Memorandum submitted by John Stevenson
1. INTRODUCTION
1.1 I have been involved in bookmaking politics
for the last 22 years, being Chairman of the National Association
of Bookmakers (NAB) and a Director of the National Joint Pitch
Council (NJPC) in the period 1998-2004; a founder member and Director
of the Federation of Bookmakers in the period 2002-07 and I am
currently a member of the Bookmakers' Committee.
1.2 As a consequence of the above I feel
uniquely qualified to contribute to the above inquiry.
1.3 The partnership between the NAB and
the Racecourse Association (RCA) with respect to the pitch rules,
which recognised the bookmaker lists and hence tenure, was given
formal recognition in 1958 by the Fergusson Agreement. This recognised
seniority and the transfer of seniority, which was expanded in
1998 by the establishment of the NJPC.
1.4 The bookmaker lists have been recognised
by, and conferred benefits upon, all interested parties in the
past including bookmakers, the RCA and individual racecourses,
all of which have understood that it gave bookmakers the right
to operate their pitches in perpetuity within known parameters.
1.5 Since 1998 these positions have been
traded in the market on the basis of the above understanding and
approximately £100 million pounds have been paid for them.
1.6 On 14 March 2007 the RCA unilaterally
stated that from 1 September 2012 they would no longer recognise
bookmaker lists, thereby effectively confiscating the pitch assets
of bookmakers.
1.7 The rationale upon which this decision
was taken was that the Gambling Act 2005 abolished the basis upon
which the bookmaker lists were recognised, namely the Certificate
of Approval, but did not provide an alternative mechanism to ensure
tenure.
1.8 Since the confiscation of pitches cannot
have been intended by Parliament bookmakers are asking the Government
to re-introduce a mechanism whereby list positions are recognised
and the ability to trade positions is confirmed.
1.9 In view of the position taken by the
RCA it would seem appropriate that this response should initially
concentrate on the second term of reference.
2. WHAT INDICATIONS
ON SECURITY
OF TENURE,
IF ANY,
WERE GIVEN
TO THOSE
BUYING POSITIONS
ON BOOKMAKER
LISTS IN
RECENT YEARS?
2.1 Under the Fergusson Agreement a national
system of pitch administration was delegated to the NAB by the
Jockey Club and the RCA. Any alteration in the pitch rules had
to be approved by the RCA. These rules were described by the RCA
as being "designed to avoid disturbance and uncertainty on
the course".
2.2 In 1997 the RCA served notice that they
intended to end the Fergusson Agreement on the grounds that they
wished to modernise the ring to improve customer service.
2.3 To achieve this objective a Sub-Committee
was appointed by the Horserace Betting Levy Board (HBLB) under
the Chairmanship of Sir John Sparrow, which reported in 1998.
2.4 At no point in the period 1958-1998
did the RCA question or challenge the tenure of bookmakers that
had evolved in a transparent and orderly fashion.
2.5 Prior to the Sparrow Report the only
way pitches could be transferred was between members of the same
family.
2.6 The main thrust of the Sparrow Report
modernisation plan was to replace the NAB as pitch administrator,
with the NJPC, which consisted of three independent Directors,
two RCA representatives and two bookmaker representatives, and
to introduce a pitch seniority exchange system which facilitated
the buying and selling of pitches.
2.7 The Sparrow Committee gathered evidence
from all interested parties on the administration of betting rings
including the RCA which did not disagree with the main philosophy
that the seniority system had worked well and should be retained.
In addition the RCA proposed that seniority should be capable
of being transferred on an open market basis. There was no indication
in the RCA evidence to the Sparrow Committee that ownership of
a position on the bookmaker lists was only for a limited period.
2.8 The Sparrow Report did nothing to dispel
the expectation of bookmakers that the purchase of seniority positions
was not in perpetuity other than if the racecourse ceased to trade.
2.9 In the catalogue of pitches for sale
at the first auction held at Sandown on 13th December 1998, or
at any subsequent auction up to February 2007, there was not a
scintilla of indication that purchases were not in perpetuity.
2.10 At no stage in the deliberations of
the Sparrow Committee or in the subsequent Judicial Review into
the legality of it's recommendations did the RCA raise the possibility
of the bookmaker lists having a shelf life.
2.11 At no point in the NJPC monthly meetings
held between October 1998 and April 2007 did the RCA representatives
raise the possibility that the bookmaker lists could be confiscated
as a consequence of changes in the gambling laws or the Gambling
Act 2005.
2.12 In conclusion, from the outset of the
new administration system in October 1998 both the HBLB and the
NJPC encouraged bookmakers to purchase pitches in the firm belief
that such purchases were in perpetuity and were part of the modernisation
process.
2.13 This belief was enhanced by the fact
that the RCA was represented on both the HBLB and the NJPC as
well as at the local level at each racecourse.
3. WHAT THE
LIKELY EFFECTS
WILL BE
OF ALLOCATING
ON-COURSE
BETTING PITCHES
ON A
PURELY COMMERCIAL
BASIS AS
HAS BEEN
PROPOSED BY
THE RCA
3.1 The Budd Review of the gambling laws,
which was published in 2001, reported that the Five Times Rule(*)
should be abolished and replaced by a commercial mechanism for
determining daily pitch fees to be paid by on-course bookmakers.
3.2 The Budd Review also recommended that
the Certificate of Approval undertaken by the HBLB should be retained
and parked with the Gambling Commission. Together with the Five
Times Rule the Certificate of Approval process guaranteed the
continuation of the bookmaker lists.
3.3 It is the abolition of the Five Times
Rule, which bookmakers accept, plus the failure of the Gambling
Act to recommend the continuation of the Certificate of Approval
process that has enabled the RCA to interpret the Act as enabling
racecourses to confiscate ring lists and hence the businesses
of existing racecourse bookmakers.
3.4 One certain impact of the confiscation
of pitches is that bookmakers and their families will face serious
economic hardship. Many bookmakers have borrowed substantial funds
to purchase pitches, often by using their property as collateral,
or have used savings in the expectation of having purchased a
career as promoted by the HBLB. The sums involved for individuals
range from tens of thousands to a million pounds, and in total
a sum of £100 million pounds will be lost.
3.5 The RCA has stated that it will be prepared
to sell or lease the pitches they have confiscated to existing
bookmakers.
3.6 It is possible that the main bidders
for these positions could be powerful plc's with the potential
for monopolistic tendencies to act against the interests of the
public.
4. WHAT THE
ROLE OF
THE GOVERNMENT
SHOULD BE
IN THE
PROCESS FOR
AGREEING ON
A FUTURE
FRAMEWORK FOR
ALLOCATION OF
ON-COURSE
PITCHES FOR
BOOKMAKERS
4.1 The Government should determine whether
it was the intention of Parliament that the Gambling Act should
enable the RCA to confiscate bookmaker pitches.
4.2 It is unlikely that the intention was
that bookmakers should have their pitches confiscated when they
were purchased under the strong expectation that the deal was
in perpetuity.
4.3 The Government should facilitate the
retention of the Certificate of Approval role in a reduced capacity
to ensure the retention of the bookmaker lists.
4.4 The Certificate of Approval role could
continue to be parked with the HBLB or alternatively with the
Gambling Commission as recommended by the Budd Review.
5. CONCLUSIONS
5.1 I believe that the Gambling Act does
not reflect accurately the intentions of Parliament with respect
to it's impact on racecourse bookmakers.
5.2 It would appear that a serious ommission
in the Act, namely the safeguarding of the bookmaker lists, has
enabled the RCA to propose the confiscation of bookmaker pitches.
5.3 This omission could be rectified by
amendment to the Act to enable the retention of a form of Certificate
of Approval mechanism designed to preserve the bookmaker lists.
5.4 Such a decision would pave the way for
commercial negotiations to take place with the RCA to deal with
the replacement of the Five Times Rule and other commercial issues
concerning the creation of new betting areas.
(*) This is the amount by which racecourses can
charge bookmakers for their daily pitch fee, which is determined
on five times the admittance price for the public.
October 2007
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