequate wages. Undoubtedly quite a lot of it went on.

When one asks why people accepted that situation, it was because the crime was believed to be victimless—and, if it was not victimless, it was extraordinarily difficult to prosecute and eradicate, because one could never catch up with insider dealers. Any law would be unenforceable, and an unenforceable law would have no merit. More importantly, if it was unenforceable it ran the risk of bringing the wider law into disrepute.

I have not had a chance to glance over the Minister’s shoulder to see the notes that he will use in a few minutes, but I suspect that there will be a good deal about the issue of unenforceability as a reason for not wishing to accept my noble friend’s amendment. However, to go back for a moment to the example of insider dealing, over a period of years, as the legal framework changed, the attitude to enforcement changed and the reputational risk increased, the prevalence and acceptability of insider dealing diminished. While I will not claim that it does not exist now in the City, its instance is pretty small.

That is what this amendment seeks to achieve: a higher penalty, linked to a higher reputational risk for engaging in this crime, so that its frequency is likely to be very much reduced. For match fixing is not a victimless crime. Its victims are not, of course, those on the inside, be they investors or gamblers; it is usually the smaller, poorer and less experienced people who suffer.

That takes me to my second point. If I could see further down my noble friend’s speaking note, I think I would see that he will emphasise not just the difficulties of domestic enforcement but the much greater challenge posed by the extraterritorial nature of so many of these crimes, which seem to have overseas origins. Leaving aside the desirability of our making the greatest possible effort to root out match fixing completely in the UK, my noble friend on the Front Bench should remember that Her Majesty’s Government have not always found extraterritoriality to be an insuperable bar. The Bribery Act, although not uncontroversial in its application, requires UK companies to take responsibility for their agents overseas, even where the agent is not directly employed by them. There are precedents and experience in this area which we could build on to develop our activities to inhibit, prevent and eradicate match fixing in the UK.

To conclude, it seems that this modest amendment sends a clear signal that the heat is being turned up as regards this crime: 10 years on conviction, not two years, could not be clearer. I shall of course listen very carefully to my noble friend’s reply in due course. The Hippocratic oath says, I think, “First, do no harm”. I want to hear from him not why the enforcement of this amendment will be difficult—I am sure it will be—but why its existence on the stature book would do any harm or not take us in the right direction towards eradicating this extremely unpleasant and, apparently, increasingly prevalent activity.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords)

I speak in favour of Amendment 8, in the names of the noble Baronesses, Lady Heyhoe Flint and Lady Grey-Thompson, the noble Lord, Lord Moynihan, and my noble friend Lord Stevenson. This amendment not only comes from all sides of the House but is in the names of great sporting personalities who have participated at the highest level of elite sport. I support them in their contention that sport must maintain the highest levels of integrity and be recognised to be fair and honest. Sport governing bodies have been relentless in stamping out cheating, whether through drugs, unfair equipment or fraudulent activity, in order to maintain the public’s interest and trust. We all enjoy the pursuit of excellence and recognise that competition is the spur to improvement. The public will turn away, sponsors withdraw funds and participants lose interest if they detect any level of cheating or corruption, or any lack of fair play.

The amendment creates a clear and specific offence of cheating that covers all activities that fixers may engage in. All sports would have this offence available under the Gambling Act. Recently, we have witnessed the difficulties cricketing authorities had to face in prosecuting and getting convictions regarding the bowling of no-balls by Pakistani cricketers. This situation could easily occur with throw-ins and other events in professional football. I understand that the authorities had to go to great lengths to enforce fair play and that they went ahead under the Prevention of Corruption Act 1906. This offence will enable a strong deterrent from stricter penalties to warn and educate all sportspersons. Professional bodies such as the Professional Footballers’ Association in soccer can underline to their members the dangers and risks associated with being caught cheating.

I urge the Government to take this amendment seriously and, if they cannot accept it tonight, to be amenable to bringing forward their own amendments at Third Reading, otherwise similar amendments will be pressed very vigorously then.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport)

My Lords, I am reminded by my noble friend Lord Grantchester that I have joined a rather elite and special grouping in turning up on this list. I certainly cannot pretend to have, in any sense, any quality that matches theirs in terms of the sporting achievements they have had. Along with the noble Lord, Lord Hodgson, I was a not-indifferent squash player, but I am afraid that does not take me far towards either the noble Lord, Lord Moynihan, or the noble Baronesses, Lady Grey-Thompson or Lady Heyhoe Flint.

I apologise for intruding on their party but I do so because this is a really interesting amendment, and I am rather annoyed we did not think of it ourselves on this side of the House. The 2005 Act was much castigated earlier on in our debates but is still a rather good Act in its way. It goes out of its way to make it clear that it is not dealing with the integrity of sport—this point has been made already—and does not attempt to try to deal with the actual issues around the playing of sport. Its actions are about gambling, and sport is only one of a number of things that people can gamble on. We should not therefore expect that Bill to carry us all the way to where we want to get to in this new area, which is about trying to make sure that the sport that we all love and enjoy is played to the highest standards.

I talked earlier about the need for integrity. It is an issue that we need to think very hard about. It is not necessarily the case that if you follow the argument that I am about to make through to the end we would end up with simply amending the current Bill; I suspect our ambitions are a bit broader than that. When the Minister responds, perhaps he could reflect on the question that has been posed implicitly in the speeches we have heard today and explicitly outside by a number of people who are now saying that there is something slightly odd about the way in which we pay so much attention to the process of gambling around the sporting activity but we do not think hard enough about what we need to do to ensure that the sporting activity itself is as clean and above suspicion as it should be. That is the way in which I want to approach this.

The noble Lord, Lord Hodgson, said that we were talking about something that is called a victimless crime and pointed out that that was a contradiction in terms. I follow him on that: his point is very well made. My noble friend Lord Grantchester, who has substantial experience in running a sports club of great distinction, knows all too well about some of the issues that have arisen there.

It is interesting that the only serious case we have seen in recent years, which involved spread betting rather than fixed-odds arrangements, was prosecuted under a conspiracy to defraud offence and not under the provisions of the Gambling Act. On my reading of it, that is not unreasonable because the Gambling Act does not go in that direction but, if that is the case, the point was made earlier about the need to level up the tariffs on all these approaches to try to clean up sport—they need to be the same. So we are talking about a 10-year penalty being the standard for crimes against sporting activity. If anybody affects the integrity of the sports that we are concerned about, we should be able to use a range of penalties and approaches to ensure that the person is nailed.

We have looked at the number of prosecutions for match fixing in sport and there seems to be about one a year at the moment. Although, as I have said, there are difficulties in raising these offences, it is important to recognise that they do take place. There is evidence that there is quite a lot of match-fixing activity going on, not necessarily all related to gambling, and that is one of my points.

The DCMS itself has a sports integrity review. It must have been ahead of the game in thinking that it would need to look at that, and the Rick Parry report calls for further action in this area. Therefore, the onus is on the DCMS to come forward with proposals on this. The European Parliament and Commission have called for all member states to have specific match-fixing legislation. Again, one might ask the Minister what action the department will take to respond to that call. The amendment before us derives from evidence of recent work in Australia, where legislation has recently been introduced. The amendment is based on a model that seems to be working well and is widely seen in the sport as an exemplar.

To return to my first point, although we must be thinking about the question of what to do to strengthen our sport, of which gambling is a part but not the full amount, it is interesting that the gambling industry supports this approach. Sue Rossiter, director of projects and policy at the Remote Gambling Association, which supports the amendment, says:

“Cheating is already an offence under the Gambling Act and match-fixing falls into that category. But anything which further clarifies the fact that it’s illegal is welcomed by us. Players should be made aware that if they get involved in match-fixing, they’re involved in a criminal activity wherever they are. We work closely with sports governing bodies to make sure players are clear about that”.

There is an educational element to this, which will be very important.

This amendment may seem to be at a distance from the main purpose of the Bill but it should not be rejected out of hand. I appeal to the Minister to think about bringing this back at Third Reading for a further debate, when it might be possible to get the noble Lord, Lord Moynihan, and the noble Baroness, Lady Grey-Thompson, to add their arguments to this. We will have to fix this in the future if we do not fix it now.

The sport that we play in Britain somehow makes a huge contribution to our culture. As my noble friend Lord Grantchester said, if people feel that the games they watch are in some sense fake then, to quote from “The Hunger Games”—a recent film that I am sure all noble Lords have seen—the games will not be quite as enjoyable as they might otherwise have been. That is rather an unfortunate and sad analogy but I hope some of it might live long in memory.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble Lords Spokesperson (Department for Culture, Media and Sport), Lord in Waiting (HM Household) (Whip) 9:45 pm, 4th March 2014

My Lords, first, I thank my noble friend for moving this amendment. I very much agree with her and regret that my noble friend Lord Moynihan is not with us tonight. I thank all noble Lords for speaking in this debate.

Match fixing is an issue about which I know many of your Lordships feel very strongly. The Government fully share those concerns. Match fixing has no place in sport and we must do all we can to eradicate it. That is precisely why the Secretary of State held a match-fixing summit on 10 December and the Sport and Tourism Minister followed that up with a second meeting on 3 February. That work remains a priority. I emphasise that Ministers in the department see this as extremely important ongoing work.

My noble friend’s amendment suggests that Section 42 of the Gambling Act 2005, covering the offence of cheating at gambling, is inadequate in its current form. The Government recognise that sports governing bodies have concerns about that section. Indeed, sports governing bodies were invited on 3 February to provide case studies that they believe demonstrate the failings of Section 42 in dealing with gambling-related match fixing. The Government will consider any such evidence when it is supplied. We have received two case studies to date and are aware that there may be others in the pipeline. However, we have yet to see robust evidence demonstrating a problem with Section 42 as opposed to other factors such as lack of evidence. Indeed, lack of evidence of a link between match fixing and corrupt betting would make it difficult to pursue a successful prosecution under either Section 42 or my noble friend’s amendment.

I should also say to my noble friend Lady Heyhoe Flint that Section 42, as a gambling provision, can apply only where there is evidence of cheating at gambling, as has already been discussed. As the noble Lord, Lord Stevenson, said, that is why we have long established and recognised that other criminal offences may need to be used, given that match fixing can be realised in various forms.

The noble Lord, Lord Stevenson, also referred to Section 42 in the context of negotiations on the Council of Europe’s draft convention. The Government recently reviewed Section 42 in that context. All the legal teams and others came to the conclusion that Section 42 as currently drafted, together with other fraud and corruption offences already on the statute book, gives prosecutors the tools required to deal with the circumstances that might constitute match fixing.

As the noble Lord, Lord Stevenson, said, there have been some criticisms of the 2005 Act and, perhaps, some of its consequences. At the time, Section 42 was deliberately crafted to be a broad offence in which “cheating” was intended to have its normal, everyday meaning. The provision expressly extends to actions that involve actual or attempted deception or interference with the processes involved in the conduct of gambling or any other race, game, event or process to which gambling relates. That was done precisely to ensure that it could be used in a wide range of circumstances. That is why we are concerned about changing it. I emphasise that point.

Section 42 also clearly spells out that the offence is committed not just by the person who cheats but also by a person who does something for the purpose of assisting or enabling another person to cheat. That means that Section 42 already covers all the ground that my noble friend’s amendment seeks to add. Section 42 already applies to both remote and non-remote types of betting, whereas this amendment applies only to remote betting. We therefore believe the amendment could create confusion and that it is better to retain the existing provision for that reason.

My noble friend’s amendment would also raise the custodial tariff for Section 42 offences from two to 10 years. It has been argued that an increase in custodial sentencing will both act as a deterrent to those who may be involved in criminal match fixing, and influence law enforcement agencies to investigate and prosecute more cases.

I will explain to your Lordships why we believe that there is no need for a change in the tariff. The Government consider that the penalties in Section 42 remain proportionate and appropriate, and are consistent with other offences in the Gambling Act. There is nothing to suggest that the threat of a two-year jail sentence is not a sufficient deterrent or that law enforcement agencies do not take match fixing sufficiently seriously.

The UK has a number of legislative tools at its disposal to combat corruption of sports competitions. The toolkit naturally includes Section 42 of the Gambling Act 2005, where there is a link with betting. We can also use other fraud and corruption offences where that link with betting cannot be established. It does not mean that Section 42 is inadequate simply because it cannot be applied in every situation. When a sportsperson is found to be engaged in match fixing not linked to betting, the penalties under the bribery and fraud Acts are severe, as your Lordships have already said.

The fight against match fixing is not just about legislation. The UK’s approach to combating match fixing, based on effective collaboration between the Government, the regulator, betting operators, sports governing bodies and the law, is working and, indeed, is highly regarded internationally.

I emphasise that the Government take the fight against match fixing extremely seriously. I do not know whether the match-fixing summit was the first, but it is an indication that the Secretary of State and Ministers take this matter very seriously and want to work with the sports governing bodies.

My noble friend Lady Heyhoe Flint asked whether the Government would be prepared to undertake a formal review of Section 42, in line with what the Parry review suggested. As I said, in the cross-government review of Section 42 in the context of the European convention on match fixing, we concluded, and the legal advice was, that Section 42 was robust as written. However, of course we are willing to consider carrying out a review if and when sports bodies provide robust evidence demonstrating that there actually is a problem with Section 42. That is the position that we have come to.

I will be asking my noble friend to withdraw her amendment—not because we think that match fixing is not a priority; we do. The lawyers have looked at the provisions of Section 42 and we are of the view that, until we have proper and robust evidence that elements of Section 42 are not working properly, we think it is premature and unwise to move. I have not gone back to read Hansard, but I have been informed that Section 42 was drafted to capture as much of the conceivable parameters as possible. That is why it was couched in the way it was.

I have looked into this matter very strongly because I know that it is of extreme concern to the sporting world and beyond, to those who enjoy sport. I have looked into it. I have sought to outline the reasons why we think that Section 42 is robust but, as I said, we are willing and look forward to hear from sports bodies if they can come forward with robust evidence, which we will then consider very thoroughly. In the mean time, I ask my noble friend to withdraw her amendment.

Photo of Baroness Heyhoe Flint Baroness Heyhoe Flint Conservative

My Lords, we are moving into extra time. I thank the Minister for his responses and, in most cases, his assurances. I know that there has been a great amount of background work and energy put into what he referred to as a small or niche Bill. I thank the Bill team sincerely for the courtesy of the meetings which we have had and I apologise for not being fully attentive in the earlier debate on Amendment 4, when I think that I must have been dreaming in the outfield.

Perhaps I might reiterate that sport has had and has concerns and, to a certain extent, I am very aware of the fact that the Government are seeking to deal with them. In the eyes of sport and in the protection of its integrity, even though my noble friend the Minister referred to the Bill in the early days as a small Bill, I think that sport considers it to be a big Bill because this is a growing threat to the integrity of sport. I accept the assurances from the Minister in true sporting spirit. I came off the substitutes’ bench to support my noble friend Lord Moynihan, who bowled me a googly when he told me that he had to be abroad at this stage and was unable to contribute. I have a feeling that he may continue to pursue his concerns on his return but, in the hope that he will not then put me into the sin bin, I beg leave to withdraw my amendment.

Amendment 8 withdrawn.

House adjourned at 9.57 pm.