Examination of Witnesses (Questions 39-56)
MR MARTIN
LE JEUNE
AND NICK
RUST
28 NOVEMBER 2006
Chairman: Our next witnesses are Martin
Le Jeune, Head of Public Affairs at Sky Television and Nick Rust
the Director of Betting & Gaming at Sky Interactive, BSkyB.
Sky is appearing separately from the other broadcasters because
they take a slightly different view, I think it is fair to say,
from the other commercial broadcasters which we shall be hearing
from later. May I invite Alan Keen to start?
Q39 Alan Keen: I think you have said
that it is "fundamentally misleading", can you explain
a little further?
Mr Le Jeune: You have already
heard some interesting evidence in that way and, if I may, I would
like to ask Nick to pick up on that particular question as he
is our gambling expert.
Mr Rust: I am concerned. Obviously
we operate a platform where these channels exist and we have to
grant access to those channels, so our consumers (Sky consumers)
are accessing these channels and you have heard some of the concerns
about those channels already. We think quite clearly these channels
are gambling, but they are not regulated as gambling; they need
to be regulated as gambling, for some of the reasons you have
heard this morning. We think it is a little ironic, at a time
when the Gambling Act has passed and is being implemented and,
quite rightly, is setting out very clear guidelines for gambling
operators to provide transparency to consumers and to ensure that
consumers are verified and checked as being over 18 and have a
set of tools at their disposal to ensure that they can manage
their gambling activities, which are adult activities, that this
genre of services appears not to be classed as gambling yet and
appears to have some leeway in these areas. We would like to see
them regulated as gambling, because we think very clearly the
genre at the moment are gambling services. As far as whether they
are misleading is concerned, the point has already come out this
morning and, if we use the 75p again, if you have 75p on a horserace
and your bookie does not honour it then that would be a problem
with the Gambling Commission, and Mr Kavanagh no doubt will talk
about that later on. Also, the bookmaker does not then say, "Thank
you very much indeed. Would you like another 75p on? By the way,
before the race starts (and I'm not going to tell you when the
race starts) would you like another 75p on?" and so on. These
services should be properly regulated as gambling and made visible
to consumers. We would like to see that so that consumers can
enjoy these shows, if they wish to enjoy them, but clearly understanding
that it is gambling and clearly understanding what they are participating
in.
Q40 Alan Keen: You obviously take
a serious view of it. The fact that Sky have bought shares in
ITV, I know Sky said they would not interfere editorially in ITV
and would not try to, but with an issue as serious as this is
Sky considering trying to influence ITV's channels in any way?
Mr Le Jeune: I do not think at
the moment that, with the interest that the regulators are taking
in our investment, we would seek in any way to do that. We are
not engaged, as Nick made clear, in a crusade against these shows
per se. What we wanted to do for the sake of the Committee
was to put forward some suggestions of how they might be better
regulated in the interests of consumers, in the interests of transparency.
It is not for us to judge the morals of these channels; it is
not for us to judge the morals or ethics of channels on the platform
generally. We have a suite of controls to protect consumers and
it may be, if the Committee goes down this road, that some of
those controls are things you might consider should be applied
to TV quiz shows as well. That is our key point.
Q41 Alan Keen: Could you just give
us one thing you would like to bring in more than anything else?
Mr Rust: There is a suite of things
which may or may not be appropriate. If this is to be treated
as gambling, as we believe it should be, then there are a number
of controls already in place. You need to verify who the customer
is before they can participate in gambling. You need to make sure
they are over 18. You need to make sure that they are only using
one credit card, for example, so that they can control their gambling
activities. We make available, and so do most of the online gambling
operators in this country, a number of controls that consumers
can use to limit the amount of deposits that they make; to limit
the amount of time they spend gambling. Rather than just being
reminded, they actually have those tools at their disposal, at
their control, without any intervention from the operators. Indeed,
people can self-exclude from these activities through saying,
"I don't wish to participate any more in this", by simply
online clicking on a button, and no longer will bets be accepted
from that individual. That is proper for a gambling environment.
You have heard some of the risks this morning about what can happen
in this environment at the extremes with one or two players who
perhaps go in too far—because I think it will be at the
extremes; that those people need protecting and they need to have
the tools at their control to be able to manage their gambling
activities.
Q42 Paul Farrelly: You have said
in your evidence quite clearly that you consider these shows to
be illegal lotteries. We have already heard this morning that
Big Game TV is not appearing because it is the subject of a City
of London Fraud Squad investigation following complaints. We have
heard also reference to the fact that some of these game shows
may be committing fraud or theft. Presumably, given your position
on the illegal lottery aspect, you have made representations to
the regulator to say, "Look, you are requiring us to carry
this on our platform and, therefore, making us complicit in a
criminal offence". What has been the response from the regulators?
Mr Rust: We have no evidence of
criminal offences. We believe it is an area which falls between
regulations at the moment. We would suggest that it is gambling,
and under the current law, where it does get trapped, we do believe
that they are lotteries. We have not made any allegations or have
any evidence that fraud is going on.
Q43 Paul Farrelly: Presumably you
have made representations to the regulators that they are requiring
you to be complicit in an illegal activity? If it is an illegal
lottery it is illegal, is it not?
Mr Le Jeune: That would be to
go too far. You have written evidence, and you will be taking
evidence in person from the regulators today. It is very clear
from what they have said (and I have looked at their submissions
very carefully) that they are looking at this area. Our concern
is that at the moment, as so often happens with new services,
regulation is not quite keeping pace with the way this develops.
You have heard evidence this morning about particular practices—we
really cannot go there. We really cannot comment on that. We provide
a platform; we know it is regulated; channels come on it. If we
started to embark on some kind of moral policing crusade throughout
our channels I think a) we would not do anything else in life
and b) we would become a very unpopular organisation, because
it is not our job. In the end, we work very closely with the regulators.
Nick has worked very closely with the development of the Gambling
Commission, but that is for them to do rather than for us to try
to police.
Q44 Paul Farrelly: Your view is that
these are illegal lotteries. Therefore, you are being required
to carry something that is illegal. What have the regulators said
to that? I would want an indemnity.
Mr Rust: It is not clear that
it is illegal yet. We believe that to be the case. There is no
established (legal) case concerning it. Where we do believe that
activities are clearly illegal, there have been examples of actions
being taken, but this area is not clear yet. That is what we hope
this inquiry will help to bring to pass.
Q45 Paul Farrelly: It is a view you
have not pushed as far as wanting any indemnity or protection
for yourselves?
Mr Le Jeune: We are looking at
the moment for clarity both from the regulators and, I hope, this
Committee and the Government and that will enable us to go forward
with more confidence.
Q46 Mr Hall: You described this as
a "gamble" or a "lottery" to start with but
it is not, is it? If you make a phone call to one of these quiz
shows it costs you 75p, that is blocked automatically; that is
not a gamble because you are not likely to be getting into the
game of chance itself. The only time you get into the game of
chance is if you actually get through to those calls that are
stacked up for the presenter to take, and then the gamble comes
when you actually have a chance of answering the question, so
this is just a scam?
Mr Rust: I am not a legal technical
expert. As far as I am concerned, the consumer will think it is
gambling, or should think it is gambling because they are paying
a stake to take part in an activity where there is no skill involved
and it is an element of chance whether they get through to the
prizes. It is a form of gambling. On the illegal side, I cannot
say it is a scam because I do not know. We believe it is an illegal
lottery. That is our view as presented in the submission. Either
way it is a gambling activity. Very clearly it has all the characteristics
of a gambling activity from a behavioural point of view.
Q47 Mr Hall: For the person making
the phone call who does not know that they have got absolutely
no chance of getting through because the producer has actually
put a block on calls for two and a half hours that is not a gamble?
Mr Rust: That is not transparent
at all. I think if that became transparent, however it is managed
within the gambling portfolio, then consumers at least would know
what is going on. I totally agree with that point.
Q48 Mr Hall: The chances of winning
the National Lottery are 14 million to one, everybody knows that.
What are the actual chances of getting your phone call through?
Mr Rust: I do not know. We do
not know behind the scenes how these operate. We really do not
know. That is one of the issues for you. We may have visibility
on this only through the evidence in the operators' submissions,
but there is no visibility of that to us, the general consumers
or you.
Q49 Philip Davies: I think it is
gambling too. Are your crocodile tears about the vulnerable a
bit unbelievable? Your big issue with this is that you know it
is gambling because people are spending their money on these things
rather than using SkyBet and your poker channels. What would you
say to people who say, "You don't really care about protecting
any vulnerable people. All you care about is that they lose their
money on Sky rather than losing their money on quiz TV"?
Mr Le Jeune: It is unusual to
have applause at a select committee! I would say, and I would
like Nick to come in on this, that crocodile tears or not what
we do in terms of our interactive gambling services is to put
in place a series of customer protection measures that attempt
to deal with the problems that can come about through excessive
gambling. They are listed on the back page of our submission and
I could go through them in detail if you want. We are doing that.
We are providing: age verification; spend limits; self exclusion,
which can be for a longer or shorter period according to the customer;
we are linking into the charities in this area; we are providing,
for example, free play games where no actual money changes hands,
and the odds of winning on those are exactly the same as on the
main games, so we are not touting for business or misleading customers.
Those measures are there; they are in force; and it is possible
to conceive that in TV quiz calls similar measures might be effective
in terms of dealing with the problem end of the market.
Mr Rust: We are quite happy for
these businesses to go ahead, and I think some of them, as we
have heard already, are very entertaining. The issue is visibility
for our consumers and making sure they are dealt with properly.
This is an adult and serious activity. At the end of the day we
just want to see that consumers are managed properly and that
they are not being misled into something that this is not.
Q50 Chairman: You did run Sky Quiz
Live?
Mr Rust: We did, yes.
Q51 Chairman: This essentially is
a call TV quiz show?
Mr Rust: We did for several months,
and the evidence was startling and the spend per customer levels
was such that we could clearly see that consumers were burning
through money quite quickly when they first joined and did not
have visibility of that. It was creating consumer issues and calls
afterwards when they got phone bills and things like that. Whilst
we worked with ICSTIS and others to try and improve that, we felt
that was not the right way to go and we ceased that trial and
have not continued with those activities.
Q52 Chairman: Despite the fact that
it was making large amounts of money?
Mr Rust: It was in the early days.
It was making a very nice amount of money. It was a trial and
it was not running fulltime throughout the day, for example.
Q53 Chairman: It was because of ethical
concerns that you decided not to continue with it?
Mr Rust: Consumer concerns that
we had. We were concerned about the sustainability of the business
over a long period of time—and that is for the other operators
to talk about, the sustainability of their businesses. We were
concerned about that, and concerned about the business model and
the visibility to consumers. We would rather be far more upfront
and say, "If you're taking part in gambling you've staked
this and you know what you're going to get".
Q54 Mr Evans: Could you give examples
of how much money people lost?
Mr Rust: It was a small trial
and we had a couple of phone bills of over £200, and that
was a lot of money on that activity at 75p a go. The nature of
the complaints was concerning. It was to Sky, and people were
saying, "Look, if this is being part of Sky", (as, by
the way, they do with some of the other operator channels), then
they reconsider whether they wish to stay with Sky or not, on
the basis of that sort of thing. That was our big concern.
Q55 Mr Evans: With the information
you have got with the current programmes that are available, like
the one on ITV last night, The Mint, would you advise people,
with the knowledge that they have, to play that game?
Mr Rust: With the knowledge that
is available, I cannot speak for the individual stuff but I think
until this is made very clear to consumers what this is then,
no, you could not advise it. I think that can be done. I think
controls can be put in place as we have discussed today and there
will be other suggestions, no doubt, you will receive from the
operators who are already moving on in that regard. I think we
have to come to terms with the fact that this is gambling and
therefore we need to make sure that proper controls are in place.
Q56 Chairman: You do not think that
any of the criticisms you have made apply, for instance, to Sky
Vegas?
Mr Rust: Sky Vegas has all of
the controls in place that we mentioned. When you are betting
on a single event, you know when that event is going to take place,
you know exactly how much you are staking when you wish to take
part in that; it is a similar level of consumers in a way, because
the average stake is about £1.30 as opposed to 75p—mind
you, that is £1.30 per five minute draw—so we think
those are properly managed and regulated in accordance with our
own gambling safeguards and anticipation of the Gambling Act.
Chairman: Thank you very much.
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