May I make it clear in the interests of making progress that these are probing amendments? In the light of the current inquiries into horse racing—the sport that I love—I felt that it would be unwise if the Committee did not have an opportunity to look into an issue that may well take up a lot of time when the Bill moves to another place.
As I said on Second Reading, a senior detective has been quoted as saying that more than 100 people are currently under investigation. The inquiries will last much longer than the police originally thought, so it is difficult to talk about the subject without infringing sub-judice rules. Obviously, as a lawyer who used both to prosecute and defend in the criminal courts, I am anxious not to infringe those rules. The whole issue of what is appropriate in the light of the way that betting on horse and greyhound racing has changed in recent years needs to be considered. I shall listen with interest to the Minister's reply, but amendments Nos. 25 and 26 are simply probing amendments to allow the issue to be raised in Committee.
That certainly would not be covered by these amendments. It may be a related issue but I do not want to be distracted, Mr. Pike, as you would rule me out of order. We might end up debating the England captain deliberately getting a second booking, which would open up a new can of worms. That may interest the hon. Member for West Ham and many others, but it would be ruled out of order.
A number of people in the industry have argued that the kind of bets that my amendments deal with may provide a greater element of temptation. It has been pointed out that the same object might be achieved, even if a measure similar to the amendments came into the law, by putting larger bets on lots of horses or dogs. I do not pretend that the phraseology is perfect—the amendments are simply probing amendments to get the issue on the record. I suspect that when the Bill goes to another place the matter will be discussed in greater detail.
I am glad that my hon. Friend the Member for Surrey Heath said that these are probing amendments. If they were accepted they would bring about the complete collapse of the betting industry throughout the whole country, and doubtless the Minister has brief a mile long on them.
Obviously, to strike a bet and make it stand up, someone has to accept it so that it can be laid. If someone at Brighton race course fancied Saucy Sue in the 3 o'clock and wanted to put £5 on at 3:1, they would have to find someone else who thought Saucy Sue was going to lose, and who would take that £5 and pay out £15 if their judgment was wrong. As my hon. Friend said, the problem could be overcome with a huge, complicated raft of alternative heavier bets, the only advantage being that that might give a slightly increased levy to the British Horseracing Board. I am sure that we can find an easier way to go about things.
If my new-found right-wing friend will just hold his horses, I will come on to betting exchanges in a minute. This amendment to a clause that attempts to define betting is very important. As we know, the question of betting exchanges occupied a considerable amount of time in the scrutiny Committee. We took evidence on several occasions from eminent people in the gaming and gambling industry, including people from the BHB and the Association of British Bookmakers, and those connected with betting exchanges. In fact, I opened an exchange account with Betfair—it is declared on the Register of Members' Interests—just to find out what it was all about and how easy it was to lay bets to lose. I am sorry to report that the horses do not win when I bet to win, but they do when I bet to lose. I have the coin the wrong way around and am working out how I can reverse the process. If I can, I shall make a small fortune and be able to retire even earlier than I anticipated.
I now understand the principal of exchanges. Their operation, which involves clicking on a screen, is rather soulless. There is nothing to compare with the thrill of going racing and losing one's money in person there and then, which is even better and even quicker. However, there is a serious and important point to be made. I mentioned on Second Reading the huge growth in international and internet gambling, and the moneys that can accrue. If we get our regulations right, more and more overseas money will be bet through our systems, as our people will be trusted.
Does the hon. Gentleman agree that the difference between exchange betting and race-course betting is that at a race course one bets on a horse to win, whereas in exchange betting one can bet on a range of things, including place betting and the possibility that a horse will not win?
The hon. Gentleman has grasped at a stroke the whole principle of betting exchanges. In effect, an individual can be a bookmaker and lay a bet against other people who bet on the horse to win.
Sadly, any form of activity in which money is involved includes such an element.
Sitting suspended for two minutes' silence.
As I was saying, any activity involving money can be subject to corruption and people fiddling the results. I must say to the hon. Member for North Durham (Mr. Jones) that that is not new. It has not suddenly occurred with the advent of betting
exchanges. The temptation to fix results in any game or activity has always been there. That is why it is important to have a strong, well funded gambling commission to deal with such problems.
My hon. Friend is, rightly, looking forward to the day, which we hope will occur if we get this Bill right, on which there will be more and more opportunities for properly regulated gambling to take place through British companies. Does he share my concern and amazement at the Minister's response to me on Tuesday? When I asked whether British companies might be able to have their product on the internet kitemarked to show that they are British, he said that that is not allowed under EU competition law. If he is right, we might lose that opportunity. Does my hon. Friend agree that it has come to a pretty pass if British companies cannot even say that they are British to attract inward investment?
Although we have our problems and scandals, the gambling and bookmaking industry in this country is of an integrity, style and shape at which the rest of the world looks with envy. Sometimes, we do a little too much breast-beating and saying how terrible things are. If we look at other countries, we can see that we are a shining example of how things should be done. That is not to say that we cannot make them better, but bookmakers and exchanges could be advertised in a way that shows that they are British, as that gives tremendous confidence throughout the world.
However, I will say to my hon. Friend that international gamblers do not suddenly sign up to a bookmaker or an exchange just because they feel the whim to flip through the Hong Kong yellow pages and dial a number. They choose carefully where they are going to place their money.
You are absolutely right, Mr. Chairman, and he does it to me religiously every time—this is the third time. When he leads me to speak out of order, I would appreciate it if you slapped him down quicker. That would cut out a lot of work on my part and we would get on much better.
The problem is the relationship, on which the amendment touches, between the ways in which betting exchanges and existing bookmakers operate. There is a big argument about betting exchanges—are they bookmakers or not? As we know, bookmakers have to be licensed. They have to go through integrity tests and be seen to be able to take money, because they will hold stakes and, depending on results, pay out winnings. A betting exchange does not do that. It simply transfers money from one client account to another, taking a small levy on the way, on which it will pay both tax and supporting funds to British racing. It will not surprise me if the largest exchange in the country shortly announces a profit of some £11 million, on which it will pay £4 a million levy to British racing. That is very small beer compared with
the big three, one of which is about to announce a £220 million profit, not all from bookmaking activities. Of that, some £20 to £25 million will go to the levy. It is important to get the balance right.
The hon. Member for North Durham, who has now left, mentioned integrity. One of the purposes of my hon. Friend's amendment was to probe that issue. The betting exchanges can do one thing that has never been done before—they can have an intensive audit trail. In order to register for a betting exchange, one has to give details such as a credit card number and verification of one's name and address, whereas if one went to a bookmaker in Brighton and said ''I want £5 on Saucy Sue,'' the bookmaker would not look one up and down and say, ''Can I have your name and address? I'd like to see your passport and a current bill for identification.'' The integrity of the trail is greater.
For that reason, the Bill rightly sets up a strong, properly funded, gambling commission. The Jockey Club does not have the powers or the resources to follow through some of the concerns that have been expressed, whereas the gambling commission will do. The sooner we can get the Bill on to the statute book—with the appropriate amendments about destination casinos—the better. It is a matter of regret that those amendments are not before us.
My last point is that I believe that there will be legal difficulties in working out what is a bet. The betting exchanges have been likened to a dating agency. The sooner the legislation is enacted the better—then we can let the gambling commission examine such matters, with the flexibility to propose appropriate rules and regulations. It will also have to tackle some increasingly difficult situations. A number of the bookmakers who have been quite critical of betting exchanges are launching their own betting exchanges. It will be interesting to see where the mix will come, with bookmakers running a conventional book and the betting exchanges.
I am glad that my hon. Friend is not pressing the amendment to a vote, because I would not be able to support it, but he has given the Committee a valuable opportunity to consider betting exchanges. I look forward to listening to what the Minister has to say.
This is an important part of the Bill, as the hon. Members for Surrey Heath and for South-West Hertfordshire (Mr. Page) said. I know that the threat that betting exchanges may pose to the integrity of the sport has been a cause of concern. I have some sympathy with those concerns, but I am convinced that the Government's policy on the future regulation of exchanges will protect the integrity of the sport while maintaining the increased consumer choice that those exchanges offer.
Under the Bill, there will be specific licensing for betting exchanges, with unique licence conditions. It is our policy that those conditions should include mandatory registration of all customers, information sharing agreements—the sporting regulator thinks that the question of integrity is at the centre of things, as I think has been amply demonstrated this morning—and ring-fencing of customer accounts. Anyone laying a horse or a dog on a betting exchange in the course of
business will require a betting operation license. That will ensure that people cannot use betting exchanges for commercial purposes, as a back-door way of avoiding the need for a licence.
In addition, protection measures appear throughout the Bill and will have the same effect for exchanges as they will for any other betting operator. The Bill already contains provisions to deal with bets that are made unfairly. If the gambling commission is satisfied that a bet is unfair, it can render that bet void and unenforceable. Requirements for a personal licence and the new offence of cheating will act as a further protection for individuals who participate in all forms of gambling activity.
I am sorry to interrupt the Minister, but have I understood him as saying that anybody laying a horse or a greyhound on a betting exchange would have to be registered? If so, will the small gambler—someone who may bet 20, 30 or 40 times a year and thinks that the horse will lose—have to be registered, or are we talking about people running parallel activities with a bookmaker's licence or heavy users? I am continuing to talk, so that the Minister has a chance to respond.
The advice that I have been given is that all users are registered, by the fact that they lay, and that anyone active in business is licensed.
That is immensely helpful, although I detect the hand of the Treasury in part of that answer. No doubt the Minister will tell us what ''in business'' means.
I will get the definition of ''in business'', although I think that the distinction is clear—one is registered and one is licensed. If somebody lays that bet, they are registered, and if someone runs a business, they are licensed. I will find what the definition of a business is in the Bill for the hon. Gentleman.
This is a critical moment. Legitimate bookmakers, who have a tremendous record in this country, feel that it is possible for someone to run a business through the betting exchange; that is, to use it frequently to lay bets off with other people. We accept that people will have to be registered to participate in the exchange. However, they could run a successful ''bookmaker's business'' without necessarily being required to have a licence. The critical threshold should be turnover, or some other definition of business, so that such people are under the same regulation as the bookmakers. If the Minister cannot answer that critical point today, he should certainly clarify the position. Out there, no one understands the present position.
The hon. Gentleman knows that such arguments have been well rehearsed and forcefully put by the bookmaking fraternity; there is no doubt about that. We have put into the Bill how we believe such activity on the new exchanges should be regulated. In this context, business has its normal and natural meaning. New clause 6 gives more detail on what constitutes non-commercial betting. The hon.
Gentleman knows that the issue has been part of the discussion on exchanges, including during pre-legislative scrutiny, for some time.
The issue is about registering and licensing, and those are set out in the Bill. A decision had to be made at some stage, and it has been made. Betting exchanges will operate in that context, and in the wider context of the Bill. As the hon. Member for South-West Hertfordshire said, such exchanges are a big British success story. Their growing share of the market testifies to their popularity among consumers. Restricting their services would simply drive customers offshore, which would mean that British business would be lost and that British citizens would be compelled to use unregulated foreign exchanges, from which we could offer no protection.
The hon. Member for Surrey Heath asked about the regulation of sites. We cannot regulate sites from overseas, nor have a kitemark, although people can advertise. That is important. All advertising in Great Britain of gambling from outwith the EU area will be illegal unless the Secretary of State decides that a specific state should be allowed to. That suggestion was made by hon. Members during pre-legislative scrutiny, and I think that it will give protection. We have taken that suggestion on board and incorporated it into the Bill.
What the Minister has said has been helpful and reflected not only what I put to him, but what was raised by my hon. Friend the Member for North-East Cambridgeshire. However, it is not enough for the Minister to respond, as he has to my hon. Friends the Members for South-West Hertfordshire and for North-East Cambridgeshire, that business has its ordinary and natural meaning. On Tuesday, I said that there would be concern about the overlap between this legislation and the anti-money laundering legislation that I dealt with as a shadow Minister during discussion of the Proceeds of Crime Act 2002. There will have to be an indication of turnover, as my hon. Friend the Member for North-East Cambridgeshire suggested, if there is not to be a danger that the new operation of betting exchanges might be used as a vehicle for money laundering.
We will have to know how much somebody would have to bet or lay through an exchange to turn them into a business. That is the crucial point. If the Minister cannot address that today in the way suggested by my hon. Friend the Member for North-East Cambridgeshire, he will have to do so before the Bill becomes law.
I remind the hon. Gentleman that it has never been our intention to tie everything down into the Bill. As I have said repeatedly, we are putting into place a gambling commission that will have considerable powers and be able to impose licensing conditions or issue codes of practice advising exchanges on how they should interpret ''in business''. Part 1 of the Bill makes clear our intentions on what the gambling commission will do on exchanges, or any other part over which it will have regulatory control. We are moving away from the prescriptive 1968 Act to the new Gambling Bill, which
gives considerable powers to a gambling commission. In terms of the interpretation of the word ''business'', the conditions can be laid out in codes of practice.
I am indebted to the hon. Member for Bath for drawing my attention to the fact that the Minister has now tabled new clause 6, which does not deal with the point. It basically says that anyone who self-declares themselves to be a business is a business. That will not be acceptable. I understand the Minister's point about the gambling commission, but he has to consider what is in the Bill and new clause 6 in particular. He is amending the Bill as he goes along. He has tabled new clause 6, which we have not yet come to but will debate, and it touches on the same point. We will have to see more certainty in the Bill.
The hon. Gentleman raises serious questions about how we will control the integrity, fairness and transparency of the commission. That is laid down clearly, not only when it comes to exchanges but when it comes to gambling, in part 1. We then give the gambling commission the powers to effect that. He cannot quite get into his mind that it has been difficult to move from the 1968 Act and how we have regulated and applied the law on gambling in this country, to where we want to be. I am trying to take him through that modernisation process, to put a Bill on the statute book and give the gambling commission the opportunity to intervene and to operate according to the principles of the Bill.
New clause 6 is one part of the question of business, but the more powerful part is what the gambling commission will do in its codes of practice to interpret the word ''business.'' That will be based on carrying out the mandate that it is given in part 1.
I want to pick up on a point that the Minister made earlier. I did not pose that question to imply that we want to be prescriptive about the Betfairs of this world. We recognise that time has moved on, and those are successful businesses. They could be a jewel in the crown of this country, as can other exchanges like them. It is not an attack on the exchange or the concept of it—not that we could turn the tide back in any event—but a question of a level playing field and fair competition.
I tabled an amendment to clause 1 so that the gambling commission, or whoever, would view the issue of fair competition not only in the casino environment but in this environment. We are changing the law. We have bookmakers at the moment. They are licensed and they pay a huge amount of money. In fact, when the Bill goes through, they will pay even greater amounts of money for licensing. That is a big burden on them, and they are not complaining, but they want to see a level playing field, so that other more modern and newer businesses that have evolved do not have an unfair advantage against their legitimate activities. That is the point that I was trying to get to. I think that the Minister is mindful of that.
New clause 6 helps a bit. I have no idea when we will discuss it, as it is not on our list at the moment. However, as the Minister in charge of the Bill and gambling, will he indicate where he thinks the fairness idea ought to play in this level competition?
I agree entirely. It is about fairness and a level playing field, but also about managing new technology. New technology has affected many industries, as we all know. Coming from Sheffield, I know how it has affected steel and mining. Many industries have been affected by the advance of new technology in many and varied ways. We will have to continue to manage the new electronic age that we are in.
That is now affecting the gambling industry. Up pop some bright young kids, who probably do not know a lot about betting and gambling, and they set up the exchanges. The exchanges were borne out of the City more than out of gambling. If some of the bookies realised what was happening, they would probably have got hold of it earlier, but they were not smart enough. We now have new innovation through technology that has to be managed. It has to be managed in terms of the industry.
It being twenty-five past minutes Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Two o'clock.