Joint Committee on the Draft Gambling Bill Written Evidence


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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