House of Commons - Explanatory Note
Horserace Betting And Olympic Lottery Bill - continued          House of Commons

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Clause 35: Changes in Olympic procedure

111.     The International Olympic Committee is an independent body governed by an Executive Board which retains overall control of the organisational framework for the Olympic Movement and the Olympic Games. If London is elected to host the 2012 Olympic Games and the IOC changes its arrangements or organisation it may be necessary for legislation to be amended to enable the obligations under London's host city contract to be fulfilled. This clause gives the Secretary of State the power to effect legislative change by order in response to those changes. The circumstances in which this power is exercisable are narrow. The order making power is only triggered when the IOC makes a change in arrangements relating to the Summer Olympic Games, and where the Secretary of State considers it to be necessary or expedient to make provision in legislation as a result of that change. Any such order would need to be laid in draft and approved by resolution in each House of Parliament, as provided in clause 36(4).

Clause 36: Regulations and orders

112.     This clause provides that orders and regulations made under Part 3 of the Bill are to be made by statutory instrument and specifies the Parliamentary procedures to be adopted when making such statutory instruments.


Part 1

113.     Paragraph 1 explains that Part 2 of the Schedule specifies the conditions to be complied with, for the purposes of section 4(2)(d) (restriction on pool betting on track) and section 4A(2)(b) (restriction on pool betting off track).

114.     Paragraph 2 explains that Part 3 of the Schedule makes provision for the supervision of pool betting business.

115.     Paragraph 3 explains that the term "pool betting business" means pool betting business in connection with horse racing.

Part 2

116.     Paragraph 4 provides that any totalisator (which is defined in section 55 (Interpretation, etc - general) of the 1963 Act) being used must be in proper working order and be properly operated.

117.     Paragraph 5 requires a person who receives or negotiates bets to display in a conspicuous position a notice stating, prominently and in easily legible print his key terms of business. There are special provisions for those engaged in remote betting, for example over the Internet or over the telephone.

118.     Under paragraph 6 where a person makes statements in accordance with paragraph 5 in respect of a race or set of races he is not permitted to alter those statements in respect of that race or races, and must act in accordance with the statements. For example, if a bookmaker makes a statement that he will round down winnings to the nearest 5p in respect of a race or set of races, but in fact rounds down to the nearest 10p he will have acted in contravention of paragraph 6.

119.     The purpose of paragraph 7 is to ensure that a bookmaker publishes the winning dividend as soon as possible after the relevant race or set of races has finished.

120.     Paragraph 8 makes it a condition of Part 2 that a person who receives or negotiates bets (e.g. a bookmaker) must-

  • comply with any requirement imposed by or under Part 3 of the Schedule,

  • co-operate with the supervising accountant appointed under Part 3,

  • co-operate with the technical adviser appointed under Part 3,

  • co-operate with any person authorised by the supervising accountant or technical adviser under paragraph 11(2)(e) or 13(2)(f).

121.     Paragraph 9 requires any person who carries on pool betting business to pay a yearly fee to be prescribed by an order made by the Secretary of State. The purpose of paragraph 9(4) is directed at ensuring that the amount paid by way of fees equals the costs of the accountant, the technical adviser and their staff.

Part 3

122.     Under paragraph 10 the Gaming Board is given the duty of appointing a supervising accountant (the accountant) to check whether the conditions in Part 2 of the Schedule are complied with.

123.     Under paragraph 11 the accountant is given powers to enable him to determine whether the conditions in Part 2 have been complied with, and in particular, he may require access to premises on which pool betting business is carried on, may require the production of documents, may authorise a person in writing to do anything that he can do under paragraph 11 and he may delegate his functions.

124.     Under paragraph 12 the Gaming Board is given the duty of appointing a technical adviser to advise the accountant on the working condition of totalisators. The technical adviser is given the power to do anything he thinks necessary in order to advise the accountant in relation to the conditions and in particular, may require access to premises in which the totalisator is or has been in operation and may require the examination of a totalisator.

125.     Paragraph 14 requires any person who carries on pool betting business in any month to send to the accountant a statement of account for that month. In particular, the statement must specify amounts carried over from one pool to the next where no winning claims have been made in relation to a pool bet and such other information as the accountant may require.

126.     Paragraph 16 provides for an annual audit by the accountant of pool betting accounts submitted under paragraph 14. The accountant is required to certify compliance with paragraph 14, whether the accounts are in his opinion complete and accurate and that the pool betting business carried out during the year has been in accordance with Part 2 of the Schedule. The accountant, having audited and certified a person's accounts, is required to send the audited accounts and the certificate to him, and he must then send two copies of those documents to the Gaming Board. The Gaming Board is obliged to make a copy of those accounts and certificate available for inspection by the public.

127.     Under paragraph 17 the accountant is required to report to the Gaming Board if he believes that pool betting business has been carried on otherwise than in accordance with Part 2 of the Schedule.

128.     Paragraphs 19 to 24 make provision for a number of offences. In particular paragraphs 19 to 21 make it an offence to obstruct, fail to co-operate with or knowingly provide false information to the accountant or technical adviser. Anyone found guilty is liable to a fine not exceeding level 3 on the standard scale.

129.     Paragraph 23 makes it an offence not to submit monthly accounts to the supervising accountant and to not submit two copies of the audited accounts and accountants certificate to the Gaming Board in reasonable time. The penalty is a maximum 6 months imprisonment or a fine not exceeding level 5 on the standard scale or both.


130.     This Schedule makes consequential amendments to the 1963 Act and other legislation. The more significant changes are noted below.

131.     Paragraph 2 amends section 1 of the 1963 Act (which restricts the use of premises for betting) so that those complying with new sections 4(2), (3) and (5) of the 1963 Act (as inserted by clause 10) do not commit an offence.

132.     Paragraphs 3 and 4, 6, 8 to 12 and 15 remove references to the Tote (and cognate expressions) from the 1963 Act consequent on the dissolution of that body.

133.     Paragraph 7, 11 and 13 amend sections 11(1), 16(1) and 52(1) of the 1963 Act (which deal with bookmaker's and betting agency permits, totalisators on licensed tracks and penalties) consequent on the replacement of section 4 by clause 10.

134.     Paragraph 5 amends section 6 of the 1963 Act (which restricts bookmaking on track) so as not to prevent bookmaking taking place when other events are taking place too.

135.     Paragraph 14 makes consequential changes to section 55(1) of the 1963 Act (interpretation), including a change to the definition of "recognised horse race" which will allow other types of race to be run on the same day.


136.     The paragraphs in this Schedule supplement clauses 15 and 16.

137.     Paragraphs 3 and 4 provide powers to the Levy Board and the Secretary of State to enter into agreements which confer or impose upon them rights or liabilities in respect of anything which has been or is to be transferred by a transfer scheme.

138.     Paragraphs 5 to 11 make detailed provision as to the content of a transfer scheme. The purpose of paragraph 5 is to ensure that there is unrestricted power to transfer property, rights and liabilities under the scheme without the need to observe any further formalities.

139.     Paragraph 6 provides wide scope to determine which property, rights and liabilities are to be transferred under the scheme and how they are described.

140.     Paragraph 7 deals with the possibility that property, rights and liabilities will not exist when the scheme is made but will exist by the time it takes effect. Similarly, under sub-paragraph (b), a scheme may deal with a right which is already in existence but has not yet been transferred to the Levy Board. The purpose of this provision is to ensure that proposed transfers of property, rights and liabilities to the Board do not delay the making of schemes.

141.     Paragraph 8 makes provision for the division of property, rights and liabilities. For example, a right held absolutely by the Levy Board may be split between two or more transferees.

142.     Paragraph 9 is designed to ensure that rights and liabilities are readily enforceable after the transfer has been effected and provides that new obligations may be created.

143.     Paragraph 10 allows a transfer scheme to make provision for third parties to be compensated where the splitting of rights and liabilities results in a reduction in the value of a third party's property or a right held by him. It is provided that compensation may be payable by a transferee, transferor (i.e. the Board), or the Secretary of State and that any dispute as to liability or the amount of compensation may be subject to arbitration.

144.     Paragraph 13 gives a power to the Secretary of State to issue a conclusive certificate of title stating that anything specified in the certificate has vested in a person by virtue of the scheme.

145.     Paragraphs 14 and 15 provide powers to the Secretary of State to modify a transfer scheme which has not yet taken effect and, by order, where it has taken effect.

146.     Paragraph 16 requires the Secretary of State to consult the Levy Board in relation to a transfer direction and in exercising her powers in respect of a transfer scheme, and paragraph 17 requires the Secretary of State to obtain consent from the transferee in relation to a transfer scheme before approving or making a scheme.

147.     Paragraph 18 enables the Secretary of State to direct the Levy Board to prepare accounts in respect of a period ending with the day on which a transfer scheme comes into effect. It is envisaged that where there is a gap between the end of the Levy Board's last accounting period and a transfer scheme taking effect the Secretary of State may wish to direct the Levy Board to account for its property, rights and liabilities during that gap.


148.     This Schedule sets out arrangements for the constitution, proceedings and financial arrangements of the Olympic Lottery Distributor which this Bill proposes to establish.

149.     Paragraph 1 provides for the appointment of at least five members to the OLD by the Secretary of State. This figure is lower than some other Lottery distributors to reflect its focused remit and the fact that its level of activity may not match that of other distributors particularly in its early years of operation. Subsection (3) requires the Secretary of State to consult with the Mayor and the British Olympic Association (BOA) before appointing members. This consultation reflects the fact that Government, the Greater London Authority (GLA) and the BOA are the three key parties with a stake in the London Olympic Bid, and the subsequent staging of the Games. The operation of the Olympic Lottery Distributor may have a direct impact on the operation of the GLA and the BOA, and the exercise of their own duties in relation to ensuring the successful staging of the London 2012 Olympic Games.

150.     Paragraphs 2 to 6 make further provisions concerning the OLD such as the length of tenure for members and the circumstances in which that tenure may come to an end. Paragraphs 7, 8, 13, 15, 19 to 22 and 24 all provide powers to the OLD such as powers to appoint staff and committees, delegate functions, regulate its own procedures and to make payments (including renumeration). The OLD can also receive gifts and invest in an interest bearing account. Gifts in paragraph 23 is intended to cover financial donations. Paragraphs 14, 17 and 25 provide for certain duties of the OLD including compliance with directions of the Secretary of State, completion of an annual report and maintenance and submission of proper accounts to the Secretary of State and the Comptroller and Auditor General. The Comptroller and Auditor General is the Head of the National Audit Office, the independent body which scrutinises public spending on behalf of Parliament. There are other miscellaneous provisions in the schedule which relate to such matters as designating the OLD's records as public records and relating to its supervision and status (see paragraphs 9, 10 and 16).


151.     This Schedule sets out the existing legislation which will be repealed by the Bill.


152.     As they are public bodies, the abolition of the Tote and the Levy Board will have a consequent impact on the public accounts. Their expenditure, assets and liabilities will cease to appear in the accounts. There are likely to be one-off costs arising from the sale of the Tote, of up to £1 million. The sale proceeds, which should raise upwards of £50 million, will be paid into the Consolidated Fund. There will be a very small reduction in the level of public service manpower, resulting from redundancies amongst Levy Board employed staff whose functions are not continuing under the new arrangements. The number involved may be up to 50. However, some staff may transfer under TUPE 1 and therefore, in that event, this number will be reduced. The Levy Board that has already agreed a termination package with staff that will meet the cost of these redundancies. The related costs will be met from Levy Board resources.

1 The Transfer of Undertaking (Protection of Employment) Regulations 1981

153.     The establishment of a new Olympic Lottery Distributor and funding stream will involve start-up and ongoing running costs, both of which would be recovered from Olympic Lottery games receipts. The size and structure of the new distributor cannot be confirmed until structures to organise the Olympic Games in London in the event of a successful bid are further developed. It is envisaged that the distributor will, initially at least, have five members including the Chair appointed by the Secretary of State.


154.     Regulatory Impact Assessments have been prepared for the sale of the Tote, the abolition of the Levy Board and the creation of hypothecated Olympic Lottery games.

155.     As the proposals on the Tote and the Levy Board are specific to the bodies concerned, and do not impose a regulatory cost in the conventional sense, the impact assessments are necessarily speculative in terms of their estimates of wider impact. The Assessment on the Levy Board attempts to measure possible impacts that might flow from commercial negotiations between bookmakers and the horseracing industry. It assesses the scale of impact that might be associated with a reduction in income or an increase in costs for either side of the negotiation.

156.     The Impact Assessment on the Tote attempts to measure the impact of the sale process on the Tote, the Government and other stakeholders. It also assesses the costs and benefits that may result from different approaches to the future licensing of pool betting, which at present is offered on an exclusive basis by the Tote.

157.     The creation of Olympic Lottery games will not have a direct impact on small firms, who are involved in the National Lottery mainly as ticket retailers. However, the introduction of Olympic Lottery games may result in a reduction in the level of revenue for the existing Lottery good causes due to some people choosing to play Olympic Lottery games instead. This is covered in the Regulatory Impact Assessment accompanying these notes.


158.     The provisions of the Bill will come into force on a day that the Secretary of State will specify by order. However, creation of the OLD under clause 29 will not be brought into force unless the Secretary of State has made an order under clause 22(2), declaring that the IOC have elected London as the host city for the 2012 Olympic Games.


159.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The statement has to be made before Second Reading. The Right Hon. Tessa Jowell, Secretary of State for Culture, Media and Sport, has made the following statement:

    In my view the provisions of the Horserace Betting and Olympic Lottery Bill are compatible with the Convention Rights.

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Prepared: 3 December 2003