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New Clause 1 - Licence compliance, stipulations and control

Gambling (Licensing and Advertising) bill – in a Public Bill Committee at 10:15 am on 19th November 2013.

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‘(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.’.—(Clive Efford.)

Brought up, and read the First time.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

I beg to move, That the clause be read a Second time.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

With this it will be convenient to discuss the following:

New clause 4—Reporting of suspicious activities and power to obtain financial information—

‘In order to promote consistency of sports betting regulation, regulation of remotely conducted spread betting and therefore of all spread betting shall be transferred from the Financial Conduct Authority to the Gambling Commission, which shall thereupon—

(a) have power to require and obtain from its licensees including spread betting organisations information concerning actual or potential suspicious activities in relation to sporting events, and to share such information with the relevant sports governing body;

(b) have power to require and obtain information on financial transactions by licensees which it reasonably suspects might be germane to the investigation of suspicious betting activity, money laundering or other criminal activities, or the protection of vulnerable individuals.’.

New clause 13—Discussions between gambling regulatory bodies and sports governing bodies—

‘The Secretary of State shall have power to make regulations, to be laid before and approved by both Houses of Parliament, stipulating the manner and time of regular meetings between any and all of the gambling regulatory bodies and sports governing bodies.’.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

New clause 1 covers the behaviour of betting organisations that are licensed by the Gambling Commission, but may operate in other jurisdictions, as well as operations such as spread betting that are not licensed by the Gambling Commission. It would allow the commission to consider any actions on the part of an operator that would have been a breach, had they happened under its jurisdiction, and thus to determine whether that operator is fit and proper to be licensed in the UK. It would therefore ensure that an operator could not operate at a lower standard elsewhere or become involved in serious malpractice, yet expect to be licensed in the UK.

Some areas of gambling operate under such a high standard of regulation. I believe that some casino licensing authorities in America apply such an approach to their casino operators so that if they breach a code, even if is outside an authority’s jurisdiction, that will be taken into consideration when considering its licence. We should consider such an approach so that we set a high standard for people who want to enter the UK market. The UK’s remote gambling industry represents one of the most advanced markets, so it is only right to set such standards.

New clause 4 is straightforward. It refers to the transfer of responsibility for enforcing licence condition 15.1 on spread betting from the Financial Conduct Authority to the Gambling Commission. New clause 13 would require the Government to ensure that those who regulate online gambling are in regular dialogue with those who are directly affected: the sports governing bodies, which have a lot of intelligence about what is going on at grass-roots level.

I do not like reading speeches, but I need to get across several detailed key points. As we have reached an important aspect of the Bill, I will attempt to read my contribution, but I hope that I will not sound as though I am reading out the telephone directory and that hon. Members’ ears are not bleeding when I finish. I want to cover seven areas: the importance of sports integrity; spread betting markets and sport; licence condition 15, and why information sharing and early notice is so important; the concerns of the sports governing bodies; the Government’s call for consistency and an effective approach; the Financial Conduct Authority and how it goes about its business; and—the reason for the provisions—what should be the next steps.

Promoting and upholding integrity is one of the key functions of all sports governing bodies and event organisers. The whole concept of sport is based on fair competition between participants under agreed rules. It is a vital principle for any sport that all its participants are competing to win, and that its officials are honest and are seen to be so. Those who seek to influence the outcome or progress of sports events to secure rewards through betting undermine that principle. Any suspicion that that is happening can be deeply damaging. The growth of betting services means that sports must remain vigilant against the negative impact that that can create.

The Minister will be familiar with historical and recent occurrences when people have tried to corrupt sport for financial gain through betting. Sports governing bodies, the Government and the Gambling Commission must remain alert to those dangers and treat corruption  connected with betting with the same intensity of action as that taken to ensure that sports remain free from doping. Michel Platini and the previous president of the International Olympic Committee, Jacques Rogge, have both described match fixing as the biggest threat facing sport. Indeed, that was one of the reasons why the previous Government began the work, under the stewardship of my hon. Friend the Member for Bradford South, that led to the introduction of the Bill.

Recent years have seen a huge growth in sports betting that has been fuelled by the internet, new media and the popularity of in-game betting. At the same time, we have seen the introduction of a new licensing regime that gives betting companies greater freedoms in how they can operate and market their products. The Gambling Commission has introduced a robust regime that works for sports bodies, but unfortunately we have had to witness a large number of British online betting operators moving overseas and offering services back into the UK. In doing so, they have moved outside the UK’s regulatory framework. In response to that concern, the previous Government commissioned the Parry review of sports betting integrity. In that report, Rick Parry highlighted the specific risk posed to sports integrity as a result of the current licensing regime allowing remote betting operators to base themselves outside the UK, thus evading the Gambling Commission’s licensing regime, which has important integrity mechanisms built into it.

Although the Government are now acting to address that concern, nothing is being done about spread betting. Spread betting on sport is growing in popularity, and the nature of that kind of bet, whereby the return is unlimited, makes it a high-risk activity and an area that needs regulation. Spread betting markets require sports to pay a lot of attention to protecting the integrity of their sports. It is possible to gamble on a whole range of sports—boxing, cricket, football, horse racing, greyhound racing, rugby union, tennis and so on. Cricket alone spends £2 million on protecting the integrity of its sport. The Minister and I, as people responsible for speaking up on behalf of sport, should be concerned that so much of a sport’s money is being diverted away from activities such as grass-roots sport. Similarly, horse racing spends about £2 million a year on protecting the integrity of its sport.

Photo of Gerry Sutcliffe Gerry Sutcliffe Labour, Bradford South 10:30 am, 19th November 2013

My hon. Friend comes to the nub of the point: a sport is not in control of what people can bet on. While gambling companies can promote bets on any aspect of a sport, the sport has no control over what such a bet can entail.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

Yes. I had a quick look on the spread betting website this morning to see what bets it was offering in relation to today’s England game. It offers a curious set of bets, which show the sort of thing that can go on. There is the opportunity to bet on the total number of bookings between each side. If England were to get more bookings than Germany, I would get 10 points for a yellow card and 25 points for a red card. Depending on which way I bet, the difference would be calculated to determine how much I won or lost. The point about spread betting is that what a player loses is open-ended. If they lose, the greater the difference, the greater the loss; it is multiplied by the difference. It is possible to bet on the number of yellow and red cards  that are issued against a team, the number of corners awarded during a game, the number of penalties that are taken and whether or not they result in a score, and the score against each side.

I am not suggesting that in tonight’s match an England player will kick the ball out for a corner 10 minutes into the game, but that could happen in a less high-profile match. If the exchange of information between the sport that is being gambled on and the operator is not seen and there is no requirement on that operator to share that sort of information, there has to be some concern. The sports themselves are worried about how open to that sort of corruption spread betting is. Licence condition 15.1 would require those online spread betting operators to inform the relevant sport if they detected any suspicious activity. At the moment, that is required by the Gambling Commission and it would be a requirement for all of the remote licensees under the new regime but it will not be a requirement on those who operate spread betting.

Back in May a jockey and three others were handed lengthy bans from racing, having been found in breach of a number of rules relating to conspiracy, corruption, stopping a horse and passing inside information. The corrupt betting linked to the jockey Eddie Ahern and his friend, Neil Clement, a betting account holder, took place over five races. The panel found that in one of those races Ahern had stopped the horse deliberately to lose. That information came to light as a result of intelligence that the sport itself had. It was alert to the activities that were taking place around these individuals. It had invested money in monitoring and detecting this sort of behaviour and was aware of the problem. So that did not come about as a consequence of licence condition 15.1, which requires people to inform the horseracing authorities that this was taking place.

All sports are worried that this type of corruption could be taking place in spread betting, but there is no requirement on spread betting operators to provide that information or to alert the relevant sports bodies. So as regulators we cannot afford to leave the spread betting market unregulated.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee

The hon. Gentleman repeatedly refers to the spread betting marketplace. New clauses 4 and 1 refer to the marketplace as a whole. He solely prays in aid the sports spread betting industry. I have not heard him come up with another example. Is he concerned that new clauses 4 and 1 are flawed in that they might catch exchange traded funds and financial markets at spread betting where there is an underlying transaction that a company is trying to hedge against?

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

No, because the clauses specifically refer to sports activity.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee

I quote from new clause 4:

“all spread betting shall be transferred”.

New clause 1 talks about spread betting and does not mention sport, unless I am misreading and another clause defines spread betting.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

I am advised that the Bill is tightly worded so that it can deal only with issues relating to sports advertising and sports betting. I would have thought that that would bring the amendments into order.

We are discussing spread-betting organisations being licensed by the Gambling Commission for any activity that relates to sports and requiring them, under licence condition 15.1, to make the relevant sports governing body aware. The Gambling Commission can take that into consideration when deciding whether an organisation is fit and proper to hold a betting licence.

There is a danger that, as we correctly address overseas betting operators, we will encourage cheats and criminal activity to move to an area that they know does not have the strict information-sharing requirements created by licence condition 15. The Gambling Commission applies licence condition 15 to all those who hold a betting operator licence. It places a legal requirement on betting operators proactively to share information and to report suspicious betting patterns to both the Gambling Commission and the relevant sports governing body. I will not read out licence condition 15 now, but it places a requirement on those taking bets on a sport to provide information to the relevant sports governing body if they are aware of any suspicious activity. They could lose their licence if they did not comply.

The provision is important. As we heard from the representatives of the sports bodies who gave evidence last week, they need information urgently. If there is an irregular betting pattern that may suggest a breach of rules and they are notified quickly, they can take action to prevent it. That might include changing the referee or umpire for the match or warning players that their conduct will be watched carefully. It is vital that policy-makers give sport and the regulatory bodies all the powers that they need to fight match-fixing. Our failure to apply licence condition 15 to spread betting undermines that.

As we heard last week, all the major sports bodies are alarmed about the situation, including the Sports Rights Owners Coalition, which represents bodies such as FIFA, UEFA, the International Cricket Council and the International Tennis Federation, and the Sport and Recreation Alliance, which is the umbrella body for all of sport and recreation in the UK and acts as the secretariat to the Sports Betting Group. Specific representations have been made by the Rugby Football Union, the Rugby Football League, the Lawn Tennis Association, the Football Association, the Premier League and many other bodies.

Nic Coward, speaking on the behalf of the Sports Rights Owners Coalition, said to the Committee last week:

“We think it is a serious anomaly. As has been said, we do not think that the regulator’s identity matters, but there must be the same obligation and effect as is imposed by licence condition 15.1 on whatever form of operator. That should include a spread betting operator. We think that is a serious flaw in the current system.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 8, Q7.]

Tim Lamb of the Sport and Recreation Alliance told us that

“it is an anomaly that spread betting is regulated by a different authority from the rest of betting in sport and we strongly believe that the principles underlying licence condition 15.1 should be extended to spread betting as an absolute minimum. Ideally, we would like to see spread betting come under the auspices of the Gambling Commission rather than the Financial Conduct Authority.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 22, Q58.]

The Sports Rights Owners Coalition submission to the Committee states:

“There are very few sports that have not had to deal with betting integrity and SROC welcomes the measures contained within this Bill which will strengthen the legislative framework for protecting sport from these threats. We also think that the Bill needs to go further to meet these objectives and that includes the following measures being introduced”.

It wants betting on sport to be brought under the remit of the new licensing regulations, so that all betting is regulated by licence condition 15.1.

The Sports Betting Group’s submission sets out several measures that it would like to see:

“One area where the SBG feels that the Bill could be strengthened is in relation to the regulation of spread betting. Whilst the Government should be commended for its efforts to ensure that all fixed odds betting operators offering bets in the UK comply with Licence Condition 15.1 on information sharing, the same is unfortunately not true for spread betting companies.

Spread betting companies are regulated by the FCA rather than the Gambling Commission and as a result are not required to share information on suspicious betting patterns in the same way that fixed-odds operators are via Licence Condition 15.1. While the two companies currently offering spread betting on sport in the UK have voluntary information sharing agreements in place with the FCA, the SBG feels that these should be replaced with robust, statutory arrangements.

This view is backed up by evidence provided by Jenny Williams from the Gambling Commission during the pre-legislative scrutiny stage of the Bill. Taking the example of the fixed odds betting operators, she said that the Gambling Commission received one or two reports a month from its online gambling licensees, who handled less than 20% of the market, but from the 80% licensed overseas (which had voluntary agreements in place) the Commission had received a total of about ten since 2007. Ms Williams suggested it was implausible that so few suspicious transactions had been reported.

The Sports Betting Group is dissatisfied that despite raising this issue with the FCA for many years, it has not received any satisfactory answer as to how it intends to address the regulatory shortcoming.

This anomaly should be rectified as soon as possible and tabling an amendment to this Bill would be a way of achieving this. We have been in dialogue with the FCA and GC for over a year and we have been assured that the matter is being looked into but we are still to see any substantive progress. An amendment to the Bill would expedite this process and bring spread betting companies into line with traditional operators. This would be a major boost to sports integrity and the fight against betting related corruption in sport.”

That is a powerful demand from a wide range of bodies dealing with all the major sports and many others for something to be done about spread betting and licence condition 15.1. It could not be clearer.

Last week the Minister stressed to the Committee that the Bill was about improving protection for consumers and sports fans in the UK, and repeatedly pointed out the importance of consistency. That is the reason for introducing the same licensing arrangements for betting operators based overseas as for those based in the UK.

The Government have expressly said in evidence to the Select Committee on Culture, Media and Sport that they want to achieve that:

“There is currently no way to ensure that the protections of the gambling regulatory framework, in particular those afforded by licence condition 15 on reporting suspicious betting activity, are  applied on a consistent basis to all operators who transact with British consumers or allow bets on British events. This is because regulators in other jurisdictions do not automatically notify the relevant British authorities about positive evidence of match-fixing and suspicious betting practices taking place on overseas licensed sites (including those that may have an impact on sports events held in Britain). Some operators share some information with the Gambling Commission in addition to their home regulator on a voluntary basis. However, according to the Government, this is often of insufficient detail to be used in an investigation, and there have been instances where the Gambling Commission has been unable to obtain information from the overseas licensed operator or regulator. In some cases the Gambling Commission is told the refusal to provide information is because of overseas data protection requirements. The Gambling Commission reported that since 2008 there had been only ten references of suspicious transactions from remote gambling operators unlicensed in the UK, and it gave specific examples of the difficulties in obtaining adequate and timely information from overseas operators.”

The gap created by that inconsistency is recognised by the Government and is clear for all to see.

Why have we reached the stage of wanting to amend the Bill? Spread betting is regulated by the Financial Conduct Authority. This type of betting is generally seen, given the open nature of the risk taken, as more akin to a financial investment. I do not hear any evidence that the entire spread betting market should not be regulated by the FCA going forward. It is clearly a specialist form of betting. However, we have had compelling evidence that specific action needs to be taken on sporting integrity where there are two main spread betting companies taking spread bets on sporting events.

The sports bodies have provided us with evidence that the first formal raising of the issue with the FCA was in March 2011, when Nic Coward, who was then chief executive of the British Horseracing Authority, wrote to the right hon. Member for Putney, who was then a Minister in the Treasury, to raise his concerns about the failure to introduce regulations that would protect sport from the problems that might be occurring in the spread betting markets. He concludes by saying:

“This failure to impose duties to help protect sport on which spread bets are being enabled is a failure of the system which we have reason to believe, from our own investigatory actions (in conjunction with the police and Gambling Commission), has very serious implications for…sport”.

The Sports Betting Group wrote to the hon. Member for Fareham (Mr Hoban), who was also then a Minister in the Treasury, on 8 June 2012. There was a limited response—a response of sorts—in which the Minister did say that the issue would be under review by the FCA and that dialogue would take place with the stakeholders. However, we heard in evidence last week that the FCA has not met any of the stakeholders in sport. In fact, it is highly questionable, given the answers that we heard from the FCA last week, whether it puts the regulation of spread betting relating to sport high on its agenda at all—whether it sees that as a core function of the FCA. Given how important this area of betting is to our major sports, that has to be worrying. This is not a criticism of the FCA as such, because it has an enormous amount of regulatory responsibility. In a sense, we can understand that sport might not be seen as a core function and a high priority for its resources. However, that makes it all the more worrying that we do not have consistency in relation to licence condition 15.1.

The Sports Betting Group tells me that many e-mails have been sent and phone calls made to the FCA, but with very little response. The FCA told us last week that  it had not met the sports governing bodies. I cannot think of any stakeholders more important than the sports governing bodies, which need to be notified as a matter of urgency whenever there are suspicious betting patterns on their sport. In its evidence last week, the FCA was clearly not on top of this issue. It referred to “informal arrangements” with the spread betting operators. When I asked whether that was how it approached all its relationships with the people it regulates, it was quite emphatic that it was not. It has a loose and informal arrangement with the spread betting operators and has not met the sports governing bodies, yet that is not the way it approaches its regulatory responsibilities in other areas. That clearly is not good enough. I was encouraged to see both the Minister and the head of the Gambling Commission clearly trying to secure commitments from the FCA to have equivalent codes, but that assurance, despite being clearly sought, has not been forthcoming.

We have come to the point at which we all agree. The current Minister, the previous Minister, the Gambling Commission and the sports world itself agree that there needs to be consistency and a level playing field in regulations, and that it is important to uphold the integrity of sport. That is one of the main reasons why the Bill is before us.

The new clause is intended to ensure that the Bill will see holistic, consistent coverage, so that every bet placed on sporting events in the UK is regulated to the same high standards, whether the bet is placed in a betting shop, online with an operator in Gibraltar, over the phone to an operator in the Isle of Man, or with a spread betting company. Sport cannot rely on the informal and voluntary arrangements that seem to be the modus operandi of the FCA when it comes to sport. The integrity of sport is too important to rely on good will and a handshake.

The appearance of the FCA last week as witnesses did not reassure any of those who were present that we should have confidence that it is effectively addressing the issue, and that there will be any movement on its part to adopt licence condition 15.1 in the near future. Therefore, we feel that without a specific guarantee-type commitment from the Minister, from her ministerial colleagues at the Treasury, or from the FCA itself that they will introduce licence condition 15 as a matter of urgency, we are right to proceed with an amendment to bring spread betting into the remit of licence condition 15.1. This will give the sporting world the certainty that it needs against match fixing. The amendments are intended to promote the consistency of sports betting regulation.

New clause 1 imposes a condition that will require that all online operators who offer spread betting are brought into the remit of the Gambling Commission’s regulations, which would include licence condition 15.1. New clause 4 has the intent of transferring the regulation of remotely conducted spread betting, and therefore of all spread betting, from the Financial Conduct Authority to the Gambling Commission.

This change in licensing requirements will give immediate effect to the important intent of the Gambling Commission having the power to require and obtain from its licensees, including spread betting organisations, information concerning actual or potential suspicious activities in relation to sporting events, and to share such information with the relevant sports governing bodies. I commend the new clauses to the Committee.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee 10:45 am, 19th November 2013

I think the shadow Minister is right to highlight issues relating to sports spread betting and the potential concerns. Punters in Southend placing a bet would certainly share some of those concerns, given national stories. I would, however, gently say that if these are more than just probing amendments, I am disappointed. Perhaps the new clauses were drafted before Second Reading, when I and other Members expressed concern about the wide definition of spread betting and the use of the terms “sports spread betting” and “spread betting” almost interchangeably. I believe that new clauses 1 and 4, as they stand, are fundamentally flawed, badly drafted and poorly thought through, which is disappointing given that the points they address are reasonable.

In future, there could possibly be an enhanced role for the Gambling Commission over sports spread betting. However, in terms of overall value rather than number of transactions, I would estimate that financial services transactions would be greater than betting transactions. I think it is right that the Financial Conduct Authority retains control over those financial spread betting transactions, whereas I think that the Gambling Commission perhaps does have a role to play on sports spread betting. I very much hope that new clauses 1 and 4 are probing amendments, and will not be pressed.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

I just want to allay the hon. Gentleman’s fears about the drafting. I am sure he is aware that the Government will always draft their own amendments anyway, even if they were to accept the force of my argument. However, it does refer to licence condition 15.1, which, in effect, only relates to spread betting on sports events. Other forms of spread betting would not be related to sporting events and would not be covered by licence condition 15.1.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee

The hon. Gentleman may be right in relation to new clause 1; I am not necessarily conceding that, but he is certainly not right about new clause 4, which does not mention licence condition 15.1 in any way. That new clause specifically includes all spread betting. New clauses 1 and 4 are fundamentally flawed. It would have been much more helpful if the shadow Minister had done his homework and put something on the table that the Minister could develop and fine-tune, rather than rewrite entirely.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

I am sure the hon. Gentleman will learn how these things happen in due course. The first line of new clause 4 states:

“‘In order to promote consistency”— the Minister used that word—

“of sports betting”.

The new clause refers to sport.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee 11:00 am, 19th November 2013

The hon. Gentleman is being selective in his quoting. I have quoted this before, but the new clause does state:

“In order to promote consistency of sports betting”— but it then continues—

“therefore of all spread betting shall be transferred from the Financial Conduct Authority to the Gambling Commission”.

I might have to shoot down to the House of Commons Library to find a dictionary to see what “all” means, but in my experience it means everything.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

I am grateful to the hon. Gentleman, but that sentence makes it clear that if the spread betting was not sport-related, it would not be covered by the clause or the Gambling Commission.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee

I totally disagree with the hon. Gentleman. I am not a lawyer and I shall not sully his reputation by suggesting that he is or has been a lawyer, but it is clear to me that the new clause covers all spread betting. If the new clause is probing, perhaps the Minister can go away and look at it, but it would have been much more helpful if the new clause had been fully thought through, particularly because both Government and Opposition Members raised the issue on Second Reading.

Photo of Gerry Sutcliffe Gerry Sutcliffe Labour, Bradford South

I hear what the hon. Gentleman is saying, because there is agreement across the House on the issues around spread betting and new forms of betting on sport. My hon. Friend the Member for Eltham is right to raise this issue.

The Minister might be unable to deal with this within the scope of the Bill, but there is a fundamental relationship between sport and betting. I say now, because our proceedings are spied or visited from outside the House, that the majority of British sport is clean. There are no fundamental problems in relation to the issues around sport or sports betting. I came to that conclusion by looking at two issues: the impact of betting on sport and the impact of drugs on sport. We set up the national anti-doping agency, and I am happy that we are leaders in the world on anti-doping attitudes in sport.

Sport is fundamental to our country, and we only have to look back at the success of the Olympics and Paralympics last year to see that. It was a great pleasure to see that sporting success gee up the nation in its sporting impact. So doping is a key element, but I think increasingly, betting is too. One reason why I set up the Parry inquiry to look into sports betting rights was the relationships that were coming into sport, not necessarily just within the UK. My hon. Friend referred to the horse racing scandals, but Members will remember the young Pakistani cricketer with his career ahead of him who got caught up in a betting scandal. There were also issues with betting in the far east on second and third-division football in the UK, where some lower-league players were throwing games.

Sports betting is not a massive problem, but it is one that we need to address. The Bill needs to be consistent, and that is why my hon. Friend is right to try to make licence condition 15.1 applicable to the Bill, notwithstanding the need to be specific about the betting being sports-related. It should not be beyond the wit of us all to come back on Report and table an amendment, if the Minister accepts the principle of what we are saying: that mentioning licence condition 15.1 in the Bill would give us consistency.

The relationship between sport and betting is vitally important. We can see the competitive nature of the gambling industry and we talked earlier about the increase  in advertising as betting operators fight to get customers to bet with them. That is, however, true in sport as well. We can see the coverage that we get from Sky Sports and BT Sport and all the other bodies that bid for our great sporting events, but it is time that the relationship between gambling and sport was looked at. Sporting bodies should be able to control what bets can be taken on their sports. At the moment that is not the case. Any authority that a sports governing body has is negated by gambling companies’ ability to pick any aspect of a sport and allow bets to be taken on it.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

Would a perfect example of that be the no ball scandal?

Photo of Gerry Sutcliffe Gerry Sutcliffe Labour, Bradford South

Exactly. My hon. Friend makes the point about the no ball scandal. The integrity of sport is vitally important. It is a grave mistake for sports governing bodies to have no control over what is bet on in their sport. As the situation becomes more competitive, bets on incidental things become even greater, whether on the number of no balls, the number of corners or the number of times the ball goes out of play. The opportunity for young sportsmen and women to be corrupted into kicking the ball out—which they may not see as cheating but in fact is cheating—becomes a problem within the sport.

The new clause on regular meetings between sports governing bodies and gambling companies is vital. If we cannot reach an arrangement where the sport is in control, and rights can be shared between sports governing bodies and betting companies to see what offer is appropriate, there is the danger that sport will become corrupt. That would be a problem for us all because sport is an integral part of our nation’s psyche, as is gambling. The previous Conservative Government introduced the national lottery, and what a great thing it is in terms of its commitment to spending on good causes, particularly sport. However, there is an inconsistency even there. The Government have just announced the merger of the National Lottery Commission with the Gambling Commission. In the UK you are not allowed to go into a betting shop until you are 18, but you can buy a national lottery ticket at the age of 16. There are a lot of inconsistencies.

It might be difficult for the Minister to address these issues within the scope of the Bill, but these concerns are starting to come forward. We need to modernise the relationship between sports and betting. The last thing that any of us would want to see is the nation moving away from sport because people feel corrupted by the lack of integrity in sports. The issue of doping is well documented. You have only to look at cycling, and the effect on the sport of the Lance Armstrong case.

I ask the Minister to look at increasing consistency by mentioning licence condition 15.1 in the Bill, and perhaps to come back on Report when we can get an agreement on how we need to move forward on that. Regarding the principle of the relationship between sport and betting, I believe that on this occasion the sports rights coalition are correct. There needs to be a stronger relationship between the world of sport and the world of betting.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

I thank the hon. Gentleman for raising the important issue of reporting suspicious market activity and the regulation of spread betting. The new  clauses would oblige sports spread betting operators to report suspicious market activity to the regulator and to the relevant sports governing bodies. They also stipulate the regularity with which gambling regulatory bodies should meet sports governing bodies. I understand why these new clauses were tabled, and I agree that all gambling operators, whether they provide spread betting or fixed odds betting services, should be subject to obligations to report suspicious market activity.

I am satisfied that the current arrangements are working well in allowing the sharing of information between the Financial Conduct Authority and the Gambling Commission, and the two firms operating sports spread betting. The shadow Minister referred to the evidence which was provided in Committee by a number of witnesses, but I remind him that Nic Coward of the Premier League said:

“We do not think, therefore, that there needs to be a substantial change”—[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013, c.9, Q8.]

in the regulation of spread betting. Tim Lamb of the Sport and Recreation Alliance said:

“We have written to the FCA and we have had a helpful response. The intention is to meet with it to see if we can work collaboratively together”.—[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013, c.22, Q58.]

That indicates that progress was being made.

To strengthen the current arrangements, the FCA has stated that it is considering issuing guidance to those firms, advising them of their obligations to notify suspicious market activity and to provide clarity about the definition of suspicious market activity. I look forward to seeing the product of its consideration sooner rather than later. It is important to note that the FCA already has at its disposal a number of supervisory and enforcement tools to ensure that firms comply with the principles and rules.

The FCA requires spread betting operators to advertise their products in a fair, clear and not-misleading way. That includes providing suitable risk warnings to potential customers. There is also an obligation on sports spread betting operators to assess whether the product is appropriate for customers; this is a significant control, which acknowledges the level of risk for sports spread betting products. It is right, too, that a consistent approach is taken, as mentioned by the shadow Minister, in regulating all spread betting, whether sports or financial. I am content that the FCA should make any decisions on the regulatory framework for the sector.

The shadow Minister referred to the integrity of sports betting generally, as did the hon. Member for Bradford South, and to the Parry review. I genuinely believe that the current system will be enhanced by the Bill, which will extend the ability to collect intelligence. In addition, the sports themselves should impose robust sanctions to deter corruption. Such sanctions are for the governing bodies to determine, not Government. I note that, following the Parry review, most sports have worked hard to develop education programmes and to put systems in place to combat cheating. I am sure that such progress will continue, as it must.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

The Minister has prayed in aid the premier league and Tim Lamb, but that contradicts the bodies that represent the premier league, which have  lobbied this Committee, the Select Committee and others, as well as Tim Lamb himself. In his evidence, Tim Lamb made it quite clear that the fact that spread betting is not covered by licence condition 15.1 is a major flaw, and the Minister herself has called for consistency. We are not satisfied with the current situation, in which we have a growing market of betting on sport in the spread betting industry, which is regulated to a different standard and level from those activities licensed by the Gambling Commission. There is an exchange of information directly with the sports governing bodies, which the FCA accepts that it has never met. The Minister must be concerned that there is a serious flaw in the regulatory regime.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

I hear what the shadow Minister is saying, but I do not accept that the system is broken or that legislation is the answer to absolutely everything. In referring to what a number of witnesses said in Committee, I was simply wanting to apply a little balance.

The Government have no current plans to make the regulation of spread betting the responsibility of the Gambling Commission, but clearly it is not something that I would rule out in the future, were it to become appropriate. I hope that I can provide the hon. Gentleman with a little reassurance by telling him that I intend to write to the FCA Minister about the matter and to follow up what progress the FCA has made since the letter referred to by the shadow Minister was sent, and since the comments on guidance and further action made by the FCA in Committee. It is unwise to be prescriptive in legislation about the timing and manner of engagement between sports governing organisations and gambling regulatory bodies, which should take place in a productive manner appropriate to the circumstances. For those reasons, I do not intend to accept new clauses 1, 4 and 13.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

Mr Bone, am I speaking to the whole debate or only new clause 1 at this stage?

Photo of Peter Bone Peter Bone Conservative, Wellingborough

At the moment, we are debating new clause 1, but you do not have to make a decision whether you want to press a vote on new clauses 4 or 13 at this stage.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

So, to be clear, I am summing up the whole debate at this stage?

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Yes. I should just explain to the Committee: we are debating the three new clauses, but the rules are that we do not vote on them all at this time.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport) 11:15 am, 19th November 2013

For the benefit of the hon. Member for Rochford and Southend East, I was clarifying whether I was to speak only on new clause 1 because that is the only measure on which we can vote. We must deal with new clause 3 before we can vote on new clause 4. That is why I sought to clarify what I was being asked to respond to.

I am really not satisfied with the Government’s response. We are being asked to accept the status quo, where we have one form of regulation from the FCA and another from the Gambling Commission. Of course, the Gambling  Commission’s licensing regulation area will expand because it will now be licensing offshore, remote gambling operators advertising in the UK.

When she asked questions of the FCA, the Minister herself talked about consistency. We cannot talk about consistency while we allow dual regulation to continue, so we must find a mechanism that allows us to introduce licence condition 15.1 into spread betting operations. That means either that the FCA must adopt condition 15.1, and that the Gambling Commission must become the licensing body for spread betting, or that the Gambling Commission must introduce a mechanism whereby it can take into consideration the activities of those operators it licences for betting—it can only be those operators—which may also operate in spread betting or another jurisdiction relating to other betting activities. The Gambling Commission will then be able to say, “If you have breached the standards we expect under our code and regulations, that can be taken into account when we consider whether you are an appropriate operator to be offering services to UK customers.” That seems a perfectly reasonable and sensible thing to do. It would increase the scope of issues the Gambling Commission can take into account when considering which operators it should licence in the UK.

If we are not going to alter the FCA licensing regime in order to adopt licence condition 15.1, then logically the Gambling Commission must become the licensing body for spread betting. It is a fact that the time has come. I do not accept what the Minister said about the current situation being satisfactory and that we should continue as we are. The time has come for us. We are legislators and will ultimately be held accountable. If the system breaks down and people are dissatisfied with it, it is to us, as the ones who set the framework for such licensing regimes, that people will look and ask, “Why  did it go wrong? Why did you not take this action?” The situation we are in has existed for too long, but we have an opportunity to change it that we should not miss.

I intend to press new clauses 1 and 4 to a vote because we must send a message that up with this we will not put. It is time for change. It is time that we altered this anomaly and made sure that all sports betting was licensed under one standard.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 8, Noes 9.

Division number 1 Decision Time — New Clause 1 - Licence compliance, stipulations and control

Aye: 8 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Mr Efford, do you want to press new clause 2, which has already been debated?

Ordered, That further consideration be now adjourned. —(Karen Bradley.)

Adjourned till this day at Two o’clock.