DGB 33
THE GAMBLING BILL
Prepared by the Association of British
Bookmakers
for the Joint Scrutiny Committee
1. Introduction
The Association of British Bookmakers (ABB) was formed
in November 2002 following the amalgamation of the Betting Office
Licencees Association and the British Betting Office Association.
ABB is betting's main trade body and betting is by far the largest
sector in gambling, accounting for more than 8,000 retail outlets
and providing employment for some 36,000 people.
2. Definitions
2.1 The draft Gambling
Bill does not define what constitutes bookmaking, or being a bookmaker,
and does not clearly establish what is betting and what is gaming.
ABB believes it is essential in the interest of objectivity, clarity
and to aid future planning that clear definitions are included
in the final version of the Bill.
2.2 Under present
legislation, a bookmaker is a person who by way of business accepts
a wager placed by an individual on an undetermined event, the
outcome of which is not within the bookmaker's control. To qualify
as a bookmaking transaction (fixed odds bet) both parties to the
contract must be capable of winning or losing and the customer
must have access to the odds associated with the event on which
he is betting. Bookmakers have always been able to offer odds
about the result of any such event, regardless of whether skill
is involved, and it is with regard to these established principles
that bookmaking should be defined in the Bill.
2.3 Gaming, on the
other hand, involves a number of parties, including the operator,
all being present and taking part in a game. Amusement with prizes
machines (AWPs), also qualify as gaming because the game mechanism
is encompassed within the machine and inter-activity between the
machine and the player is possible. Also, the operator is guaranteed
a profit and the player has no indication of how much he might
win.
2.4 In addition to
distinguishing between bookmaking and gaming, ABB contends that
virtual events, which are an increasingly popular betting office
innovation, should continue to be defined as betting. Clause 192
of the Bill proposes that virtual betting (i.e. random number
generated bets graphically presented as horse and greyhound racing)
should be re-classified as gaming simply because it is "virtual",
even though such bets are in every respect fixed odds betting
opportunities. There is no logic, or advantage, in redefining
virtual events and we strongly recommend that the status quo be
maintained.
2.5 ABB also has strong
opinions on how fixed odds betting terminals (FOBTs) and betting
exchanges should be defined. These are expanded on below.
3. Fixed Odds Betting Terminals
3.1 The Committee
will be aware that DCMS, the Gaming Board and ABB recently agreed
a Code of Practice governing the use and supply of FOBTs in licensed
betting offices. ABB understands that this Code will form the
basis of FOBT regulation under the Gambling Commission. Mr Paul
Bellringer, Chief Executive of GamCare, advised throughout on
the preparation of the Code. A copy is at appendix one.
3.2 Given that the
Government's desire to limit proliferation of machine gambling
prompted the ABB to identify in its Code four FOBTs as the maximum
number per betting office, the Committee may wish to consider
how proliferation in other premises should be controlled.
3.3 FOBTs are bet
acceptance terminals in that they offer customers an opportunity
to bet at fixed odds at stakes of their choice on the outcome
of a graphically packaged future event decided by a random number
generator that is independently controlled and located away from
the premises on which the bet is struck. This description conforms
entirely to the long established definition of betting as discussed
above.
3.4 Gaming machines
do not offer fixed odds and do not enable the player to identify
prior to the event the amount he might win. On FOBTs, the punter
knows what the return will be if he wins. It is ABB's contention
that the fundamental differences between FOBTs and gaming machines
lead logically to the conclusion that FOBTs should be defined
as bet acceptance terminals and placed in a separate machine category.
3.5 This would mean
that, under proposed Government policy, FOBTs would be limited
to outlets licensed specifically for betting (betting offices
and casinos) and would not be available in premises licensed for
gaming (bingo halls, adult entertainment centres and public houses).
This would both address the Government's concerns about proliferation
and deny access to those less than 18 years of age. We look forward
to enlarging on this view in oral evidence.
4. Betting Exchanges
4.1 ABB members are
fully prepared to meet the commercial challenge presented by betting
exchanges. There are, however, a number of concerns that arise
from the exchanges currently being unregulated and also about
the way it is intended to regulate them in the future. These concerns
fall into two categories - integrity and taxation.
4.2 In the draft Bill,
betting exchanges are defined as "betting intermediaries"
and are to be licensed as such. This definition implies that exchanges
are not bookmakers, a contention with which we agree.
4.3 It is, in fact,
the users of exchanges, specifically those who act as layers (bookmakers),
who are very often engaged in the business of betting rather
than the exchanges themselves. The Government believes the licensing
of such layers to be unnecessary. We disagree and contend that
the exchanges are eroding, and under present plans will continue
to damage, this country's reputation for firm and sensible regulation
of gambling.
4.4 It is ABB's strong
opinion that the exchanges pose a serious threat not only to the
integrity of the licensing system, but also to the stability of
the tax regime and the reputations of those sports on which betting
takes place. It should, therefore, be incumbent on those who lay
bets on the exchanges to pass the "fit and proper test' applied
to all others who act as bookmakers.
4.5 With regard to
the very real threat of corruption of betting and sport, particularly
betting on horseracing, the exchanges provide opportunities for
anyone, based anywhere in the world, to lay horses to lose and
to do so anonymously. Recent reports clearly indicate that this
opportunity has led some exchange customers to seek to influence
the outcome of races and/or to employ privileged knowledge to
the detriment of the ordinary punter. Typically, this would involve
offering attractive odds about a fancied runner in the near certain
knowledge that it is going to lose.
4.6 This situation
promotes a motive for criminal intervention in any betting event
and we see the Government's stance on non-licensing of exchange
layers as inconsistent with the aim of keeping gambling crime
free. Again, there is a clear public interest issue here that
requires a licensing regime that encompasses individuals who lay
bets other than by way of recreation.
4.7 We accept that
the exchanges provide an innovative and successful medium for
betting. However, they are no longer the preserve of the person-to-person
recreational bettor - if indeed they ever were. Accordingly, we
urge the Committee to consider what constitutes recreational betting
and to take a view as to whether licences should be required by
those who bet above a particular threshold, be that defined by
frequency, volume, or both.
4.8 Clarification
of what constitutes recreational betting would also permit a review
of the basis upon which exchanges are taxed. We strongly believe
that the current gross profit payment of 15% of commission in
tax and 10% in horserace levy does not represent a fair contribution
in either case. We attach under appendix two examples of how this
differential works in practice. ABB wrote recently to Customs
and Excise on this and associated issues and a copy of this correspondence
is at appendix three.
4.9 We also suggest
that consideration be given to transferring the regulation of
betting exchanges to the Financial Services Authority. A regime
which required the registration and licensing of betting exchanges
and much more detailed information about their customers would
help protect the integrity of that market and generate the trust
that is essential to the long term health of all sports betting.
5. The Gambling Commission
5.1 ABB endorses the
need for effective regulation of gambling and looks forward to
working constructively with the proposed Gambling Commission.
Betting is by far the largest sector in gambling. We believe,
therefore, that it is important that the sector is well represented
on the executive and management of the Gambling Commission - and
any Shadow Commission that precedes it. To win the confidence
of bookmakers, it will be important for the Commission to include
in its composition those with the experience of working in sectors
other than those currently regulated by the Gaming Board.
5.2 We welcome the
intention to use agreed codes of practice, such as ABB's GamCare
and FOBT codes, as a principal policy tool of the Commission.
We are concerned, however, that regulation should be as 'light-touch'
as possible and that the Commission should not become a costly
and unwieldy bureaucracy. In this context, DCMS's regulatory impact
assessment estimates that some £12 million to £16 million
will be added to the costs currently underwritten by those activities
within the Gaming Board's remit.
5.3 While it is anticipated
that the gambling market will grow under the Government's proposals,
the best betting can hope for is to hold its present position.
It is entirely possible that the new regulatory regime will have
an overall negative effect on the betting market. Indeed, it is
possible that betting could gain no benefit from these reforms
but, because it is the largest gambling activity, could pick up
the greatest part of the cost. This would be detrimental not only
to bookmakers, but also to horse and greyhound racing, which derive
much of their funding from betting.
5.4 One area in which
cost could escalate unnecessarily is that of personal licensing.
It is appreciated that DCMS has already concluded that it will
not be necessary to license betting office managers. ABB endorses
this view, but would add that there are other, more senior people
in betting who have no influence on the betting transaction and
no obvious need to be licensed. We understand that in such circumstances
it is intended that the licensing requirement will be confined
to a compliance officer. ABB believes that this is the correct
way to proceed.
5.5 More important
than cost, however, is the extent of the powers to be exercised
by the Commission. As it is not clear what these will be, or how
the appeals procedure will work, ABB must reserve the right to
comment in detail on these issues when the situation become clearer.
5.6 We are also less
than sanguine about the proposal to transfer responsibility for
premises licensing from magistrates to local authorities. The
present method has worked perfectly satisfactorily for years and
we see the proposal as a move to a potentially more politically
charged and controversial system.
6. Remote Gambling
6.1 The need for effective
regulation of remote gambling was one of the main drivers of the
Budd Review and the consequential decision to replaced outdated
legislation through a Gambling Bill. ABB is pleased to learn,
therefore, that the Committee will be dealing with this important
matter separately. We have been advised by DCMS that it will be
appropriate to submit a more detailed paper on this single issue
early in the New Year. This we intend to do.
6.2 It is the Government's
wish that British-based remote casino gambling will provide the
safest, fairest gambling opportunities available anywhere in the
world. If this objective is to be achieved, UK-based operators
must be in a position to compete successfully in the international
market. If regulation or the tax regime are too onerous and/or
too expensive operators will choose to base themselves elsewhere
and customers, including British based clients, will be denied
the ability to gamble in the secure environment the Government
is seeking to create. We look forward to commenting further on
these issues in the paper referred to above.
10th December 2003
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