Indications about security of
tenure
34. Our evidence discussed at length whether or not
any indications about security of tenure were given to those buying
list positions since 1998—in other words, whether people
were advised that they were buying list positions in perpetuity,
or whether people understood they were buying list positions for
a limited period of time. This issue is important as it is relevant
to whether or not the pre-existing value of the list positions
should be taken into account in some way when considering the
allocation of pitch positions from 2012 onwards.
35. The Government was very clear that no indications
were given to those buying list positions that the list positions
were purchased in perpetuity. It stated that "no indication
was given that there would be security of tenure over positions
bought at auction". The Government also pointed out that
the NJPC's conditions of sale and business for the auction of
bookmakers' seniority positions stated "the buyer will be
deemed to have knowledge of all matters which he could reasonably
have been expected to find out given his knowledge as an authorised
bookmaker and the exercise of due diligence".[63]
In oral evidence, the Parliamentary Under-Secretary of State told
us that "nobody has proven to me or given me evidence that
[security of tenure] ever existed in terms of being codified".[64]
36. Other witnesses agreed that no indications about
security of tenure were given, but suggested that this was because
it was thought such an indication was unnecessary as, through
custom and practice, it was understood that security of tenure
did exist. The Levy Board, for example, said it "did
not consider that bookmakers had security of tenure in respect
of pitches and is not aware that any indication was given to purchasers
of pitch positions that they may have had security of tenure"
but noted that it could "see how some purchasers […]
might have thought […] where there were no proposals to repeal
the 1963 Act […] bookmakers who had purchased pitches
would retain the right to trade from those pitches".[65]
37. The NJPC told us that "no indications on
security of tenure were given to those buying positions on bookmakers'
lists in recent years". However, it also said that "racecourse
bookmakers sold and purchased list positions in good faith on
the understanding that the bookmakers' lists would last in perpetuity
and the NJPC administered the process on this premise".[66]
The NJPC recognised that it may seem odd that it did not make
a specific written statement on the issue of security of tenure,
but argued that since "seniority lists had existed since
1928 […] which gave the overwhelming impression that the
lists were not subject to a fixed term […] it was not considered
that any statement on security of tenure was needed".[67]
Tom Clarke, Chairman of the NJPC, added that while on one hand
no statements had been made indicating that list positions were
purchased in perpetuity, on the other hand, no statements had
been made indicating that list positions were time limited. He
told us that "there was never any mention of a time limit
under the previous seniority system, nor had there been any mention
of a time limit in the Sparrow Report".[68]
38. Evidence from bookmakers expressed a firm belief
that list positions were purchased in perpetuity. The FRB said
that "it has been understood by all bookmakers that list
positions, and correspondingly their rights to operate their pitches,
are held in perpetuity, subject to the continued existence of
the racecourse in question".[69]
Individual bookmakers and small bookmaking companies also told
us that they thought they were purchasing list positions in perpetuity.[70]
The FRB said bookmakers held this view because, during the auction
and sale process, NJPC staff reinforced the permanence of list
tenure.[71] This was
supported by Clive Reams, former Chief Executive of the NJPC,
who said that "bookmakers were led to believe that tenure
of their list positions was effectively in perpetuity",[72]
and he confirmed that he and NJPC staff used the term "in
perpetuity […] on countless occasions at roadshows prior
to the system being introduced".[73]
On the other hand, Angus CrichtonMiller, former Chairman
of the Racecourse Association, challenged the view that any list
positions bought would be enjoyed in perpetuity. He told us that
"at no stage did the Levy Board or NJPC make any such commitment".[74]
39. Leaving aside the issue of whether or not the
NJPC gave any indications on tenure, bookmakers argued that their
belief that list positions were brought in perpetuity was reasonable
as every system of governing the transfer of list positions in
the past had treated list positions as assets that would last
until the owner's death and would then be passed on.[75]
Taffy Limited, an on-course bookmaking business, told us that
the Sparrow Report's "recognition of the principles of inheriting
seniority […] amounted to a powerful representation that
the investment in a list position was something that could be
relied [upon] as a long-term business asset".[76]
40. While some witnesses accepted that bookmakers
may have thought that security of tenure for list positions did
exist—due to custom and practice for example—other
witnesses argued that, at some point during the process for developing
the Gambling Bill, bookmakers should have realised that the operation
of list positions might be time limited. The Levy Board, for example,
said that while it understood how some bookmakers could have originally
thought they would retain the right to their list positions, once
proposals were brought forward to repeal the 1963 Act, bookmakers
should have been aware of the risks of a change in legislation.[77]
41. The Government pointed to a clause added by the
NJPC to the conditions of sale and business for the auction of
bookmakers' seniority positions in January 2005—which stated
that "authorised bookmakers are advised to be aware of the
full implications of the forthcoming Gambling Act before buying
or selling any list positions"[78]—as
evidence that bookmakers should have been aware that list positions
might not be held in perpetuity. The NJPC, however, told us that
this clause was never intended to be a "veiled warning"
to bookmakers that there might be some uncertainty over the duration
of tenure and that it was merely a reference to reform of the
five times rule and the impact of increased competition from new
betting areas.[79]
42. Our evidence indicated that some on-course bookmakers
were at least aware of the risks of a change in legislation to
bookmakers' list positions as early as 2003. In response to a
May 2003 DCMS position paper on the licensing of betting premises,
the bookmaker members of the NJPC—representing the NAB and
the Rails Bookmakers' Association—said that under the arrangements
proposed by the Gambling Bill, "it is imperative that following
the demise of the Levy Board future legislation should recognise
the need for security of tenure" and that "this should
be achieved by the continuation of the seniority list by the NJPC
or its successor".[80]
These bookmakers recognised that "if tenure was not guaranteed
then capital investment in 'picks'[81]
could be lost completely".[82]
In addition, in March 2004, Robin Grossmith and John Stevenson
of the FRB submitted a report to DCMS on "The impact of licensing
changes on racecourse bookmakers". This report warned DCMS
of the negative impact of the Gambling Bill on the enforcement
of list positions and made a range of suggestions as to how these
consequences could be avoided. DCMS did not adopt the FRB's suggestions
to preserve the tenure of list positions and the FRB told us that
its "concerns were not sufficiently heeded in legislation".[83]
43. We heard conflicting views on whether or not
any indications about security of tenure were given to those buying
positions on bookmakers' lists. We did not see any evidence to
suggest that definitive indications were given stating either
that list positions were bought in perpetuity or that list positions
were bought for a limited time period. However, we are convinced
that those purchasing list positions in auctions administered
by the National Joint Pitch Council (NJPC) did so in the firm
belief that these were purchased in perpetuity and that buyers
were encouraged in this belief. It was also reasonable for buyers
to believe that this was accepted by the Racecourse Association
(RCA) given the RCA's representation on the NJPC.
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