Memorandum submitted by David Agnew and
Seabay Corporation Ltd
MY BACKGROUND
1. I am 43-years-old. I live with a partner
and we have three children, My address is in Sussex.
2. I am an independent authorized bookmaker
and, with a partner, Alan Pook, I carry on an on-course betting
business through a company called Seabay Corporation Limited ("Seabay").
I retired from the police-force in February 2002 after 15 years'
service. I retired at that time, because I have had a lifetime
interest in horse racing and I had decided that I wanted to change
my lifestyle and so I decided to become an on-course bookmaker.
Through Seabay, Alan and I acquired a number of pitches by private
sales and at the NJPC's auctions at various meetings at a number
of different racecourses in England and Scotland. I contributed
my share of the purchase costs of these pitches using all my own
assets and by borrowing money from my family.
3. My sole income comes from my bookmaking
activity. Like many ordinary people, I have personal financial
commitments including a substantial mortgage. I have no significant
assets apart from my home and my shares in Seabay.
THE PURCHASE
OF OUR
PITCHES
4. Before starting out as a bookmaker and
purchasing any pitches, I made careful inquiries in various quarters
(including speaking to the National Joint Pitch Council ("NJPC"))
as to what we would be buying and how the whole system of on-course
bookmakers' pitches worked. As a result of those inquiries, my
clear understanding was that, firstly, the pitch rights were perpetual
rights for particular meetings operated by each racecourse owner.
They were very valuable rights and the prices at auction represented
their full open market value.
5. Secondly, the whole pitch structure operated
by means of an extensive set of rules and regulations called the
Joint Pitch Rules which were enforced by the NJPC on behalf of
everyone directly involved in the management of horse-race betting
at racetracks (ie the licensing authority, the Horserace Betting
Levy Board, the racecourse-owners and the on-course book-makers).
The racecourses were all required to adhere to the Pitch Rules
as a condition of their certificates of approval issued by the
Levy Board. This is a statutory body, created by Parliament, and
I understood that this body, acting on behalf of the Government,
was effectively guaranteeing that the racecourse owners could
not unilaterally do away with the structure or scheme. (It should
be noted that I do not accept that this is a course which is open
to them now in any event, given that they were party to the creation
of the 1998 structure and have stood by and allowed perpetual
pitch rights at their racetracks to be sold at auction).
6. Thirdly, I understood that the racecourse
owners earned their income relating to pitch-owners in two ways.
Firstly, as an integral part of the "structure" they
have a direct income through the statutory maximum entry charge
to bookmakers to be able to use his pitch-rights on each racing
day. By the time that I started to buy pitch rights, the statutory
Five Times Rule had been in force for 40 years at least (and probably
for much longer than that), In addition, they earn a substantial
income from the gate-charges paid by the race-going public. I
believe that it is very important for the Select Committee to
appreciate that the presence and activity of on-course bookmakers
is a very significant "draw" to bringing in members
of the public and getting them to come to the racecourse instead
of staying at home.
7. Fourthly, the pitches or pitch rights
have a significant commercial value as between bookmakers which
depend upon all the other elements being in place. For instance,
if they had no significant value, there would be nothing for the
NJPC to auction and thus there would be no source of the income
which made the NJPC self-financing. I understood the NJPC to be
an entity operating with the Government's approval and with its
support: it is a company which does not have shareholders, instead
is guaranteed by the Levy Board.
8. From my point of view, through Seabay
I was acquiring valuable property or property rights which were
not terminable (ie they were perpetual) except in the case where
a racecourse ceased any longer to operate race-meetings. The purchase
of these rights represented a sound and conservative investment.
I was given no reason at all to think that the structure, to which
everyone (ie statutory licensing authority, racecourse owners
and on-course bookmakers) had subscribed could or might be changed.
9. It seemed to me to be a structure which
worked very effectively, at no cost to the public or the race-course
owners and which ensured that there would always be an effective
competitive market for placing bets offered to the public at any
racemeeting.
10. Since my original purchase of pitches,
I have learned that the NJPC structure was set up in 1998 after
long discussions between all the interests involved in on-course
horserace betting and following a report called the Sparrow Report.
All these relevant interests combined and agreed on a structure,
approved at the governmental level through the Levy Board,[5]
by which perpetual pitch rights could be sold transparently and
in a way which generated enough income to support all the activities
of the NJPC both at a national level and also all its supervisory
activities at each race-meeting.
11. I would ask the Committee particularly
to note that the independent role of the NJPC under the Pitch
Rules is of enormous benefit to the public since (a) the NJPC
is designed to operate independently of any particular interest
group and regulates the day-to-day activity of bookmakers at the
racecourse level so that the racecourses themselves are not involved
at all in managing or supervising the activity of bookmakers in
the bookmakers' ring; (b) the Rules ensure that there will always
be a number of independent small bookmakers offering their services
to the public at any race-meeting; (c) the NJPC resolves disputes
between race-goers and the bookmakers; (d) the NJPC provides a
system for ensuring that no winning punter can be left unpaid,
and so on.
MY PERSONAL
INTEREST
12. I invested most of my assets in the
belief and understanding that my property rights were going to
be in place in perpetuity. Taken together, they were very valuable
rights and were readily saleable in an open and transparent market.
I bought them in the legitimate expectation that the structure,
which had been carefully put in place, after much consideration,
by the Government's regulator and with the agreement of all the
parties in horseracing industry who were involved, including the
racecourse owners through the RCA.
13. The Gambling Act 2005 (a) has changed
the licensing system so that local authorities now are the licensing
authority for each separate racecourse and (b) does not contain
any requirement that the local authorities are to impose the same
requirements as the Levy Board had done, so as to ensure the retention
of the existing structure. In addition, (c) the Act abolished
the Five Times Rule without replacing it with any kind of maximum
fee which may be levied by the racecourses upon on-course bookmakers
who want to use their pitch rights. It is hardly surprising, therefore,
that, as soon as they could, the RCA decided to further undermine
the entire present structure by announcing that they did not intend
to honour existing current pitch rights beyond 2012. The effect
is that they would acquire the value of my existing pitches for
nothing at that time.
14. I could no doubt continue working as
a bookmaker up to 2012, but the value of the pitch rights, which
are my principal assets (through my shares in Seabay), have, for
the time being, been reduced to a small fraction of their previous
value. I believe that, in this respect, I am in the same position
as almost every other small, independent on-course bookmaker.
15. I personally face financial ruin as
and when I retire—or rather when I am forced to retire—from
bookmaking. The pitch rights, which should have been valuable
and saleable assets, are now neither of these things.
16. I do not believe that Parliament can
have intended or envisaged this to be the outcome when it passed
the Gambling Act. So far as my solicitors can learn, although
there may have been some discussions about the issue of on-course
bookmakers prior to 2005, the attention of Parliament does not
seem to have been drawn to our potential plight when the Act was
passed. Parliament has never properly considered how the continued
service provided by the independent, individual bookmakers at
racemeetings was going to be ensured. In short, we seem to have
been overlooked at that time or perhaps someone in the Department
of Culture, Media and Sport may have thought, too optimistically,
that it "would all get sorted out" by the Gambling Commission
when it came into being. And that has not happened.
17. In the meantime, as I understand it,
the Gambling Act 2005 has abolished the Levy Board as from the
end of this year. The NJPC, which is a limited company presently
guaranteed by the Levy Board, has no longer a sufficient income
to continue in business (because there are currently no auctions
of pitches) and has announced that it will stop its business activity
very shortly and be wound up. In any event, its guarantor is about
to cease to exist. Earlier this year, I understand that there
was talk of a replacement company being established, but that
has not happened, I believe, because of the unilateral steps taken
by the members of the RCA.
18. I appreciate, as a result of my discussions
with my solicitors, that the arrangements under the Gambling Act
could have involved the Gambling Commission in being required
by the Government (or itself deciding) to give a direction to
each licensing authority that it must include in each racecourse
licence (a) a requirement for the continuation of the Pitch Rules
and (b) the continuation of a maximum entry charge for the on-course
bookmakers with a pitch, but I understand from my solicitors that
the only indication thus far is that (i) the Gambling Commission
was giving "advice" as from June 2007 to track premises
licence holders with a view to preserving the present system,
but then only until 2012 and (b) the Government has produced draft
Regulations with the same wording as the advice, but this draft
has not yet been debated by Parliament.[6]
Again these Regulations would bring the scheme to an end in 2012.
19. The date 2012 is, of course, the date
which the RCA (on behalf of its members) has given to the on-course
bookmakers with a view permanently to bring an end to our pitch
rights and to the entire existing scheme. They are obviously acting
in their own interest and no one else's. I am very concerned that
both the Gambling Commission and the Department seem to be prepared
to accept the stance of the RCA, although it represents just one
interest-group. That is hardly fair treatment to inc and the other
pitch-owners like me.
THE PUBLIC
INTEREST
20. I understand from my solicitors that
the recommendations of the Sparrow Report started with the premise
that it was clearly in the public interest that there should independent
on-course bookmakers at race-meetings offering their services
to the public who carne there. It is not my role to delve into
the history of this public interest, but there have always been
bookies at the rails at race-meeting since livingmemory, even
when other sorts of horserace betting were illegal and before
the legalisation of betting shops.
21. To my mind, we provide a service to
race-goers which is important. We are highly competitive as between
ourselves at any race-meeting, and also as between ourselves and
(i) the Tote and (ii) the large national bookmakers. We provide
a very personal service, and often I have punters regularly come
to my pitch whom I have got to know over the years. Unlike the
Tote, I offer odds which are given out at the time when the bet
is placed: the odds are fixed and not just an indicative figure
which can change up to the time when the race starts. Also, I
may well be persuaded by individual race-goers to negotiate over
my odds for a particular bet. This is all part of the experience,
pleasure which race-goers have when they go to the races.
22. In short, the independent racecourse
bookmaker is part of a long-standing and valuable racing heritage
in this country and one which is not composed of faceless owners
like a modem supermarket. I am my own boss and I personally deal
with each punter who places a bet. Without being presumptuous,
I think that the on-course independent bookmakers like me make
up an important element which gives "colour" to race-meetings
in England and which makes our race-meetings stand out in the
world. Race-goers would not come to the courses and place bets
with us if they thought that they could do better elsewhere.
23. The structure, put in place in 1998
and into which I have bought through buying pitches, was agreed
on by all the racing interests and the racing regulator. It works
very well, and is based upon its day-to-day administration by
a self-financing body, the NJPC. So why change it? No one has
been able to give me any coherent reason.
24. I have read a letter dated 25 July 2007
from the Minister of Sport to various MPs (copy attached) which
recognises that the RCA "has taken advantage of the abolition
of certification" by the Levy Board to announce that its
members will not recognize existing pitch rights after 2012.[7]
It is, however, too optimistic on the Minister's part when he
expresses the view that, if the racecourse owners are left entirely
free to negotiate over on-course betting rights, they will do
anything other than sell the on-course bookmaking rights to the
national or international bookmaking organizations who have financial
resources far beyond my resources.
25. In short, if the existing structure
is dismantled, it is certain, in my view, that after 2012 there
will be no small independent bookmakers left at any race-meetings
because we will have been forced out of business. There will be
no one left to compete against the Tote or against the large national
(or international) bookmakers. Horse-racing in this country will,
therefore, be the poorer for it and that would, I believe, be
against the public interest.
26. In addition, it cannot be fair and in
the public interest that small individual investors like me, who
have bought pitch rights on the understanding that we were acquiring
perpetual alienable rights, should be deprived at a stroke of
the value of our investment,
27. If nothing is done to right this wrong,
the racecourse owners will be unjustly enriched at our expense.
I use the word "unjustly" quite consciously because
the owners knew perfectly well that bookmakers like me were buying
the pitch rights at their racemeeting on the basis of the pitch
structure established in 1998. Indeed, the RCA was party to its
setting-up.
THE FIVE
TIMES RULE
28. This statutory rule, providing for a
modest maximum charge which race-course owners can charge bookmakers
for operating their pitches at the pitches which they have bought,
may be thought to be a historical hang-over. That would be quite
wrong, in my view. Although each sum paid on any occasion may
individually be relatively small (and depends on the price charged
to the race-goers for the particular location/race-meeting), there
was no suggestion in the scheme established in 1998 that this
element was unfair to the racecourse owners. That there should
be a maximum possible charge to the bookmakers ensures that the
small, independent bookmaker like me will be able to afford to
attend meetings, even if his profits may prove to be very small
or even if he makes a loss. We take that risk.
29. Apart from the owners providing the
space and location of the bookmakers' ring at the racecourses,
under the Pitch Rules the owners have no part to play—and
thus no cost to incur—in the administration/oversight of
the bookmakers operating in the ring. That is carried out by the
NJPC's own staff at the expense of the WPC.
30. I do not think that there is any good
reason for abolishing the Five Times Rule. It ought to be reinstated
(as is proposed in the draft Regulations), but without limit in
time. It is an important element of the structure which upholds
the value of the pitch rights and that, in turn, ensures that
there is an income to the NJPC from sales of pitches sufficient
to pay for all the services/duties which it carries out.
31. In return for the charge paid by the
bookmakers, we get very little from the trackowners: a place in
which set up our joints. Why should Parliament now give the owners
an opportunity which they plainly intend to turn to their sole
financial advantage?
CONCLUSION
32. I respectfully ask the Select Committee
to do its utmost to see to it that Parliament does take the necessary
steps to re-establish the existing structure as it has been since
1998, That involves effectively a requirement, preferably in the
form of Regulations (with no time limitation such as 2012) in
each race-course licence, to the effect that:
(i) the owners must provide a Bookmakers'
ring at each race meeting for use by independent bookmakers who
own pitch rights;
(ii) the Pitch Rules must be operated at
the race-course as condition of the track licence; and
(iii) the racecourse owners may not charge
more than the current maximum of five times the price paid by
race-goers to the particular meeting, or alternatively a maximum
fee (to be set out in the licence) sufficient only to cover their
overhead costs of providing the ring.
33. Also, it seems to me inevitable now
that this ought to be something which is the subject of legislation
by Parliament, since the RCA's members wish to take unfair advantage
of the undermining of the present structure by the Gambling Act
2005. This was no doubt unforeseen, but that should be now remedied,
It would be thoroughly unfortunate if matters were left solely
in the hands of the Gambling Commission to remedy, since I can
foresee the possibility that the RCA would then seek to challenge
in court any decision by the Gambling Commission alone.
34. This can, I am told by my solicitors,
all be quite simply enacted now by Parliament—by simply
deleting subparagraph (9) from the draft Regulations. (This is
the provision which says that the relevant paragraph of the draft
Regulations shall not apply after 31 August 2012).
35. I am willing to amplify my submission
and to give evidence to the Committee if asked to do so.
October 2007
5 Obviously, if the Government had disapproved in 1998,
it would have made sure that the NJPC structure was never given
the go-ahead and implemented. Large numbers of members of both
the House of Commons and the House of Lords, as well as members
of the general public have benefited from the continued presence
of the small independent bookmakers at race-meetings in competition
to the national bookmakers and the Tote. Back
6
Gambling Act 2005 (Mandatory and Default Conditions) (England
and Wales) Regulations [2007]. Back
7
Not printed. Back
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