Memorandum from Sportingbet PLC (DGB 99)
Sportingbet Plc is a UK based international
operator of interactive licensed gambling services. Our company
is listed on the Alternative Investment Market of the London Stock
Exchange. In excess of 90% of Sportingbet revenues are from overseas
with the US dominating as our major market. In line with the company's
on-going policy Sportingbet Plc has been lobbying the US government
in support of a fully regulated system of internet gambling and
we are strong supporters of UK Government policy to update the
gambling regulations. To give you an understanding of the scope
of our business Sportingbet's figures for the financial year ending
March 2003 was turnover £1,150.3 million, Gross profit of
£74.1 million, Net profit of £14.6 million. We are currently
licensed in the UK and employ more than 450 people worldwide.
1. Sportingbet welcomes the publication of the
U.K. Draft Gambling Bill and agrees with its intention to de-regulate
the U.K. Gambling Industry. In particular, Sportingbet is in favour
of the specific provisions regarding the creation of remote gambling
licences. Sportingbet has for some time been supportive of the
efforts to modernise the gambling market in the UK, and in particular
provide better regulation for the industry, including remote gambling
operators.
2. Sportingbet agrees with the Bill's purpose
of creating a proper UK regulatory framework by issuing a set
of regulations and conditions for a remote gambling licence. Remote
gambling is the only gambling segment currently unregulated in
the UK and this Bill will bring such laws up to date with new
technology and communications platforms. This will have the affect
of enhancing consumer protection and social responsibility for
such services. In addition it provides the opportunities to put
control measures in place against money laundering, and create
proper audit trails.
3. Sportingbet believes that the Bill strikes
the right balance between wanting to bring remote gambling within
the regulatory sphere whilst at the same time assuring that such
an industry can operate in the UK. Sportingbet welcomes the approach
by the Bill to provide flexibility in adopting new technologies,
licensing the use of such technologies and advancing new services.
4. Sportingbet strongly believes that the prohibition
of remote gambling is not a viable option, as this would only
encourage sites to be established in other jurisdictions with
less rigorous standards of regulation. Prohibition would not be
able to limit the ability of UK citizens from accessing remote
gambling sites. In this light, it is encouraging to see that the
Bill recognises this basic tenet and seeks to provide a licence
to establish a level of probity for the industry.
5. Sportingbet recognises the responsibility
of the industry to uphold the three principles outlined by the
Government in the Draft Bill. Sportingbet are members of the IGGBA
whose membership has adopted its own internal Code of Conduct
as well as having concluded a substantial Code of Practice with
Gamcare, the social responsibility organisation. The latter Code
of Practice is the most far reaching if its kind and addresses
key issues of age identification; socially responsible gambling
and consumer protection and Sportingbet will abide by the iGGBA
proposed code of conduct.
6. Sportingbet believes the remote gambling licence,
without prejudice to taxation and regulation levels will have
a positive impact on job growth, tax revenues and overall technological
development in the UK.
7. Sportingbet believes that the opportunity
of maximising tax revenues would be enhanced by the creation of
a two tier taxation structure. This would involve the creation
of a new lower tax category for business form non domestic markets.
8. Sportingbet believes that the success of a
remote gambling licence will rest on the interpretation of this
Draft Bill by the Gambling Commission and the drafting of such
regulations by the Commission. Sportingbet would like to see the
measured content of the Bill prescribed into the final legislation.
9. Sportingbet believes that much of the responsibility
for the operation of licences should rest on the personal and
fit and proper tests. By underpinning the regulation on these
two items, the ability to adapt operating services to the market
is enhanced. Sportingbet recognises the fact that a level of regulation
must be administered in this sector, but by relying on the probity
of the operating company and the personal licence major regulatory
hurdles can be avoided that would make it impossible to operate
in the UK.
10. Sportingbet welcomes the establishment of
a Gambling Commission (Article 2, point 12). However, Sportingbet
would strongly encourage the prompt establishment of the Commission
in order to provide licences at the earliest opportunity. Sportingbet
is concerned that the delay in obtaining licences will diminish
the UK's ability to capture a world leading position in this industry.
11. Sportingbet supports the exemption of offshore
operators from the obligation to licence in the UK or for "providing
the facilities for gambling" under Article 3, point 21. However,
Sportingbet is concerned that Article 3, point 25 (4b) could be
construed as offering gambling and thus obligate offshore operators
to procure a licence. It is important to understand that the remote
gambling market is a global one and that efforts to segment the
market by regulation simply skews the market in favour of companies
remaining offshore.
12. Sportingbet is concerned about Article 3,
point 31 which stipulates the ability of the Secretary of State
to determine which countries an operator may not take bets. Sportingbet
believes it is the operator's responsibility to obey the laws
of other jurisdictions and that once an operator has a UK licence
it is free to provide such services globally. The liability of
obtaining bets from other jurisdictions is the business of the
operator and international treaty obligations. Our concern is
based on the fact that 70% of our business comes from the United
States of America, our largest market. We comply with international
treaties and after investing heavily in this market and others
Sportingbet believes it and other operators should have the business
environment in which is can further invest with confidence.
13. Sportingbet believes that it is an important
tenet of the Gambling Bill that the bets are legally landed in
the UK. Hence compliance elsewhere is restricted to banking and
route to market legislation, etc.
14. Sportingbet is concerned about potential
under age gambling. In the event that such activity inadvertently
takes place, Sportingbet voids all such transactions and refunds
deposits. Sportingbet notes Article 4, point 34 which addresses
gambling advertising in relation to children. Sportingbet supports
the wholesale restriction of gambling to under 18's, but often
advertising media are of such a nature as to be visible to under
18's. It is unclear whether this would mean a potential liability
for the operator. Advertising should restrict the element of invitation
to play, but the posting of a web site in itself should not imply
an offence under the Act.
15. Sportingbet would welcome clarification of
Article 5, point 2 which indicates that the Gambling Commission
will not provide a unified remote gambling licence. Remote gambling
operators increasingly today provide a mix of casino, gaming and
betting services to consumers. To obtain all three licences separately
would be an undue regulatory burden on remote gambling operators.
Sportingbet would ask that a single remote gambling licence be
awarded instead of extending operating licences to remote gambling.
It is unclear that a remote gambling licence for multiple games
could only be made available under a casino operating licence
(Article 5, point 54 (4)). Sportingbet wish to offer a variety
of games across the gambling spectrum and having to obtain multiple
licences would be delay the start of services and cause regulatory
gridlock when having to comply with different sets of regulations.
16. Sportingbet would welcome clarification about
Article 5, point 64 (7) which seems to allow a licence to be arbitrarily
amended for any number of items, particularly restricting means
of communication which previously were acceptable under Article
1, point 3. Such uncertainty will make it more difficult for operators
such as Sportingbet to take up a UK licence with confidence.
17. Sportingbet supports the testing of equipment
as written in Article 5, point 70 (1-6), but would suggest that
a licence be granted after the passing of the fit and proper test
and personal licence test for the application. Approval of equipment,
games and other compliance factors should be considered with a
regard to the proportional benefit of each regulation.
18. Sportingbet is concerned about the change
control mechanism under Article 5, point 81 (6) which allows the
Gambling Commission to determine when a variation to the licence
may take effect. Sportingbet feels that if the holder of the operating
licence has passed the fit and proper test and hold a personal
licence then the variation should be permitted during the time
of Commission amendment of the licence or approval of the variation
within the licence.
19. In summary, Sportingbet welcomes the Draft
Bill which reflects the position set out by the government in
the Remote Gambling Position Paper. The provision of a UK remote
gambling licence will go a long way in securing a proper regulatory
environment, protecting consumers and accruing benefits to the
UK in terms of jobs and tax revenue. Sportingbet would welcome
the opportunity to provide further clarification by way of oral
evidence.January 2004
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