Examination of Witnesses (Questions 1740
- 1759)
MONDAY 1 MARCH 2004
RT HON
TESSA JOWELL
MP, RT HON
LORD MCINTOSH
OF HARINGEY
AND MR
ELLIOT GRANT
Q1740 Jeff Ennis: So you do not accept,
Lord McIntosh, the argument BACTA are putting forward on this
issue?
Lord McIntosh of Haringey: They
want to retain the existing limits. We have taken a view between
BACTA and Budd, if you like, which we think is rational. You have
had a lot of evidence on this point, we will listen very carefully
to what the Committee says on it.
Chairman: Your position has changed marginally
in this latest Position Paper and I think perhaps we both need
time to reflect on it and not pursue it any further now.
Q1741 Mr Wright: Secretary of State,
you have recently said, I think it was in November at the Business
in Sport and Leisure Conference, that the question of FOBTs is
on probation. Who, in your opinion, would be responsible for ensuring
that the industry complies with the terms of the settlement and
the voluntary code of practice, the terms of which will come into
effect at the end of this month, in terms of numbers and the amount
of prize levels?
Tessa Jowell: You are absolutely
right in quoting my words back to me, and that remains the position.
My officials and the Gaming Board will remain in contact with
the Association of British Bookmakers to monitor the effectiveness
of the code in practice, but the real test will be the research
which has been commissioned into the effect of these machines
on problem gambling. Beyond this it will be for the Gambling Commission
to ensure all operators of Fixed Odds Betting machines comply
with whatever regulatory regime is finally put in place.
Q1742 Chairman: You mention there
is research being done and the ABB has commissioned this research,
if the research shows that there is a problem with FOBTs with
problem gambling, what will you do about the agreement you have
reached with the betting shops, and would you conclude that this
would be a reason to be concerned about the proliferation of FOBTs
or indeed gaming machines generally in local communities in what
after all are high street premises?
Tessa Jowell: The answer is yes,
if it was clear that Fixed Odds machines were driving an increase
in problem gambling, I would be very concerned about that. We
would then look at a range of possible options with the industry
in order to address that. I go back to what I said earlier, the
overriding obligation is that we get the right balance between
modernising our legislation and protecting people who might otherwise
be at risk of becoming problem gamblers, and we do not want to
create a situation where modernisation, widely accepted as necessary
and desirable, becomes a route by which significant numbers of
people become addicted to whatever form of gambling. So we will
look at that research with very great interest in order to make
a judgment about the effect of these machines.
Q1743 Chairman: Concern about them
does, it seems to us, provide further support for your determination
to avoid proliferation of access to gaming machines through too
many casinos too locally based. Is that a fair conclusion?
Tessa Jowell: That is absolutely
right.
Lord McIntosh of Haringey: Will
you say so to the OFT please?
Q1744 Chairman: I have just said
so in a very public arena and, like you, must wait for their report.
Tessa Jowell: The OFT have to
be reminded that the decisions we deal with have public policy
dimensions in addition to competition dimensions.
Chairman: Indeed they do. Let us move
on to another contentious area, bookmakers and betting exchanges.
Q1745 Lord Donoughue of Ashton: Secretary
of State, betting exchanges are a subject I am sure close to your
heart in your recent life experience. Do you in fact accept there
is a difference in principle between those who lay bets and those
who back them? In that context, because the concerns mainly relate
to those who lay bets, who do you think should be doing more to
monitor suspicious betting patterns, of which there is evidence
particularly in horse racing? Who should do more, the sports regulators,
the traditional bookmakers or the betting exchanges?
Lord McIntosh of Haringey: We
think all of them have a responsibility. They all have an interest
in cracking down on cheating and any unfair betting. On the whole
I think they are working well together because, for example, the
Jockey Club has a memorandum of understanding with the Association
of British Bookmakers and with BetFair, the leading betting exchange,
and the Jockey Club I understand has been beefing up its investigation
and security arm. What will change under the new legislation will
be that the Gambling Commission will be in the field, it will
have powers to require the information of its licensees and importantly,
in the clauses which we published earlier this year, will have
the power to freeze bets if there is any suspicion and to void
them if it finds them to be unfair. That I think makes quite a
strong regulatory regime; a combination of the sporting regulation
and of the official statutory regulation.
Q1746 Lord Mancroft: Could I go a
little bit further? We have received evidence from both sides
of this argument. Do you not think there is a case for seeking
to regulate those users who can be described as non-recreational,
possibly professional users, of betting exchanges?
Lord McIntosh of Haringey: Find
a definition of "non-recreational, professional users".
We have issued that challenge right from the very beginning and
nobody has come up with a definition. Our view is that betting
exchanges exist on the basis, and this is self-evident, that they
make their money by charging a commission on putting two different
sides together on a bet, and you have to have two sides for a
bet. How you would define who is a commercial and non-recreational
user of a betting exchange, I do not know. What we are doing is
increasing regulation by bringing betting exchanges under the
bookmakers' regime.
Q1747 Lord Donoughue of Ashton: If
we come up with such a definition, are you assuring us you will
look at it positively rather than negatively?
Lord McIntosh of Haringey: We
will look at it very carefully and very sympathetically.
Chairman: We are working very hard to
try and find one.
Q1748 Viscount Falkland: I admit,
on behalf of myself and I think other members of the Committee,
we are in some difficulty with the whole business which we are
discussing. Lord McIntosh made some remarks when we last spoke
to him about unfair betting and he has repeated that phrase today.
Could I ask Lord McIntosh to be a bit more precise and tell us
exactly how he perceives betting when a bet is unfair? If I could
help him, supposing somebody gets information at a cocktail party
on a Sunday that a horse is sick for a Monday and he lays against
that horse, as it were, on the betting exchange.
Lord McIntosh of Haringey: That
is cheating.
Q1749 Viscount Falkland: That is
cheating?
Lord McIntosh of Haringey: Yes.
Q1750 Viscount Falkland: That is
very interesting because that is not the kind of answer we have
got. That is very definite. In that case, it complicates the matter
even further. Then I think you should ban betting exchanges.
Lord McIntosh of Haringey: And
drive them offshore!
Q1751 Mr Page: If I could follow
on the same line of questioning. I have read the reply you sent
to John Brown, the consultant of William Hills, on 7 February.
As we all know the revenue generated from general betting duty
and the horse race betting levy per betting exchange transaction
is a fraction of that of the traditional bookmaker. Do you feel
this is a fair difference and do you think it should be addressed?
Lord McIntosh of Haringey: The
first thing I have to say is that matters of taxation are a matter
for the Chancellor and not for this Department, and you will have
to pursue that directly with Treasury Ministers. But you will
be aware that there was an attempt at law to place a levy on those
who lay bets with betting exchanges and it was overturned on judicial
review, and your attempts to find a definition will have to take
that into account. Not you personally.
Q1752 Mr Page: I appreciate that
problem, Lord McIntosh. You must not take it too hard if we try
and draw you out on some of these points and see whether you have
had any original thoughts since you last wrote on 7 February.
Lord McIntosh of Haringey: No,
no original thoughts, for which I apologise.
Q1753 Lord Donoughue of Ashton: I
am not sure if Lord McIntosh answered my question whether there
is a difference in principle, but would he agree that whereas
laying a bet with the help of professional inside knowledge of
the industry may be in breach of Jockey Club rules and may be
cheating, elsewhere, such as in the City of London, it is a criminal
offence? How do you justify the difference?
Lord McIntosh of Haringey: It
is commonsense, is it not? It is not an issue of principle, it
is an issue of practicality. It is commonsense that if you bet
on something to win you cannot ensure it wins, but if you bet
on something to lose you can either ensure it loses or you may
have knowledge which is not available to the person you are betting
with which enables you to have greater certainty it is going to
lose. Clearly somebody who bets with somebody else who is laying
a bet has to be that much more careful. These are matters of the
English language.
Q1754 Lord Donoughue of Ashton: Why
are you happy that it is a criminal offence on a share and it
is not a criminal offence on a bet?
Lord McIntosh of Haringey: I will
have to think about that. I am not sure there are not circumstances
in which cheating, in other words having knowledge which enables
you to win something by misleading somebody else, would not be
under certain circumstances a criminal offence. I think I will
have to write to you about this, it is a difficult issue.
Mr Grant: There are Jockey Club
rules which prohibit owners and trainers and so on, licensees,
from laying their own horses and to do so would be a breach of
what the draft calls "industry rules", which would constitute
a ground for the Commission to void a particular bet if it were
satisfied that the bet was unfair for that reason. But of course
people, individuals, without any connections with a particular
runner, may choose at the moment to lay a bet privately and they
may do so on the basis of suspicion, intuition, gossip or anything
else.
Q1755 Lord Donoughue of Ashton: But
the brother of the trainer or the stable lad is an individual
and he is not covered by the Jockey Club rules.
Mr Grant: The intention is, through
voiding powers, that the Gambling Commission would be able to
make an assessment of the fairness of a particular bet by requiring
the licensed operator, ie the operator it licenses as a gambling
operator, to provide information. With the help of the racing
regulator through the exchange of information a judgment could
be made about whether that particular bet involved unfairness
or not. If satisfied, then the Commission would have the voiding
power which of course does not exist at the moment.
Q1756 Chairman: Lord McIntosh, I
am sorry there has been a rapid fire of questions and exchanges
but you can see how much it is exercising the Committee, but you
did say, if I heard you correctly, that someone placing a bet
through an exchange would have to have regard to the fact that
the layer may indeed have some information that he does not have.
Do you not have concern that in the years to come the use of exchanges
could have very deep-seated ramifications and implications for
the governance of not just racing and greyhound racing but all
sports, in that from time to time there are problems of match
fixing in cricket, in football, in tennis and even in golf, and
it does not need the person taking part to place a bet, someone
can do it for them? Do you feel this is an issue that the Gambling
Commission will need to address with all the sporting bodies of
the kinds I have suggested?
Lord McIntosh of Haringey: Yes,
and not just sporting bodies, because of course you can take and
lay bets on other things than sporting events, and there can be
inside knowledge on those as well. But I agree with the thrust
of your question, yes, the ability to affect the outcome of a
bet is greater if you are laying a bet than if you are placing
a bet. That, it seems to me, is self-evident, and it must be a
cause for concern.
Q1757 Chairman: The consumer who
goes into a betting shop knows the person in the betting shop
that he is placing his bet with is licensed—I will refrain
from saying that a fit and proper person is licensed but he is
someone who meets the objectives—but that does not apply
to betting on a betting exchange with the layer with whom he connects.
Lord McIntosh of Haringey: The
proprietor of the betting exchange will have to have a bookmaker's
licence.
Q1758 Jeff Ennis: Do you accept,
Lord McIntosh, that betting exchanges have created a new type
of gambler who is only interested in laying a horse or a greyhound
to lose rather than one to win, and that there are some gamblers
who bet on the betting exchanges who bet exclusively on horses
and dogs losing?
Lord McIntosh of Haringey: Yes,
that must be the case.
Q1759 Jeff Ennis: I guess the equivalent
of that in the City would be somebody who was a bear, shall we
say?
Lord McIntosh of Haringey: Yes.
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