Examination of Witnesses (Questions 80-99)
16 DECEMBER 2003
LORD MCINTOSH
OF HARINGEY,
MR CHRIS
BONE, MS
ELIZABETH HAMBLEY
AND MR
GREIG CHALMERS
Q80 Dr Pugh: We were talking about a
changing picture, a rapidly changing picture in some cases. Should
there be a moratorium on applications for new casino licences,
to prevent new developments benefiting from grandfather rights
and thereby evading the proposed minimum size rules, and avoiding
obligations to contribute to urban regeneration? You see the point
of that question?
Lord McIntosh of Haringey: Even
if we wanted a moratorium we do not have the power to impose one;
it would require primary legislation. I think we would be in some
difficulty about that. We do have protection, that under the current
law casino licences can only be in a permitted area which has
already been identified under current legislation. For example,
it has been necessary to say to those who want to put a casino
in the Dome that that could not happen under the existing law.
I think this is an argument for making quick progress with this
Gambling Bill.
Q81 Viscount Falkland: Having been brought
up myself in a seaside resort which is now, like many others,
in decline, in common with others both on the Committee and generally,
I reacted with initial dismay at the Budd Report's recommendations
about seaside resort regeneration. In my own personal case, my
view is somewhat changed since we visited seaside resorts and
I do see some merit (and I think others share the view) in casinos
and gambling operations as being a very important part in certain
circumstances of regeneration of deprived areas on our coast.
Following on from that, also I agree with others that your answer
in limiting, as it were, the strategic discussions on how this
should occur and your remarks about the market leaves one with
the impression this is very much suck-it-and-see, but it is a
serious result if things go wrong. Is anybody asking you whether
you are prepared to let one or possibly two resort operations
go on trial or on a pilot basis? Are you absolutely intransigent
about your view you have expressed that any strategic input by
central government is just not on, and it would be left entirely
to regional development as to the next level?
Lord McIntosh of Haringey: No,
nobody has asked me that question. I would be, and have been,
very reluctant to express opinions from my position which would
affect people's business judgment in particular cases. I could
get in terrible trouble if I did that. We will set up a regime
which will apply for everybody, but we are not going to start
advising people as to what they should do in business terms. Blackpool,
for example, has already done a great deal of work which no doubt
they will show you, if they have not done already—
Q82 Chairman: We have been.
Lord McIntosh of Haringey:—
showing all of the areas for different casinos, the local regeneration
and everything. My response to that is that I have seen and read
that with great interest.
Q83 Viscount Falkland: Could I just interject
there, having been to Blackpool, and having been very much impressed
by the attitudes and the articulated way views were put to us
about it, whatever happens in Blackpool is going to be a very
big operation indeed if it is going to be successful. The investment
there is going to be enormous and the effects of the changes of
that investment, if it is successful investment, will have ramifications
very wide, and socially could be quite complicated. I am worried,
and I think colleagues are worried, that this has not yet been
expressed in any of the documentation we have seen prior to our
discussions today, and wonder whether you are open again to the
idea that there is something about regeneration here but it is
very, very much more complicated than that foreseen by Budd and
was included in the White Paper?
Lord McIntosh of Haringey: The
Committee is entitled to its views; I shall be very interested
to read them. I do have to have a self-denying ordinance that
I do not comment on people's individual business proposals. As
I have said, I have seen and read the Blackpool proposals with
great interest and am not prepared to go any further than that.
Q84 Lord Brooke of Sutton Mandeville: In
the absence of the ability to have a moratorium, am I right in
assuming that the provisional statement covered in clauses 166
and 167 will not apply until the Bill is law; but if it were to
it would seem sensible to advise local authorities that they may
be committing themselves in the context of grandfather rights?
Lord McIntosh of Haringey: You
are right, it will not apply until the Bill is law.
Q85 Chairman: Two or three more brief
supplementaries to finish off this casino discussion. Why did
you decide against a tendering process for major casino developments,
which is what has happened in Australia and South Africa, to which
you referred?
Lord McIntosh of Haringey: They
started from a different base. They did not have any casinos at
the time, and they started from the assumption (which I do not
make) that Whitehall knows best. They may have made some money
on it, but we do have 120 casinos in this country and we are not
in the business of second-guessing businesses—it is up to
them. If we started to auction off additional opportunities when
there are already people in the business, would we be discriminating
against the people already in the business? It is a difficult
question. We think it is better to let the operators take the
market decisions and set up a regime which will enable the Government
and the public to benefit through taxes and regeneration, and
not to intervene.
Q86 Chairman: On a similar point, there
does appear to us to be some slight confusion in the 7 August
policy statement about small and large casinos. There is an impression
that there will be two categories of large—large and largest.
The kind of resort casinos we have been discussing in the last
few minutes would be substantially bigger than the definition
of "large" within the 7 August statement of 10,000 square
feet. Those 10,000 square feet casinos, under the proposal, would
have an unlimited number of jackpot machines with no maximum stake
and no maximum prize. Have you done any assessment about the interaction
between these two different sizes of large casinos and the implication
that if, for example, you had to have Regional Development Agency
and Regional Planning Authority support for a huge resort casino,
no such requirement would be necessary for a large casino of 10,001
square feet, but it could undermine the regeneration ability of
the resort casino. Has any thought been put into this?
Lord McIntosh of Haringey: Yes,
certainly thought always is put into it. What we have done is
analyse the results of the responses to the consultation which
we initiated in our 7 August document. The conclusion we have
come to at the present time is that we will stick to the principles
we put forward—in other words, that there would be a complete
ban on new casinos under 5,000 square feet; there would be a strict
limitation of machines in 5,000-10,000 square feet but no limitation
in 10,000 and above, and above goes to the top, in other words.
There would only be two categories. That is the provisional view
we have taken on the basis of the consultation responses that
have been sent to us. We now have to talk to people about it.
Q87 Chairman: We already are. Your answer
is very helpful because you appear to be implying that this is
something you would like to look and comment on more. There is
now this 3:1 proposal for the small. What was the thinking behind
that? To what extent was it perhaps an attempt to try and answer
the concern which was being expressed before you made your statement
that the deregulation of casinos could lead to the proliferation
of a number of relatively small casinos, albeit bigger than existing
casinos, all over the country in virtually every high street?
Lord McIntosh of Haringey: That
is exactly the concern we had. It is the concern Budd had, but
Budd was, in our view, let me say representing the position at
the time that he reported it, that he made his judgment. Our view
is that as of 2003 we need greater restriction on the numbers
of machines in smaller casinos, and we need a complete ban on
new casinos below 5,000 square feet—exactly for the reason
you put forward, that we do not wish to see the proliferation
of small casinos on every street corner. I have just come back
this weekend from Prague where they have casinos everywhere, just
shop-front casinos, well we had that in the 1960s and it did not
work and we do not want to go back to it.
Chairman: That is very clear. We want
to move on now to a quite different topic but one which is currently
equally controversial, betting and betting exchanges.
Q88 Mr Meale: Minister, you have said
that the power to void bets will "only be useable in relation
to bets that are not settled immediately". Given that most
bets on betting exchanges are settled immediately, will this power
not be virtually useless? It is a very hot topic indeed at the
moment; how is this meant to allay the fears of those with concerns
about unfair bets being laid currently on betting exchanges?
Lord McIntosh of Haringey: Two
things to be said about that: first of all, we define "settlement"
as being when any money related to the bet is transferred to or
from the accounts of those who are party to the bet. What Bet
Fair say to us is that this takes place at the close of business
each day immediately. There is a window in which a bet can be
voided and, after investigation, cancelled. We are not terribly
worried about losing a lot of bets because of immediate settlement
of the debt. The other point I want to make is, none of the people
running betting exchanges want to avoid the kind of control that
we are talking about. They think it is a good thing that there
should be provision for voiding and cancelling debts, and they
are not going to go to any lengths to try and get round what we
are proposing to do. It is in their interests that unfair bets
based on inside information, particularly laying odds, should
not occur, because their reputation as betting exchanges will
be at risk if this happens. Of course, what will then be involved
is that, in particular, the racing authorities will have to come
into it, and they will have to insist in ensuring that there is
not insider dealing.
Q89 Mr Meale: I understand that. I am
quite surprised you say that at the end of the day's trading is
sufficient. Of course, if somebody is very clever they can actually
place their inside information just before closure of the day's
business. Perhaps greater help needs to be given. The Government
has stated that "it is only right that sports regulators
take the leading role in controlling the betting behaviour of
participants in their sport". You then go on to say, "The
Gambling Bill . . . might usefully complement these measures .
. .". What I need to ask a question on is, what additional
thought could given to the Bill itself to protect that? The Chairman
and I were for many months engaged in an inquiry into the racing
industry and the gambling industry in the Home Affairs Select
Committee. We found very, very quickly the simple reality that
there is more money to be made in losers—easier money to
be made in losers—than there is in winners. With the betting
exchanges and some of the things which are being accused at the
present time it needs only a very little window. If we could get
some additional support built within the measures of the Bill
that would be extremely useful.
Lord McIntosh of Haringey: If
you find a way of doing more than we are doing I shall listen
with great sympathy. Betting is on the fence, is it not. They
are on a race which is at 2.40 or three o'clock, whatever it is,
and you cannot change that in relation to the close of business.
You have to place a bet or lay a bet before the race, not before
the close of business.
Q90 Mr Meale: It does not quite work
like that. I will give you an example. In the same period of time
those many years ago I was invited to go to Yarmouth by my colleague.
I went there and whilst there we were introduced to the then Senior
Steward of the Jockey Club and the Head of Security who has since
left the Jockey Club, but whom I believe was a very good Head
of Security. He said that something was going to happen in the
2.45 race that day off course on the betting which was going to
affect the prices on a particular race. There was a horse which
we looked at. It had seven noughts next to its name and on paper
it should have had no chance whatsoever but it was brought into
the betting from 33:1 to 2:1 favourite and was then wiped off
the board. The difficulty was that all the money piled on the
course was to effect betting off the course, a couple of million
pounds or more, and it came in, as expected, stone last. The people
who made the running were not the bookmakers on the course, they
were people off course who were jiggering about with the value
of the horse to make money from it. What I am telling that story
for is that was information picked up in advance of the event.
What we want in the Bill is some action, some measure, some help,
to allow those authorities to deal with that.
Lord McIntosh of Haringey: That
is cheating, is it not?
Q91 Mr Meale: Yes.
Lord McIntosh of Haringey: The
Gambling Commission has powers to deal with cheating. If you do
not like the powers then suggest how to improve them.
Q92 Mr Meale: What you are saying is
you would like us to come back with a suggestion?
Lord McIntosh of Haringey: By
all means.
Q93 Viscount Falkland: With the deepest
respect, I do detect a level of naivety in the response there.
I had a close acquaintance who was a professional gambler and
everything went wrong for him and he ended up in court for fraud.
The judge was very disappointed in his summing up and said, "A
man with your background, with your good family support and so
forth you find yourself in this terrible position, to what do
you attribute it?" He thought for a moment and he said, "Bad
information, my Lord". It seems to me that anybody who backs
horses—and I have done a lot of backing horses and I suspect
a lot of my colleagues have—will know that it is always
on information of one kind or another, either perceived, imaginary
or good. If you can get good information then of course you are
going to be quite successful and wear nice suits and eat in nice
places, but generally speaking there is a lot of fantasy in this,
there is a lot of gossip and a lot of poor stuff. The problem
now with the betting exchanges is that there has been a whole
new element brought into this business because when there are
16 horses in a row only one is going to win, 15 are going to lose.
I am a reformed reprobate and I do not have an account with Bet
Fair. I would always look for information on horses that were
not going to win and it is much easier to find that than it is
the one that is going to win. Minister, on these matters of betting
exchanges, would you agree that the idea of alleged or proper
interference with the outcome of sporting events has been greatly
increased? Let us not deceive ourselves within these four walls
and I think it ought to be broadcast outside these four walls,
racing is as clean as anywhere in the world but it is still not
a very salutary affair. It attracts people to it who are there
to make a quick buck and the police and other bodies have to be
extremely alert. The arrival of the betting exchanges, which is
an area which the Minister and I would surely agree is wonderfully
well run, does give rise to enormous anxieties because criminal
elements are extremely sophisticated in every field and in this
one it is easier to infiltrate than almost any other.
Lord McIntosh of Haringey: If
I was going to cheat in the way that is suggested I would have
three enemies: one is the betting exchange itself, one is the
Gambling Commission and the third is the Jockey Club. I think
they all have the same interest to ensure that odds are set in
such a way that there is not the kind of temptation that you are
talking about and that any impropriety which is identified by
betting patterns as well as by anything else should be notified
to the Jockey Club and there is time to do that.
Q94 Lord Donoughue of Ashton: Minister,
I find most of this Bill admirable, but this area is the only
one where I find traces of naivety and perhaps complacency for
the reasons Lord Falkland has expressed. The question is who initiates
the necessary rapid inquiry which should expose skulduggery. You
have made your suggestion, but I have to say that in the real
world that will not deal with most of the problems, though it
is good in itself. Will it be the Gambling Commission who will
have the responsibility? You have mentioned the Jockey Club but
I do not think they are up to what may be required here. It would
require not just general oversight but some very specific requirements.
There are two types of compliance which need to operate, one of
which is the internal compliance. In my time in the City firms
acquired internal compliance officers, but when I first went there
they did not have them. Then they realised they needed external
compliance officers and the Financial Services Authority was then
appointed. We know that in the City the degree of skulduggery
has gone up with the rapid expansion of the bureaucracy in the
FSA, but that is a slight aside.
Lord McIntosh of Haringey: I will
not respond to that.
Chairman: I do not blame you!
Q95 Lord Donoughue of Ashton: Even so,
as a former stockbroker, it seems to me that betting exchanges
is not like bookmaking at all, that is a delusion, they are like
old fashioned stockjobbing with matched deals and that still exists.
Do you think the FSA ought to regulate this area and, secondly,
are you contemplating giving either the Jockey Club in its final
dying months or the Gambling Commission specific requirements
to operate which needs to be on a day-to-day basis and quite a
bit of resourcing? I am not clear that the Gambling Commission
as contemplated is necessarily expecting that, but that is what
it needs. It is not a criticism of the betting exchanges, in fact
their compliance provisions are growing very well and the computer
paper trail is better than it is with existing bookmakers. After
all, they do not take a stake like some highly bright bookmaker
who may suddenly lay what was a favourite at 10/1 or something
and he has a stake in that whereas the betting exchanges do not.
It does seem to me that the statements so far have not really
taken on board the problem and the threat to the integrity of
racing that we have heard about.
Lord McIntosh of Haringey: Betting
exchanges will be regulated by the Gambling Commission. If they
are not, they will be illegal and will be stopped. If they are
regulated by the Gambling Commission the regulation will require
compliance. They will be required to have reporting procedures
to the Gambling Commission which will have the capability as well
as the power to take action on a reported violation of the regulations,
which could lead, and should lead, if necessary, in the end to
the cancellation of the bet. It is as simple as that.
Q96 Lord Donoughue of Ashton: I do not
think you will find anything is as simple as that.
Lord McIntosh of Haringey: Of
course, the implementation is not as simple as that, but I repeat
what I say, there are three groups of people who have an interest
in stopping the kind of thing that you are talking about, one
is the betting exchanges because they will lose their licence
if they cheat, the second is the Gambling Commission and the third
is the Jockey Club or its successor, whoever is the sporting authority.
They are all on the same side.
Q97 Lord Donoughue of Ashton: The Gambling
Commission will be sufficiently resourced to do what is a very
resource intensive job, will it?
Lord McIntosh of Haringey: Yes.
There will be a revised offence of cheating that is not in the
published Bill that you have, but we have a draft and we will
let you have it when it is ready. I understand your concern, it
is a legitimate concern, but there will be a revised offence of
cheating which will apply not just to gambling activities but
also to those occasions on which betting takes place, such as
sporting events. It is not just racing where it will be happening,
people are going to bet on all sorts of sporting events.
Q98 Chairman: The implication of what
you are saying is that not only are these additional clauses still
awaited which will deal with the issue of cheating insofar as
the exchanges are concerned, but the Commission also has a requirement
to develop a regulatory structure for these exchanges which is
not on the face of the Bill, this is part of the Codes of Practice
and potentially the Statutory Instruments that we were talking
about before.
Lord McIntosh of Haringey: That
is right. The detail of the regulatory procedures will never be
on the face of the Bill but they will be there.
Q99 Chairman: There is one specific question
that I think we should just ask you and you may well want to think
about this and not give me a direct answer now. Is it the Government's
view that these exchanges are for the benefit of punters or should
they also be available to licensed bookmakers? If it became the
practice that licensed bookmakers were using these exchanges to
avoid their obligations as licensed bookmakers in terms of the
regulation that they have in the high street, would that be something
you would want to see the Commission address?
Lord McIntosh of Haringey: My
instant answer is both, but I think I had better write to you
about it.
Chairman: That is very helpful. We have
made very good progress. There are eight questions that we still
want to ask you about which we have given you notice of and I
do want to try and finish by half-past twelve, so if colleagues
could now just deal with these final questions which are allocated
to them. First of all, Lord Walpole wants to ask about remote
gambling.
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