Memorandum submitted by the Gaming Board
for Great Britain
As you will know, the Home Office has established
a Gambling Review Body, under the chairmanship of Sir Alan Budd,
to undertake a wide-ranging review of the gambling laws. Its terms
of reference however specifically exclude it from considering
changes to the National Lottery. The Review Body has been consulting
interested parties on a range of issues, including whether there
should be a unified body to licence and regulate gambling. Many
respondents, including the Gaming Board, have said that there
would be merit in such a single regulatory authority and some
of these have argued that it should also embrace the National
Lottery, notwithstanding the limits on the Review Body's terms
You asked whether the Gaming Board believed
that such an authority would be suitable as the Lottery regulator.
I gave you my initial reaction but said that I would write once
I had taken the view of Board members themselves.
We believe that such a regulatory authority
could undoubtedly successfully regulate the National Lottery,
at least insofar as that relates to the continuing duties of policing
and monitoring the Lottery operator. One of the prime responsibilities
of the gambling regulator would be to ensure that gambling of
all sorts continued to be conducted in ways which were fit and
proper, were fair to the players and were free of crime and honest.
That would be an area in which it had expertise and, in a sense,
the Lottery operator would simply be one other body which it was
required to police.
However, of course, in addition to its ongoing
monitoring work, the current Lottery regulator has, every seven
years, to conduct a competition for the licence. It is less clear
that a single national gambling regulatory authority would be
best placed to conduct that competition. Although that regulator
would be required to grant certificates/licences to other companies
wanting to establish gambling operations, that certification work
would concentrate on the probity and capability of the applicants
and, unless the current gambling legislation were to be changed
in highly unlikely ways, the regulator would not be required to
choose between competing bids.
We believe that, potentially at least, there
could be difficulties in the regulator conducting, and in particular
demonstrating that it had conducted, a fair competition for the
licence. It would inevitably have developed a relationship with
the existing operator which, assuming that operator was a bidder,
must have some impact on its decision. More generally, it would
be quite likely to have to choose between competing bids, some
of whom were from operators well known to it and others who were
not. One requirement in letting the licence would be to aim to
maximise revenue. It would be no part of the regulator's duties
in other areas for which it would be responsible to ensure profit
maximisation in granting certificates or licences and indeed it
is possible to envisage circumstances in which it might conflict
with those duties. The potential for accusations of dual standards
would seem to be present. The regulator would also have little
expertise in assessing economic cases.
None of this is fatal to the suggestion of a
single regulator for all gambling. For instance, it is possible
to envisage a system in which the Secretary of State established
a time limited group every seven years to let the contract. Those
appointed would have had no involvement with the Lottery or potential
bidders, thereby demonstrating impartiality. The regulator would
still have a significant role as it would be ideally placed to
conduct probity and background investigations into the bidders
and present a report on its findings to the selection committee.
Advice on the economic feasibility and financial viability of
the bids could be obtained from appropriate private sector consultants,
as we believe is currently done. The committee would make its
decision based on all this information.
In summary, therefore, the Gaming Board believes
that a single gambling regulatory authority could police and monitor
all gambling operations, including the National Lottery. That
authority could also play a major part in the seven yearly competition
for a licence by investigating and vetting the competing bidders.
But there is a case for a separate, time limited, body or committee
to be established when necessary to invite bids, decide between
them and appoint the operator.