Joint Committee on the Draft Gambling Bill Minutes of Evidence


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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