Gambling (Licensing and
Advertising) bill

The Committee consisted of the following Members:

Chairs: † Mr Peter Bone  , Hywel Williams 

† Bradley, Karen (Lord Commissioner of Her Majesty's Treasury)  

† Bray, Angie (Ealing Central and Acton) (Con) 

Duddridge, James (Rochford and Southend East) (Con) 

† Efford, Clive (Eltham) (Lab) 

† Farrelly, Paul (Newcastle-under-Lyme) (Lab) 

† Grant, Mrs Helen (Parliamentary Under-Secretary of State for Culture, Media and Sport)  

James, Mrs Siân C. (Swansea East) (Lab) 

† Jones, Graham (Hyndburn) (Lab) 

† Kwarteng, Kwasi (Spelthorne) (Con) 

† Leech, Mr John (Manchester, Withington) (LD) 

† Macleod, Mary (Brentford and Isleworth) (Con) 

† Morrice, Graeme (Livingston) (Lab) 

† Morris, David (Morecambe and Lunesdale) (Con) 

Sandys, Laura (South Thanet) (Con) 

† Shannon, Jim (Strangford) (DUP) 

Smith, Nick (Blaenau Gwent) (Lab) 

Sutcliffe, Mr Gerry (Bradford South) (Lab) 

Weatherley, Mike (Hove) (Con) 

† Wright, Simon (Norwich South) (LD) 

Neil Caulfield, Committee Clerk

† attended the Committee

Witnesses

Gareth Wallace, Public Affairs Adviser, Salvation Army

Helena Chambers, Director, Quaker Action on Alcohol and Drugs

Professor Jim Orford, Emeritus Professor of Clinical & Community Psychology, University of Birmingham (expert on addiction and gambling)

Dan Boucher, Director of Parliamentary Affairs, Care

Nick Poyntz-Wright, Director, Financial Conduct Authority

Helen Roberts, Financial Conduct Authority

Helen Grant MP, Parliamentary Under-Secretary of State for Culture, Media and Sport

Alison Pritchard, Head of Gambling and Licensing, Department for Culture, Media and Sport

Joanna Hemingway, departmental lawyer, Department for Culture, Media and Sport

Jenny Williams, Chief Executive, Gambling Commission

Paul Morris, Head of E-Gambling Policy and Implementation Team, Gambling Commission

Public Bill Committee 

Tuesday 12 November 2013  

(Afternoon)  

[Mr Peter Bone in the Chair] 

Gambling (Licensing and Advertising) Bill

Examination of Witnesses

Gareth Wallace, Helena Chambers, Professor Jim Orfor d and Dan Boucher gave evidence  

2.30 pm 

The Chair:  We will now hear oral evidence from the Salvation Army, Quaker Action on Alcohol and Drugs, Professor Jim Orford and CARE. 

Before I call the first Member to ask a question, I should like to remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed. For the record, would the new witnesses please introduce themselves to the Committee? 

Gareth Wallace: Good afternoon, my name is Gareth Wallace and I am the public affairs adviser for the Salvation Army in the United Kingdom and the Republic of Ireland. 

Helena Chambers: I am Helena Chambers from Quaker Action on Alcohol and Drugs. 

Professor Orford: I am Jim Orford, from the university of Birmingham, and founder of the Gambling Watch UK website. 

Dan Boucher: I am Dan Boucher, director of parliamentary affairs for CARE. 

Q 89 1 Jim Shannon (Strangford) (DUP):  My big concern relates to those with gambling problems and vulnerable people in general, so this evidence session will be important. At Second Reading last week the Minister said she would be prepared to look at ISP and financial transaction blocking as a possibility. Do you feel that ISP and financial transaction blocking would be a good way to help those gamblers and vulnerable people? 

Gareth Wallace: We certainly agree that ISP blocking would be extremely valuable. We welcomed the Bill at draft stage but now that it is going through the House, we feel it should have more teeth. It seems to be all carrot and no stick. The briefings which, for example, CARE has given out expand on how we think different forms of technology could be used to help people who have problems with their gambling. 

Dan Boucher: We very much welcome the fact that the Government have said that this Bill is about consumer protection. Mindful of that, the failure of any enforcement mechanism in the Bill is of real concern. The effect of the Bill could be simply that there was more gambling advertising, enabling those who get licences to advertise—at

the moment they cannot—from outside the UK and white-listed jurisdictions. At the same time, it would allow everyone who does not have a licence to continue to access the UK market. The Bill will tighten up consumer protection only if it does two things: first, it should insist that those who can advertise get a licence, but secondly it should prohibit those who do not have a licence from accessing the UK market. Financial transaction blocking is probably the most effective way of addressing that. I have heard some references to the effect that its results are mixed; I would like to suggest that in a mature and open market financial transaction blocking is very effective. 

In closed markets, there is quite an incentive for punters who want to shop around for more competitive odds to use Paypal or other mechanisms to get around the financial transaction block, but in a relatively mature and open market, where the odds offered are pretty competitive, there is not the same incentive to try to evade financial transaction blocking. Similarly, from the supplier’s point of view, the cost implications of trying to deal with financial transaction blocking are such that at the end of the day it is actually cheaper to go and get a licence from the UK Gambling Commission. 

We feel that the combination of the carrot provided by the advertising provisions plus the absent stick—the stick that we believe must be provided in the form of financial transaction blocking—will help to drive firms towards getting licences so that the stated intention of the Bill—namely, to enhance consumer protection—is in fact delivered. 

Q 2 Jim Shannon:  This morning, one of the witnesses mentioned that the gambling sector was quite keen to take action and work on improvements to try to stop gambling problems at an early stage. What actions do you think the sector should be taking to detect problem gamblers online? The witnesses are going to make a written submission to the Committee as to what they would like to see happen, but I would like to hear your ideas. 

Professor Orford: There is a variety of good practices, I think, which some of the best sites are already offering. However, practice is very varied and the standard really ought to be raised so that all providers offer socially responsible gambling. There is a whole clutch of things really. Having a good self-exclusion system that is co-ordinated across different providers—the expression “one-stop shop self-exclusion” has been used—is very important. 

Pre-commitment is another good practice whereby people commit to a maximum spend and maximum time when they start to gamble, probably voluntarily. In Australia people have been seriously talking about mandatory pre-commitment, so people would not actually be able to start engaging in online gambling unless they stated beforehand the maximum they wanted to spend. A very clear, well publicised, voluntary pre-commitment is probably very important. 

There are also things such as arranging breaks during play. Part of the problem with online gambling, or with any dangerous gambling, is the immersive nature of it—the fact that it is fast and quick and you can gamble again straight away. On poker sites, for example, I think I have read that you can play 70 hands in an hour online, whereas otherwise you are lucky if you can play

30 hands in an hour. Breaks and pauses break up the immersive and therefore the addictive nature of it online gambling. 

There is a whole clutch of other things as well. They are there in the literature as good practice. All licensed sites should adopt that good practice. 

Dan Boucher: One of our concerns about the Bill as it is currently structured is that a number of companies that, for various taxation reasons, decide to leave the UK and locate themselves in white list jurisdictions find themselves in Gibraltar and Alderney with more robust licensing conditions than we currently have in the UK. If I could just quote quickly from the Gibraltar code, it says that 

“the licence holder should initiate measures to assist the customer manage their gambling. This should include the generally available facility to set controlled, daily deposit, time or gambling limits, and self exclusion. The Commissioner will monitor local arrangements before considering whether specific standards for limits should be set.” 

The UK code does not state that. Those are protections that UK consumers are currently able to benefit from. At the same time as introducing the Bill, we should review the protections provided by white list jurisdictions from which British consumers currently benefit, since so many gambling providers have relocated to white list jurisdictions. If our protections are not as good as theirs, in the context of the Bill, although everyone will have a UK gambling licence, the regulatory framework will not be as sensitive to the needs of problem gamblers as it is at the moment. That is another major concern that we have with the Bill. 

Q 3 Jim Shannon:  You suggested that the one-stop shop was a possibility. Certainly the Minister last week in the Chamber said that he was prepared to look at that as well. How do you see it working? Do you see it as an advisory-type thing, maybe? I would perhaps say a wee bit tighter, in legislation if that is possible. In what way would you see the one-stop shop being more effective? 

Professor Orford: I do not know the mechanism whereby it would happen, but many problem gamblers find self-exclusion very useful. I have spoken to a number of people who have said: “Yes, it has really been a saviour for me, being able to self-exclude from the place where I normally gamble”. However, if it is specific to one site, one operator or one place where you gamble, then it is comparatively easy to go to another site or place. Everybody is saying and everything I read about it says, “Self-exclusion is good. We must have self-exclusion”. But the more co-operation and co-ordination we can have on it the better. As for the mechanism by which it is done—and I am sure that it is difficult—I do not know. 

Dan Boucher: Dr Sally Gainsbury recommends in her book Internet Gambling: Current Research Findings and Implications that it is built into the licensing code. If you want a UK licence, you should sign up to being part of a one-stop shop facility. 

Gareth Wallace: The fact that the internet is a technology that allows for a lot of data capture has many positive implications. While online companies can gather data on their customers, there is the opportunity for them to gather data on problem gambling and to pick up patterns. So there is an opportunity to use what might be seen as commercial data for marketing purposes but also to help people who have revealed potential problems in their

play patterns and allow those people to self-exclude. Some friends from Gambling Reform and Society Protection—GRASP—who are recovering problem gamblers, have pointed out that while they welcome the opportunity for this technology, in some cases providers contradict the Gambling Commission’s code. When someone has self-excluded for a period, as soon as that period has expired, providers once again direct promotions and advertising to that person. Perhaps we need to look again at the methods of self-exclusion and the rules and enforcement of self-exclusion for online providers, so that this technology and information can be used to protect the vulnerable. 

Q 4 Mr John Leech (Manchester, Withington) (LD):  I want to pick up on something Mr Boucher said. If I heard you right, you suggested that the incentives for online providers to get a licence would probably encourage them to do so. What about the disincentives for consumers to use licensed online providers? If we bring everyone who is currently offshore within this regulatory system and then within the tax system as well, do you not think that there will then be an incentive for people to go searching for non-regulated providers in order to get better deals? 

Dan Boucher: One of the benefits that we have in this country is that the gambling market is relatively mature and open. The odds that people can find here are fairly competitive. If we operated a closed gambling market, there would be a significant incentive for people to try to evade financial transaction blocking. However, mindful of the lack of security in using some of these codes, the lack of protection when you commit your money, and the fact that you should be warned that the company is not licensed when a financial transaction block takes place, one hopes that common sense will prevail in the majority of situations. I am sure that some people will try to evade, but at the end of the day, from a public policy point of view, one wants to try to frame the law in such a way that it will have a positive effect in the majority of cases. It will not necessarily deal with people who are deeply and profoundly committed to evading, but for most people that incentive will not be a strong one. Financial transaction blocking gives a strong incentive to companies, because it is cheaper for them to get a licence than to deal with the problems of financial transaction blocking. 

Q 5 Mr Leech:  So you think the disincentive for consumers to go searching for unregulated sites means that the predictions that there will be lots of online gambling on unregulated sites will probably not come true? 

Dan Boucher: If you are talking about having financial transaction blocking in place, yes. If there is no financial transaction blocking in place and we proceed with a Bill with no teeth—as Gareth said, all carrot, no stick—then no. One of our concerns is that those who get licences will be able to advertise, but those that do not will be able to continue to access the UK market as readily as they can today. The sense in which the Bill tightens regulation then becomes less than obvious, because its main effect will simply be to allow some companies that cannot advertise in the UK today to do so. It will continue to allow companies that cannot advertise and do not want to get a licence to continue to access the

UK market. That will change if financial transaction blocking is in the Bill, and if it has a carrot and a stick—an enforcement mechanism. 

Q 6 Mr Leech:  So your view is that the Bill can work as long as it has got teeth? 

Dan Boucher: Yes. But it obviously does not have teeth at the moment. 

Helena Chambers: May I make a simple point, going back to Mr Shannon’s question? I have spent lots of time looking at gambling websites recently, and the code of practice for terrestrial gambling currently says that displays about responsible gambling and help need to be prominent or very visible. I do not think the equivalent is in the code for internet gambling. On some of the sites, the link is tiny; it is in small writing at the bottom of the page in the terms and conditions. That is one obviously thing that needs to be in the code. People need to have their attention drawn to it. 

Q 7 Clive Efford (Eltham) (Lab):  As Ms Chambers has raised that point, I will pursue it. Some have suggested that there needs to be a clearly identifiable standard kitemark on all websites, to show that the website is licensed by the Gambling Commission. That, in turn, could provide a link to the sort of information that you have just spoken about. Would that be welcome, and is it needed? 

Gareth Wallace: I have to say, Mr Efford, that your speech on Second Reading was excellent. We welcome a lot of the comments you made, and we would certainly welcome a kitemark. Echoing Helena’s point, there should be larger, more prominent links to GambleAware to improve people’s knowledge of the treatment provided by, for example, GamCare. There should be a simpler, more obvious way to find the excellent information on the Gambling Commission website as people are playing, so they do not have to search the Gambling Commission website separately for it. 

Q 8 Clive Efford:  Does anyone have anything to add to that? 

Dan Boucher: The only thing I would add to that is that it would be a good thing, but we should not be tempted to think that a kitemark was an excuse for not including proper enforcement provisions in the Bill. 

Q 9 Clive Efford:  Right, you are all feeding me the lines. That is exactly where I was going next. Can you say what you hoped to see in the Bill that would promote responsible gambling? 

Dan Boucher: I very much would have hoped to have seen, first, a clear enforcement mechanism. My preference is for financial transaction blocking, but ISP blocking is equally acceptable. At the moment, people in the UK access online services to a large degree from white-listed jurisdictions, where they are able to benefit from codes of practice that exhibit a greater concern for problem gamblers than our own codes of practice. At the same time as trying to domesticate our licensing provisions, and to license companies based abroad within the UK, the Bill should provide for researching or reviewing the licensing provisions that UK consumers currently benefit from when accessing gambling services from white-listed jurisdictions; and seek to review our code of conduct to

ensure that its regard for vulnerable problem gamblers is as strong as the best white-list jurisdiction provisions. Any changes to our code consequently needed would be made on the back of that. 

I would also want to see a clear commitment to a one-stop shop provision. The point of the Bill as currently construed is that it will increase the amount of advertising available for online gambling. That would be its effect. Online gambling is a form of gambling with a higher problem prevalence figure. Looking at slot machines, it is 9.1% problem gambling, which, on an annual basis, is a very high figure. 

In that context, I would have expected that, at the same time as effectively liberalising advertising, a step would have been taken to afford greater protections to vulnerable problem gamblers, with a recognition that self-exclusion does not work in an online context. It can logically work in an offline context. You can self-exclude from the four gambling shops in your local town, but it is completely useless and meaningless in an online context—well nearly useless and meaningless. Because if you exclude yourself from four sites in your bedroom, there are hundreds and thousands out there that you can still go to. The one-stop shop principle is, in our view, imperative, because if this Bill is really about consumer protection, that principle needs to be at the heart of the Bill. 

Professor Orford: I would like to see much more attention given to the dangers posed to children. The protection of children is a major aim of the Gambling Act 2005, but there are a lot of things going on with online gambling that present a danger for children, and we know that online gambling is particularly attractive to children. We know that a lot of under-16s manage to engage in online gambling. We know that there is an enormous grey area growing up around social networking and the use of social network sites and interactive television. All that is going to develop very fast over the next few years, and children may be particularly at risk. 

Free play sites and practice sites are a particular worry to us. A lot of those sites are not so well protected. In effect, they are providing gambling and almost certainly training the next generation of adult online gamblers. There are matters to do with advertising and the pre-watershed. On Friday night, when England play Chile, there will be children sitting with their parents, encouraging their fathers to bet immediately on Rooney scoring the next goal in the second half. We think in-play gambling is particularly dangerous. 

All our information is that parents are not well clued up about the dangers for their children. They know about drugs as well as a number of other worries, and they now know about internet pornography, but they do not yet know much about the dangers of gambling and internet gambling. I would like see protection for children against such dangers and information for parents and families made much more prominent in the Bill. 

Gareth Wallace: I would like to point out that there is a restriction in football on having a gambling advert on a youth strip, but not the adult strip, but that is nonsense when you can have pre-watershed advertising. It is an anomaly that is exemplified in the different types of strip that an adult and their child would wear on the terraces. We would want to look more closely at the fact that people can access the internet freely and children

can see what is happening online. We would have a closer look at the impact of gambling advertising on children. 

Helena Chambers: May I pursue Professor Orford’s point about practice sites, to give a bit of evidence? The Ipsos MORI inquiry into children’s gambling that the national lottery commissioned in 2011—I am not aware of anything more recent—said that 

“playing free online gambling games in the past seven days was the single most important predictor of whether a child had gambled for money in the seven days preceding their interview, and one of the most important predictors of problem gambling among those who had gambled”. 

That was particularly in the context of vulnerable children, so the effect of these practice sites on children is tested. 

Gareth Wallace: May I make a point about research? The point was made that about 9.1% of people who play online slot machine style games have a problem with their gambling. On Second Reading, the Minister said that less than 1% of the population as a whole have a problem with their gambling. There is obviously a huge discrepancy in the addictive nature of online slot machine style games. As we go forward, and as this appears to open up the online market, we need more research and more funding for research into the impact of online gambling and online problem gambling. 

Q 10 Clive Efford:  Would you want something put in the Bill that requires operators to contribute towards that? 

Gareth Wallace: When we have responded to Government consultations, we have previously been in favour of a levy. Online gambling is worth approximately £2 billion a year, and yet there is a voluntary contribution to research, education and treatment of £5 million from the industry. With this huge growth area—it is a £5 billion gross gambling yield industry in the UK—the industry could be a lot more generous in its provision of funding for research, education and treatment. 

Q 11 Clive Efford:  On the operators themselves, do you think that they currently do enough to detect under-age gambling or problem gambling? 

Dan Boucher: There is some interesting technological developments called adaptive behavioural analytics, which is a technology that has been developed by the Harvard medical school, Buddy and Featurespace for monitoring people’s gambling habits and enabling them to pick up immediately if someone is beginning to exhibit problem gambling behaviour, so that interventions can then be— 

The Chair:  Order. I am sorry to interrupt. Let me make it clear that members of the public are not allowed to take photographs in here. 

Dan Boucher: The companies can then make appropriate adjustments and intervene and have conversations. It is very important preventive health care for problem gamblers. It is obviously always better to try to prevent a problem from coming to fruition and potentially costing the taxpayer a lot of money as well as the individual and their family an awful lot of pain. The Government in Ontario recently conducted a literature review, which is well worth looking at in relation to the use of this kind of technology, and found that although there were some sites that were doing it voluntarily, for which they

must be commended, the take-up was very low. Certainly, promoting this kind of technology in tandem with tightening up our own codes of practice and trying to emulate the better level of care provided in Gibraltar for problem gamblers would help to make the UK’s approach much more robust in terms of our regard for problem gamblers. 

We must remember, picking up on Gareth’s point, that 1% of the population is a huge number of people in absolute terms. Proportionately, it might not seem like a lot of people, but it is 450,000. Obviously, no man or woman is an island, and all those people are surrounded by families who are also affected, so we should not underestimate the significance of this problem. If we are looking narrowly at online gambling, online slot machine problem gamblers amount to 129,000 people. I do not have a figure for the total number of online problem gamblers, but just on slot machines it is 129,000. That is 129,000 people with 129,000 families. It is a significant challenge for us, and if we are a humane society we should be doing our absolute utmost to put in place these mechanisms to help prevent problems from emerging in the first place, by using technologies such as adaptive behavioural analytics. 

Helena Chambers: I understand that the Gambling Commission is receptive to the possibilities of using this kind of technology for safety purposes. This is another area for research, and it is important for it to be properly funded. When we made proposals about research on other aspects of gambling which are of concern to us, particularly regarding certain types of gaming machine, we were told that there is a very limited research pot. This really does need to be addressed. I made the point in my submission that the Gambling Commission was looking to receive £9 million for research, education and treatment by 2011. This simply has not happened. 

The other point concerns the use of messages to tell someone about how much they have spent and for how long they have been playing. This is something which we are already doing, but which could be more robust in the code of practice. 

Professor Orford: The simple answer to the question of whether the operators are doing enough is that the picture seems to be very variable. Some operators are behaving very responsibly and doing very well, but a large number of them are not. This is why I think that we are all agreed that the level ought to be put up. 

Q 12 Clive Efford:  Following on from that, do you think that the gambling code’s requirements on operators are strong enough, particularly in relation to advertising? 

Helena Chambers: Do you mean the code— 

Q 13 Clive Efford:  Do you think that the protocols in the licensing code of conduct are stringent enough, in terms of both player protection and how the market advertises itself? 

Dan Boucher: I certainly do not think that the code is stringent enough in terms of protection. This relates to my point about trying to bring our codes up to the level of the best white-list codes. I am looking particularly at Gibraltar and Alderney, which represent the imperative for doing this now. Presumably, one of the hopes of the Bill is that companies that might previously have located themselves in places such as Gibraltar and Alderney

might come back and locate themselves here, or may continue to locate themselves abroad but will need to have a licence from the UK Gambling Commission. 

Q 14 Clive Efford:  We are told that the Gambling Commission is going to tighten the code and that it can deal with this, and therefore we do not need to legislate for it in the Bill. However, if the Gambling Commission was inclined to do this, would it not have done so already? 

Dan Boucher: If you are saying that this is an initiative in two halves, with half of it in the Bill and the enforcement half of it in the Gambling Commission, what is required is a pincer movement. The Department and the Gambling Commission need to move at the same pace, so that when the Bill is published, at the same time the Gambling Commission is setting out everything it is going to do in order to give the Bill teeth. If you are saying that it would be better to pass the Bill and wait, and at some point in the future get around to thinking about what to do about enforcement, in my view that is not a very acceptable way forward. I would encourage a pause, perhaps, for the Gambling Commission to publish the details of what it is going to do and how it is going to enforce the provisions in the Bill. Members could then make a decision about whether or not they feel able to support the Bill. 

Professor Orford: I think that as legislators MPs need to steer the Gambling Commission. I do not envy the Gambling Commission its task. It is required under the Act to permit gambling and make it as facilitative as possible for operators to provide gambling, but you as legislators are dealing with something that I would term a risk to public health if it goes wrong. It is therefore important that you make it clearer to the Gambling Commission what it has to do; otherwise, they are torn in many directions as a regulator. 

Q 15 Clive Efford:  Does anyone else have anything to add to that? 

Gareth Wallace: The Gambling Commission needs to be adequately resourced for this task as well. We have worked with it for many years, and it has only 199 employees, while I think more than 90,000 people are employed in the gambling industry in the UK. In the Second Reading debate, I think Mr Davies claimed that the Gambling Commission might be building an empire, but the only empire is the gambling industry empire and if the Gambling Commission were better resourced for its task, it might be able to help with this a lot more. 

Q 16 Clive Efford:  I was going to come to that, and I will ask for comments on that in a minute, but before that, I want to pursue whether the industry is doing enough. There is clearly an incentive to develop the best forms of technology and software to get people to gamble, but do you think that there are enough incentives to develop the best forms of software to detect problem gambling? 

Dan Boucher: The software is there with the adaptive behavioural analytics technology. Perhaps if our gambling codes enforced the same requirements as the Gibraltar code, for example, in terms of requiring companies not simply to log certain forms of behaviour, which is what

our code requires at the moment, but to follow through with specific obligations on what the company must do, that would provide a real incentive and reason for companies to take up the technology provided by adaptive behavioural analytics. 

Clearly, at the moment the technology is out there that companies can use, and the really responsible ones do. Whether it would be in order to create some statutory obligation to require gambling operators to use it, or whether it would be more appropriate simply to make demands of them that would be best serviced by their using that technology without expressly stating that they should use it, I do not know. But certainly if one went down the Gibraltar road, one would be asking of companies the kinds of things that adaptive behavioural analytics could provide, which would generate an incentive for companies to do that. 

Q 17 Clive Efford:  In the code, or in the legislation? 

Dan Boucher: In the code; though equally if that was in the legislation. 

Gareth Wallace: I must confess that I am no expert on adaptive behavioural analytics—I have to defer to Dan on that. Based on a simpler piece of technology, for many years some of the groups to my right have often said that you should not gamble on credit—money that you do not have. On the other hand, credit, or credit cards, can provide useful age verification. So one simple piece of technology that we could encourage or enforce gambling websites to implement would ensure that people had to register a credit card to prove that they were over 18, but then for them to gamble only on a debit card so that they were gambling with money they had in their bank account. 

That would seem a very sensible and simple way of using technology online so that people could set a budget and ensure that children were not gambling. After all, it is no fun losing your money and if people in the gambling industry want to see gambling as a form of entertainment, it is important that people are protected from overspending. 

Q 18 Clive Efford:  Mr Wallace has already commented on resources for the Gambling Commission. Does anyone else have any concerns about whether it is sufficiently resourced to deal with this area of activity? 

Professor Orford: I notice it said in the notes that the additional costs will be met out of the hoped-for additional licence fees. I do not know whether that is actually true or whether the cost of regulating in this difficult area will exceed the new fees coming in. I am not an expert in that, but it seems an assumption that new money coming in will be sufficient for the new task. I wonder whether that will be the case. 

Q 19 Clive Efford:  May I ask about watershed? Someone referred to it earlier. Do you have concerns about watershed advertising, which now seems to be blanketing football in particular when that is on TV, and its possible implications for problem gamblers and under-age gambling? 

Professor Orford: Yes, I think I was the one who mentioned it earlier. Yes, I do. Just taking the scenario of Friday night when England played Chile, it combines all the things to do with children being present with adults who will convey great excitement about the game

that is going on. There is even the sense now that one is being somehow loyal to the English team if one bets on England winning, despite the fact that they are losing at half-time. The way the technology is developing, it will not be long before you can bet using your television remote control. Perhaps you already can: I am not sufficiently technological to know that. But if you cannot it will not be long before you can, so pre-watershed advertising will just be part of making it very difficult for parents to resist the pressure from their children to take part in online gambling. So, yes, I do think it is a risk. 

Gareth Wallace: In 2011 there were 154 complaints to the Advertising Standards Authority about gambling adverts; in 2012 there were 873. There is clearly an increase in people complaining about this. There is clearly an increased visibility of advertising in the public’s mind, particularly gambling websites on television. This needs to be looked at again. This anomaly, as evidenced by the adult versus child football strip, is something we should look at online. I realise there is no watershed on the internet, but there needs to be greater protection online for children and a greater realisation that sports sponsorship, as well as sports advertising, has an impact on the normalisation of gambling around football. 

Q 20 Clive Efford:  We have spoken about free gambling on social media websites. We now have real money gambling on social media websites. Do you have any concerns about that? That tends to be somewhere where young people spend a lot of time. I know from my own family that that is true. What are your views on that? 

Professor Orford: It is developing very fast. The whole area is developing so quickly that it is difficult to predict what the next technological changes will be. There is a whole variety of different ways in which online activities—to which children and young people have easy access—are either gambling in themselves or are clearly training people in the ways of gambling. It may actually be roulette but it is free. You may be betting on something that is not roulette or it may be a social game that enables you to earn the coinage of the game. But the coinage of the game can be transferred into prizes or it may even have a value on the market. There have been recent cases—I do not know the details—where social game coinage has a value of hundreds of thousands of pounds on the market although it is not actually pounds and pence. 

The Chair:  I am sorry to interrupt, but we are very close to having to throw you out. The Minister wants to ask a question. 

Q 21 The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant):  I have one quick question to all of you. It has been very interesting to hear what you all have had to say. I have been listening very carefully. Do you believe that consistency of regulation is important in strengthening player protection in this country? 

Gareth Wallace: Yes. 

The Chair:  We might as well go down the panel. 

Helena Chambers: Yes, as long the standards of regulation are robust. 

Professor Orford: Consistency sounds like motherhood and apple pie. It must be good but I do not know what is behind your question. 

Q 22 Mrs Grant:  It concerns the word “consistency”; no more, no less. Do you believe consistency of regulation is important in terms of player protection? 

Gareth Wallace: The third licensing objective in the Gambling Act 2005 was protection of children and the vulnerable. If this Bill is to be consistent with protecting children and the vulnerable to the highest possible standard, then obviously we would be supportive of it. 

The Chair:  Order. I am afraid that brings us to the end of the time allocated for the Committee to ask questions of this panel. I thank you on behalf of the Committee. We now move on to hear oral evidence from the Financial Conduct Authority. 

Examination of Witnesses

Nick Poyntz-Wright and Helen Roberts gave evidence.  

3.16 pm 

The Chair:  Welcome. For the record, please could the new panel introduce themselves to the Committee and state their positions. 

Nick Poyntz-Wright: My name is Nick Poyntz-Wright. I am the director of long-term savings and pensions in the supervision area of the Financial Conduct Authority. 

Helen Roberts: My name is Helen Roberts. I am a manager in the long-term savings and pensions sector team, which falls within Nick’s area of supervision in the FCA. 

Q 23 Clive Efford:  May I start by asking whether you think that operators of spread betting on sporting events should be subject to similar provisions as outlined in the Bill? 

Nick Poyntz-Wright: We regulate and supervise spread betting firms more generally, and we have certain standards to which we require those firms to adhere. In conjunction with the Gambling Commission, we have looked closely at how those requirements might align with what the Bill requires, but clearly right now the supervision regulation of those spread betting firms is outside and comes to us. So we are interested in making sure that there is alignment and that standards are upheld in a consistent way. 

Q 24 Clive Efford:  In pursuit of that, do you know how many times the FCA has met with the sports governing bodies? 

Helen Roberts: We have been in written communication with the Sports and Recreation Alliance, whereby we have talked about developing greater consistency between us and the Gambling Commission. In fact, we received a letter from them on Friday, requesting a meeting that we will be looking to action. 

Clive Efford:  So the answer is none. 

Helen Roberts: I personally have not had any action. I am not aware of any in the past, in terms of face-to-face meetings. 

Q 25 Clive Efford:  What proportion of the activities that you regulate does spread betting represent? 

Nick Poyntz-Wright: Maybe I can put it into context. The FCA regulates around 26,000 different firms; 25 of them offer spread betting and, of those, two offer sports spread betting—the others offering spread betting on financial indicators or instruments. 

Q 26 Clive Efford:  What I am trying to get a feel for is whether this is really high on your set of priorities, that you would put a lot of resources into monitoring what is going on in the sports betting that you regulate? 

Nick Poyntz-Wright: In the way that we carry out our regulation, we take a risk-based approach, so that does not necessarily mean that we follow the weight of numbers—it will depend on our view of the level of risk in a particular part of the market. Having said that, we also need to bear in mind that the actions that we take need to be proportionate and, clearly, it is only a minor number of firms relative to the whole spectrum of what the FCA oversees. 

Q 27 Clive Efford:  I have a letter here from March 2011 from the then Economic Secretary to the Treasury, the right hon. Member for Putney (Justine Greening). She said that the Government believed that the FSA ought to use its powers to impose part of the process of authorisation and that the FSA was the most appropriate body to regulate spread betting. Can you tell me what has changed since that letter was written in March 2011, specifically in relation to regulating spread betting? 

Nick Poyntz-Wright: Perhaps I can start by saying that, in terms of financial regulation in the UK, a great deal has changed. As you say, the FSA was our predecessor organisation, and it has now been divided into two separate regulators, of which the FCA is one. That took shape on 1 April 2013. 

On the specifics of how we have looked after spread betting, I am happy to talk about how that is now operating under the FCA, if that would be helpful. 

Clive Efford:  Yes, it would be very helpful. 

Nick Poyntz-Wright: As you are probably aware, we have been given a number of statutory objectives, and we are required to try to ensure that they are achieved. Essentially, there are three operational objectives: one is on consumer protection; the second is on the integrity of financial markets; and the third is on competition. When we exercise those objectives in supervising firms, included within which are the spread betting firms, we think about the risks that they may potentially pose to those objectives. 

We take a risk-based approach to what we do. There are three different ways in which we operate that supervision. We operate it at the individual firm level, so we routinely take steps to look proactively at how the firms are operating and what they are doing through the lens of whether they are ensuring that consumers are protected and getting what they have been led to expect. 

The second approach is across sectors, so we look at the risks and issues that we can see presenting themselves in a particular sector of the market, and we might undertake a project-based approach to tackle that risk across a number of firms and, in some cases, across a

whole sector. The third way is when events occur. Obviously, from time to time, events will occur that come to our attention through the intelligence that we gather, and we respond to those events. 

We have that three-pronged approach, part of which is designed to ensure that we are more proactive in identifying the emerging risks, rather than waiting until damage has occurred. 

Q 28 Clive Efford:  How many reports of suspicious activity have you received from spread betting operators? 

Nick Poyntz-Wright: Of the 25 spread betting firms, there are two that conduct sports spread betting, and we have informal arrangements with them to ensure that, where they identify signs of suspicious activity, they talk to us. We also have an information gateway, as it is known, to the Gambling Commission, through which we are able to pass on that information and share it with the commission, where appropriate. We have been looking into the actual use of that gateway, and we have identified that it has been used in the past, although not very much. 

The Chair:  I encourage members of the Committee, with Mr Efford’s permission, to come in on a particular point if they want to do so. That would be good. 

Q 29 Mrs Grant:  On the same point, you say that there are informal arrangements in place with the two operators offering sports spread betting. Have you any plans to underpin those informal arrangements with any form of guidance to strengthen and tighten them? The arrangements are obviously working but we want to make sure. 

Nick Poyntz-Wright: What we do have is certain requirements placed upon firms to notify us in certain events. That is the first thing to say; the requirements are there. We believe that provides some protection to ensure that the flow of information, in terms of potential suspicious activity taking place, is actually coming through. So those requirements are there but it is fair to say in this particular case—not least because there are two firms operating in this area and we have been in discussion and liaison with the Gambling Commission—we have decided to have dialogue with the firms and with the Gambling Commission to ensure that the informal arrangements are there, but they are underpinned by requirements within our supervision manual. 

What you might be alluding to is: should there be more? Could we be clearer in terms of the requirements that are on these particular firms in this particular segment of the market? We are actively considering whether it would be appropriate to give guidance to those two individual firms, which makes absolutely clear what we are requiring them to notify us of. And through the information gateway that I mentioned, once we receive that information we would then have an arrangement with the Gambling Commission to pass that information on. 

Q 30 Clive Efford:  You are aware of licence condition 15.1? 

Nick Poyntz-Wright: Yes. 

Clive Efford:  Why has the FCA not just adopted that condition, which would bring in uniformity across the whole of the sports gambling industry? 

Nick Poyntz-Wright: I do not know whether Helen Roberts wants to add some detail, but to begin with, as I said, we have a whole overarching regime of regulatory requirements placed on the firms that we authorise. In the main, those requirements would apply to all firms. Sometimes there are some sector-specific requirements, but the notification requirements I referred to earlier are generic, so they operate across the 26,000 firms that we supervise. In respect of the detail around 15.1, this is something that we have been discussing with the Gambling Commission, because we are sensitive to the fact that we would like consistency and we would like them to align. Helen, I do not know if you would like to add anything on the detail. 

Helen Roberts: The difference between 15.1 and our supervision requirements is lies in materiality. So our requirements are for the firms to notify us of, for example, fraudulent activity, but it is where it has a significant impact. The benefit in perhaps providing some additional guidance might be around the level to which suspicious activity is notified to us. We are generally content that the requirements are there, and with this extra bit of guidance—if we go down that route—there would be no need to adopt 15.1. 

Q 31 Clive Efford:  Condition 15.1 requires the operators to notify the sport’s governing bodies, to share information with them if they suspect that there may be some suspicious activity relating to their sport. If you are not talking to the sports, how do you know whether the activity has significant impact or not? 

Helen Roberts: It is for the firm to determine what “significant impact” is. We can engage with the spread betters on that. 

Q 32 Clive Efford:  So we have a regulatory regime for spread betting, but if we were to suggest it for remote gambling—that is, only the operator will determine whether there is a significant impact, which is basically ad hoc self-regulation—we would be quite rightly lampooned as regulators. Why should we tolerate that with spread betting? 

Nick Poyntz-Wright: I don’t think it is right to regard it as ad hoc. These are very specific requirements. Obviously, it is the firms themselves operating the spread betting that are the first, or very often the first, to hear about or gather the information. So what they are required to do is to assess whether that information gives them reasonable grounds to think that there might be fraudulent activity going on. In that instance, they are required to notify us. 

I mentioned earlier that we have these different cycles and approaches to supervising the firms. We will have a rolling programme—first, of looking at the firms themselves over a period. We may well look at their procedures and how effective they are at notifying us if those events may have occurred. How did they judge whether it was appropriate to notify? Similarly, on the sector-wide risks we may identify, we may look at that across the market, perhaps comparing and contrasting with the other spread betting firms. There is a routine and a process around that. 

The Chair:  I think the Minister wants to come in on this. 

Q 33 Mrs Grant:  This is a slightly different issue and aspect of your work, but can you explain what requirements you place on firms in their advertisement of sport spread betting? 

Helen Roberts: For sport spread betting, we have a detailed set of rules that applies to all investment activity, whereby the adverts are required to be fair, clear and not misleading. There are lower-level rules that underpin that. One thing I do know is that we proactively monitor advertising. That is done on a weekly basis and regularly includes sport spread betting firms. Such adverts are very prevalent in the marketplace, particularly because they tend to market on specific sporting events, so new adverts come out on a regular basis. We check them to see that they are compliant and, where they are not, we take action against the firms. 

Q 34 Mrs Grant:  Do you place any obligations on firms to assess whether a product is appropriate for the customer? 

Nick Poyntz-Wright: Perhaps I can start; you might want to add to what I say, Helen. We have requirements on firms to assess whether the products that they are offering are appropriate for the client. Essentially, what that means is that the firm needs to determine the level of knowledge and level of experience of the client regarding the particular product that it is selling. That is a generic requirement, which clearly also applies in the investment markets, but the appropriateness test is particularly important. Helen, do you want to add anything? 

Helen Roberts: It is directly relevant to spread betters, whether they be sport spread betters or financial spread betters. 

Q 35 Clive Efford:  I am sorry; I missed the answer to my question earlier. How many suspicious betting activities related to sporting events has the FSA identified in the last year? 

Nick Poyntz-Wright: We have looked at the experience that we have had in terms of notifications, and I think it is right to say that we have identified one. 

Clive Efford:  One? 

Nick Poyntz-Wright: Yes. 

Q 36 Clive Efford:  Do you really think that it is likely that there has been only one? 

Nick Poyntz-Wright: What we are saying is that there is one example where, in this informal arrangement that we have, the firms have come forward. Are you asking whether other activity may have been going on? 

Q 37 Clive Efford:  Well, in the evidence from Jenny Williams, the chief exec of the Gambling Commission, she clearly suggested that there was a great deal of under-reporting going on in the areas of the gambling industry where the Gambling Commission does not license. For the 80% of the market that it does not regulate, she said that there had been 10 reports that she was aware of since 2007 and she suggested that—these are the words of the Select Committee report— 

“it was implausible there were so few suspicious transactions.” 

Does that not seem to apply to spread betting as well? 

Nick Poyntz-Wright: As I said, there are three different approaches we take. We have not received or seen any evidence that suggests to us that there is significant suspicious activity going on that has not been brought to our attention. 

Helen Roberts: It might be worth noting as well that we have a whistleblowing hotline that is open to members of the public or anybody if they have suspicions, not just in relation to spread betting but generally. Then we investigate those where they are notified. Indeed, we would log them on shared intelligence systems, which the Gambling Commission and other regulators have access to. 

Q 38 Clive Efford:  How many phone calls do you get on your hotline? 

Helen Roberts: I do not know; I could find out. 

Q 39 Clive Efford:  It would be nice if you could let us know, as it would be useful. If we have a system that is heavily reliant on the operator fessing up to this suspicious activity, inevitably there is going to be an under-reporting of it. Is that not likely to happen? 

Nick Poyntz-Wright: If firms were operating spread betting in a manner we would expect, there is an incentive for them to raise suspicions with us. 

Q 40 Clive Efford:  Then why are the sport governing bodies that are directly affected by this so alarmed by this loophole in the regulations that you are not applying licence condition 15.1? 

Nick Poyntz-Wright: I am sorry; I cannot answer that question directly. All I can say is that we have been liaising with the Gambling Commission to try to ensure we have consistency and alignment. 

Q 41 Clive Efford:  The Minister’s letter of 25 March 2011 that I quoted earlier, states that they wanted you to adopt requirements equivalent to those imposed by the commission via licence condition 15. Have you done that? 

Nick Poyntz-Wright: We do not have requirements that literally spell out 15.1. No we do not. 

Q 42 Clive Efford:  Have you explained to the Government why you have not done that? 

Nick Poyntz-Wright: I do not know; we would have to look into that. 

Q 43 Clive Efford:  Well, we are two and half years down the road. You can go and look into it and by all means let us know, but there seems to be a lack of urgency across this industry. The Minister referred earlier to consistency. There is a gaping hole: the regulations relating to spread betting. You are not filling me with confidence that you feel that urgency. 

Nick Poyntz-Wright: I am sorry that you are not getting the confidence. We are absolutely concerned to ensure that the firms are operating the spread betting activity effectively, safely and appropriately. That is going back to our objectives of consumer protection and market integrity. So there is every intention to ensure that happens. We have been in discussion over that period about how we get clear consistency and

alignment, despite the fact that, as you have pointed out, the copy-across of 15.1 has not precisely occurred. We are confident with the two firms concerned here, and also with the Gambling Commission, that as far as we can reasonably tell that is working effectively. 

Q 44 Clive Efford:  Will you explain to me what your role is in monitoring performance, particularly of the spread betting operators? Is there any form of investigation that you undertake to ensure that they are informing you of any irregular activity? What kind of enforcement do you undertake? 

Nick Poyntz-Wright: This is what I am saying. We have the three approaches. One approach that we would take is that on a regular basis, for each individual firm that we regulate and supervise, we will look at what risks they might present to the achievement of our objectives. In this case, that would be consumer protection but also market integrity. Any hint of fraudulent activity would play to the market integrity objective. We do a review, which is a risk-based review according to the size and shape of a particular firm, where we would look at that periodically for each firm. We would look at how they operate and think about where the risks might lie. Clearly, with these spread betting firms, which would include those firms that are facilitating spread betting on financial indicators, the risk around suspicious betting activity and fraud would be high on the list of risks we might consider. 

Q 45 Clive Efford:  May I ask you quickly about financial transaction blocking and IP address blocking? Do you think that that would be an appropriate form of enforcement if you found any irregular activity taking place? 

Helen Roberts: I am not sure that I understand the question. 

Q 46 Clive Efford:  In your activities, do you ever undertake any enforcement action against an operator by blocking financial transactions? 

Nick Poyntz-Wright: There are two things that are relevant. Beyond that we perhaps did not come ready with the answers to that question. The first thing to say is that one particular strand of activity that we have, thinking particularly about financial markets and market abuse, entails screening large numbers of transactions to see where there might be abuse in that respect. The second area is looking at the individual firm level. However, I do not know whether any consideration has been given within the FCA to blocking financial transactions. 

What we could do if we believed that a firm was not exercising its responsibilities appropriately is to vary the firm’s permissions to conduct certain types of activity. That would obviously be if we had real concerns about the firm’s ability to conduct spread betting, for example. We could require their permissions to be varied, which would mean that they would have to stop. This would stop that particular activity—that is, spread betting—entirely, but would not be for one particular transaction or client. 

Q 47 Clive Efford:  One last question. Why was your agreement with the spread betting operators informal? 

Nick Poyntz-Wright: This is simply because— 

Q 48 Clive Efford:  Are all your relationships informal? 

Nick Poyntz-Wright: No, they are absolutely not. As Helen or I explained, we require firms to notify us in certain events, including if there are reasonable grounds for them to suspect that significant fraudulent activity is going on. In this particular instance, because of our discussions and interactions with the Gambling Commission, among other stakeholders, we decided that it would be worth engaging these two firms—bearing in mind that there are only two—to put these additional arrangements in place. As we covered earlier on, we are considering whether to formalise those discussions. We have no reason and we have gathered no evidence to tell us that they are not working effectively. However, we could put them in the form of guidance, which would be a requirement on the firm to operate in that way. 

Q 49 Clive Efford:  We heard from Tim Lamb earlier. He is concerned about the impact of spread betting. His concern was that there is no requirement on spread betting organisations to share information. Therefore, inevitably, there would be no evidence of any irregular activity. What is your response to their concern that there is a complete lack of information, which leads to a complacency that endangers our sports governing bodies? 

Nick Poyntz-Wright: I do not accept that there is complacency. Certainly the discussions that we have had with the firms do not suggest that. There are requirements on the firm to notify us in certain situations. My colleague Helen indicated that the requirements that are there require a degree of certainty and significance of those events. We wanted through the arrangements to strengthen that and we are considering doing it through guidance. 

Q 50 Clive Efford:  Tim Lamb indicated that when licence condition 15.1 was introduced, a flurry of reporting took place. Since your informal agreement, has a flurry of reporting taken place? 

Nick Poyntz-Wright: No. 

Q 51 Clive Efford:  Does that suggest to you that nothing is going on? 

Helen Roberts: We have been in dialogue with the firms, and only last week we had a discussion with one of them about this and the extent to which they are looking. They have stated that they are not aware of any suspicious activity at this time and therefore they have not notified us. They have said that they have engaged with the Gambling Commission on a couple of occasions about fixed odds issues, but not about sports spread betting. 

Q 52 The Chair:  I am afraid that that brings us to the end of the time allocated for the Committee to ask questions of this panel, and I thank it on behalf of the Committee. We will now hear oral evidence from the Gambling Commission and the Minister. 

Examination of Witnesses

Helen Grant, Alison Pritchard, Joanna Hemingway, Jenny Williams and Paul Morris gave evidence  

3.46 pm 

Q 53 The Chair:  Good afternoon. I do not know whether we have saved the best for last, but we will find out. For the record, will the new panel introduce themselves to the Committee? 

Helen Grant: I am Helen Grant, Minister for Sport, Tourism and Equalities. 

Alison Pritchard I am Alison Pritchard, head of gambling at the Department for Culture, Media and Sport. 

Joanna Hemingway: I am Joanna Hemingway, the DCMS lawyer on this Bill. 

Jenny Williams: I am Jenny Williams, chief executive of the Gambling Commission. 

Paul Morris: I am Paul Morris, lead on e-gambling and implementation at the Gambling Commission. 

Graeme Morrice (Livingston) (Lab):  I want initially to ask the Minister about some of the responses we heard earlier this afternoon from our witnesses, particularly the first set. As you know, Mr Bone, I was not around for much of this morning’s sitting as I was in Westminster Hall with you, so I was not able to hear what the witnesses from the industry said, but I will obviously read the transcript in due course. It was certainly suggested by at least one of the earlier witnesses this afternoon that the Bill lacks teeth in its enforcement measures. It was also suggested that the gambling code was not strong enough and that proposals for improving that did not go far enough. It was also suggested that the advertising code could be improved to protect, in particular, vulnerable consumers, those with gambling problems, young people and children. How would you respond to those comments? 

Mrs Grant: Those are fair questions to put to me. At the moment, according to the Gambling Commission, which I am sure will elaborate on what I say, about 85% of remote activity in the United Kingdom is not regulated by the commission. We also know that remote gambling is on the increase year after year around the world, and I believe that it increased last year by approximately 10%. We have an opportunity here to do something significant to protect British consumers. 

There is also an issue with creating a level playing field between all remote operators so that everyone is regulated whether they are offshore or onshore. We think that is important in terms of fairness. 

On enforcement, I am sure colleagues will want to say more about that, in particular the Gambling Commission. There will always be grey areas to be considered and in those situations judgments on risk and proportionality will have to be made depending on the individual case, but I am satisfied that the Gambling Commission has the expertise, experience and tools to enforce the law. 

Jenny Williams: You said that the present arrangements lacked teeth. I was surprised to hear that, because we have some of the most extensive powers of any of the regulators we deal with. I think there have been some misunderstandings: all the conditions that the gentleman from CARE was referring to are in our codes and technical standards—he might not be aware of our technical standards. Basically, the Gibraltar regulations are based on ours. There is a requirement on our licensees to offer pre-commitment levels to set the amount of time you spend. There is a requirement to offer

self-exclusion. There is a requirement to monitor players’ play and to decide whether to interact. There is all of that. 

As the Minister said, we license only 15% by value, but for our licensees we can enforce all of that. However, there is a separate issue about what is required in addition to that. Although there was a lot of talk about data analytics and different ways of doing things—we are as keenly interested as anybody to find out what works—there is currently no consensus about which works properly and which can be counter-productive. For every bit of research that shows that an approach works, I could show you another saying that it has some downsides. 

I am frustrated, as I suspect were the faith groups and the community groups, about the slow rate of progress on research, but it is now starting to gather momentum. The Responsibility in Gambling Trust has a big harm-prevention conference with some worldwide experts coming in to try to work out what we should be building into our codes to make them stronger. In that, we are streets ahead of the other regulators. That is because it is our population and we have the interest. We have the Responsible Gambling Strategy Board of independent experts advising us on what is to be done. As soon as it is clear that the codes ought to be more specific, we will make them more specific. However, at this stage it is not clear that that would not be counter-productive. So, as I say, on that level we have all the teeth we need for player protection if we can regulate all those supplying the British market—we currently only do 15%; that is where we are currently lacking the teeth—which is what the Bill provides. 

Q 54 Mr Leech:  Mr Boucher also said that additional work needed to be done to the Bill on avoiding consumers moving to the non-regulated market. The Treasury forecast that up to 20% of online activity might be in the unregulated market following the passage of the Bill suggests that additional work must be done to stop people moving to the unregulated market. From the perspective of the Gambling Commission, do you think you have all the tools you need? Is the Bill lacking anything you need to ensure that consumers are not encouraged into the unregulated market? 

Mrs Grant: It is the same issue really. I am sure Jenny will elaborate and give me a nudge if she has not, but I think the Gambling Commission does have the tools and expertise to enforce the law, regardless of the amount of tax. I do not think the two issues should be conflated. 

Q 55 Mr Leech:  In that case, why is the Treasury predicting that up to 20% of online activity might be in the unregulated market? 

Mrs Grant: As far as tax is concerned or as far as regulation is concerned? You will have to confirm which is which, because the two are quite separate and quite different. The Treasury is doing what it is doing and we are doing what we are doing. 

Q 56 Mr Leech:  Forgive me if I have got this wrong, but my understanding is that the Treasury is predicting that after the Bill is passed, there is the potential for 20% of the market to be unregulated because there will be an increase in activity in the unregulated market. 

Mrs Grant: I do not believe that that is right. I would like to pass this over to Alison. 

Alison Pritchard : To clarify, the Treasury assessment is that there will be a 20% gap in the taxation that it would be able to obtain. That is not necessarily the same as an enforcement gap because although, yes, there may be an element that is unlicensed, it will also relate to issues such as tax avoidance and the administrative issues to do with acquiring tax from licensed operators. So the enforcement gap is not necessarily the same as the Treasury’s assessment of a taxation gap. 

Q 57 Mr Leech:  Has DCMS made any predictions of what the gap will be? 

Alison Pritchard : We have not speculated on the size of any enforcement gap, but we believe that the regulator has the means to minimise it to a level that is not significant from a regulatory perspective. 

Q 58 Clive Efford:  On that question of resources, Jenny Williams, can you clarify something for us? In your evidence to the Select Committee, you were confident that the extra income received would be sufficient to support the work of the Gambling Commission, but in his evidence to the Select Committee, Tim Lamb said—he repeated it today when he gave evidence to this Committee—that you had expressed concern in private: 

“We have had recent discussions with the Gambling Commission where they have raised the lack of resources as a matter of concern with us.” 

That seems to contradict the evidence given to the Select Committee. Can you clarify the Gambling Commission’s position on resources? 

Jenny Williams: Obviously, I was not at that particular conversation, but my expectation is that it slightly mixes up two quite separate points. One is that at the moment, we do not get fee income from 85% of the market that we are trying to enforce, and we will be getting more. There is a separate question about the cost-effectiveness of pursuing prosecutions as opposed to disruption or other types of activity. 

For example, when we are doing sports betting integrity, we often start down a prosecution route and do some investigation. Then, when we have enough information, it may be much more effective to pass the information over to the sports bodies, which can then take civil-type remedies and take action against the sportsmen. That can be much more effective and much quicker. It was some combination of those two things, but there is no doubt that a full-scale prosecution is a very expensive thing, and that we are short of income from a lot of the people whose market we are helping to protect at the moment. 

Q 59 Clive Efford:  So will the additional income in future allow you to pursue those cases, or will it still remain too expensive to pursue them? 

Jenny Williams: Well, no. It will always be a very expensive option, and there are probably much more cost-effective ways of doing it, but it will enable us to do them, and to help fund that activity. We spend a lot on that at the moment. 

Mrs Grant: That is why, of course, the judgment risks will always have to be taken in each individual case. 

Q 60 Clive Efford:  So the Gambling Commission does not have any reservations about the resources available to it? 

Jenny Williams: No. Of course, fees are reviewed every year. At the moment, we think that would help a great deal. 

Q 61 Jim Shannon:  This morning we had a presentation from the industry. Mr Roy Ramm said, in response to a question that I asked him, that the industry was prepared to consider regulation and to address the issues of problem gamblers and vulnerable people. This afternoon, we had the very good presentation by four individuals: one from the Salvation Army, one from the Quakers, a professor and Dan Boucher from CARE. All indicated, as my colleague just said, a need for teeth. Roy Ramm seemed to indicate that the industry needed teeth, and the groups indicated the same. Minister, it is nice to be working with you again; we have done Committee work together in the past. 

Mrs Grant: Likewise. 

Jim Shannon:  In the Second Reading debate, we had the opportunity to make some comments. May I read into your responses what your line of thought is? I hope that I am doing it correctly. First, you said that you would not rule out ISP and financial transaction blocking. Secondly, you mentioned the fact that I had referred to the need for a one-stop shop approach. If it is appropriate to ask you at this time, as I hope it is, what are your thoughts on those two proposals for improving the legislation? I believe, from the presentations that we had from the group this afternoon and the industry this morning, that there is an understanding for change and an understanding of the need to have better teeth. Do not think of this as a criticism, because it is not. If the situation can be improved, that is good for everyone. What is your thinking? 

Mrs Grant: We want to protect people. We want a system of robust, consistent regulation that protects British people. We want a level playing field and proportionate and reasonable action. We want to look after people. We will look at everything that we should be looking at to ensure that we reach that goal. 

On Second Reading, the hon. Gentleman mentioned ISP blocking and I would like my colleague to say a little more on that. We have a wide range of criminal offences to rely on. There is the possibility of removing licences and there are fines. Many different things can be applied to protect people, but we have to ensure that anything that we decide to use has been trialled, actually works and has good evidence to support the fact that it will help. 

I will ask my colleague to say something about ISP blocking, about which the hon. Gentleman is especially interested. 

Jenny Williams: This was looked into when the Bill was being drafted and proposals came forward in some detail from both the financial services people, for financial blocking, and Ofcom. Ofcom did a big report, with which I am sure you are familiar, on the difficulties of ISP or URL blocking and came to the conclusion that it is not cost-effective on the whole. You heard from the witnesses this morning that it is not that effective. It can be a disruption tool. Our colleagues in Italy, Norway

and around the world, with whom we have discussed the virtues or lack thereof a great deal, say that it is very labour-intensive and disruptive but not that effective. The general view that we and Ofcom came to is that if you have a good open market with a wide range of products and other ways of tackling the illegal market, it is a totally disproportionate use of resources and can have a lot of unforeseen effects. You can over-block or block legitimate businesses. At this stage, therefore, it is not thought to be a sensible thing to embark upon. 

However, technology is changing and collaboration across Europe is changing. It could well be that the position is quite different in two to three years’ time. Everybody is looking at how e-commerce is developing not only for gambling, but on a much wider front. It is a watching brief. We do not think that it is sensible at the moment, but it might become sensible at a future stage, in particular if the black market were to become more of a problem than we expect, but we really do not expect it to be a significant problem in the UK market. Other commentators looking at this—those that do not have tax-related interests—share that view. 

Q 62 Jim Shannon:  If there continues to be a clamour for change, surely now is the time to make that change. Is that not correct? 

Mrs Grant: I think we are making that change with this small but important piece of legislation, which my colleague on the other side of the room and others did a lot of work on to help make happen. If we are talking about protecting people, the fact that the Gambling Commission will require licensees to have policies, procedures and practices in place to promote socially responsible gambling and to request a much larger group of people—it is only 15% at the moment, but that could be increased considerably—to contribute to education and treatment of problem gambling is one of the most effective things that we can possibly do. 

Q 63 Paul Farrelly (Newcastle-under-Lyme) (Lab):  I am sorry for being late, Mr Bone, but the security alert over lunchtime meant that I had to have meetings one after another. I have a few questions for the Minister, which I hope to put speedily and get some brief replies to. Earlier on, Minister, we talked about sports betting integrity and the bearing you might have on the Treasury to provide some funding for an integrity unit that gives some Government funding for consumer protection with all the millions that will be raised from this new regime. What do you think about that? 

Mrs Grant: It sounds very interesting. But I would quickly add that tax is a matter for the Treasury. It has to raise it and it does a lot of the spending of it as well. The whole issue of sports integrity is important. It is close to my heart. This country is one of the leaders in relation to it. We work very closely with the International Olympic Committee and other international organisations. 

Q 64 Paul Farrelly:  You are a new Minister so it is probably unfair to ask you whether you have read Rick Parry’s review, but have you? 

Mrs Grant: No, I have not. But obviously I have my own views. I may have been a Minister for only four weeks, but I have been a lover of sport all my life. I think we are doing well in this area. That is not to be complacent. We need to look at any new ideas that

might help the situation. Equally, I was a lawyer for 23 years before I became a politician. I am well aware of the fact that it is very easy to make more legislation. It is very easy to add various different things. 

Q 65 Paul Farrelly:  Will you meet— 

Mrs Grant: Just a minute. We have a lot of effective criminal offences, including bribery, corruption and fraud— 

Q 66 Paul Farrelly:  Okay. So there is a list you are going to read from. 

Mrs Grant: Which we should be using to deal with cheats and people who do wrong. 

Q 67 Paul Farrelly:  Will you meet the people who did that and then come back and say— 

Mrs Grant: Did what? 

Q 68 Paul Farrelly:  The sports betting review—and then be charged with persuading your colleagues in the Treasury to spend some money on this? 

Mrs Grant: I will be very happy to read the report thoroughly and then to have a conversation with the hon. Gentleman. We will see where we go from there. 

Q 69 Paul Farrelly:  And meet them? 

Mrs Grant: Let us read the report first and then I will have a conversation with you. 

Q 70 Paul Farrelly:  Say you will meet them. 

Mrs Grant: I will meet them. 

Q 71 Paul Farrelly:  Great. Second question: this is a very short Bill. It has been so crawled over, not least by our Select Committee. Why have the Government not accepted our recommendation that you should be able to bet online in casinos? 

Mrs Grant: I touched on this earlier when I was asking Roy Ramm a question. Fundamentally, what the casino amendment seeks to do would undermine our current gaming machine provision. That cannot be right. We also feel that there should continue to be a proper balance— 

Q 72 Paul Farrelly:  So why is the Select Committee so wrong and you are a new Minister and you are so right? 

Mrs Grant: Let me just finish, because I want to answer this properly and fully. First, it will undermine current gaming machine provisions. Secondly, we feel that there should be a proper balance in casinos of table play and machine play in order to protect jobs. It is a very important industry. I understand that completely. On the other side of that, I remind the hon. Gentleman that we have also agreed to increase stakes and prizes for B1 machines, which I am sure will help the industry. 

I mentioned at Second Reading, and I am happy to put this on the record today, that I am quite content to look at the entire issue of gaming provision in casinos. That does not need to be dealt with in the Bill. We do not need primary legislation to deal with many of the issues that the casino people want. 

Q 73 Paul Farrelly:  Okay, Minister: you are determined to resist any amendment on that, are you? Just two final questions about the Gambling Commission. What is your view on the Gambling Commission consultation on what would otherwise be called the Full Tilt conversation, which is about disclosure and separating consumers’ money from company money? In particular, what do you think are the merits of the halfway house that is a proportionate response called the quistclose trust? You are a former lawyer, and this is well established in UK law. 

Mrs Grant: It sounds like something off “Strictly Come Dancing”. Jenny, this is something that you are doing. Can you elaborate and provide sufficient detail? 

Q 74 Paul Farrelly:  After Jenny has elaborated—very briefly, because time is short—I would like to ask the Minister for her views. 

Jenny Williams: The matter of quistclose trusts is something that had taxed the industry lawyers’ minds. To expect the Minister in the first four weeks to have got to the bottom of quistclose accounts is— 

Q 75 Paul Farrelly:  She is a lawyer. 

Jenny Williams: Absolutely, but it has not been a priority to brief the Minister on that. That is no doubt our fault; if we had realised that that was going to be the subject, we would have done so. You have obviously read the report, and the problem with quistclose accounts, as you will know, is that they are very easy to break by mistake. They do not apply to overseas jurisdictions. I am not sure that you could have a quistclose account, for example, in Gibraltar, although I do not know. Although they have their attractions because they are a rather cheaper way of protecting clients’ funds, we are not sure that requiring them for licensees would necessarily be wise, because it might give them a false protection. 

Q 76 Paul Farrelly:  Let me cut you off. bet365, the biggest, has that arrangement, and it is the most successful. My final question is about the licence conditions. Minister, having read that review and consultation, what do you think about the Gambling Commission’s possible intention to focus on the location of an individual when they place a bet, rather than their normal place of residence? 

Mrs Grant: Are you talking about point of consumption? 

Paul Farrelly:  Yes. 

Mrs Grant: We need that for this Act to happen. 

Q 77 Paul Farrelly:  This is about making the legislation work. Should it not be the place of residence rather than just where they are in the world? 

Mrs Grant: I think we are quite satisfied that it is the difference between the tax definition and our definition. You are quite satisfied, are you not, that we have defined it correctly? 

Jenny Williams: Yes, and we have been having a lot of discussions with the RGA and with bet365 about this difference in definition. Although it would be wrong for me to put words in their mouths, I think they are getting more comfortable with it, and they understand why we think that “in Great Britain” is the appropriate definition for this Bill, which is about protecting consumers in

Britain and not about who should pay tax and offset tax arrangements. That is what the tax definition is much more about. 

Q 78 Paul Farrelly:  But should it not be place of permanent residence? That is really simple. 

Jenny Williams: It is not actually that simple, and it would produce all sorts of avoidance and problems that we are trying to avoid in terms of coverage of people in the UK. As I have said, when you work through the different categories of people and the effect that this would have, for example, on a licensee in Kahnawake and people playing on a Kahnawake site, you see the problems that would produce for us for enforcement. I think you will see that for our purposes, it is a much better definition. 

The Chair:  I will call Angie Bray next, but Mr Efford is being very patient and time is getting on. 

Q 79 Angie Bray (Ealing Central and Acton) (Con):  I shall be very quick. I wanted to ask the Minister for some clarification. She has just said to Paul Farrelly that she is not looking to support any amendments that might come through the Committee, but she will know that I was also quite interested in what Roy Ramm of the National Casino Forum had to say about the position that bricks-and-mortar casinos find themselves in, and the fact that the Select Committee’s recommendation has not been accepted by the Government. There was a little to-ing and fro-ing, if I may say that, between the Minister and Mr Ramm this morning about whether casinos sought unlimited gaming through being allowed to operate online. I think that he was trying to make clear that that was not necessarily what they sought. I note that the Minister said on Second Reading that she is open to having another look at some of these issues. Even if that does not mean accepting amendments, may I assume that that is an issue that she might be prepared to look at again? 

Mrs Grant: Absolutely on both fronts. I will not accept the amendment, but I want to get this right. I do want to work with the casinos and other partners to ensure that we are fair, reasonable and proportionate. I am very happy indeed to review the whole issue of gaming machine provision in casinos. 

Q 80 Clive Efford:  Minister, you heard the answers from the Financial Conduct Authority earlier. Are you satisfied that its arrangements are sufficient for regulating spread betting? 

Mrs Grant: Yes. I was able to put questions to Nick and Helen and we are quite satisfied that they are doing a good job. That is not to say that the FCA may not wish to make changes in the future. I know that it works closely with the Gambling Commission and spread betting operators to ensure that some system of co-operation is in place to inform of any suspicious market activity. 

I note the distinction you draw on licence condition 15.1 of the Gambling Commission code and your query on whether there is a gap. That is something that I am sure our witnesses will take away and consider and I will speak to them about in the future. 

Q 81 Clive Efford:  Minister, when your colleague the right hon. Member for Putney (Justine Greening) was Economic Secretary, she wrote that she believed the

FSA was using its powers, as part of its process of authorisation— requirements equivalent to those imposed by the Commission via licence condition 15.1—but that has not happened. It is unfair to ask you, but could someone from your Department enlighten us as to why, in spite of the Government’s expressed will, that has not happened? 

Mrs Grant: I cannot say any more than what I have just said. You were able to take evidence from the witnesses this morning. They are looking at what more they can do to strengthen and underpin the requirement they have placed on the two sport spread betting organisations, and I am sure that they will do that. I would be happy to write to my right hon. Friend and to make inquiries at the Department if you would like that. 

Q 82 Clive Efford:  Well, she is not in that post any more, but that was an expressed desire on the part of the Government, with serious implications for sport, yet there has been no move to adopt licence condition 15.1 for spread betting, even though it was stated in this letter in 2011. 

May I ask you, Ms Williams, whether you are happy with the anomaly that the FCA is not regulating spread betting in regard to licence condition 15.1 or its equivalent requirements? 

Jenny Williams: Like all these things, the arguments are very finely balanced. Either you regulate by putting all the betting-type functions together or you put the people-type functions together, because spread betting is a different sort of betting from fixed-odds betting and the whole approach, as you heard, with the experienced investor is different. A lot of the people who do spread betting on sport also do spread betting on financial markets, so it is six of one and half a dozen of the other. We work with the FCA and the spread betting companies, which we also license for fixed-odds betting. Whichever way you do it, you will get some crossover and will need to work together. This works fine. You are quite right that it would be good to have the formality of guidance, and that would be a helpful push in that direction. If you think about priorities and what else the FCA has had on over the past couple of years, as well as some of the things that we have been concentrating on, such as the Olympics, you can see that this has not been the highest priority to push on, but it is being given a welcome push now. 

The Chair:  Mr Morris has been very patient and wants to say something. I will come back to you, Mr Efford. 

Q 83 David Morris (Morecambe and Lunesdale) (Con):  Minister, can you give us the background of the relevant pre-legislative scrutiny that has brought us to this point? There has been quite a lot of in-depth questioning, but surely there must have been some sort of positive view to get us to where we are now. 

Mrs Grant: I think that that is a good point. There has been considerable pre-legislative scrutiny by the Culture, Media and Sport Committee. It did an excellent job on that. I know that some members of that Committee are members of this Committee, and I thank them for that scrutiny. We are where we are with the Bill. I believe that the Bill is important and has to go through. It will be very good for consumer protection and fairness. I am

not sure that I can add any more. I cannot give you a list of the details of the evidence that was taken, but I know that considerable care was taken in getting us to this position. We looked at the Committee’s report, and that informed our judgment and led us to where we are today. 

Q 84 David Morris:  On that point, obviously the Bill has gone through the Committees and the issue crosses the political divides. Whatever we have to scrutinise has been drawn from the different Committees and the different views. 

Mrs Grant: It has. The Bill is very much cross-party. There has been a considerable amount of consensus, and even today I sense that there is a fairly considerable amount of consensus, although there is inevitably—this is politics—some difference on certain details. 

Alison Pritchard: I was going to add that we found the Committee process very helpful and valuable in steering us towards one provision, which we adopted in the Bill. That was the nature of the scope for which the licence would be required. Initially, the Bill talked about the equipment “being capable” of being used. We took that wording away, as the pre-legislative scrutiny Committee asked, and refined it to the equipment “being likely” to be used and people “knowing that it was likely” to be used. 

Q 85 Clive Efford:  May I move on to the betting levy? Why do the Government not just accept the clause that was in the Offshore Gambling Bill, in the light of the ruling of the European Commission on the French form of levy? There was a clause to introduce a betting levy for online operators in that private Member’s Bill, which was presented by her colleague, the hon. Member for West Suffolk (Matthew Hancock), and then taken up by her colleague the hon. Member for Thirsk and Malton (Miss McIntosh). 

Mrs Grant: Unfortunately, the way the hon. Gentleman sets it out makes it sound very simple, but it is not. The levy, as he well knows, is 50 years old and was created in 1963. I completely accept that it does not necessarily reflect modern gaming and betting now. In my opinion as the new Minister, I feel we have to have a proper look at the levy and try to reform it, and that does not simply mean extending it to offshore bookies. That is one thing, but we also want reform. 

On reform and extension, as I am sure I have said at parliamentary questions on at least two or three occasions—it also came up on Second Reading—I am very happy to consult on any workable proposal that is sustainable, enforceable and legally sound. 

On extension, which deals with his point, the parafiscal levy and the EU decision, it became very obvious from that decision that the levy actually constitutes EU state aid. Therefore, if we are going to extend it, that would require the approval of the EU Commission, because it is an alteration. If we were to do that, it would certainly require careful consultation and consideration from betting, horse racing and all other interested parties. If we did not ask for approval and just did it, there would be huge risks. If we did it and the money was collected, and then the EU did not give approval, the money would have to be repaid. That would cause absolute

havoc. The other worry for me—after 23 years of being a pretty careful lawyer—is that, in doing it without permission, we could also unravel the more voluntary arrangements that we have with Betfair and the big four bookies. 

The way I see it is that we got an agreement for four years, so we now have time to look at this and deal with it properly. That is what I intend to do. I know that the hon. Gentleman wants to try and move things through, and I can see why, but we have not even received an official translation yet of the judgment. Interpreting what one decision means in one jurisdiction and whether it applies in another, without an official translation, would be completely foolhardy. 

Q 86 Clive Efford:  With that in mind, to follow that up specifically—it is a direct follow-up question, because I asked the initial question purposefully—I should say that I agree to some extent with what the Minister is saying. Therefore, why not set the time scale and give yourself a reserve power in the Bill to go and do just that—consult and come back with a form of levy? 

4.27 pm 

The Chair deferred adjourn ing the Committee (Standing Order No. 88).  

Q 87 Clive Efford:  Thank you very much, Mr Bone; that is very kind of you. 

Minister, so why not have a reserve power in the Bill to do just that? 

Mrs Grant: We want to know what the various options are before we start saying that we need extra powers. We may well have the means to do what we need to do anyway, but we do not know what we want to do until we clarify what is relevant and what is not. 

Q 88 Clive Efford:  But you have stated your intention to do it and to take it forward—you have just said that. 

Mrs Grant: It is very much my intention to look at it, to consult, to consider, to speak to betting, racing and other interested parties and, probably, to take legal advice as well. Once we have carried out all of that, then we will move forward, and not before. 

Q 89 Clive Efford:  But as this piece of legislation demonstrates to us, getting legislative time to deal with that can be very problematic. Therefore, taking this opportunity to give yourself that reserve power would remove that obstacle to future regulation or legislation and allow you to deal with the issue of the levy. 

Mrs Grant: I cannot say any more than what I have already said—that is my position. We do not need to take that action at this time. 

Alison Pritchard: We are not certain that primary legislation would be needed to make amendment to the levy. It is possible that it could be done in secondary legislation. Until we know the options that are worked up, it is not possible to make that determination. 

The Chair:  Mr Farrelly wants to come in on the levy. 

Paul Farrelly:  My question is not on the levy. 

Q 90 Clive Efford:  There is also an issue around the Betting, Gaming and Lotteries Act 1963, which effectively licenses the remote online operators. They therefore operate under the Act and should pay the levy, similar to other operators that are onshore and contribute to the levy. Have the Government had the opportunity to look at that? 

Joanna Hemingway: On balance, we do not think that the 1963 Act applies to offshore bookmakers. It is fair to say that the definition of bookmaker is not tied to a place or establishment, but the Act is, to say the least, unclear and ambiguous as to whether it would apply offshore. In the absence of any express intention, it is fair to say that, on balance, we do not think that it would apply. 

Q 91 Clive Efford:  But if you look at section 55 of the 1963 Act, the term bookmaker is very broad. There is nothing there that describes a bookmaker that would exclude remote gambling operators. 

Joanna Hemingway: It is true that there is no express intention for it to have an extraterritorial approach. 

Clive Efford:  There is no express intention for it to have bookmakers in the high street. 

Joanna Hemingway: So we think that you cannot automatically read across a point of consumption that is being brought into this Bill into the levy regime. 

Q 92 Clive Efford:  But if I opened a brand new bookmakers, a completely new company, on the high street now, would I be required to pay the levy? 

Joanna Hemingway: Well, you are in the UK. 

Q 93 Clive Efford:  And the operators that are going to be licensed by the UK Gambling Commission, are they not deemed to be in the UK? 

Joanna Hemingway: The gambling licence regime operates separately from the 1963 levy regime, so it is not the case that if you have a Gambling Commission licence you are necessarily a bookmaker within the meaning of the 1963 Act. 

Q 94 David Morris:  I want to question an anomaly in this. We are looking at the 1963 Act. It is a 60-year-old Act. There was no internet at that particular point and the definition of a bookmaker by and large has now exceeded where we were 60 years ago. On the point of levies, has the levy changed since then? If so, how many times has it changed and in what directions? I am quite perplexed about this. We are discussing gambling as it is today, but going back to an Act that is 60 years old and that has absolutely no comprehension of what could happen in the future. 

Alison Pritchard: I do not have the history of the levy in front of me at the moment, going back to a time before I was born, and before many in this room were born, I am sure. The Minister has made it clear that we do want to make progress on this issue. We do need to understand the various options that might be possible, and then we can seek and acquire the legal advice around these specific issues that are being raised today. 

David Morris:  I stand corrected. It is a 50-year-old Act. My maths is not that good today. 

Q 95 Paul Farrelly:  Mr Bone, I have three questions, two of which will compliment Conservative colleagues of mine on the Select Committee. First, I was very comforted, Minister, by the answer you gave to my hon. Friend the Member for Ealing Central and Acton earlier on that you might consider sympathetically an amendment, not in this place but possibly in the Lords. Why will you not make a difference on casinos by not resisting a sensible amendment here? Mr Bone, it is a bone of contention for you that we propose sensible amendments here in the Commons that are resisted by the Government but then are accepted in the Lords. So why will you not consider one here in the Commons on casinos, following the Select Committee report? 

The Chair:  I have absolutely no views on anything in this Chair. 

Mrs Grant: I am not prepared to say any more or offer any more than what I have done on the Floor of the House and what we have done here today. What I am suggesting is a sensible and reasonable way forward. I am pretty sure that we do not need primary legislation in order to do what many supporting casinos want us to do. It can be done through secondary legislation. What I have said is a sensible and reasonable course to take and I stick with that. 

Q 96 Paul Farrelly:  Time is brief. The opportunity is here and it would be just two lines. My hon. Friend the Member for Shipley, the often controversial Philip Davies, put a question to you about the economics at the Treasury. In the Treasury’s modelling this regime will capture 80% of the current market at the current tax rate. In your new role as the Minister for the Bill and for this new regime, what representations on consumer protection have you made to the Treasury about how you might capture 95% in terms of the general tax rate? 

Mrs Grant: The two are clearly very separate issues. If you have tangible issues that you want me to put to the Treasury Minister who is dealing with this issue, I am happy to do that. Our officials speak with and liaise with each other on issues. 

Q 97 Paul Farrelly:  Have you made any representations at all? 

Mrs Grant: In relation to what? 

Paul Farrelly:  The level of tax and therefore the capture in the white market rather than the growing black market. 

Mrs Grant: This Bill—the Bill that I am responsible for—has nothing to do with tax. 

Q 98 Paul Farrelly:  Have you made any representations over tax? 

Mrs Grant: It is nothing to do with tax. It is to do with consumer protection. 

Paul Farrelly:  Have you made any representations over tax? 

Mrs Grant: I haven’t. 

Alison Pritchard: We have had ongoing dialogue with the Treasury— 

Q 99 Paul Farrelly:  The Minister has not. That is fine. My last question: you will agree, Minister, that it is important in terms of capture that you are not only taxing at the right level but are taxing the right definition. So what is your view of a gross profits tax compared with a gross gaming revenue tax? [ Interruption. ] No, it is a question for the Minister. Should it be a gross gaming revenue tax or a gross profits tax? 

Mrs Grant: I am not going to fall out with the Chancellor of the Exchequer. Tax issues are for his Department. I am sure you can put that question to him. 

Q 100 Paul Farrelly:  Can you tell us what the difference is? 

Mrs Grant: It is not for me to decide a definition. 

Paul Farrelly:  What are the differences? 

Mrs Grant: Tax is a matter for the Chancellor of the Exchequer. He is very well placed to deal with it. 

The Chair:  Order. I do not think that we are on the Bill at the moment, Mr Farrelly; I think we have moved away somewhat. 

Paul Farrelly:  We are on relevant ground. 

The Chair:  I think Mr Efford should have the last say. 

Q 101 Clive Efford:  That is a dangerous thing to say, Mr Bone. May I move on to the issue of dormant accounts? The Department commissioned a report that was written by the right hon. Member for Bath (Mr Foster). One thing he highlighted was the difficulty in identifying just exactly how much betting companies hold in dormant accounts and in unclaimed winnings. The Bill seems to give an ideal opportunity to require online companies to report on what they actually hold. The Government have committed themselves to regulating on this matter, subsequent to the Bill’s becoming an Act, and the Bill would be an opportunity to make sure that the information is there so that the subsequent legislation is relevant. Why are we missing that opportunity, Minister? 

Mrs Grant: It is not really a case of missing an opportunity. The Government have made it clear that we are happy to consider the proposals in the report of my right hon. Friend the Member for Bath, who knows a lot about these issues. Once again, we do not believe the Bill is the correct vehicle. We do not think that is needed. The proposals and ideas he has brought forward, some of which are very interesting, need proper consideration and proper consultation. That will happen in due course, after the Bill has, I hope, become an Act of Parliament. Clarifying the extent of the problem and the extent of what is in dormant accounts has shown that it is pertinent that we know what is in overseas accounts. The current Bill should be effective in helping to provide that type of information. 

Alison Pritchard: I want to add that there are existing powers in the 2005 Act that would allow a Secretary of State to require as a licence condition that operators provide that type of information. Jenny, is that right? 

Jenny Williams: Yes, that is right. 

Q 102 Clive Efford:  So you would not feel the need to use this piece of legislation for those requirements? 

Mrs Grant: No. 

Q 103 Clive Efford:  If I may, I will move on to the issue of public protection and kitemarking. We heard from some witnesses earlier that there was an inconsistency in how advice and information from the Gambling Commission are presented on websites to advise people about what is a licensed site, the dangers of using unlicensed sites, where they can get help if they have a problem, and so on. Why does the Bill not require there to be a standard kitemark on every website? 

Jenny Williams: Because the Bill does not need to say that. That is put on the licence condition when someone is given a licence. You say, “You must do X, Y and Z”. One of the things which we have been looking at a bit more following the Select Committee session is the way in which we require “licensed by the Gambling Commission” to be displayed. We think that it is quite right that this could be a lot clearer. What we propose to do, when we actually manage to license most of the market, instead of only a very small proportion of it, is require the number to be used in such a way that you can click straight through to our website and see whether it is a genuine licence, what its status is, whether it has been sanctioned in some way and whether the issue has been addressed—that sort of thing. 

It is a very fair point. If you go on to any of the websites at the moment and compare the overseas websites, particularly those for casinos, and try to work out who licenses them, you will see that there is an absolute mess down at the bottom. Sometimes it is in white on black, and this does need a licence condition making it clearer. That was a helpful suggestion from the Select Committee, and we have done some work on it. 

Q 104 Clive Efford:  The question has to be why that has not been done before, if it has been identified as a problem. 

Jenny Williams: Well, when we regulate so little of it, I suppose that we have to decide what to concentrate on in terms of priorities. As I say, we regulate very little of the overseas casino industry at the moment. 

Q 105 Clive Efford:  You started your first answer by suggesting that you were disappointed that the people from CARE who were here earlier were not aware of your technical code and the full conditions of your licensing code. As they are involved in monitoring the industry and are well informed people, does it not alarm you that they were not aware? 

Jenny Williams: Yes, it does. There is a lesson for us in that. One of the things which we have on our list, as it were, when we again license more of the industry, is to do much more of a public education campaign and make it much clearer. Obviously we are going back to the community groups, which we talk to a lot. I had not actually realised that they were not aware of it, so that was a lesson for me too. 

Q 106 Clive Efford:  There is clearly an incentive for the industry to constantly develop technology to allow people to gamble. Inevitably, they are not as incentivised to deal with problem gambling and to use technology to

identify that. Do you feel that more pressure needs to be put on the industry to develop that sort of technology for public protection? 

Jenny Williams: Yes. My chairman has been making speeches to that effect, calling on the industry to get on the front foot and to do more, and indeed for the industry to contribute more and to get on with it. Yes, absolutely. 

Q 107 Clive Efford:  That suggests to me that a system of only having a code does not work, because why has the code not then been beefed up in that regard? 

Jenny Williams: The problem is knowing what to put in the code. We have the powers to put things in the code, but until you are clear exactly what to put in and you have the techniques developed and evaluated—as I say, things are moving a bit faster now. We have experts coming in later this year, so I am hopeful that things are starting to move and that we will have a clearer idea of what to actually prescribe in the code. 

The Chair:  It is entirely up to you, Mr Efford, but Mr Farrelly indicates that he wants to ask a very short question. 

Q 108 Paul Farrelly:  It is really the same question from the Select Committee. Given that this is all about raising more money for the Treasury, Jenny—as we have got to know each other in the Select Committee—are you satisfied that you can cope with your extra

responsibilities without any extra money within your current budget? 

Jenny Williams: I do not accept that presumption. For me, this is about regulation and about consumer protection, and it is about the fact that at the moment I do not have the resources from 85% of the British market. 

Q 109 Paul Farrelly:  But can you cope with your new responsibilities within your existing resources? 

Jenny Williams: Well, with the additional income, and we will build up our resources. I do have quite considerable resources already, which is not to say that in a couple of years’ time I will not say to the Select Committee that I would like a little bit more. At the moment I am reasonably confident, but it depends what happens. 

The Chair:  I am afraid that brings us to the end of the extra time allocated for the Committee to ask questions of these witnesses. On behalf of the Committee, I thank the witnesses very much. The Committee will sit again for line-by-line consideration of the Bill next Tuesday. 

Ordered, That further consideration be now adjourned. —( Karen Bradley .)  

4.45 pm 

A djourned till Tuesday 19 November at twenty-five minutes past Nine o’clock.