Gambling Bill

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Clause 11

Betting: prize competitions

Mr. Caborn: I beg to move amendment No. 13, in

    clause 11, page 5, line 30, leave out 'he guesses' and insert

    'participants are required to guess'.

This is merely a drafting amendment. Its purpose is to clarify that clause 11 does not apply to knowledge competitions. The amendment makes it clear that the clause applies only to such competitions where all participants are required to guess or predict the answer.

Amendment agreed to.

Clause 11, as amended, ordered to stand part of the Bill.

Schedule 1

Betting: Prize Competitions: Definition of Payment to Enter

2.45 pm

Mr. Moss: I beg to move amendment No. 63, in

    schedule 1, page 151, line 10, leave out 'includes' and insert 'is'.

The Chairman: With this it will be convenient to discuss the following:

Amendment No. 56, in

    schedule 2, page 153, line 3, leave out 'includes' and insert 'is'.

Column Number: 105

Mr. Moss: Amendments Nos. 63, 56 and the others in the group, if I might call it that—

The Chairman: Order. There are only two amendments in this group, which are amendments Nos. 63 and 56. There are others grouped further on under the schedule. As I usually say at this point, I am perfectly happy to have a wide-ranging debate on the amendments—if that suits hon. Members on both sides of the Committee—as long as it is clearly understood that there will not be a stand part debate afterwards.

Mr. Moss: I am grateful for your directions, Mr. Gale. I simply wanted to alert the Committee to the fact that some of the amendments relate to schedule 1, but that quite a few of the amendments I tabled are to schedule 2. I will discuss them under schedule 1, however. My point is that schedules 1 and 2 are pretty much the same, except that the former refers to prize competitions and the latter to lotteries. The principles that I discuss relate to both but appear first in schedule 1.

Amendment No. 63 is a textual change. It takes out ''include'' and replaces it with ''is'' in order to firm up the three conditions that must be met to participate in the arrangement. The conditions are found in sub-paragraph (a), ''paying money'', sub-paragraph (b), ''transferring money's worth'' and sub-paragraph (c),

    ''paying for goods or services at a price or rate that reflects the opportunity to participate''.

It has been asked why ''include'' should relate to those conditions when there does not seem to be any other means of making a payment, donation or contribution to participate in the game or lottery. Rather than use ''include'', would it not be stronger to use ''is''? It clearly defines what is really meant.

Mr. Caborn: I am afraid that I cannot see any merit in either amendment. They seek to tinker to no good effect with schedules 1 and 2. Although in reality people will be required to pay to enter a betting prize competition, amendment No. 63 would result in the competition falling outside the scope of the regulation if the payment took some form other than those set out in paragraph 2. I cannot forecast what form that would be, but it would be unwise to exclude the possibility of new payment media or mechanisms being developed by the gambling industry.

Although people in reality will have to pay to enter a lottery, amendment No. 56 would result in the lottery falling outside the scope of the regulation if the payment took some form other than those set out in paragraph 2. Again, I cannot forecast what form that might be, but it would be unwise to exclude the possibility of new payment media or mechanisms being developed by the gambling industry.

We are trying to future-proof the provisions as we go through them, and this is yet another example of that. With that, I ask the Committee to reject the amendments.

Mr. Moss: I am grateful for the Minister's explanation, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Column Number: 106

Mr. Moss: I beg to move amendment No. 64, in

    schedule 1, page 151, line 13, leave out 'reflects' and insert

    'is enhanced or increased in a manner directly attributable to'.

The Chairman: With this it will be convenient to discuss the following:

Amendment No. 65, in

    schedule 1, page 151, line 29, leave out 'does not reflect' and insert

    'is not enhanced or increased in a manner directly attributable to'.

Amendment No. 57, in

    schedule 2, page 153, line 6, leave out 'reflects' and insert

    'is enhanced or increased in a manner directly attributable to.'.

Amendment No. 58, in

    schedule 2, page 153, line 21, leave out from 'which' to 'and' in line 22 and insert

    'is not enhanced or increased in a manner directly attributable to the opportunity to participate in an arrangement.'.

Mr. Moss: Amendments Nos. 64 and 65 refer to schedule 1 and amendment No. 57 refers to schedule 2. The reason that we have tabled them is consistency. Without them, the Government's intention to adopt the so-called New Zealand model could be frustrated or indeed negated. In that model, draws tied to a product promotion do not have to be free to enter as long as the cost of entering them is no more than the cost of the product. Amendment No. 58, relating to schedule 2, would remove the words

    ''does not reflect the opportunity to enter a lottery''

and replace them with

    ''is not enhanced or increased in a manner directly attributable to the opportunity to participate in an arrangement.''

The difficulties surrounding the use of the term ''normal rate'' were well aired in the scrutiny Committee, when Susanna Fitzgerald QC and Philip Circus, legal advisers to the Institute of Sales Promotion, gave oral evidence. The issue was covered in detail and their responses are set out in questions 1629, 1630 and 1631 to that Committee. I quote Mr. Circus at the scrutiny Committee:

    ''It is virtually impossible in the majority of cases to establish what the 'normal' price [for goods] is.''

We concur with that view.

We do not wish to take up the Committee's time by running through the difficulties in defining ''normal price'', but I provide one example to establish the existence of such difficulties. How does one define the normal rate in price of a product that has only just reached the market and, therefore, has no trading history to show that its price was not inflated to cover the cost of running a competition?

The Government's intention in the schedules is clearly to protect consumers from those promoters who openly flout the spirit of those rules that we referred to as the ''New Zealand rules''. It is right and proper that that is done. We think that our proposed revision would help to capture what the Government intend—namely, to ensure that the prices of products are not inflated by unscrupulous operators to cover the cost of running the competition. Therefore, the objective of the amendments is to remove the uncertainty about what constitutes the ''normal rate''

Column Number: 107

while ensuring that consumers are protected, by making certain that operators of prize competitions cannot artificially inflate the prices of the product to cover the cost of running the competition.

Mr. Caborn: Again, I cannot see merit in any of the amendments in this group. I think that they seek to tinker, to no real effect, with schedules 1 and 2. Amendments Nos. 64, 65, 57 and 58 seek to lengthen that part of the definition that covers cases where people have to pay extra for a product to enter a prize competition. The words in the amendments do not make the schedule any clearer—they just make it longer—and, by introducing the concept of direct attributability, they introduce additional and unnecessary complexity and scope for legal argument. The word ''reflects'' in the draft clearly encompasses payments that are announced or increased. With that explanation, I ask the Committee to reject the amendments.

Mr. Moss: We hear what the Minister says. I do not think that he addressed all my points. Those points did not come off the top of my head, but were put to us by QCs who considered the law in this context. While I do not want to prolong the debate, the issue is something that the Minister and his team might reflect on to make sure that their legal advice is spot on.

Mr. Caborn: I probably did not give a full enough answer about the expert legal advice that was given to the pre-legislative scrutiny Committee. I return to the point that it is possible for the gambling commission to establish the normal price. If expert evidence is needed, the commission can get that evidence and act on it. In my view, that would be a sensible approach. The fact that such a provision is not included in the Bill is not important because the gambling commission has powers to call for expert advice or evidence and to act on it.

Mr. Moss: That was helpful. We now have it on the record that there is a backstop in the form of the gambling commission. I am grateful to the Minister for those words of clarification. In view of that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Moss: I beg to move amendment No. 66, in

    schedule 1, page 152, line 6, after 'pay', insert

    'the promoter or an associate of the promoter.'.

The Chairman: With this it will be convenient to discuss the following:

Amendment No. 59, in

    schedule 2, page 153, line 30, after 'pay', insert

    'the promoter or an associate of the promoter'.

Mr. Moss: The amendments refer to similar situations and seek to protect respectable promoters of competitions for which there may be entirely legitimate costs associated with consumers collecting their prize, while ensuring that operators could not possibly benefit financially from such costs. Consumers would still be protected from the type of scam that was described in other places—certainly in

Column Number: 108

the scrutiny Committee—but also have the opportunity to win worthwhile prizes. Without the amendment, all sorts of meaningful prizes might be outlawed.

By way of illustration and to help the Committee, perhaps I could give some examples. Could a car be offered as a prize if the insurance and road fund licence had to be paid by the winner, or would that scheme be considered a lottery on the basis that payment of the insurance would be regarded as payment to participate? Suppose someone won a competition to go to a concert, perhaps in Sheffield. In order to take possession of their prize—to attend the concert—they must pay the associated costs of travelling to Sheffield, as if they wanted to go there. Would such a competition also fall foul of paragraph 7? Let us say that a person wins a prize by which they get a 50 per cent. discount on something, say a cruise. In order to take possession of their prize—to join the cruise—they would have to pay the other 50 per cent. The consumer may well consider the discount an extremely valuable prize, yet, as I interpret paragraph 7, it may be prohibited.

Those are the issues that have been raised with us. The question is whether the wording is accurate enough to allow for some leeway of interpretation for those prizes, games and competitions that are currently operated but which are not scams and which do not rip off the public in any way.

 
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Prepared 11 November 2004