Memorandum from British Sky Broadcasting
Limited (DGB 58)
I enclose BSkyB's submission in response to
the call for written evidence issued by the Joint Committee on
the Draft Gambling Bill on 19 November 2003.
Although major sections of the new Gambling
Bill (the "Bill") were published in draft on 19 November
2003, the Bill as currently published remains incomplete and there
are key issues (such as taxation and advertising) that are currently
unresolved. This factor, together with the number of important
matters that are left by the Bill to Codes of Practice and Guidance
to be issued by the Gambling Commission, mean that it is currently
impossible to provide a full response to the issues raised by
the proposed reforms. However, we have tried to identify the major
issues arising from the Bill.
BSkyB has various interests in the remote gambling
industry and these are briefly touched upon in the first section
of the attached submission.
If invited to do so, BSkyB would be happy to
give oral evidence to the Joint Committee on any of the matters
covered in this submission or otherwise in relation to the Bill.
1. BSKYB: BACKGROUND
AND INTEREST
IN GAMBLING
INDUSTRY
1.1 BSkyB is Britain's biggest media company.
Since Sky was launched 14 years ago, BSkyB has pioneered multi
channel and digital television in the UK—bringing increased
choice, improved quality and new services to millions of viewers.
BSkyB has invested over £2 billion in digital satellite television
over the last five years. More than seven million households now
subscribe to Sky and the digital satellite platform currently
has over 400 channels and a wide range of interactive services
from a variety of different providers.
1.2 BSkyB includes a betting and gaming
division—Sky Bet. Sky Bet currently operates fixed odds
betting services via interactive television, the Internet and
by traditional telephone betting. Additionally, it operates an
Internet-based casino, www.skybetvegas.com, licensed by the Alderney
Gambling Control Commission.
1.3 The interactive television services
made possible by the digital satellite platform have also attracted
considerable interest from the gambling industry. In addition
to Sky Bet's own services a number of third party operators—such
as Blue Square, Ladbrokes, Littlewoods, Avago, BettingCorp and
Fancy A Flutter—have developed a range of interactive television
betting services made available by means of the digital satellite
platform. These have variously been made available either in conjunction
with BSkyB's own Sky Active services or independently of those
services through use of the regulated access route to the digital
satellite platform provided under the Communications Act 2003
(and its predecessors).
1.4 BSkyB is committed to socially responsible
gambling and has drawn up a Code of Practice in association with
GamCare to promote socially responsible gambling on the digital
satellite platform.
1.5 BSkyB is not currently involved in any
non-remote gambling and therefore this submission concentrates
principally on the issues raised by those sections of the Gambling
Bill published in draft on 19 November 2003 (the "Bill")
as they affect forms of remote gambling.
1.6 This submission makes general comments
about the Bill's overall themes. A commentary on specific provisions
of the Bill is set out in the attached appendix.
2. LIBERALISATION
AND SOCIAL
RESPONSIBILITY
2.1 BSkyB welcomes the broad thrust of the
Bill and its aims to de-regulate the gambling industry whilst
maintaining the three "licensing objectives" and seeking
to create a successful British gambling industry.
2.2 BSkyB strongly supports the licensing
objectives enshrined in Clause 1 of the Bill[1]
and believes that these three core principles are critical to
the establishment and continued operation of a widely-accepted,
successful and internationally competitive British gambling industry.
BSkyB is committed to socially responsible gambling and is at
the forefront of promoting socially responsible gambling in the
areas in which it operates, having pioneered with GamCare a Code
of Practice to promote socially responsible gambling on the digital
satellite platform.
2.3 Liberalisation and a regulatory policy
based on principles of "social responsibility" will
not of themselves be sufficient to ensure the development of a
successful British gambling industry. Three further factors will
be critical to that success in the remote gambling field—an
appropriate tax regime, clear rules on advertising and a proportionate,
transparent and effective regulatory regime that intervenes only
where necessary to uphold the licensing objectives.
3. TAXATION
3.1 As yet the clauses dealing with the
taxation of gambling have not been published. When the approach
to taxation is considered, we believe the following key points
should be bourne in mind:
— in an internationally competitive
market it is essential that the costs of operating in Britain
are both proportionate and reasonable. Excessive licence fees
and/or high taxes would severely jeopardise the regulatory structure
proposed by the Bill and undermine the British-based industry's
ability to compete internationally;
— a tax regime that undermines the
regulatory structure proposed by the Bill as it affects remote
gambling will not limit the global growth of remote gambling but
will merely drive British customers to unregulated overseas sites
which may do little to protect the vulnerable;
— the different treatment of betting
and gaming under the current legislation has led to operators
expending considerable time and effort in devising products that
are technically betting products and do not fall foul of the gaming
legislation but which might not be considered to be within the
spirit of the gaming legislation. The proposals to deal with betting
and gaming in the Bill mean that such devices are unlikely to
be repeated in future unless there are other compelling reasons
for operators to seek to fall within one regime or other. Differing
approaches to taxation is likely to be such a reason. We would
therefore hope that the Government's progressive approach to the
taxation of betting and bingo is extended to other forms of gambling
with the introduction of the gross profits tax at a common rate
across the various different types of gambling (ie whether betting,
gaming or bingo);
— although conceptually we would support
a common tax treatment for remote and non-remote forms of gambling,
the nature of remote gambling and the inherent risk of operators
"forum shopping" for the most advantageous tax and regulatory
jurisdiction may mean that a lower gross profit tax rate than
that applied for land-based gambling may be necessary for remote
gambling.
4. ADVERTISING
4.1 Although provision is made in the Bill
in respect of the advertising and promotion of gambling to children
and young persons, provisions dealing more generally with advertising
have yet to be published.
4.2 BSkyB is of the view that, subject to
issues surrounding the protection of children, young people and
the vulnerable and a prohibition on the advertising of sites from
"unsuitable" jurisdictions, the regime applicable to
the advertising of gambling should be liberalised for all media.
4.3 This issue will be of particular importance
as regards remote gambling. One of the principal advantages that
a British-licensed remote gambling operator could enjoy would
be the freedom to advertise its services in Great Britain. BSkyB
is of the view that there should be restrictions on advertising
in Great Britain by offshore remote gambling operators and that
in some cases such restrictions should extend to an outright prohibition.
This is not a cry for protectionism, rather we believe that only
remote gambling operators that are established in jurisdictions
that provide for an appropriate level of social responsibility
and player protection should be entitled to advertise their services
in Great Britain. We would envisage either the Gambling Commission
or the Secretary of State certifying various jurisdictions as
complying with the required minimum standards of social responsibility
and player protection to be permitted to advertise in Great Britain.
5. BASIS OF
REGULATION
5.1 As stated in Paragraph 2.2 above BSkyB
strongly supports the three licensing objectives enshrined in
the Bill and believes that the Bill establishes the right guiding
principles to be applied in regulating the Gambling Industry.
Additionally though BSkyB believes that there should be explicit
subsidiary aims requiring any such regulation to be proportionate
and to adhere to the principle of technological neutrality.
5.2 Proportionate Regulation
BSkyB is a firm believer in proportionate regulation,
believing that government should only intervene in order to protect
a public good or prevent a public disbenefit and that any intervention
should be the minimum necessary to safeguard those objectives.
For the most part, the Bill adopts such an approach, for example,
in the setting the Gambling Commission's secondary aim as being
"to permit gambling" insofar as such gambling is consistent
with the pursuit of the three primary licensing objectives[2].
To that extent it is therefore to be welcomed.
We believe though that the Bill, and the subsequent
regulatory regime, would be improved by an explicit reference
to the principles of better regulation and an obligation on the
Gambling Commission to review the regulatory burdens it imposes
on operators from time to time. Such an approach would mirror
that applied to OFCOM under the Communications Act 2003[3].
Further under Section 6 OFCOM has duties to review
regulatory burdens arising from its functions as follows: "(1) OFCOM
must keep the carrying out of their functions under review with
a view to securing that regulation by OFCOM does not involve—
(a) the imposition of burdens which are unnecessary; or (b) the
maintenance of burdens which have become unnecessary. (2) In
reviewing their functions under this section it shall be the duty
of OFCOM— (a) to have regard to the extent to which
the matters which they are required under section 3 to further
or to secure are already furthered or secured, or are likely to
be furthered or secured, by effective self-regulation; and (b) in
the light of that, to consider to what extent it would be appropriate
to remove or reduce regulatory burdens imposed by OFCOM."
5.3 Technological Neutrality
BSkyB believes that unless, as a result of the
particular features of the relevant technology, any of the licensing
objectives demand otherwise, any regulation of remote gambling
should be technologically neutral—the same principles should
be applied to interactive television, the Internet, mobile phones
and any other remote devices that can be used for gambling.
Technology is developing rapidly within the
remote gambling sector and if the Gambling Commission attempts
to define regulation too closely by reference to the technology
being used, there is a risk that it will quickly become outmoded.
6. TRANSITIONAL
ARRANGEMENTS
6.1 We welcome the recognition in the DCMS
Policy Document accompanying the Bill that the transitional arrangements
must be effective and not cause unnecessary disruption and uncertainty.
However, even if the Gambling Act receives Royal Assent early
in 2005 and the new regime is implemented without delay, it seems
likely to be early 2006 before gambling operations under new licences
granted under the Act can first be provided.
6.2 It is widely recognised that the current
legislation is inappropriate and out of date. Any steps that can
be taken, whether in the form of a shadow Gambling Commission
or otherwise, to speed up the passage of the new regulatory regime
are therefore to be encouraged. To permit further delay with regard
to remote gambling merely heightens the risk of widespread consumer
acceptance of lower regulatory safeguards associated with certain
offshore remote gambling operations.
6.3 Detailed transitional provisions are
still awaited but we expect the Gambling Commission in exercise
of its licensing jurisdiction to rely, at least to a certain extent,
on authorisations under the existing regime (eg certificates of
consent, bookmaker's permits, pool promoter's licences etc). BSkyB
would suggest that the Gambling Commission also be permitted to
rely on equivalent investigations undertaken by Gambling Authorities
in other appropriately regulated jurisdictions such as the Crown
dependencies of Alderney and the Isle of Man.
7. GAMBLING INDUSTRY
CHARITABLE TRUST
7.1 BSkyB has already shown its strong support
for the prevention of underage and problem gambling through the
development of the Code of Practice referred to in Paragraph 1.4
above implemented in July 2003 and £90,000 of direct contributions
to GamCare in 2003-04. As such, we are committed to the aims and
objectives of the Gambling Industry Charitable Trust.
7.2 BSkyB understands the reasons for providing
within the Bill for reserve powers permitting a "social responsibility
levy" being imposed on operators in the event that voluntary
contributions do not reach the required level. However, we believe
through its work with the Gambling Industry Charitable Trust that
the gambling industry will raise the required funds.
December 2003
1 "(a) preventing gambling from being a source
of crime or disorder, being associated with crime or disorder
or being used to support crime; (b) ensuring that gambling is
conducted in a fair and open way; and (c) protecting children
and other vulnerable persons from being harmed or exploited by
gambling." Back
2
See Clause 14(b). Back
3
Section 3(3) Communications Act 2003 states that: "In performing
their duties under subsection (1), OFCOM must have regard, in
all cases, to- (a) the principles under which regulatory activities
should be transparent, accountable, proportionate, consistent
and targeted only at cases in which action is needed; and (b)
any other principles appearing to OFCOM to represent the best
regulatory practice." Back
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