Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


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 of reference.

  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.

October 2000

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