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Westminster Hall

Wednesday 18 March 2009

[Mr. David Wilshire in the Chair]

Online Gambling

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Blizzard.)

9.30 am

Robert Neill (Bromley and Chislehurst) (Con): It is a pleasure to serve under your chairmanship this morning, Mr. Wilshire. I am grateful for the opportunity to raise the issue of online gambling and the ramifications that stem from it. I have read some of the House’s previous debates on the topic, and I am grateful for the remarkable amount of material that various interested groups have sent me. When I entered the ballot for this debate, I thought that it might make a change from my normal activities relating to local government finance and unitary councils, and it certainly has. It is obviously an issue that generates strong considerations, and I hope that those who have contacted me will forgive me if I am unable to pursue all the points that they have raised.

I am also conscious that, on online gambling, there is a need to avoid special pleading, because a number of conflicting interests must be reconciled when dealing with the issue. Perhaps I had better get, as I used to say as a lawyer, my mitigation in first and say that I shall not pretend any great expertise in the field; I, like many people, am an occasional gambler who loses a bit of money on the grand national and might rashly be tempted into risking £20 on West Ham United winning the premiership—a guaranteed write-off and the triumph of optimism over experience. I admit that, wearing my professional hat as a barrister before I entered the House, I had to learn to play roulette, because I was instructed in a casino fraud, and we had to understand how to play the game before we could understand the fiddle, but that is the extent of my involvement in gambling.

For the record—it is a matter of record—I am a member of the all-party Channel Islands and Gibraltar groups. Online gambling is an industry in both areas, but neither authority in those two places has approached me and sought to initiate the debate. What caused me to initiate it, in fact, is the work that I have recently done in my constituency with several organisations that are concerned about problem gambling, and I pay tribute to those local and national organisations that deal with it. That, and some of the related regulatory issues, struck a chord with my past experience as a lawyer before I entered the House. There are concerns about ensuring that inappropriate people do not become involved in gambling, and about the social consequences, which are often not picked up as readily as other issues such as alcohol abuse. That is why I am particularly interested in the issue.

We must be realistic about certain things, however. Gambling has always existed and I have no moral objection to it, having set out my limited experience of it. It would be bizarre in the modern world if we did not
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recognise that the internet will play a role, and it would be foolish to pretend that the online gambling market is not substantial. Back in February, during a Delegated Legislation Committee debate about amendments to regulations on Antigua, the hon. Member for Bath (Mr. Foster), whom I am glad to see present today, set out in some detail the economic substance of the industry, which I shall not repeat because I doubt whether the figures have changed very much since then.

Online gambling is big business, and it creates not only opportunities but challenges. I accept that the Gambling Act 2005 was a well-intentioned attempt to strike a balance. Like a number of people, I have some criticisms of how it has worked out in practice, but we must take on board the fact that the enormous growth of the internet has almost outpaced the regulatory regimes. There are about 7,000 gambling sites, although that figure is very rough. Some are regulated and regulated very well by our regime, but the vast majority—about 6,000—are not effectively regulated, and that causes real concern. A number of constituents raised that issue with me.

David Taylor (North-West Leicestershire) (Lab/Co-op): The hon. Gentleman talked earlier about having an annual bet on West Ham winning the premiership, which would generate about the same odds as the hon. Member for Shipley (Philip Davies) making a speech or asking a question that did not include “political correctness”. The serious point is whether the hon. Member for Bromley and Chislehurst (Robert Neill) has assessed the debate held in Europe in the past few days, whereby MEPs want to push European-wide controls and regulation back to nation states, where they say that the power and responsibility lies. Many of the gambling facets that he describes are global, regional and continental, so is there not some scope for co-operation between nations on gambling—particularly online gambling?

Robert Neill: I very much agree. I was tempted to say that I phoned up William Hill to get odds on an intervention by my hon. Friend the Member for Shipley (Philip Davies).

The irony is that, if there is one area in which Europe could do more to achieve a level playing field, it is online gambling, but that is the area in which Europe has lamentably failed. The European Parliament’s debate on the Schaldemose report represents a missed opportunity, and I shall be interested to hear the Government’s response to it. While I yield to no one in my defence of subsidiarity, there may be merit in looking at the proposal, which the British MEP Malcolm Harbour floated, for a European code of conduct that, at least voluntarily, could set in train the common approach that most of us would like.

Mr. John Greenway (Ryedale) (Con): That is the nub of the problem. In essence, there are a number of jurisdictions in Europe where it is impossible legally for the United Kingdom to ban their UK-facing operations. We do not have common standards, and that is what we need.

Robert Neill: I pay tribute to my hon. Friend and his experience of those matters, which is very much greater than mine. That is why I was grateful for his intervention,
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and he is absolutely right. If we are to make sense of the single market, something to which I am committed, we have to create a genuine level playing field, but that simply does not exist at the moment. The difference between Germany, where online gambling is virtually outlawed, and the monopolistic approach in France and other European jurisdictions makes a level playing field impossible, and responsible British operators are often disadvantaged by that climate. It is very difficult for the various bodies trying to ensure that gambling is dealt with responsibly in the UK to counteract the inevitable penetration of the British market by unregulated bodies and the EU’s broad approach. If we cannot get right the approach in the EU, it will be very difficult for us to have any great authority when we try to argue with jurisdictions outside the EU about adopting the same common and responsible approach.

I hope that the Government will respond favourably to the approach of Mr. Harbour MEP, because it seems to be a balanced and sensible route towards standardisation, which in turn appears to be both the only way that is consistent with single-market principles and social responsibility, to which I think all parts of the House are committed. That is important not only because of the growth of unregulated sites and the variety of regulation, but because of the downside of gambling.

Gambling can be a legitimate form of enjoyment, and it produces a good deal of money for the UK, but it is a matter of concern. It is certainly a matter of concern for the constituents who have contacted me, because problem gambling appears to be growing faster online than in other areas of gambling, which is demonstrated by the Gambling Commission’s prevalence study. The figures on page 95 of the study demonstrate that internet gambling is the area where, by the commission’s two measures, the growth of problem gambling seems to be the greatest, and clearly that needs to be tackled. I am interested to see what proposals the Government have, on the back of those figures, to deal with the growth in problem gambling.

I pay tribute to the good work done by the Gambling Trust, as do the other organisations that I have had dealings with. I am interested to know what plans the Government have to strengthen support given to that trust, and to organisations like it, which are dealing with the issues that I have mentioned.

Given that we are not yet able to get common standards within the EU, we ought at least to be making sure that the maximum effort is made to ensure that there are proper standards in the white-listed jurisdictions. Can the Minister help? Do any of the white-listed or EU jurisdictions contribute towards the work of the Gambling Trust? I know that the trust receives financial contributions on a voluntary basis, but I am interested to know whether any of the EU or white-listed jurisdictions currently make such voluntary contributions and, if so, which ones. That may provide an interesting picture of the attitudes of the people with whom we are dealing.

Mr. Greenway: I can help my hon. Friend immediately, as chairman of the Gambling Trust. Operators in Alderney, which is a white-listed jurisdiction, are now contributing substantially to the Gambling Trust. Those contributions would be less likely had we gone down the road of
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introducing a statutory levy on operators. I congratulate the operators in Alderney on the support that they have given, which helps us support one of the organisations in my hon. Friend’s constituency.

Robert Neill: I am grateful to my hon. Friend for that information. I endorse his observations. That is the right approach. We ought to be seeking to use such authority as we can to encourage other operators in white-listed, and similar, jurisdictions to adopt the same approach. I should be interested to hear from the Minister about what more the Government can do to try to achieve that, about what can be said to the other white-listed jurisdictions on that topic and whether there is any scope for work with our EU colleagues on a similar approach there.

Philip Davies (Shipley) (Con): For the benefit of the hon. Member for North-West Leicestershire (David Taylor), I certainly will not mention the words “political correctness”.

Does my hon. Friend agree that there is an anomaly with regard to the funding for the Gambling Trust, because many organisations might be considered to contribute to problem gambling, including the Government themselves through the national lottery, which allows people to gamble from the age of 16? Scratch cards, for example, strike me as highly addictive. Does he agree that if we want to tackle organisations that promote inappropriate gambling, the Government might want to contribute to that fund?

Robert Neill: That is a tempting and interesting argument. I shall not follow it, but I suspect that my hon. Friend the Member for Shipley (Philip Davies) will want to pursue it in due course. His point that there ought to be consistency of approach is important. The Government have a role to play in encouraging the work of organisations such as the Gambling Trust, whether by direct contribution or using their leverage to ensure that there are contributions from the industry on a voluntary basis. I agree with my hon. Friend the Member for Ryedale (Mr. Greenway) that that would be preferable. I agree with my hon. Friend the Member for Shipley that it is important that the Government get involved and play a role.

David Taylor: I agree with the hon. Member for Shipley about organisations that may assist the work of the Gambling Trust. It is well known that online gambling heightens fraud, crime, gambling addiction, risk to children and so on. A relatively new occurrence is interference with the integrity of sporting events. Does the hon. Member for Bromley and Chislehurst believe that there is a role for the sports control bodies in cricket, rugby and so on and that the Minister is in a good position to respond to that matter when winding up this debate? That is a serious issue, is it not?

Robert Neill: The issue is very serious, and the Minister will have taken those concerns on board. It has clearly spread well beyond the occasional fringe scandal in the past. Now one finds it in mainstream sporting activities, with household names sometimes being implicated. That is damaging for the concept of sport, when in the run-up to the Olympics we are trying to encourage participation—it is scarcely a good role model for young people—and it calls in question the regulatory ability of some of those bodies. I hope that the Government will
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tell us what plans they have to take that issue on board, because it is topical at the moment. All these issues link together. It is a question of how we encourage greater harmonisation in the UK, support the work of the Gambling Trust and other jurisdictions and encourage a robust approach to the integrity of sport by the various regulatory bodies concerned.

I turn now to the consistency and robustness of the regulatory regimes that we allow legitimately to have access to the UK market. I am grateful to the hon. Member for Bath for his detailed exposition in the February debate on the piece of delegated legislation that I mentioned earlier. He got to the nub of the issue, when referring to the statutory instruments, when he said that, although we do not regard an identical regulatory regime as being necessary, the white-listed jurisdictions

and must

That includes, among other things, the protection of the vulnerable, which I mentioned earlier, fairness and compliance, which are topical at the moment, and ensuring that crime is kept out. I am not convinced that we have the necessary assurance that that is so in respect of such jurisdictions. In some cases, that is probably fairly easy to achieve. For example, it is well known that some established white-listed jurisdictions have a good track record and one should not denigrate the work that they do. But there are concerns that, if we are not transparent about the criteria that we apply to white-listing, the value of the white-listing process—often involving jurisdictions with important connections with the United Kingdom—can be undermined in terms of the rest of the world. I hope that the Minister can assist me, following the issues raised in the February debate and subsequent developments.

What are the current arrangements by which the Government test the robustness of the regulatory regime in white-listed jurisdictions? The hon. Member for Bath mentioned how difficult it is to get information on the submissions for white-listing. I understand that those submissions are not available for scrutiny, which the hon. Gentleman mentioned in respect of the difficulty that he faced on freedom of information applications. I would like to know the justification for that, as the Minister understands it. It has been suggested that commercial confidentiality is an issue—in my experience, it is usually the one that is raised most often. We would like to know whether that is so. Is that the sole reason?

Are there any other reasons that might be advanced, or have been advanced, by way of exceptions to the Freedom of Information Act 2000, as to why those submissions should not be available? I should have thought that it was in the interests of jurisdictions seeking white-listing for their submissions to achieve maximum transparency, because that would inspire confidence in the strength of their regimes. But it is also important for us, in respect of the due diligence that we owe to the British population, to be assured that there is a means by which the authorities in the UK can clearly and objectively compare the regulatory regimes of the various jurisdictions that apply for white-listing. We do not have that transparency or that assurance at the moment.

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The mystery shopper pilots were mentioned in February’s delegated legislation debate. That is a well-established means of testing the system’s robustness in respect of under-age people and so on. There was an indication that the mystery shopper pilots were to be extended beyond the UK, but it was apparent that none of the pilots had taken place outside the UK. Can the Minister tell us what the position is now? When will those pilots be rolled out to jurisdictions outside the UK? Has that happened yet? If not, when is it going to start and on what basis?

In that debate, reference was made to the Ascot conference and the minimum international standards document, which, as far as I am aware, is still not in the public domain. Is it proposed that it should be? It is difficult to understand why a document setting out minimum international standards should not be publicly available. That should be part of the process of robustness that we want to be available and that the House should be able to see as a measure of scrutiny of the regulatory regime’s strength. If the document is not available, why not? Is it because of commercial considerations, or are there objections from certain jurisdictions—if so, which? We are entitled to know. In the absence of overwhelming reasons to the contrary, it should be placed in the public domain as soon as possible.

Another aspect of white listing that was referred to in the debate is the situation in Antigua and Barbuda, which goes to the heart of ensuring faith in the robustness of the white-listing system. When I worked as a lawyer, I dealt with several commercial fraud and money laundering cases, and it was apparent that some jurisdictions throughout the world are susceptible to pressure from organised crime in several ways. Gambling and related activities have always been vulnerable and require particularly high standards to protect honest and legitimate operators—the majority—from such infiltration.

The position in Antigua was a matter of concern to hon. Members during the debate in February. We have not had any information to assuage those concerns, which have since been heightened by what has happened since, particularly among cricket fans as the Allen Stanford scandal hit the headlines. It is worth remembering that Stanford’s operations were based in Antigua and Barbuda. A particular concern to me is that unlike the UK, where the regulatory organisation for financial services is separate from that for gambling—that also applies is some other white-listed jurisdictions—the Antigua and Barbuda Financial Services Regulatory Commission is extraordinary in that it regulates not only financial services but online gambling. Its capacity and capability have inevitably been called seriously into question by what has come to light over the Stanford affair. If its capacity is subject to grave doubt—I say that as moderately as I can—on such an issue, we are entitled to be concerned about its ability to regulate online gambling to the standards that we expect of a white-listed country.

In fairness to UK citizens, whose market the commission could be involved in, and the whole white-listing system, it is important for the Minister to make it clear what discussions the Government or the British regulatory authorities have had since February with those in Antigua and Barbuda, as well as what they are doing to satisfy themselves of the robustness of the regulatory regime in that jurisdiction and its ability to meet the appropriate regulatory standards. In February’s debate, the response
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was that it was capable of meeting those standards, but that is not the same as an assurance that it does. Any risk management—that is partly what we are engaged in—needs a robust, embedded process, not an aspiration for the future. Nothing that I have seen or read suggests that we have that, and the Government owe us maximum clarity as regards the situation in that white-listed jurisdiction.

I hope that those who are interested in related issues such as spread betting, betting exchanges and so on will forgive me if I do not trespass down that line. I have tried to limit myself specifically to the regulation of online gambling, although I suspect that other hon. Members will want to raise additional points. I hope that I have clarified which two areas particularly concern me. These concerns are cross-party, and they are not driven by ideological considerations. I hope that we can approach the matter with a sensible and balanced view. I also hope that the Minister will respond to the debate constructively. My hon. Friends and I have been critical of the Government on some issues, but we want to help them to improve the situation because responsible gamblers and businesses in the industry—the vast majority—are entitled to clarity and equity of standards, which we do not seem to have at the moment.

Several hon. Members rose—

Mr. David Wilshire (in the Chair): Order. I always work on the assumption that all hon. Members who turn up to these debates want to speak, and 35 minutes remain before I want to call Mr. Foster. I do not know what the odds are on calling eight hon. Members in 35 minutes.

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