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Mr. Foster: I have listened to the hon. Gentleman with considerable interest. He clearly has a much better understanding of how exchanges operate than I do. I will tell him privately my experience of trying to understand them.
In a nutshell, after the hon. Gentleman's lengthy contribution, is he merely asking the Minister to say whether an individual or organisation who lays bets on an exchange is or is not a business? If that is the gist of his question, we could ask the Minister for an answer and then move on.
The Chairman: Order. Before I call the hon. Member for South-West Hertfordshire (Mr. Page), I must tell him that he is pushing me to the extreme. I am listening to him carefully. The clause covers exceptions to offences and, so far, he is in order, but he is pushing me to the limit, so perhaps he will keep himself in order.
Mr. Page: I would never want to push you to the limit, Mr. Pike.
I must apologise for not making the point more clearly. Because of the open audit trail of betting exchanges, it is easier to trace and to identify offences, but there is concern that all is not fair and above board and that all is not cricket, which is why I have been going through the scenario for the Committee. The hon. Member for Bath—I was going to say my hon. Friend.
Mr. Caborn: It is getting a bit like that.
Mr. Page: One never knows. After the next election—[Interruption.] Is the Minister going to intervene or is he getting a drink?
Mr. Caborn: I am getting a drink.
Mr. Page: After the next election, we may need the support of my hon. Friend the Member for Bath to drive this great nation forward to even better and other things, or we may not.
To return to where we were. The Government need to go beyond what is in the clause. We want to understand the thinking behind the Government's way of going forward. It is not just a definition of a business that is needed. What will be the definition of customers who use betting exchanges? Will there have to have a certain volume of activity and transactions for registration? What will happen if there is a large overseas bet? Will that require any record keeping? Will passports and utility bills have to be provided to discover whether money laundering is involved? This is a can of worms and the Government must provide clear guidance for the industry on where we go from here.
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You are right, Mr. Pike. The question, ''What is a business?'' is just the tip of the iceberg. The Government have avoided tackling the problem in the clause. They have ducked it, but I am now looking the Minister fair and square in the eye—it is no good him grinning and smiling at me—and asking him how he will deal with the severe problems that will arise.
Mr. Caborn: If that were the tip of the iceberg and we kept going, the iceberg would melt. I was going to quote another metaphor about cricket and taking a catch, but, as a good Yorkshireman, I will not.
The clause allows people to take part in and provide facilities for private betting and gaming, as defined in schedule 12, without committing an offence under the Bill. It is important to ensure that the Bill does not outlaw perfectly acceptable gaming and betting that takes place in private. The limits under the existing law are being preserved.
Subsection (3) contains protection for those who bet but are not doing so in the course of a business. It allows people to place bets using the services of a betting operator or a betting intermediary on a non-commercial basis without the need for a licence. It also allows private bets between friends and others to take place without any need for authorisation and without committing an offence.
I shall try to answer some of the specific questions that have been raised. The issue is not an easy one. As the hon. Member for Bath said, it has been bouncing around.
First, on the money limits to which hon. Members referred, precise boundaries would not be helpful as there will always be people who bet recreationally but in large amounts—people will know who they are. They would be caught, whereas people who want to evade a limit could always find a way to come under the threshold. Therefore, we do not believe that money limits would be helpful.
Betting exchanges are licensed as bookmakers under the same test. The Bill provides a specific licence with a specific test that protects the consumer. As the hon. Member for North-East Cambridgeshire acknowledged, bookmakers already live with a business test in section 55 of the Betting, Gaming and Lotteries Act 1963. The test is defined in that Act.
Otherwise,
''in the course of a business''
is a question of fact. It will be about the amount of activity carried on and whether the person holds themselves out for business. Given the possible variations, we think that it would be best to leave the matter for the commission. It is difficult to come up with a foolproof definition of all circumstances, as the hon. Member for North-East Cambridgeshire said. Therefore, we need a combination of common sense and flexibility, which is why we believe that the new
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commission, which is the regulator, ought to and will have powers to make a decision on
''in the course of a business''.
4.30 pm
Mr. Prisk: Presumably, therefore, someone must demonstrate that they are making or are seeking to make a profit from the activities.
Mr. Caborn: Not necessarily. In the course of business, the person running the business is one consideration. The people who are laying the business also need protection, so I would not think that the definition would rely solely on whether they make a profit on a particular transaction.
Mr. Prisk: So someone who is self-employed, who clearly is not an enterprise in the corporate sense, would be included in the definition.
Mr. Caborn: Yes.
Bookmakers based abroad should be licensed in that country. If they are based here and are acting in the course of business, they need an operating licence. Again, if someone has an operating licence here, they can advertise and do all sorts of things. If they are licensed abroad and trying to ply their business here, they will not get the same advantages as a business licensed in this country.
How are users who act in business identified? The commission and betting exchanges will work together to identify parties who may be using exchanges to run a business, and a commission code of practice could also be developed.
Mr. Page: I am sorry to ask this just as the Minister is drawing to an end. We have a real problem, in that one cannot lay a book on a betting exchange. A bookmaker can make a book because they can actively control the odds, whereas on the betting exchange the odds are on the screen, and one has no control over them. That is a fundamental difference.
The worry is whether there are people who are able to manipulate those figures from outside and using outside influences that may not always be honest—hence, my question about overseas bookmakers. Bookmakers in this country who are using betting exchanges and not declaring that are doing something unlawful, and they would be in severe trouble if they got caught; they could lose their bookmaker's licence. However, with regard to the other systems I am talking about, I wonder whether we should try to get some definition a little ahead of the gambling commission coming forward because, as my hon. Friend the Member for North-East Cambridgeshire says, that could take two or more years.
Mr. Caborn: I think that I follow the logic of that. The hon. Gentleman is saying that people would want to lay bets from abroad on to the exchanges, and he is asking whether that would be in breach of the law. One would have thought so. The hon. Gentleman's premise
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for his scenario is that odds cannot be given on the betting exchanges. That is not true; odds can be offered on the betting exchanges.
Mr. Page: No, I did not say that.
Mr. Caborn: I thought that the hon. Gentleman did say that.
Mr. Page: I thank the Minister for giving way. If someone goes to lay a bet on the betting exchanges, there are odds. If someone were to go through the piece of all the odds being offered, whatever happens—and we assume that they get the winner or loser as the case may be—if they had invested £100 they would come away at the end of the day with £92. They would not come away with £110. That is because in these circumstances a book cannot be laid in the same way as a bookmaker can make a book. At the end of a race, a bookmaker should be able to put some money in his pocket because he has got active control of the odds. However, if one goes on to the betting exchanges, one cannot control the odds; they are there for an individual to accept or reject. That is the difference.
Mr. Caborn: That might be the difference, but I do not know what point the hon. Gentleman is making. Someone might want to have a fixed-odds bet and the bookmaker might want to make his 5 per cent. or 10 per cent., but as far as I understand it on the betting exchanges it is those who are matching the bets up who get the commission in any case. Are we talking about the definition of what a business is, rather than trying to define what the betting regimes are—whether they are fixed-odds or on the exchanges? I do not follow the argument; I do not even know the question that the hon. Gentleman wants me to answer.
Mr. Page: I fully accept that my inarticulate stuttering has not got through to the Minister, and I apologise for that. What I am endeavouring to say is that if one uses the betting exchanges to lay bets, it is impossible to run a business that will not eventually go bust, and, as I understand it, the objective of most businesses is to make a profit. That is why my hon. Friend the Member for North-East Cambridgeshire has perfectly legitimately asked whether the Minister would care to develop the definition of what is a business so that we can see where this is all leading, because the scrutiny Committee initially got itself into quite a muddle on the matter and, listening to the Minister, I can understand why.
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