14 Jan 2014 : Column GC53

14 Jan 2014 : Column GC53

Grand Committee

Tuesday, 14 January 2014.

Gambling (Licensing and Advertising) Bill

Committee

3.30 pm

The Deputy Chairman of Committees (Lord Brougham and Vaux) (Con): My Lords, if there is a Division in the Chamber, the Committee will adjourn for 10 minutes as soon as the bells are rung.

Clause 1 agreed.

Amendment 1

Moved by Viscount Falkland

1: After Clause 1, insert the following new Clause—

“Power to extend the horserace betting levy to overseas bookmakers

(1) The Secretary of State may by regulations amend any provision or provisions of the Betting, Gaming and Lotteries Act 1963 (at a time when the provisions listed in section 15(1)(a) to (c) of the Horserace Betting and Olympic Lottery Act 2004 (horserace betting levy system) have not been entirely repealed by order under that section), the Gambling Act 2005 and/or the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159 for the purposes of ensuring that each person who holds an operating licence under the Gambling Act 2005 which authorises that person to provide facilities for betting shall be—

(a) liable to pay the bookmakers’ levy payable under section 27 of the Betting, Gaming and Lotteries Act 1963; and

(b) subject to the provisions of section 120 of the Gambling Act 2005 (as modified in accordance with the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159) if that person is in default of such bookmakers’ levy.

(2) Regulations under this section must be made by statutory instrument.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

Viscount Falkland (CB): My Lords, in the absence of the noble Viscount, Lord Astor, I speak to this amendment, which is not brief but is logical. I hope I can persuade others it is logical that when we extend the area of tax we expect to online betting, the levy should benefit accordingly from the benefits that the bookmakers get from their increase in betting online. Noble Lords will realise that the levy fall has had a grave effect on the finances of racing. Among the causes of the fall has been the move to online betting by people who back horses and the fact that no levy comes from that source. There are all kinds of other reasons why the levy contribution has fallen. As regards the popularity of betting on horses, since the 1960s when the law effectively changed to introduce betting shops and so on, the fall has been gradual but the amount of betting has not in any way declined. It has just been spread over a wider area of gambling opportunities and is not likely to change favourably for racing in the foreseeable future.

14 Jan 2014 : Column GC54

I urge the Government to consider the logic of what I am saying. If the bookmakers find this unappetising and unacceptable, I suggest they realise that racing is threatened. The sport has existed in the form we know basically from the early 18th century. It has a worldwide reputation and its brand is unequalled. We really cannot afford that to change because bookmakers do not feel that they should contribute towards the sport from which they profit. I do not want to get any more e-mails from bookmakers, which I expect noble Lords also have been getting, saying how lovely betting shops are with their daffodils and how they are places where you can take children. Of course they are not like that.

As we all know, in those shops there are four gaming machines. They are called fixed-odds betting terminals, which is a euphemism and nobody understands what it means. They are casino machines. You can play poker, blackjack and so on. In most betting shops, they are a main contributor, if not the major contributor, to the bottom line of the bookmakers’ accounts.

I do not want to be rude about bookmakers. I did that once in the House. It was covered by what I can only call a pornographic newspaper, the Daily Sport. I had the privilege of removing the ladies in compromising positions on the front of the Daily Sport to find that my face was very large on the front of the paper under a heavy headline saying, “Falk Off!”. I have to tell you that that newspaper is displayed in a prominent place in my house. However, if noble Lords will allow me, I will say to the bookmakers through this Committee that if they do not play ball on this we will take away the machines—simple as that. The previous Government did not seem keen even on looking at the machines although, in opposition, most of the complaints about betting machines come from the Labour Party—I hope that the noble Lord, Lord Stevenson of Balmacara, will take note of this—and I agree with them. It is no good the bookmakers saying that there is no danger to people who go into betting shops in terms of social damage from increasing their gambling habit. It is a fact that it does that, but the bookmakers deny it.

I think it will be quite some time before we get those machines removed. I see no evidence of movement on that; other noble Lords may be able to disabuse me of that. If the bookmakers do not play ball now, such is the threat to racing that we have to find ways of putting pressure on. Maybe they have suddenly had a change of heart. If they agree that they should pay a levy online, we will have to find other ways, but if they do not agree we should consider asking the Government to tell them that the machines will be removed—simple as that. Others may not agree, and bookmakers certainly will not, but that is it.

That is what this amendment is about. I hope that the Government can make an encouraging response, because the other day we all had the benefit of listening to the new head of the horseracing authority. I was impressed by his general approach. His is a fresh look at racing, because he comes from outside it. He made this important point about this wonderful sport that we have exported to the rest of the world: what other activity is there, half of which is extremely profitable, in this case the breeding industry and the bloodstock agency in particular, and the other half of which—the

14 Jan 2014 : Column GC55

racecourses and the people who work in the racing industry—is having a very bad time? It is about time that the Government took steps—many of us are keen to work with them and talk to them, together with the horseracing authority—on how they can get a balanced view of that and get racing back into the position where it deserves to be and is properly funded.

Lord Lipsey (Lab): My Lords, nobody is going to tell the noble Viscount, Lord Falkland, to “Falk off” this afternoon because he is doing a noble thing. He sees the levy lying nearly unconscious on the sidewalk and rushes up to offer it mouth-to-mouth resuscitation. In that way, he offers the Committee a chance to discuss the levy and its future; I, among others, am grateful for that. However, I cannot support his amendment, and I am afraid that I am going to detain the Committee for a few minutes in explaining why.

I shall start at the technical end. It is not clear that the amendment would not constitute state aid in European terms, and state aid that would not be allowed. The recent French judgment on state aid has been much misunderstood. The Commission did not rule that the activities of the pari-mutuel in France were not state aid. It did rule, however, that it was legitimate state aid. What we have yet to determine is whether a similar ruling would apply were we to extend the levy in Britain, in the way that this suggests, to overseas betting. That judgment needs to be studied carefully and the views of the Commission need to be sought. It would be premature—indeed, I would say provocative—to seek to advance at this stage. On those minimal technical terms alone, I would not support the amendment.

A broader question is going to constitute the majority of my remarks. The Government have for some time been looking, and still are, at the future of the levy. There are all sorts of notions about the levy, from the kind of notion put forward by the noble Viscount, Lord Falkland, that we should extend its scope to the whole question of a sporting levy in general for sporting betting rights, to, at the other extent—and I am about to expand on this—the abolition of the levy. All these options are rightly open at the moment and still being reviewed. The Government have lurched to and fro for rather a long time on this, and changes in Ministers have meant changes of attitude. This is certainly not something that we should rush into. The levy has been about for 50 years, and for most of that time it has served its purpose. We ought not to go into a decision about its long-term future without careful reflection and analysis of the alternatives.

Having said that, I make it clear that I am in favour of the abolition of the levy. I have been for 25 years. I first wrote a leader on this subject in the Times in 1991 or 1992, and I have consistently never changed my mind about it. The only thing is that in those days, and indeed when I came into this House, I was in a minority of one. There really was not anyone else, in this House or another place, who favoured the abolition of the levy. That is not so today. Some of the most knowledgeable people about racing in the House of Commons take the view that the levy should go. I think of Mr Robertson, the chairman of the horseracing, betting and levy group, and Philip Davies. These are

14 Jan 2014 : Column GC56

all opponents of the levy. They may or may not be right—indeed, I may or may not be right—but they have a view that ought to be carefully weighed.

I am an opponent of the levy for two sets of reasons, and they consist of being an economist and a socialist. The two do go together—in some people’s minds, anyway. First of all, I shall expand on the economic case. Throughout the world, including in a lot of countries that were once communist, there is now a strong understanding of how very bad subsidies are for industries. When I look at racing, I do not see an industry that has been brought low because it has not had enough subsidy; I see an industry many of whose flaws stem from the subsidy that has meant that every time, instead of sorting out the fundamental problems of the industry, people have asked someone else to pay for them through the levy. For years we have had a situation where the bookmakers and racing were at loggerheads, because racing was seeking more money out of the bookmakers and the bookmakers were seeking not to give it to them, when they should have been working together to grow the size of the cake by looking to their mutual interests and advancing those.

The multiyear settlement this year was a tremendous step forward, and the great improvement in the climate of relations between bookmaking and racing is also an extraordinarily encouraging development. I hope, however, that it could go still further: I hope that within a year or two the levy will simply seem to be an unnecessary mechanism. I am certain that no one would cheer louder in that case than Her Majesty’s Government. An absurd situation has arisen in recent years where at midnight one night negotiations break down and a Minister of the Crown is asked to decide how much money one industry should give to another in subsidy. That beggars the imagination. If anything other than racing were involved, it would be recognised that it beggars the imagination.

3.45 pm

If the levy went, many of the other restrictive practices that bedevil racing would go. One example is the ban on artificial insemination of horses. In greyhound racing, which I used to have the pleasure of running, artificial insemination is taken for granted. In harness racing—I am president of the British Harness Racing Club—artificial insemination is universal, because it keeps the price of horses down and makes the racing industry viable at much lower prices. However, that restrictive practice, which suits a certain number of high-level breeders extremely well, persists in horseracing. I do not say that it would be easy to get rid of it, but it is the kind of thing that would go if we ever got rid of the levy.

Incidentally, the idea that the lack of a levy—and in particular the lack of levy support for prize money—is bringing racing to its knees is a total nonsense. I went to the opening meeting at Cocklebarrow, the new Heythrop point-to-point course near Northleach, on Sunday, to watch my two horses get pulled up. There is virtually no levy support for point-to-point racing, and none at all for prize money. If you were racing that day, the top prize was £500, which is very unusual, as it is usually £200. There were 234 entries for the

14 Jan 2014 : Column GC57

seven races; they had to be divided. We started at 11 am and never stopped racing all day. That was not because people were in it for the money but because they were in it for the glorious sport of watching those horses racing.

Unlike horseracing in general, the standard of point-to-point racing has gone up and the standard of point-to-point riding has improved hugely. I cannot remember if the noble Viscount, Lord Falkland, ever rode in a point-to-point, although there are certainly Members of your Lordships’ House who have. The standard of riding is now extremely high, and all of it takes place without a penny in subsidy. That sport is flourishing. Harness racing manages without a levy; greyhound racing has a certain amount of levy support, but it is a voluntary levy and therefore more akin to a commercial transaction than anything else. Therefore the idea that racing would come to an end if the levy went is simple nonsense; that would be the first step to a more thriving industry.

I can speak as an economist in this House with perhaps more confidence than as a socialist, because I know that most Members of this House are not socialists. I have one other great problem with the levy. I simply cannot understand—it is beyond the life of me to do so—why poor people who like a bet on a horse should have to subsidise the hobby of rich people, like myself, who like to keep a horse. That is the most extraordinary reverse redistribution from the poorer to the richer, and it is wholly unjustified.

What would I like to see in its place? Obviously, in order to retain its profitable interest in horseracing the bookmaking industry needs a largish number of horseraces to be run each year. The suppliers of that racing are, essentially, racecourses, which in turn subcontract the provision of horses to owners and trainers to run in those races. Essentially, therefore, what we need is simply a commercial agreement, whereby both parties seek to maximise their revenue and the bookmakers offer the racecourses the amount of money that is required to get the sort of number of races that they think will be profitable for them. The racecourses then take into account that income, together with the income they take at the gate, in deciding what to put on; negotiation takes place and a sum is found. That might be a greater or a lesser sum than at the moment; it is very unpredictable where a free market would end up on that. However, it is perfectly clear that this is a free-market arrangement done on decent market principles, and that it would not be a compulsory levy on punters to subsidise the pastime of the better-off.

I have said not only that I think that it is premature to take a decision but what I think the decision eventually should be. I do not expect there to be 100% support—I should be delighted if the Minister stood up and said that he totally accepted my impeccable logic and would immediately ensure that it happened—but I do expect a proper analysis to take place. That should not be dominated by the interests involved—not by the bookmaking industry, not by the racing industry and not by owners or trainers—but should take place in a cool, calm economic framework designed to reach a cool, calm economic outcome that is in the interests of everyone. That would be a much better way forward than persisting with the pernicious levy system.

14 Jan 2014 : Column GC58

Lord Cavendish of Furness (Con): My Lords, I support the amendment proposed by my noble friend Lord Astor. First, I should declare an interest—a very direct one—as a racecourse owner. As I said at Second Reading, I have never made money out of owning a racecourse and I do not think that there is room in racing for hungry shareholders; I do not think that it is greedy from that point of view.

The noble Viscount, Lord Astor, was called away to China, as some of your Lordships know, which is why he is not present. He has ridden and won in point-to-points, and he told a story a long time ago of how he and the late Lord Longford were racing together and fell off together, and their heads collided together. He always said that, before that collision, the late Lord Longford was a very staunch Conservative and that that changed him for ever—he then joined the other side. Whether that tale is apocryphal remains to be seen; I remember him as being a wonderful addition to your Lordships’ House.

I am much intrigued by what the noble Lord, Lord Lipsey, said and take issue only in one thing, which is that I do not really regard the levy as a subsidy—it is the wrong definition. After all, we are producing a product which is used by bookmakers and all we ask is that they contribute for that product. Racing has to be co-ordinated centrally, or else we would all race on one day and there would be no racing on a lot of other days. Also—here, I do not declare an interest—I race on very favourable fixtures and I think that one ought to have regard for the people who stage races on very unattractive racecourses in February on a windy, cold day.

After Second Reading, my noble friend the Minister kindly gave some of us the time to discuss the Bill. I went to the part of the meeting on the levy and I thank him for that—it was very kind. During that meeting, I think that it was the noble Lord, Lord Stevenson, who summed it up best by saying, “Well, since this amendment probably cannot be included in the Bill, could at least powers be taken in this Bill?”. The significance of that is that any reform of the levy will require primary legislation, slots for which are not easily come by.

We heard that the Government still had anxieties—the noble Lord, Lord Lipsey, referred to this—about state aid, which may well be the case. I think that there was also a feeling that this was not entirely the appropriate Bill for this kind of amendment. Although the Treasury is very keen to reclaim leaked taxation, I think that the Government understood that we are also very keen to retrieve some of our leaked revenue. I therefore ask the Minister, since this is a probably a probing amendment, whether there would be a possibility of the Government bringing forward their own amendment if this one was not right, taking those powers in due course so that the need for primary legislation could be avoided.

Lord Collins of Highbury (Lab): My Lords, I have added my name to this amendment, which is a reflection of cross-party support for the levy and the principles that underpin it, even if there is not exactly unity on it within one party. Its purpose is to capture the revenue that racing should be paid, as Parliament has already determined, from all betting operators who take online and telephone bets on British racing, wherever they

14 Jan 2014 : Column GC59

are located—in effect, to secure levy payments from exactly those operators whom this Bill brings within the remit of the UK tax regime, as we have heard, and who will have to have a Gambling Commission licence in order to be allowed to continue to operate in the British market.

I do not want to repeat all the reasons why there has been a fall in the value of the levy; we have heard them already in the debate. But this change in arrangements could be worth up to £20 million a year to British horseracing and, in my humble opinion, would lead to a healthier sport, more investment, growth and jobs.

I have heard the ideological arguments today and I am impressed by them, but too often people focus on the prize money, which of course is substantial. However, there is other work that the levy provides and the board distributes, such as training, education and employment initiatives, which are key to the sport retaining its integrity and developing. Nor do people see the broader picture of how the racing industry has a direct link to building sustainable rural economies. In the past, as a socialist, I have been very keen to support training levies and to ensure that the small firm is able to benefit from the overall expansion of training and education.

This measure would also create a level playing field among all betting operators. Why should onshore betting operators and those in betting shops pay the full levy while others based overseas, which do not have a voluntary agreement with British racing, do not pay a penny? This unfairly distorts competition. It is not the free market that we are talking about. I understand the frustration for racing of seeing the Government now acting to require overseas betting operators to comply with Gambling Commission regulation, to pay the social responsibility levy and subsequently to pay tax. The only area not to be harmonised is for them to pay the levy, which Parliament has already decreed they should. Perhaps the Minister can explain why the Government have not seen fit to act further and faster for racing.

The Bill does not make any provision in relation to racing or the horserace betting levy, meaning that the sport will not receive a return from remote betting activity even once it is licensed by the UK Gambling Commission. We have heard the very persuasive argument from my noble friend that any reform to the levy to capture revenues under a point-of-consumption licensing regime would constitute state aid. He and I know that the British racing industry strongly disagrees with this interpretation and, having read and heard the arguments, I am inclined to agree with the industry.

My noble friend also made reference to what I believe is a comprehensive ruling on this by the European Commission. A French parafiscal levy on online horserace betting has been approved, recognising racing’s special status and common interest with the betting industry. That sets a precedent and I know it is in the process of being reviewed by DCMS lawyers.

Like my noble friend, I am sure that the Minister may want to look at a more modern and commercial framework for the levy in the long term. Certainly, we have had many serious reviews of it, but very little

14 Jan 2014 : Column GC60

progress. I know that the racing industry itself would support that—not just the owners, but the workers in the industry, who for a long time I have worked to support. Therefore, will the Minister reassure noble Lords and the racing industry that we are not going to wait several more years during which the racing industry will continue to lose out on this vital source of income—as I said at the beginning, £20 million a year?

4 pm

Clearly there is a strong argument for further consultation—I hear the points made by my noble friend—and for further assessment of the implications of the European Commission’s ruling approving state aid. This amendment, and the reserve power it gives to the Government, will allow that to happen, giving the Government the opportunity to consult the Commission. When the work is complete, if this route is the right one, the Minister and the Government will be allowed to deal with it, without more years of delay. Even if there is not quite inter-party unity, there is an opportunity for cross-party unity on setting in motion a solution to this problem, and I look forward to the Minister’s response.

Lord Clement-Jones (LD): My Lords, such was the clamour to sign this amendment that I was unable to put my name on it, but if I had been able to I would have done. As was intended by my noble friend Lord Falkland, an interesting debate has been raised today, and I hope the second intention—to produce a positive response from the Minister—will also be achieved as part of that.

I was extremely interested to hear what the noble Lord, Lord Lipsey, had to say. I do not think I have heard him speak quite as passionately on any subject since he defended his minority report on the long-term care of the elderly. He was no less cogent today than he was on that subject. However, I disagree with him on this matter as much as I disagreed with him about that report. He seems to believe that those involved in horseracing should do it for love not money, which seems an extraordinary position for an economist, because I cannot see, if there were no levy, where the industry would have the leverage to ensure that bookmakers made a contribution towards the welfare of the industry.

The welfare of the industry is an important part of our national life, considering not only how many people attend horseracing, but also the 85,000 people who work in the industry. I am not a socialist myself, but if I were my first consideration might be about the number of people employed in an industry. There is no doubt that the rise in betting operators licensed offshore over the years has contributed to a fall in revenue from the levy of about half between 2003 and today—a drastic reduction in support for the industry. There is only one major operator in the British market—Bet365—which is fully licensed for remote sports book operations by the UK Gambling Commission, and is therefore obliged to pay levy.

During the debate we have heard that a five-year deal was agreed with Betfair last year. There is also a four-year arrangement with William Hill, Ladbrokes, Coral and Betfred to make an additional voluntary

14 Jan 2014 : Column GC61

contribution to the industry’s funding as part of the recent levy agreement. However, these are all voluntary arrangements, and legislative action is still required to provide a level playing field for all operators in the betting market in respect of their payments to British racing. Successive Governments—including the Labour Government—and Ministers have said that their preferred policy outcome is that all betting operators taking bets in Britain pay levy wherever they are located.

All amendments in Grand Committee are probing amendments. I hope that the amendment will elicit from the Government their views about the future of the horserace betting levy. The amendment would allow the Secretary of State to introduce a power. As was alluded to by my noble friend Lord Cavendish earlier, in discussions with the Minister that seemed to be an eminently sensible way forward: a power that would allow the Government to extend the levy to overseas bookmakers through a point-of-consumption licensing regime.

We have heard a considerable amount this afternoon about the ruling from the European Commission and the French power of fiscal levy; if I knew what a power of fiscal levy was, I would be far wiser than I am. Clearly, that set a precedent as far as the Commission was concerned. The noble Lord may be correct in saying that this is a permissible element of state aid rather than not constituting state aid; I am sure that he has a point there. Nevertheless, if we can get through the eye of a needle with the betting levy in this country on the precedent of the French power of fiscal levy, then surely we should be pursuing that.

What is the preliminary conclusion of the DCMS lawyers on that? Does the collection of levy from remote operators under a point-of-consumption licensing regime in their view constitute state aid or not? Is this a platform on which we can build a future levy? I hope that my noble friend the Minister can give us more information.

The reserve power is surely a way forward of which we could take advantage. It would allow us, as a number of noble Lords have said, to have proper consultation with the European Commission and other affected parties on the measure, and would allow the full implications of the ruling on the French power of fiscal levy to be assessed. Measures could therefore be enacted afterwards once the Government were satisfied of their legal position. What is not to like about that solution? I look forward very much to hearing what my noble friend the Minister has to say.

Baroness Golding (Lab): My Lords, briefly, I share an office with my noble friend Lord Lipsey. We go to gambling meets together—horseracing and dog meetings—and share a great interest in it. I have never heard him say what he said today. I agree with every word that he said, and I wish to support him.

Lord Gardiner of Kimble (Con): My Lords, I thank the noble Viscount for his amendment and the Government fully acknowledge the strength of feeling on this issue. I will therefore explain why we feel that we are unable to accept the current amendment, clarify the state aid position and explain what we are doing to address the issue of levy reform.

14 Jan 2014 : Column GC62

The problem with the amendment is that it is too narrow in scope to offer the flexibility we would need to reform the existing system. Much has been said about the current levy regime no longer reflecting modern betting and racing. We want to consider reform across the whole system and the amendment will not enable or facilitate this wider approach. If we accepted this clause and notified the European Commission of our intentions, it could come back, as it did in the case of the French levy, requiring us to make changes to the levy system which could be made only through primary legislation. For that reason, among others, the clause is too narrow in scope to cater for such an eventuality.

A number of your Lordships—the noble Lord, Lord Lipsey, and my noble friend Lord Cavendish in particular—referred to the state aid position. I hope it will help your Lordships to address some of the issues raised in the European Commission decision about the French levy. The Commission ruled that France’s levy on online horserace betting operators was a state aid compatible with the state aid rules. That confirms the Government’s position that the UK levy also is a state aid. Any substantive alteration to an existing state aid requires approval by the European Commission. The French decision does not mean that the UK would not have to seek separate approval for a substantive change to the existing system. Indeed, the French had to make changes to the proposal they originally notified to the Commission in order to gain its approval. As I have said before, the amendment does not provide any room for manoeuvre should the Commission seek changes to the levy system to maintain state aid compliance.

I move on to levy reform. I am particularly mindful of what the noble Lord, Lord Collins of Highbury, said about many of the other activities of the levy board. Training is one that I know something about. The recent figures published by the Horserace Betting Levy Board indicate that levy yields, including voluntary contributions from bookmakers, will rise in the next two years from £74.4 million in 2012-13 to an estimated £75.6 million in 2013-14 and an estimated £80.2 million in 2014-15. That is clearly good news—I think that the noble Lord, Lord Lipsey, described it as encouraging—but it does not mean that the Government are kicking levy reform into the long grass. The Government have said that they would like to see the levy replaced by a more commercial arrangement between racing and betting, but a workable replacement that is fair, sustainable, enforceable and legally sound has yet to emerge. We all wish to see a vibrant racing industry. I am very much aware of just how important that industry is in many parts of the country.

Some points were made by my noble friends Lord Clement-Jones and Lord Cavendish about why the Government do not take a broader power to reform the levy. The Government are rightly cautious before adopting broad reserve powers, but are thinking carefully about how such a power could appropriately be used to achieve levy reform.

I understand your Lordships’ desire to make progress. The Government want to make progress too and are giving levy reform current and active consideration.

14 Jan 2014 : Column GC63

As an immediate next step, the department is initiating discussions about the state aid implications of reform with the European Commission this month. For the reasons I have outlined and in the circumstances, I very much hope that the noble Viscount will feel able to withdraw his amendment.

Lord Cavendish of Furness: Am I to understand that there is a possibility that a reserve power provision could be added at a later stage of the Bill?

Lord Gardiner of Kimble: I do not think I can confirm that. The Government are in thinking mode on that. For reasons I have described, a lot of work is going on more generally on the levy. I am really saying to your Lordships that the Government are cautious about adopting broad reserve powers. Many of your Lordships would be concerned about the Government reserving those powers, and we are cautious about doing so for those reasons—but we are thinking about it. I am sorry that I cannot be more exacting than that.

Viscount Falkland: My Lords, the Minister has responded in a very agreeable way, and I understand exactly what he is saying. Of course the amendment is probing. The Bill is primarily about taxation but gives us a good opportunity to discuss a number of matters that I imagine will have roughly the same kind of reaction from the Minister when he comes to them. So we are grateful for this assurance that the Government are thinking about what we have said, and we look forward to the future.

4.15 pm

The noble Lord, Lord Lipsey, made an interesting speech—interesting in that he declared that he was not a socialist, which I am rather disappointed about, as I like to count him among my socialist friends in the House. In a way that rather accords with that, he has a sort of reactionary view of prize money. I remember years ago when we had a debate in your Lordships’ House—he may remember it; I am sure that he was there—and the Duke of Devonshire and I sat on the same Bench. He is a close relative of my noble friend Lord Cavendish of Furness, from a notable Whig family. He said, when we were discussing prize money, “I don’t know what all this prize money means to a lot of rich people who own racehorses. I own racehorses and am also a member of the Royal Yacht Squadron, but I don’t expect people to pay for my sails”. That was his view. His son, who was in the Gallery, and who later played a prominent part in various changes in racing, went puce—I turned round to watch him.

I say to the noble Lord, Lord Lipsey, as I would have said privately to the Duke, that of course racing was originally the sport of a number of very rich men, many of whom had made money in the plantations in Jamaica and elsewhere, who had bought land and wanted to breed horses and compete with their horses. They did not care terribly about prize money—they had matches with one another, but it was not a factor. However, when horseracing got taken up in the 19th century as a sport which engaged with ordinary people who wanted to bet on horses and with ordinary people

14 Jan 2014 : Column GC64

who made some money and wanted to own horses, of course they did not have those resources. Nowadays a large part of ownership consists of groups of people who go together. In fact, the noble Lord, Lord Lipsey, and I were in a syndicate and owned a horse together—an unfortunate horse who did not live to fulfil his full potential. However, I am quite sure that the noble Lord will agree with me that unless prize money had been available, three of us in your Lordships’ House would not have gone into that agreement.

Quite frankly, owning a racehorse is an expensive business. However, as the noble Lord, Lord Collins, said, there is a lot more to it than that. Nowadays you need prize money to pay for all the things that surround racing. For instance, stable staff have to be looked after and paid a decent wage, trainers have to be able to survive, and so on, and they can do that only through prize money. Therefore times have changed. I do not know why the noble Lord should be so deeply immersed in the idea that prize money is wrong—although as a non-socialist, I can understand. Are we to deprive all those people of owning horses? They do not get very much back for owning their horses; they seem to get pleasure from losing all that money. I suppose that trainers get some benefit—certainly the people who transport horses around do. Will he deprive everybody in the modern world of having a chance to take part in racing, when the only way they can do it is through an improvement in prize money?

Lord Lipsey: I am sorry to interrupt the noble Viscount, especially as his point about the yacht-owning, horse-owning aristocrat made my point so much more eloquently than I did myself. Perhaps he has not entirely followed the full detail of my argument. I spoke as a socialist, not as a non-socialist—I am so sorry to disappoint him. I would have bought my share in Robber Baron had there been no prize money, just as willingly as I did when there was prize money. Anyway, we did not get anywhere near that prize money very often. I suggest not for one second that there should not be prize money, but that it should come about as a result of the commercial business of racing, supported by the bookmakers for commercial purposes, not by a compulsory tax on poor betting-shop customers.

Viscount Falkland: We shall discuss that outside the confines of this Room, I am sure.

The only other point I have to make is in answer to the noble Lord, Lord Clement-Jones. I have thought of a definition of “parafiscal levy”: I think it is a soft tax. Having said that, I thank everybody for their participation in this debate, which has been an interesting one, and I hope that over the coming months we can have further discussion on it. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2

Moved by Lord Clement-Jones

2: After Clause 1, insert the following new Clause—

“Facilities for remote gambling

(1) Section 235 of the Gambling Act 2005 (gaming machine) is amended as follows.

14 Jan 2014 : Column GC65

(2) In subsection (2), after paragraph (i) insert “, and

(j) a machine is not a gaming machine by reason only of the fact that it is remote gambling equipment (within the meaning of section 36) which is made available for use in a casino.”

(3) After subsection (2) insert—

“(2A) The Secretary of State may by regulations provide for the maximum number of machines to which subsection (2)(j) applies that may be made available for use in a casino.””

Lord Clement-Jones: My Lords, under existing regulations, onshore casino operators can and do hold remote licences, which permit them to advertise their online products in their casinos. However, those licences do not allow operators to indicate that the product is available from any internet-linked computer within their casino or advertise their online site on or around a computer with internet access supplied by the operator. In other words, it is currently illegal for a casino to offer a customer access to its own legitimate online business if the customer is inside its bricks-and-mortar business.

Therefore, there is the anomalous situation that a customer is currently able to bring their own internet access device—iPad or smartphone—into a casino and play online, perhaps even on the casino’s own online site, but the operator is not able to offer that facility. It is totally illogical that the most rigorously controlled premises, intended by statute to be at the top of the regulatory pyramid, are not permitted the most up-to-date technological products.

The industry asserts that the opportunity to undertake research and player protection would be lost if the product were not to be available in terrestrial casinos, which are required by law to have the most rigorous control measures. It points out that all casino gaming staff are licensed by the Gambling Commission; that all staff, including all food and beverage and administration personnel, are trained annually in responsible gambling practices; and that effective policies are in place to protect the young and the vulnerable.

A UK terrestrial casino provides the only environment where online play could be monitored, observed and researched. During pre-legislative scrutiny, the Culture Media and Sport Select Committee made a cross-party recommendation to the Government to amend the Bill to allow British bricks-and-mortar casinos to offer their online gaming products within their own premises. The committee said, at paragraph 68:

“We see no reason why online gambling should be illegal in highly-regulated and inspected casinos. We recommend that a clause be added to the Bill to remove this anomaly”.

From the proceedings in the Commons and the responses of the Minister, Helen Grant, it appears that the Government have it in mind to allow this but only by means of secondary legislation. This route seeks to categorise an internet access device as a gaming machine, perhaps a category A machine, if it is offered for use in a casino. That would mean that someone playing in the bar on their own iPad was not playing a gaming machine but someone playing a device offered by the casino was.

If an internet access device is categorised as a gaming machine in these circumstances, it would become subject to machine technical standards regulations.

14 Jan 2014 : Column GC66

These detailed regulations would overlay conditions as to how the device could be played in the casino that might be entirely different from those applied elsewhere. The outcome could be that a player accessing his or her online account from different devices with different IP addresses—one provided by the operator on the gaming floor in the casino, and their own device—might face different conditions of play. Customers would be able to use their own devices without restriction. This would be confusing for the consumer and unnecessarily bureaucratic, and does not meet either the industry’s aspirations or any measure of common sense.

The Minister in the Commons told both the CMS Committee and the House that she was confident that secondary legislation would give the industry what it wanted. But as can be seen, that is far from the case. By contrast, Amendment 2 clarifies that a remote gambling terminal provided in a casino is not a gaming machine, and provides for the Secretary of State to be able to make regulations setting the maximum number of such terminals which may be made available in a casino. This would allow the UK onshore casino sector to provide its customers with the same online gambling experience as the online sector. The devices would not be one-armed bandits; there would be no means of putting money into them; and a player would simply log on to an existing account or create a new one. That is a simple and transparent solution. The products that the casinos seek to offer through this amendment are not slot machines; the look or feel of British casinos would not fundamentally change.

Before the proposed new clause came into effect, the Government could consult on the desired maximum number of devices and appropriate measures to protect the public. These could include ensuring that players were over 18 years of age and ensuring that players were not “vulnerable” within the meaning of Section 1 of the 2005 Act. Players would benefit from the industry’s commitment to player protection, outlined in the playing safe statement of principles. The area concerned would be supervised by trained and licensed casino staff and be subject to casino surveillance measures. Social responsibility information would be available in accordance with guidelines. The terminals would be under the supervision of trained and licensed staff and covered by casino surveillance. A whole series of conditions could be applied for the operation of these terminals. A full audit trail for all transactions would apply in accordance with AML requirements.

This amendment received considerable support from MPs across party during the passage of the Bill through the Commons. It is clear that these proposals can be realistically achieved only through primary legislation. Seeking to introduce them via secondary legislation would add an unnecessary layer of complexity to the Bill. The amendment would give a clear definition to the changes. I hope that the Government will reconsider their position during the passage of the Bill through this House and introduce or support an amendment in support of this principle. I beg to move.

Lord Flight (Con): My Lords, I support the amendment. I have not added my name to it, but it seems to me straightforward common sense. It is nonsense for it to

14 Jan 2014 : Column GC67

be legal to play on one’s own personal device in the middle of a casino building but not to play on a device provided by that casino. I know that it is a somewhat shallow example, but you can imagine people coming in, one of whom has got their machine and the other who has not; the two want to play and one cannot. I just do not see the logic of that.

The amendment is before us largely because, when the Bill was passing through the Commons, there was the expectation that government was going to sort out the issue—indeed, that was what the Minister there implied—and to do it via secondary legislation rather than by primary legislation. However, it seems to me that the primary route is much simpler. The problem really arises because the Government still categorise internet terminals as gaming machines. The amendment clarifies that a remote gambling terminal provided in a casino is not a gaming machine, and provides for the Secretary of State to be able to make regulations setting the maximum number of such terminals which may be made available. The industry has added a whole list of what I will call morally correct undertakings in relation to this.

This is a silly anomaly which it is time to sort out. I hope that the Minister will be able to tell us either that the Government are willing to sort it out this way or that they have some better route.

Lord Stevenson of Balmacara (Lab): My Lords, I start at a considerable disadvantage in that, having been nurtured in the far north-west of Scotland and led a very sheltered life, I have never been in a casino, although I have seen them on television or in films, which I suppose equips me to comment on matters as much as I am able to today. The Gambling Act 2005, which, as our founding document, has formed part of a lot of the discussion that we have had today, was very good and well respected for being what it is, but unfortunately technology has moved on and one therefore needs to think again about some of the regulatory arrangements.

I say that because it seemed to me that my good friend the noble Lord who moved the amendment was trying to lay a somewhat philosophical conundrum before us about whether or not, if you were in a place such as a casino but playing online on your own iPad, you would be in some way susceptible to the same sort of regulatory environment as you would be had you been playing on a machine, probably with the same internal workings and connections, supplied by a third party—presumably a casino. When the Minister comes to reply, I wonder whether he can be clear about where he thinks that we have got to in this process. I can think of many bad things we could do in reviewing the Bill, but the one thing we should try to do in this area is not to anticipate where technology might be taking us on this matter. We are at a point where things may change considerably.

4.30 pm

The noble Lord waxed lyrical about the environment within which those playing on their own iPads in casinos, or on machines supplied by casinos, would be better protected; I think that he called it the pinnacle

14 Jan 2014 : Column GC68

of the regulatory framework. I understand what he is saying, in a sort of Victorian way: that beautiful women in long flowing dresses and men in black tie, or even white tie, being swept around with carafes of champagne and being looked after by servants, give you a sense of the environment being the sort of thing that the noble Viscount, Lord Falkland, would be used to, I am sure. However, I find it very foreign, and I do not see how it fits with people sitting in bingo halls or the unmanned facilities now springing up in our high streets, where people are playing for very high stakes on machines that are so complicated and difficult, yet so small, that you could not possibly regulate them even if you could find them.

I am saying that the Minister needs to be very clear about this. If it is true that secondary legislation is the way forward, please may we have a clear indication of how that will go? If it is not, he has a challenge, which needs to be addressed, as to how these machines will interface with a much wider range of issues than were able to be addressed in the short debate that we have had so far.

Lord Gardiner of Kimble: My Lords, I thank my noble friend Lord Clement-Jones for his amendment. The argument has been made that if remote gambling can be played on portable devices in bedrooms and on trains, why can it not in the well regulated environment of casinos? Such devices can already be played in casinos and can indeed be, and already are, offered by casinos to customers, but within the limits of machine stakes and prize regulations. The debate is therefore about the ability of casinos to promote and encourage the use of their own devices outside of those controls.

Where casinos are promoting and encouraging gambling services to be undertaken on their own premises, the Government remain of the opinion that it is right to consider potential flexibility within the structure of existing machine stakes and prize regulations. The amendment would remove those controls, leaving those devices outside the existing stake and prize framework. That would be a potentially considerable relaxation of machine gaming policy if it were not addressed most carefully.

Parliament only last month approved an increase to the existing stake and prize limits for casino gaming machines. Parliament has approved regulations which will more than double the maximum stake for category B1 gaming machines, which are only available in casinos, from £2 to £5, and the maximum prize from £4,000 to £10,000 on a single machine. Casinos will also be able to offer a linked progressive jackpot of up to £20,000. These changes were predicated on commitments the casino industry has made in relation to player protections. The Government would like to assess the effectiveness of these player protection measures, and consider the issues of gaming machines and remote gambling provisions in casinos more generally, before considering any further changes. I can confirm that any legislative changes could be via secondary legislation.

In addition, if the principle is accepted through the amendment that remote devices should be outside of gaming machine regulations when offered in a licensed premises, it could—and, we predict, would—be argued

14 Jan 2014 : Column GC69

by each and every sector, including betting shops, bingo halls and arcades, that they should offer similar unlimited stake and prize facilities in their own locations.

The second part of the amendment provides controls on the number of such devices, but there are no proposed controls on how they might develop. There is nothing to prevent casinos developing devices that are defined in law as remote, but could begin to look and feel like more regular gaming machines.

That said, the department is currently undergoing a programme of engagement with the casino industry and considering the sector’s flexibility and modernisation proposals. Such discussions will include an examination of the remote gambling flexibility measures that the industry is requesting. The department is part-way through these discussions, having held three meetings already, and intends to conclude these initial discussions by the end of March. The Government are therefore not rejecting the industry’s remote gambling proposals, but we want to complete these initial discussions with the industry. The issue of gaming machines and remote gambling provision in casinos should be reviewed, but must be progressed in a considered and balanced way, and it is for those reasons—that work is already in hand—that I ask my noble friend to withdraw his amendment.

Lord Clement-Jones: My Lords, I thank my noble friend for his response, and the noble Lord, Lord Flight, for his valuable support. I also thank the noble Lord, Lord Stevenson, for his comments, although I think he has a slightly romantic view of casinos—perhaps we should go off together and I will introduce him to a casino or two.

The Minister took away with one hand and started giving back with the other, which I found interesting; his response seemed more negative at the beginning than at the end. The discussions which I hope are taking place are demonstrating that it is not sensible simply to address these issues within the framework of the current machines, stakes and prices structure. Therefore I take some comfort from what he said about the current discussions. The big issue is that they will not conclude until the end of March, and I suspect that this Bill will be well gone from this House by the end of March. Therefore, I urge the Minister to take reserve powers in this Bill to do what he expects to agree to, probably by the end of March—that would be a very satisfactory conclusion—otherwise I will be extremely worried that the opportunity for primary legislation will not return to this House for some years. In the mean time, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

4.38 pm

Sitting suspended for a Division in the House.

4.48 pm

Amendment 3

Moved by Lord Browne of Belmont

3: After Clause 1, insert the following new Clause—

14 Jan 2014 : Column GC70

“Consultation on and implementation of self-exclusion for remote gambling

The Secretary of State shall—

(a) review and report to Parliament on the significance of the remote gambling market in relation to potential problem gambling;

(b) within one year of this Act coming into force, consult on a system of standardised self-exclusion for remote gamblers; and

(c) within two years of this Act coming into force and after the conclusion of consultation under this section, introduce a system of standardised self-exclusion for remote gamblers.”

Lord Browne of Belmont (DUP): My Lords, I am pleased to speak to Amendment 3, which is in my name and those of my noble friend Lord Morrow and the noble Baroness, Lady Howe. By way of introduction, I apologise to noble Lords for my absence from Second Reading, which was unavoidably caused by illness and meant that I was unable to travel to London during that week. This was a matter of some frustration as I intended to speak and had a speech lined up which was given in my absence by my noble friend Lord Morrow. However, I have read the debate with interest, particularly the Minister’s response.

The reality of problem gambling is that it is a terrible blight on our society. The 2010 UK problem prevalence figure demonstrates a problem gambling figure of 0.9%, which may not sound very much on one level but equates to 461,000 people. However, to really understand the challenge, we need to remember that the actual figure is much larger if one includes the families who are associated with this problem. Indeed, in 2012, the Gordon Moody Association, which treats the most serious addicts, estimated that each addict,

“will have severely affected the lives of at least 15 others in order to support their gambling”.

Of course, we have to understand that gambling online has a significantly higher problem prevalence figure than gambling generally. Far from being 0.9%, the problem prevalence figure for online slot machines was actually over 9%, rising to over 17% on a monthly basis.

I am of course aware that a perceived drop in problem prevalence figures associated with the Health Survey for England is currently being used by some to mitigate the sense of urgency for implementing stronger social responsibility mechanisms. Lest anyone here should be attracted by such arguments, I will make three brief points. First, the Health Survey for England itself acknowledges that health surveys tend to report lower gambling problem prevalence figures than dedicated problem gambling research. Indeed, I understand that there was a relatively low response to the gambling section of the survey.

Secondly, notwithstanding the perceived lower overall gambling prevalence figure, that number does not tell us much at all in relation to this Bill. The Bill is about online gambling rather than gambling in general. What the Health Survey for England results do tell us is that problem gambling is particularly associated with young men aged between 16 and 24, an age group noble Lords will no doubt associate with mobile phone apps and the use of the internet. The health survey says:

14 Jan 2014 : Column GC71

“Among men aged 16-24, 11.7% were classified as low risk gamblers and a further 3.2% as moderate risk gamblers … When combined with problem gambling rates, 16.6% of men aged 16-24 experienced some type of difficulty with their gambling behaviour in the last year”.

That means that there is the potential for at least 16% of men in that age group to develop a very serious problem indeed.

Thirdly, the point should be made that you cannot compare the UK problem prevalence figures with the results of Health Survey for England questions on gambling, not least because they do not include the results from the equivalent Scottish Health Survey or figures for Wales and my very own Northern Ireland. Moreover, even if there was a drop in problem gambling of a few per cent from 461,000, it would still leave hundreds of thousands in need of help. This would be no cause to relax.

In making this point, I think particularly of the two cases that the noble Lord, Lord Morrow, mentioned at Second Reading: Lisa Carville, the accountant from Northern Ireland who stole £50,000 to feed her online gambling habit between March 2010 and September 2012; and Michael Garner, the financial adviser who stole almost £1 million from friends, a charity and investors to feed his online gambling habit between December 2011 and May 2012.

Having made these important introductory remarks about the sad reality of problem gambling, I now turn to self-exclusion. The principle of self-exclusion is not one that I have dreamt up. It is standard that is widely recognised, not least by the Gambling Commission codes for the purpose of helping problem gamblers and those who feel they are at risk of becoming problem gamblers. Put very simply, on a strong day someone who recognises that they have a problem, or are in danger of developing a problem, can visit each of the betting shops in their town—perhaps up to four or five—and self-exclude for a fixed period of time, such as six months. During that period the betting shops in question are not permitted to serve them.

By acting in this way, the problem gambler will effectively cut themselves off from the opportunity of terrestrial gambling in their home town for six months, during which time they can get help and try to put their lives back together. The problem with this protection from the perspective of today’s debate is that although online problem gamblers can self-exclude from an online provider, self-exclusion does not provide them with comparable assistance because it cannot cut them off from online gambling opportunities. They can self-exclude from four gambling websites, but there will still be hundreds if not thousands of online gambling providers that they can access without even having to leave the comfort of their own home. The reality of this failure is particularly problematic as online problem gambling has a higher problem prevalence figure than gambling generally. It is extremely ironic that in this context, where it is needed most badly, self-exclusion is most ineffective.

The good news is that a remedy is available. I suggest that in future, rather than trying to self-exclude from the hundreds if not thousands of online gambling websites that are out there, online problem gamblers

14 Jan 2014 : Column GC72

should simply have to register their self-exclusion with the Gambling Commission. Any holder of a UK Gambling Commission licence should then be required to respect the terms of their self-exclusion.

When this was proposed in another place, the Minister did not appear to have any real arguments against implementation apart from the fact that it was complicated and she wanted to give the industry more time—although more time for what was not entirely clear. At Second Reading in your Lordships’ House the Minister also mentioned that implementing such a solution would be complicated. In my experience, most worthwhile endeavours require hard work. I am not suggesting that setting up such a system would be a walk in the park, but I am suggesting that it would be possible.

Indeed, Dr Sally Gainsbury, author of Internet Gambling: Current Research Findings and Implications, published in 2012 by Springer in the SpringerBriefs in Behavioral Medicine series, states that a significant limitation of self-exclusion is,

“the lack of collaboration between different online gambling sites and venues, so that excluded individuals may find it easy to gamble at another site or venue”.

She argues that the technology is available and points to its feasibility, particularly in the UK due to the current existing licence conditions and code of conduct upheld by the UK Gambling Commission. In demonstrating that a one-stop-shop facility is technologically entirely possible, Gainsbury highlights a programme called VeriPlay.com, developed by Bet Buddy, which allows the secure exchange of anonymous data. It enables operators to check whether a player is on a centralised list of players who have self-excluded. Gainsbury also argues that collaborative efforts would help to strengthen self-exclusion. Moreover, research presented to the Canadian-based Responsible Gambling Council in 2011 by the British-based GamCare and the University of Salford, along with Bet Buddy, endorses the proposal.

Within the past week I have been informed that both the industry and officials see no reason in principle why we should not embark upon such a project, nor why it should not work. Some might seek to argue that the difference of treatment meted out to online problem gamblers compared with that afforded to terrestrial gamblers is justified, because it is not possible to provide online problem gamblers with as robust a form of self-exclusion as that enjoyed by online terrestrial gamblers. That would constitute a legitimate defence if it was true but, as we have seen, it is not. In a context where we have the capacity to deliver online problem gamblers an equally credible form of self-exclusion to that afforded to terrestrial problem gamblers but choose not to, we practice discrimination. In this context, the basic question that we have to ask ourselves is: can we bothered, and do we have the will to do this?

5 pm

The imperative for addressing this clear injustice would stand even if the Bill did not exist. The presence of the Bill, however, greatly compounds the already powerful imperative for action such that, to my mind, rejecting Amendment 3 is frankly unthinkable. First, and most importantly, the Bill would widen the scope for online gambling advertising. At present, only online

14 Jan 2014 : Column GC73

gambling providers located in the European Economic Area and whitelisted jurisdictions can advertise in the United Kingdom. Under the terms of the Bill, the scope of gambling advertising will extend to any provider in any jurisdiction, so long as they have a UK Gambling Commission licence. The Bill would widen the scope for making people in the UK, including all the problem gamblers, more aware of online gambling opportunities—a form of gambling which, as we have seen, has a higher prevalence of problems. To me it is utterly inconceivable that we in this House should countenance doing such a thing without, at the same time, equipping online problem gamblers with the self-exclusion tools that can work at least as well for them as they do for the terrestrial problem gamblers.

The Bill provides in any event the perfect vehicle for addressing this injustice. I have heard it said that the Minister has suggested that the Bill is not really the place for introducing a credible vehicle for online self-exclusion. However, I cannot conceive of a better vehicle. It is a gambling Bill and so affords us the opportunity to address the discriminatory practice that I have highlighted. Not only this, it is also the first online gambling Bill that has ever come before your Lordships’ House. In this context, I cannot conceive of a better opportunity to correct this great wrong, nor can I conceive of a greater disregard for injustice and discrimination than were this obvious opportunity to be passed by. I hope that the Minister will accept this timely and important amendment. I beg to move.

Viscount Falkland: My Lords, I recognise the sincerity with which the noble Lord has introduced his amendment. Unlike the noble Lord, Lord Stevenson of Balmacara, who told us that he had led a sheltered life and had not seen a casino in his part of north-west Scotland and so on, I, unfortunately, did not have such a sheltered life and spent quite a lot of time in casinos, backing horses and so on. In fact, I had what I consider to be a gambling problem.

What I mean by a gambling problem is that it distracted me from my work. It made me have an overdraft which I should not have had. It caused family problems at home. It did not, so far as I know, do anything to destroy my health, but it nevertheless made me nervous and erratic from time to time. I am telling the Committee this because I think that the statistics are nonsense. The statistics are given to us by the Government, and they were given to us by the previous Government. I spoke to the Minister in charge and told him—which he agreed with; I was quite persuasive on that occasion—“What you are giving us is a figure which represents the number of people who are in treatment for a gambling problem”. That is just the tip of the iceberg because there are people like me who are on exactly the same drift towards a serious addiction.

I quite honestly do not think that self-exclusion, whether it is online or terrestrial, is generally the answer. Self-exclusion is rather like dieting. You can tell your wife not to buy any more ginger biscuits for six months and to stop you when you go to take double portions of a rather fattening dinner, but when she stops doing that you just go back. That is a characteristic of dieting. It is characteristic of heavy

14 Jan 2014 : Column GC74

social drinking. You can stop it during Lent or make up your mind to stop drinking for a while but inevitably you go back. That is self-exclusion.

A self-exclusion agreement with an online company, a casino or anywhere else is the same. When the pre-legislative scrutiny committee went to France, it discussed this. France has tried self-exclusion in casinos and there is the same problem. A gambler, drinker or eater with a serious addiction can have a sincere wish one day to change their life but, unless they get proper treatment and get to grips with the problem, they will just go back to it. As I have said, a huge number of young men go to betting shops, for example. I have rather condemned the fixed-odds betting terminals to which these young men get addicted, as well as to all other kinds of betting. Often, they are young married men with small children. We got evidence of that on the pre-legislative scrutiny committee when we spoke to GamCare. Some young men have exactly the same characteristics in their addiction to gambling as people have with drugs or drink.

In a way, it happened to me, although it was not serious. I would say to my wife that I was going somewhere I was not going and I was going to a casino. That is what happens. You deceive yourself and other people. Self-exclusion may well play a useful part for some of the gambling population. However, the Government have to accept that the statistic they brandish and boast about as regards having one of the lowest levels of incidence of gambling in Europe—I think that that is the way in which it is phrased—is not true because they do not know about the vast bottom of the iceberg and the vulnerability of people. Fundamentally, before you get to the business of self-exclusion and other things, you have to recognise that some people have problems. They need to find a way of stopping their denial of their problems. It is not easy and I do not expect the Minister to give us much encouragement on this issue.

However, it is a recognised problem. Every day in every newspaper we read about people who have cheated their companies of vast sums of money. We read about accountants and all kinds of businesses, and about people who turn to shoplifting to feed their habit. I am very sympathetic to the concern of the noble Lord, Lord Browne, about gambling and he is quite right to be concerned about it, as should we all. However, we have to be able to detect it sooner. Families should be able to detect it from behaviour, as do the online companies. At Second Reading, I said that I am quite encouraged by online companies. They take great efforts to detect the behaviour of people, as now do, I think, casinos. They step in and say, “Look, you’ve got a problem and you should get it dealt with”.

Fundamentally, it is a deep problem. If you want to stop it or to reduce it, you cannot mess about with it. You must be prepared to spend money and resources on it, as we do with any other addiction, and take strong measures. There is nothing much that you can do about the real addicts except to get them into GamCare or Gamblers Anonymous. I know someone in treatment at the moment. I think I said at Second Reading that he told me that all the young men

14 Jan 2014 : Column GC75

coming into his branch in Slough had become addicted to the machines, which used to be called slot machines. They are now very sophisticated and attractive pieces of technology.

The noble Lord, Lord Browne, is quite right that gambling online is more dangerous in a way because you are on your own. When you are on your own and there is no sociability attached to it, you are much more vulnerable. At least if you are playing roulette every week and people see you are losing a lot of money, they will come up and tell you to take it steady, but if you are online in your bedroom, no one is going to do that. Much more serious measures than self-exclusion have to be taken, and I will be interested to hear what the Minister has to say.

Baroness Howe of Idlicote (CB): My Lords, I am very pleased to support the amendment moved by the noble Lord, Lord Browne. I am not certain whether the noble Viscount, Lord Falkland, is in favour of it or against it. I was rather confused by what he was saying because he was almost indicating that we should do our best in these areas, yet doubting that that would have any effect for the better.

Viscount Falkland: Since the noble Baroness mentioned me by name—

Baroness Howe of Idlicote: Are you in favour of it?

Viscount Falkland: I am not in favour of it generally, no. It may well be a tool for some people, but a very small minority.

Baroness Howe of Idlicote: Okay, that gives a somewhat clearer impression that part of you thinks there might be some savings for life and family. Without doubt, the social problems we have heard about, including family breakdown, prison and suicide, are not only terrible personal tragedies for those involved but quite a considerable challenge for the state in terms of the cost of dealing with people with these sorts of addictions. If you can help them out of the scene earlier, I would have thought the sooner the better.

I am not going to repeat a lot of what has been said. But as we have been told, the academic Dr Sally Gainsbury has pointed out that Britain will be particularly well placed to introduce such a system through its Gambling Commission licence. Rather than having to register self-exclusion with each online gambling website, which is an impossible task, the problem gambler would simply have to register self-exclusion once to the Gambling Commission and all Gambling Commission licence holders would then be required to respect this as a condition of their licence.

If this is a possibility, let us get on with it. Let us try it. Can we be bothered to provide online problem gamblers with a credible form of self-exclusion? Are the Government and the Gambling Commission prepared to take action? Of course it will not be easy—no one is suggesting that it will—but surely now is the time to take some action and, where there are loopholes, to see if we can ensure that they are effectively closed.

14 Jan 2014 : Column GC76

Lord Lipsey: My Lords, the noble Lord, Lord Browne, began his speech with a number of statistics about gambling. I do not want to speak about self-exclusion but I would like to take a minute or two, if I may, to speak to the Committee about gambling statistics.

In preparing for this afternoon’s debate, one of the most depressing things was to follow the various statistical claims made both by those who are generally pro-liberalism in gambling and those who want a crackdown and to see a degree of statistical distortion that I can rarely remember coming across. As my exhibit A, the Guardian says:

“According to researchers while the number of people addicted to the gambling”—

that means FOBTs—

“represents only 1% of the total number of gamblers, such is the extent of their habit that they contribute up to 50% of industry betting revenue”.

That must be false. There is a piece of research that governs how much they contribute, and it says that 23% of profits from FOBTs come from problem gambling, so the other 77% is not from problem gamblers, which knocks the Guardian’s statistic on its head without further help. However, that piece of research is itself a bit peculiar because it uses a sample of only 25 problem gamblers, and would be subject to orders of magnitude of error.

5.15 pm

In saying these things, I speak as chair of the All-Party Parliamentary Group on Statistics, and am a great believer in the use of evidence for these things. Evidence is important, but must also be taken with due criticism and, where necessary, a pinch of salt. Our main source is of course the Gambling Commission’s British Gambling Prevalence Survey. I expect that this broadly measures the number of people who participate in gambling. It is not a good source for finding out about problem gambling for this reason. There are only 7,000 in the sample and, of those, only a small number are problem gamblers. You are therefore dealing with very small numbers of people, such as the 25 in the research I just cited.

In addition, surveys of that kind—this was essentially a telephone poll of the population—are not very good sources for information on something like gambling. As an analogy, we know that telephone surveys of drinking show that people say that they drink half as much as they actually do; it is quite easy to compare the two because we know how much people actually drink by taking the total consumption of liquor in the country and dividing it by the number of people. People halve the amount; some of us probably do it when we see our doctors each year. In the same way, I would not want to give a gold standard to the studies of gambling prevalence that rely on people’s answers when asked questions of this kind.

The answer to all questions is always more research. In the case of the gambling industry, the bookmakers would like that research to take 10, 20, 30 or 50 years without any action in the mean time. I simply say that we should be very cautious about citing statistics, and particularly cautious about citing statistics cited by others who are using them for campaigning purposes and not in order to state the truth of the matter.

14 Jan 2014 : Column GC77

Lord Stevenson of Balmacara: My noble friend Lord Lipsey has been strong in keeping us off the statistics, but whatever the figure actually is, there is no doubt about the testimony of the noble Viscount, Lord Falkland, for which I thank him very much. It brought a measure of realism into our debate. There is a problem here, and I am sure that what has been said in this Room will be picked up by the Minister and we will hear how he intends to take that forward.

It is interesting that some of the territories which are currently hosting a number of the operators who offer gambling services within the UK from without our territorial borders—the so-called whitelist—have procedures and systems in place which at least permit what is being suggested by the noble Lord, Lord Browne. There are some sensible things in that. It is therefore, by deduction, a bit strange that the Bill does not refer to it at all. When the Minister comes to respond, can he tell us the reason for that? Is it a general sense of hopelessness, as expressed by the noble Viscount, Lord Falkland? Is it more a general feeling that the nanny state should not be taking on these burdens through its appointed agency, the Gambling Commission? If either of those two is correct, I do not think that it meets the challenge laid down by those who have said that this is an addiction which needs some sort of approach, and we need as a sensible and responsible society to take into account those who are calling for help and must not let them down.

Lord Gardiner of Kimble: My Lords, I am grateful to the noble Lord for his amendment.

As your Lordships have reflected, problem gambling does serious harm, not only to an individual, but also to their friends and family, as the noble Lord, Lord Browne of Belmont, highlighted so strongly. As I said at Second Reading, GamCare has calculated that every problem gambler costs the state £8,000 every year, and we must never forget the distress and upset this causes to wider family members. That is why the Gambling Commission’s licensing conditions require operators to make a commitment to the identification and treatment of problem gamblers, and set out how operators will contribute to this. The Gambling Commission’s licence conditions and codes of practice already include the requirement for each remote licensee to have, and to put into effect, procedures for self-exclusion, which must include a register of those excluded with appropriate records, and the removal of access from those self-excluded persons found to have gambled or to have attempted to gamble on the facilities. This recognises that self-exclusion is an important tool for those individuals who have already recognised that they have an issue with their gambling and wish to address it.

As the noble Baroness, Lady Howe, noted at Second Reading, in principle the software exists to set up a central self-exclusion scheme, but there are wide ranges of practical and legal issues to be resolved. Those complexities include issues such as the compatibility of different operator systems for registering players; the range of self-exclusion options offered by different operators, which may vary in the length of time and range of activities covered; and how to ensure the wrong people are not prevented from gambling or “self-excluded” by third parties, not by themselves.

14 Jan 2014 : Column GC78

Any comprehensive centralised system would require a trusted third party to run the central list and oversee the scheme.

The first step to resolving these complexities and achieving a system for self-exclusion is the enactment of this Bill, which will bring operators within the remit of the Gambling Commission. It will give the Gambling Commission direct access to information from operators to assess the most effective way of achieving a system for self-exclusion.

The noble Lord, Lord Stevenson, rightly wanted to know the Government’s view. Work is under way on reviewing the effectiveness of self-exclusion as a tool for managing problem gambling. The Gambling Commission asked its expert advisory body, the Responsible Gambling Strategy Board, to look at the effectiveness of self-exclusion as a tool and how it could be improved. Self-exclusion also forms part of the Responsible Gambling Trust’s work programme, and they are due to report their findings in March. Further steps will be developed once these findings have been considered and the remote operators are brought within the regulatory oversight of the Gambling Commission. The Remote Gambling Association also convened an industry meeting in November 2013, and this will be contributing to the process. What is more—and this is crucial to the amendment—under the Gambling Act 2005 a centralised self-exclusion system can be achieved in licensing conditions and does not require further primary legislation. For that reason, although I entirely understand the force of arguments about problem gambling and our mutual desire to assist as much as possible, I ask the noble Lord to withdraw his amendment.

Lord Browne of Belmont: My Lords, I am grateful to those who have participated in this debate, and for the Minister’s response. I am glad that he now seems to be engaging with this issue rather more than the Minister in the other place, and that he understands that the Gambling Commission and the industry are considering addressing this problem in various ways.

However, it is the state, through legislation, that proposes that the scope for British people, and therein all problem gamblers—I will not cite any statistics at this stage—should be widened, that they should be made more aware of types of gambling with a higher prevalence of problems than gambling as a whole. It is therefore only right that the state should, as a minimum, provide problem gamblers, through the same legislation, with equal and opposite protection in the form of a credible model of self-exclusion. To simply leave this to the industry is not acceptable. I should say that I would welcome self-exclusion from restaurants—it might help to improve my figure. I beg leave to withdraw the amendment.

Amendment 3 withdrawn.


Amendment 4

Moved by Baroness Heyhoe Flint

4: After Clause 1, insert the following new Clause—

“Licensing of remote gambling: conditions

(1) This section applies in any case where a remote gambling licence is awarded to an operator of sports spread betting.

14 Jan 2014 : Column GC79

(2) It shall be a condition of a licence to which this section applies that the operator shall report to the Gambling Commission and to sports governing bodies any activity (including financial transactions) which the operator considers suspicious in relation to sports spread betting (whether or not that information is relevant to any ongoing criminal investigation).

(3) The Gambling Commisson may require an operator to furnish any information to it if it considers that the provisions of subsection (2) may apply with regard to that information.

(4) The powers of the Gambling Commission under this section substitute for powers of the Financial Conduct Authority in respect of the provisions of this section.”

Baroness Heyhoe Flint (Con): My Lords, this is a probing amendment. I fully support the general principles of the Bill. Not only will it create a level playing field—if that is not a well worn cliché in these surroundings—for all betting operators, regardless of whether they are located in the UK or offshore, but it will have a positive impact from a consumer protection perspective. Crucially, it provides a huge boost to the integrity of sport. Operators will be required to comply with the Gambling Commission’s licence condition 15.1 on information sharing, meaning that any suspicious betting patterns will have to be reported to both the Gambling Commission and sports governing bodies. Given the growing threat of match fixing and betting-related corruption, this is a very welcome development. The Bill has been endorsed by all major sports bodies in the UK, including the Sport and Recreation Alliance, formerly the Central Council of Physical Recreation, and the England and Wales Cricket Board, where I have to declare an interest, being on its board.

Spread betting is, for example, betting in what year England will next win a test match in Australia between 2014 and 2018, although that might be negated by the fact that the women actually won their test match yesterday in Perth, and long may that continue. To be slightly more serious, though, unfortunately the Bill fails to address the anomaly of spread betting. While traditional betting operators are regulated by the Gambling Commission, at present spread-betting operators are regulated by the Financial Conduct Agency. However, the FCA regulations do not contain an equivalent to Gambling Commission licence condition 15.1 on the sharing of suspicious information. The two companies that currently offer spread betting on sport in the UK have voluntary information-sharing agreements in place with the FCA, but spread-betting companies in totality are under no binding legal obligation to report suspicious activity. Herein lies the problem, because there is no statutory obligation for spread-betting companies to report suspicious activity. Sports bodies cannot be entirely confident that they are receiving all the available intelligence about suspected corrupt activity.

Indeed, the weakness of non-statutory agreements was highlighted by Jenny Williams from the Gambling Commission during the pre-legislative scrutiny stage of the Bill. Using the example of fixed-odds betting operators, she said that the Gambling Commission received one or two reports of suspicion a month from its online gambling licensees, who handled less than 20% of the market, but that from the 80% licensed overseas, which had voluntary agreements in place,

14 Jan 2014 : Column GC80

the commission had received a total of about 10 since 2007. Jenny Williams suggested that it was “implausible” that so few suspicious transactions had been reported. That is one of the reasons why the Bill is before this House; it clearly makes little sense to introduce statutory arrangements for sports betting but not to do so for spread betting on sports.

The Government have assured us that the FCA is looking into the issue and, in turn, the FCA has confirmed that it will be issuing new guidance for spread betting. While this is a positive development, sports bodies are not satisfied that the new arrangements will be directly comparable to, or as effective as, the requirements set out for fixed-odds operators under licence condition 15.1. Specifically, sport has ongoing concerns over the quality of information that might eventually reach governing bodies, and the speed with which it will be made available. Furthermore, sports bodies are yet to receive confirmation on whether the new FCA guidance will even be made publicly available for them to see. Perhaps the Minister could offer some hope as to whether that confirmation is imminent or likely.

I gather that the reason for the non-confirmation is that the FCA says that its own statutes do not allow it to instruct spread-betting companies to share information directly with sports governing bodies. They also preclude it from publishing formal—on the record—guidance. Those are major problems, which is why I have tabled this amendment, for I feel that now we have the opportunity before us, we must seek to correct the primary legislation and use every weapon—or even cricket bat—at our disposal. As a member of the ECB I know how vital it is that sports bodies receive timely information when there is a betting concern, and that they do not pick up that information from revelations in the national media. If received in real time, this allows governing bodies such as us, the ECB, to warn the umpires officiating and the players involved, which acts as a great deterrent. I hope that all Members of the House will support me in looking to give these powers to sports governing bodies through the Bill.

5.30 pm

Those points of concern that I have just highlighted were raised by the Sport and Recreation Alliance and the England and Wales Cricket Board in a meeting which I attended last week with my noble friend Lord Gardiner and his officials. I sincerely thank them all for the time they spared for us. He assured me that the department will look into these lingering concerns and that it will continue to work with the FCA to ensure that the new guidance is as robust and effective as possible. However, I urge my noble friend—and I know that the DCMS Secretary of State takes this issue very seriously—that if he really wants to address the highlighted problems, it would be of enormous value to the integrity of sport to accept the amendment.

The easiest way to guarantee a level regulatory playing field between traditional betting companies and spread-betting companies would be to transfer responsibility for sports spread betting from the FCA to the GC, which is what the amendment does. It is carefully drafted—that sounds rather immodest, but it

14 Jan 2014 : Column GC81

is—so that only sports spread betting is transferred and not the wider spread-betting industry, which would create many administrative difficulties. I therefore encourage my colleagues who believe in integrity in sport, and indeed integrity in life, to support this amendment for the reasons that I have set out. I beg to move.

Lord Moynihan (Con): My Lords, I support my noble friend’s amendment. The amendment is important, because it goes right to the heart of integrity in sport, and the fight against irregular and illegal betting is critical if we are to maintain the integrity of sport, on which all international sport and indeed all sport depends. I declare an interest as a member of the working group of the International Olympic Committee, which has sought to define a common approach in the fight against irregular and illegal betting. The work we have done was touched upon in a number of speeches made in Grand Committee this afternoon, and fell into three distinct areas.

First, there is the importance of education, which is critical. In the context of sport that means the education of the athletes and the entourage around them, ensuring that they understand the impact of betting and in some cases what they can and cannot bet on. Secondly, it is vital to maintain the integrity of sport. We need to monitor and have first-rate intelligence and analysis. The global monitoring system that was introduced for the first time in London 2012 went a long way in the right direction, but we need to build on the work that was done in London. The third area is legislation and regulation. This legislation before us is important in that context. It is important because, as my noble friend has pointed out, there is a loophole here, which applies to sports and spread betting and which needs to be closed through her amendment either now or subsequently, in later consideration of the Bill.

In the run-up to the Olympic Games in London 2012 it was interesting that the president of the International Olympic Committee, at that time Jacques Rogge, opined that the greatest threat to the Games in London was illegal gaming. I take issue with that view, as I think the threat of doping in sport is currently a greater threat. Nevertheless, he was right that we need to be serious in our approach to suspicious betting patterns. If that does not happen then we challenge the integrity of sport, and that challenge will grow exponentially.

It is not just a matter of a small bet. I shall give the Committee an example. If you are a young athlete in Africa and someone comes along and says, “I’ll give you $10,000 if you come second or third in the race”, and you know that in that heat you will still manage to qualify for the final, then that $10,000 is a vast amount of money. That sum can then be multiplied in bets that can be made in the irregular markets and indeed in the legal markets, and they require very close monitoring. It is that type of example that can undermine sport and lead to widespread international movements of illegal gaming, the kind of gaming that can corrupt young people and, as in the amendment that we have just discussed, goes to the very heart of the integrity of, in this case, my noble friend’s subject: sport.

14 Jan 2014 : Column GC82

Compliance with the Gambling Commission’s licence condition 15.1 on information sharing is a really important step forward and I hope it is welcomed by all sides of the House, but it should be all-embracing within the industry and we should not leave a loophole here when it comes to sports spread betting. In this context, I strongly urge the Government to continue to work with all members of the sports movement to update their internal rules, to use legislation such as the Bill before us to remove any loopholes that exist and, in the case of government legislation, to ensure that we combat irregular and illegal sports betting.

We need effective regulations, we need sanctions and we need to combat all forms of cheating linked to sports betting, including spread betting. We co-operated well for the first time in London and I think that all those involved in that work, particularly within the IOC, can be proud of the fact that there was greater co-operation than we have ever seen at a sporting event. It was not just the UK experts who were brought together; it was the industry, working with the United Nations Office on Drugs and Crime, the UNODC, and of course Interpol was critically important. This cannot be seen in the domestic or European context; it has to be seen in a completely international one.

I hope that my noble friend gets a fair hearing on this. If that requires further consultation and discussion between now and the latter stages of the Bill, I for one would welcome that.

Baroness Golding: My Lords, a number of years ago the All-Party Betting and Gaming Committee did a very short inquiry into suspicious betting in sports. We took evidence from a number of sporting organisations, which was very freely given. We published the results of it and there was quite a bit of talk about it at the time, but nothing has happened. I should say to the noble Baroness that the area of most concern was cricket, and this was before any big scandal arose. The report was put on the shelf and left there. I hope that with the noble Baroness’s help we will bring this to a greater audience. It is a real problem, and something needs to be done. I hope that the Minister will help give the amendment a favourable reply.

Baroness Grey-Thompson (CB): My Lords, I must apologise for not being present at Second Reading but I am not an expert in gambling, although I visited a casino once. As ever, it is a joy to be here today in your Lordships’ House; it truly is an education. I congratulate the noble Baroness on tabling the amendment because of how it refers to sport. She has put forward a very strong case for what needs to be done in this area so I will not repeat it, and of course I defer to the extensive experience of the noble Lord, Lord Moynihan, in this area.

The area that I would like to pick up on is around the sharing of information, which is vital. Every time we see a story in the press about match fixing or dishonourable behaviour, it affects the wider public perception of sport and raises further doubts and gossip. Ultimately, it affects how parents think about that sport and how they encourage their children to be involved in it, and how people engage in that sport. It

14 Jan 2014 : Column GC83

does a great disservice to the wonderful parts of sport that we all know. I think that national governing bodies and international bodies would welcome all the support and help that they can receive, not just to tackle ongoing cases but to put measures in place for the future. Governing bodies cannot always be two steps behind, as they are now. With drug-testing in sport, much more information is shared and we are able to look at it intelligently, to track patterns and see how we tackle it. This is such an important issue that I hope that the noble Baroness continues to press it at further stages of the Bill.

Lord Stevenson of Balmacara: My Lords, this is one of the most important of the amendments that we are discussing today, and it has been good, but short, debate. At the heart of it is the concept of what sport is and how we regard it. It is clear that it has to be fair competition; it has to be between participants who are playing under the same and agreed rules; and it is vital that all participants are competing to win and not following some agenda and that the officials are honest and are seen to be so. Therefore, there are a number of very important moving parts in any event like this. Sport is important also, as has been said, because it seems to be part of our culture, particularly in Britain. It is important for how we stand in the world and how we operate that our sports should be run effectively and are above reproach and suspicion.

If that is to be the case, it falls to the governing bodies—the international bodies, as we heard from the noble Lord, Lord Moynihan—to police what is happening and to make sure that conduct is appropriate. This Bill is remote from that, because those governing bodies have an unavoidable duty and should be held to task for it. However, the growth in the number of betting services has meant that there is a surrogate way of checking out what is happening on the ground. Where strange events in betting are happening, which are often seen, and when there are strange outcomes that can perhaps be looked at in retrospect, it is important that they are properly investigated and any criminality or other bad behaviour taken account of.

We need to make sure—and this is the point of the amendments—that the structures of regulation match the aspirations that we have for our sport and for those who operate within it. It may well be true that match fixing is not the most important threat facing sport—it was suggested that it is drugs—but the points made by Jacques Rogge and the International Olympic Committee are important in this context. In response to that, the DCMS set up its own review, the Rick Parry review of sports betting integrity, which suggested that a specific risk was posed to sports integrity as a result of the current licensing regime. If that is the case—and the Minister must speak his feelings about it—surely the present situation does not match up to the aspirations that we have for our sport. To split responsibilities for spread betting from those of the Gambling Commission is clearly going to lead to trouble. It is interesting that the three amendments in this group give a range of options, a pick-and-mix, as to how to do it. One could leave things as they are, with two bodies responsible, but it would then be

14 Jan 2014 : Column GC84

necessary for the Government to ensure that arrangements for reporting—as picked up by the noble Baroness—were exactly the same, so that both the Gambling Commission and the FCA could ensure that irregular patterns were reported to the authorities as quickly as possible. That would be one approach.

The second approach would be to make the Gambling Commission fully responsible for all aspects of gambling activity, which would have a clarity that is lacking in the present arrangements. In that way, licence condition 15.1, which is generally accepted to be very good, could be applied to all areas. In that situation—and this is the third option—you could keep the general responsibilities for spread betting within the FCA, but licence condition 15.1 in relation to gambling operations would have effect within that. There are therefore three options for the Minister to consider. It is important that we get some clarity on this. If we cannot get some movement, we will need to come back to the matter on Report and at later stages.

Could the Minister respond also on the question of whether we have sufficient legal power to deal with match fixing? There is some concern that the UK does not have a specific law to deal with the offence of cheating or match fixing in sport. The current arrangements, set out in the Gambling Act 2005, were deficient in relation to the recent case of the Pakistani bowlers; I defer to the noble Baroness, who is nodding vigorously, so it seems I am correct on this. It seems perverse to have had this piece of legislation in place and yet to have discovered that the way in which they were eventually prosecuted was through the Fraud Act, not the Gambling Act. This was clearly an offence in terms of match fixing. If we do not have sufficiency in legislation, could we not take this opportunity to bring ourselves up to date?

There has been a core reaction here by the European Parliament, with its action plan on organised crime, corruption and money-laundering, which recommends that member states should make sports rigging a criminal offence in order to strengthen the fight against illegal sports betting. I hope that the Minister will consider that.

5.45 pm

Lord Gardiner of Kimble: My Lords, I am most grateful to my noble friend for her amendment and, indeed, for raising the important issue of reporting suspicious betting patterns by spread-betting operators. It provides me with an opportunity to update your Lordships on the work that is already under way.

We all expect and seek integrity in sport. We could have no better ambassadors here than my noble friend Lord Moynihan and the noble Baroness, Lady Grey-Thompson, on these matters; that is clearly important. What my noble friend Lord Moynihan said about education is also extremely important.

The Government are clear that all gambling operators, whether they provide spread betting or fixed-odds betting services, should be subject to obligations to report suspicious market activity of the sort which is set out in licence condition 15.1. The Government confirmed in the other place that the FCA would issue guidance to the sports spread-betting firms operating

14 Jan 2014 : Column GC85

in the United Kingdom regarding how they report suspicious betting transactions under the Financial Services and Markets Act 2000. So far as is possible, it will be aligned to those requirements on the fixed-odds betting operators licensed by the Gambling Commission under licence condition 15.1. This is an important development that will strengthen the existing arrangements, and allow for greater consistency in the way that suspicious activity is reported. I am pleased to be able to confirm that work on this has been progressing. Officials from the FCA met the representatives of sports governing bodies and the Gambling Commission on 5 December 2013. The FCA is now in the process of drafting the guidance, and I understand that it hopes to be in a position to issue a draft to operators in early February. The department will continue to explore the provision of draft guidance with the FCA.

Concerns have been raised about whether compliance with the FCA guidance will be just voluntary. Compliance will indeed not be voluntary. Real consequences can flow from a failure to follow the guidance. Failure to comply could result in the FCA determining an operator has breached FCA rules, which would put the operator at risk of enforcement action by the FCA. In parallel to the FCA guidance, the Gambling Commission has just completed consulting on changing licence condition 15.1 to make it clearer that the Gambling Commission expects operators to report all information about suspicious betting patterns in its knowledge to the Gambling Commission and sports governing bodies, whether or not those occurred on their Gambling Commission-licensed bets. This would include information about suspicious betting patterns in its spread-betting operations. Those changes will be made as part of other changes being made to the licence code and conditions in anticipation of the new licensing requirements.

This is an important part of the picture, because the vast majority of sports spread betting is covered by the two operators that are also licensed by the Gambling Commission for fixed-odds betting. The commission has found the operators co-operative in responding to inquires about spread betting on specific events, and willing to volunteer such information. However, if contrary to the commission’s experience of working with them, its licensees breach the licence condition, it would be open to the commission to consider an appropriate sanction, which can include financial penalty, imposition of licence condition or, in extremis, licence revocation. The commission therefore already has the powers suggested in Amendment 11.

Amendment 12 raises the question of whether sports spread betting should be transferred from the FCA to the Gambling Commission. As I have said, the integrity of sport is absolutely paramount. The public has to be confident that what they are seeing in front of them is true and fair. However, the Government do not believe that at this stage there is a case for fundamental change to the existing arrangements or that non-legislative options for strengthening sports integrity have been exhausted.

Given that the FCA regulates and supervises spread-betting firms more generally, only two of the spread-betting operators relate to sport out of 26. There are

14 Jan 2014 : Column GC86

advantages to ensuring that responsibility for the regulation of sports spread betting remains with the FCA, in that it allows for a consistent approach to the regulation of all spread betting—both sports and financial spread betting. The Government believe that that is the right approach and that regulation of spread betting in all its forms should remain with the FCA. Enshrining licence conditions in primary legislation also limits the flexibility to amend this position should that be necessary in future.

Obviously, the Government acknowledge the importance of ensuring that there is consistency in the way that suspicious activity is reported between sports spread-betting and fixed-odds betting operators licensed by the Gambling Commission. The Government believe that the FCA guidance and work being done by the Gambling Commission will create that consistency without the need for legislative intervention.

The noble Lord, Lord Stevenson, mentioned a new offence of cheating at sport. My understanding is that in response to proposals from the Council of Europe for a convention on sports integrity, the Government reviewed the case for a specific match-fixing offence. They concluded that it was not needed as any non-betting match fixing, as well as betting-related match fixing, already was covered adequately by existing legislation. The “cheating at gambling” offence under the Gambling Act 2005 is deliberately wide to extend its applicability and we would not want to lose that flexibility.

Only last month, the Secretary of State brought sports and the Gambling Commission together to work to combat match fixing. We believe that this is the right forum in which to consider further action to safeguard the integrity of sport. Clearly, I understand that this is a matter of concern to your Lordships. Obviously, as with meetings we already have had, I am always interested in hearing issues that may be alive on this matter. However, on the basis of the reasons I have outlined, I ask my noble friend to withdraw her amendment.

Baroness Heyhoe Flint: My Lords, first, I thank the noble Baroness, Lady Golding, and our finely tuned athletes the noble Baroness, Lady Grey-Thompson, and my noble friend Lord Moynihan, for their contributions. If the noble Baroness, Lady Golding, would like it, I will put her into the “finely tuned athletes” bracket. I feel so passionately about this amendment, which has so many implications for sport not just in this country but globally. Who better to speak on that than my noble friend Lord Moynihan with his experience throughout the world of the Olympics and the noble Baroness, Lady Grey-Thompson, with her level of participation? I sincerely hope that this issue is revisited and is given consideration later during the passage of the Bill.

The noble Lord, Lord Stevenson of Balmacara, mentioned the Sports Betting Integrity Panel report led by Rick Parry. That was in 2010, since when there have been four years during which we still have concerns about matters relating so deeply to sport. We had the wonderful presentation of the Olympic Games in this country. However, had one betting incident occurred, all those memories and the kudos brought to this country from staging such a memorable event would

14 Jan 2014 : Column GC87

have been erased. That is probably why, more than anything, I hold this concern about protecting the integrity of sport.

I have received assurances from the Minister. We will keep an eye on this issue. I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Amendment 5

Moved by Baroness Howe of Idlicote

5: After Clause 1, insert the following new Clause—

“Credit and financial institutions must not accept payments to and from unlicensed remote gambling organisation

In Schedule 7 to the Counter-Terrorism Act 2008 (terrorist financing and money laundering)—

(a) at the end of paragraph 1(4) insert—

“(4A) The fourth condition is that the Treasury reasonably believe that one or more people or organisations who do not hold a remote gambling licence are advertising unlawful gambling.”

(b) at the end of paragraph 2(6) insert—

“(7) “Remote gambling licence” means a licence under section 67 of the Gambling Act 2005.””

Baroness Howe of Idlicote: My Lords, I am pleased to speak to my Amendments 5, 6 and 7, each of which highlights the lack of a proper enforcement mechanism in the Bill, and proposes a remedy.

As I said at Second Reading, on any view of it, the Bill is all carrot and no stick. In providing the offer of advertising to UK Gambling Commission licence holders, the Bill certainly provides a carrot, but what of a stick to protect UK consumers from accessing unregulated websites? On that the Bill makes no provisions. When pressed about this at Second Reading, the Minister said that,

“the Government and the Gambling Commission are confident that action can be taken through existing enforcement mechanisms to disrupt and stop unlawful gambling. These include action on illegal advertising, player education and, ultimately, prosecution”.—[

Official Report

, 17/12/13; col. 1252.]

I will take each of those provisions in turn.

First, taking action against illegal advertising will not prevent unregulated providers accessing the UK market but will just prevent them from advertising. Moreover, while the Department for Culture, Media and Sport says that advertising is enough of an incentive for companies outside the current whitelisted and EEA jurisdictions to apply for a UK licence, that is an untested assumption. The current experience is that providers located beyond whitelisted and EEA jurisdictions happily access the UK market even though they cannot advertise. Our current law has not prevented them from accessing our market. Is that not the principal consumer safety argument for the Bill before us today?

As if this was not enough, in a conversation I had with the industry last week I heard that remote gambling customers are incredibly price-sensitive and, in a very rapidly changing market, increasingly find online comparisons of the odds available from providers much more useful than advertising. Those customers do not rely on traditional advertising to find the best

14 Jan 2014 : Column GC88

odds but rather use price comparison websites and odds-checkers. This development makes the Bill’s dependence on advertising even more problematic.

Secondly, while better player education is obviously fine, it is no substitute for the state preventing unregulated online gambling providers getting to UK consumers. We do not find the state relying on better education in other areas to compensate for the lack of enforcement. Finally, we come to the only mechanism of the three that really pertains to preventing unlicensed operators accessing the UK market: enforcement—namely, prosecution. However, by the Government’s own admission, this is a deeply problematic mechanism when having regard for a multiplicity of small providers spread across the world.

In its 2010 remote gambling consultation DCMS says:

“In the event of detecting an unlicensed operator believed to be actively targeting British consumers, a straightforward test purchase exercise would assist the Commission in determining whether an offence was being committed. Though we recognise that without extra-territorial extent, it will be difficult to actually pursue the offence through the Courts if the operator is located outside Britain”.

How right the department is. The truth is that large numbers of relatively small online providers located beyond the UK make prosecution a woefully inadequate mechanism for addressing the problem of unlicensed operators accessing the UK market. The operators in question know that the UK Government cannot possibly devote the necessary resources to chasing them through the courts of foreign jurisdictions. They know that the chances of them ever getting convicted are absolutely tiny, and many will be quite happy to take any risk.

6pm

None of these provisions delivers credible enforcement in the sense of protecting UK consumers from unlicensed providers accessing the UK marketplace. In this context, the suggestion that the Bill is all about consumer protection gets into real difficulty. It is just not credible to argue that the Bill is about better regulation if it simply allows a whole new group of providers to advertise online gambling opportunities for the first time, without at the same time preventing companies without a UK Gambling Commission licence accessing the UK market. In this context, the principal change secured by the Bill is that more people can advertise in the UK. Unregulated providers will be able to continue to access the market as before. As such, rather than looking like a Bill that has at its heart a desire to provide better consumer protection, the Bill looks more like the online gambling licensing liberalisation Bill, in the context of which the suggestion that its primary concern is taxation revenue looks much too credible.

Of course, none of this would be true if it were not for the fact that credible enforcement mechanisms exist, in the form of financial transaction and ISP blocking. Let me begin with ISP blocking, the subject of my Amendment 7. If this provision were in place, it would be possible to block websites providing access to price comparison sites and odds-checkers that involve odds from unlicensed online gambling providers. It would, of course, also be possible to block the sites of unlicensed gambling providers.

14 Jan 2014 : Column GC89

I would certainly like to see ISP blocking as one important mechanism in the available toolbox provided by the Bill. On the basis of my research, however, if I were restricted to one mechanism, I would choose financial transaction blocking, the subject of my Amendments 5 and 6, which will be the focus of the remainder of what I am going to say. Amendment 5 would introduce financial transaction blocking, investing relevant powers in the Treasury, while Amendment 6 would introduce financial transaction blocking, investing relevant powers in the Gambling Commission.

The Government have been clear that they have not ruled out financial transaction blocking but say that the evidence is mixed, on which basis they suggest that they do not want to make provision for financial transaction blocking in the Bill. However, I still do not find this persuasive, for four reasons. First, I know that financial transaction blocking is not 100% successful. Few public policy solutions are, but that does not mean that they should be rejected. As I said at Second Reading, even if something is just 50% successful, if we want to seize every opportunity to protect British consumers when we can, we should surely seize hold of this opportunity on the basis that it is 50% better than nothing.

Secondly, the truth is that financial transaction blocking has been deemed to be sufficiently useful to be employed as a tool to protect consumers from unregulated online gambling providers in Belgium, Estonia, France, Hungary, Israel, Malaysia, the Netherlands, Norway and the United States. Thirdly, financial transaction blocking is actually likely to be more successful in the UK than in many other jurisdictions, both because as a relatively open market, blocking will not need to be employed to the same extent as in a relatively closed market, and because open markets are highly competitive so there will not be the same incentive for punters to try to evade the financial transaction blocking that exists in closed markets. The online gambling industry has been at particular pains to stress the success of financial transaction blocking in the United States. Fourthly, if the Government are concerned about solutions with mixed results, why are they entertaining the possibility of solutions that are likely to demonstrate far more mixed results; namely, prosecution, the efficacy of which is seriously called into question by their own consultation?

The fact that financial transaction blocking may not work all the time is not a real reason not to introduce it in this Bill. If the Government did so, and accepted Amendments 5 and 6, they would surely restore integrity to their proposed legislation, making what I regard as their half-Bill into a whole Bill, and making it clear that this Bill is indeed about consumer protection, and not just liberalising, advertising or promoting tax receipts.

In the past week I have been lobbied from radically different quarters about the urgent need for these amendments. On the one hand, I have been lobbied by the online gambling industry, which is very concerned that this Bill will allow many small unlicensed providers to access the UK market with impunity and without having to embrace the same regulatory costs as licensed

14 Jan 2014 : Column GC90

operators. Paddy Power, Sky and Ladbrokes have all expressed their support for my financial transaction blocking amendments. On the other hand, I have been lobbied by charities which are deeply concerned that without credible enforcement this Bill will leave UK problem gamblers in a very vulnerable position.

When such an unusual and broad cross-section of support for a change emerges, perhaps it ought to be taken much more seriously. I very much look forward to hearing what the Minister has to say.

Lord Morrow (DUP): My Lords, I am pleased to support Amendments 5, 6 and 7, and the noble Baroness, Lady Howe. She has explained very clearly why it is simply not credible for the Government to present us with half a Bill—a Bill that, as she rightly says, is all carrot and very little stick, if indeed any stick at all.

If this Bill does not provide a credible enforcement mechanism to protect British consumers from unlicensed providers, its integrity will be in doubt. Neither cracking down on illegal advertising nor player education will prevent unlicensed operators from accessing the UK market. Moreover, the notion that prosecution will do so is simply not credible, for the reasons eloquently set out by DCMS in its remote gambling consultation. The provision of an enforcement mechanism is thus imperative.

Like the noble Baroness, Lady Howe, I would like to see the integrity of this Bill restored and, as she said, have it returned to being a complete Bill, with both carrot and stick. To this end, I would very much like to see the Bill amended to make provision for both financial transaction and website blocking. Given that the noble Baroness, Lady Howe, has concentrated on financial transaction blocking, I will focus my comments on the blocking of websites.

The first point is that we already use ISP blocking to protect intellectual property. The Prime Minister’s newly appointed intellectual property adviser in the other place, Mike Weatherley, the MP for Hove, has threatened fresh legislation against broadband ISPs that,

“knowingly facilitate illegal downloading practices”

and do not take steps to stop it. If there is such an appetite in parts of government to get ISPs to help protect intellectual property, why not use the same tool to protect UK customers from accessing unregulated gambling websites?

My second point is about the nature of ISP blocking within the context of gambling in the United Kingdom. ISP blocking of unlicensed gambling websites will be much more successful than ISP blocking to prevent copyright infringement. Only last October the trade body, BPI, brought a successful case at the High Court, which issued injunctions to ISPs in the UK to block 21 websites that infringe copyright. In 2012 it successfully ensured that ISPs had to block The Pirate Bay, a website also associated with copyright infringement. The Motion Picture Association of America also brought cases against seven websites successfully in the last months of 2013. They are now being blocked by ISPs. In both cases, the websites that are being blocked by ISPs are diverse websites that allow or facilitate copyright infringement. They offer either peer-to-peer file-sharing

14 Jan 2014 : Column GC91

for music, films or TV, connecting people through the so-called torrents, or direct access to streamed content such as the BBC iPlayer or the ITV and Channel 4 equivalents.

The law that is used to effect the ISP blocks is the Copyright, Designs and Patents Act 1988, amended by the Digital Economy Act 2010. As I understand it, this is also the basis of the wording of the new clause before us now. In an article published on the BBC News website, a spokesperson for the BPI said that it felt that the blocks currently in force had,

“significantly reduced the use of those sites in the UK”.

The veracity of that claim has of course been challenged but it is safe to say that, for the casual user who is able to access free or nearly free legal content, the block acts as a significant deterrent and points users towards legal content. In the context of gambling websites, however, the evidence suggests that blocking would be even more effective. The remote gambling sector, unlike the copyright piracy sector, requires money to be spent. That increases the incentive for the person who will be spending that money to do so in a responsible way, or at least in a way that will ensure that the money does not go missing if they win a sum and then the irresponsible website does not pay up.

While I take the point that gamblers seek out the best odds that they can find, I also think that there is a desire for them to seek out odds on websites that they know are properly regulated and thus accountable in any dispute over payout and financial security, or indeed disputes about proper player protection. So while it may be possible to get around ISP blocking if one has the requisite know-how, it is unlikely that punters will seek to do this in the same way as illegal file-sharers. Moreover, if ISP blocking were to be combined with a warning page provided by the Gambling Commission that informed users that the website in question was not regulated and operated illegally in the UK, the likelihood of a person then trying to circumvent the ISP block should drop significantly.

The Minister in the other place made the point that ISP blocking for remote gambling websites has seen mixed results in other jurisdictions but it is hard to compare the UK to other jurisdictions because of how open and free the market is in the UK. This means that while there will be websites that operate in the UK without a licence, there will be fewer websites that operate without a licence here than, for example, in Italy. While blocking illegal websites accessing the UK will be very important, therefore, there would be significantly less blocking to do here than in closed markets that use blocking as an enforcement mechanism. Given that the threat of ISP blocking to a potential revenue stream is real, it would act as an incentive not only for players to gamble on regulated websites but for unlicensed websites to seek a gambling licence and come under regulation. After all, the market here is completely open.

We need to think creatively. We already ask ISPs to block certain content. Let us apply the same mechanisms to remote gambling, where almost certainly the use of such blocks, for the reasons that I have set out, will be more successful than they are in relation to other

14 Jan 2014 : Column GC92

forms of online content and in other jurisdictions. I very much hope that the Government will back Amendments 5, 6 and 7 and thereby restore integrity to the Bill.

6.15 pm

Lord Stevenson of Balmacara: My Lords, the case that has been made is very powerful. We need consumer measures to make a reality of some of the aspirations in this Bill, and it is wrong for government to will the ends of policy without also willing the means.

If the Government’s intention is to rely on a prosecutorial approach to this, they are bound to be frustrated. We are talking about a black market emerging which will be located offshore—very much offshore in some cases—in territories that will not recognise British prosecutorial intentions and in which the possibility of bringing people to justice will be very remote indeed. What will provide the stick to ensure that these measures are effective and to root out those who would operate in a way that is counterproductive to UK interests?

The two suggestions in our amendments, which shadow closely those put down by the noble Baroness, Lady Howe, reflect the two possibilities that are realistic. They are to try to find a financial way of squeezing out those who are operating out there—if they cannot make money out of it, they certainly will not continue; it is also possible to think in terms of IP.

There is a sense in which the fact that these powers exist will probably be more effective than the use of them. I say this in full understanding of the wider context—that shutting down people’s access to operating in an open economy is generally a bad thing—but there will be cases where it is necessary to do that, and we would support that if it were required.

These proposals have wide agreement. There is obviously going to be a considerable issue here, which needs to be addressed by the Government. It is up to the Government, via the Minister, to respond to the powerful case made by the noble Baroness, Lady Howe.

Lord Clement-Jones: My Lords, a strong case has been made by the noble Baroness, Lady Howe. It is rather nice to see the rebirth of Section 17 of the Digital Economy Act, which I had the honour of being instrumental in inserting into that Act during its passage through this House. As a result, I was nominated as the “internet villain of the year”.

As it happens, I need to correct the noble Lord, Lord Lipsey: it is not that particular section that is used in order to block ISPs where copyright infringement is being demonstrated; it is actually Section 97A of the Copyright, Designs and Patents Act, which has proved extremely effective. In a way, it demonstrates that you do not need such a complicated clause. That is neither here nor there, but it does show that site-blocking is perfectly effective. Indeed, as the noble Lord, Lord Lipsey, demonstrated, the BPI has been very successful in defending copyright owners in that respect, contrary to the views of Ofcom, which were expressed in 2010 and are the reason why Section 17 of the Digital Economy Act has not been brought into effect.

14 Jan 2014 : Column GC93

When I read the evidence of the Gambling Commission to the DCMS Select Committee, I really do not know what kind of universe it is living in. Its conclusions seem rather extraordinary. It is worth reading out the paragraph that deals with its rationale for why it did not recommend to the Government the introduction of site-blocking or financial measures of the kind the amendments in the name of the noble Baroness, Lady Howe, deal with. It says:

“We have also followed carefully the experience of gambling regulators in other parts of the world with site and payment blocking, which suggests in the gambling market such measures have achieved only limited disruption and deterrent effects”.

Actually, a lot of jurisdictions have adopted those, as we have heard today. The commission goes on to say:

“However this may be because they were tried primarily in markets where the legal offering was severely constrained and the tax rates high”.

I am not sure about that. It continues:

“In the case of UK gambling there is no equivalent to the copyright owners to seek injunctions nor any statutory power for the Commission at the moment to seek such injunctions. We came to the conclusion that, given all the other measures at our disposal and the very open and attractive legal opportunities for those licensed by the Commission, seeking additional powers in the Bill to enable the Commission to seek injunctions blocking illegal operators’ sites or use of payment processors would not be proportionate to the likely risks and would, if obtained, risk consuming disproportionate Commission resources to achieve limited disruption and deterrent effect”.

That argument seems to me to be saying, “The carrots are absolutely fantastic and that will mean that there will not be too much of an illegal market”. There are going to be illegal markets; there are going to be unlicensed operators; and the commission is more or less saying that the only stick of some kind at its disposal, and we have heard about the flaws in that, are on the advertising front.

The commission did say, however, that,

“we did not rule out the option of seeking such powers at a later date if our assessment of the small size of the illegal market proved wrong and of course there are continuing discussions on the wider government front and in the European Commission in relation to combating misuse of the internet and illegal remote gambling provision”.

It is very odd for a regulator of this kind not to be looking at the precautionary aspects of all this. At the very least, taking reserve powers for site blocking in these circumstances would make great sense. I hope that, even if the Government cannot bring themselves to say that they will introduce and implement this kind of measure, they will at least take a reasonably pessimistic view that a number of unlicensed operators will still be knocking around who need a considerable amount of stick to make them comply with the new regime after the passing of this Act.

Lord Gardiner of Kimble: My Lords, I thank the noble Baroness for raising through her amendments the subject of enforcement and for initiating this interesting debate. Enforcement is central to the achievement of the consumer protection purposes of the Bill.

The Bill will mean that overseas operators which are required, but fail, to obtain a required Gambling Commission licence will be committing an offence. The full set of regulatory powers available to the Gambling Commission under the 2005 Act will be at

14 Jan 2014 : Column GC94

its disposal to take appropriate action against illegal overseas operators. The commission also has powers under the Regulation of Investigatory Powers Act 2000.

The amendments assume that the existing powers will be insufficient to enforce the Bill. This is not a view shared by the Government: we and the Gambling Commission are confident that the Bill can credibly be enforced. We are therefore not convinced that there is evidence of a problem which requires a legislative solution.

Amendment 5 would make an offence of accepting payments to or from unlicensed operators. If adopted, the amendment would have far-reaching and uncertain implications for banks and across the financial sector. Therefore, very careful consideration and consultation should occur.

Amendments 6, 7, 13 and 15 relate to financial transaction and ISP blocking. The evidence of the effectiveness and proportionality in respect of both ISP blocking and financial transaction blocking is mixed—I of course take the point made on this by the noble Lord, Lord Morrow. A European Commission report in 2012 stated:

“The implementation of payment blocking systems entails substantial costs for the payment service provider and other financial institutions”.

The Norwegian Gaming Authority’s evaluation report found that,

“the prohibition against processing payments to foreign gaming companies was less effective than intended”.

On ISP blocking, a comprehensive 2010 Ofcom report found that:

“All techniques can be circumvented to some degree”.

I raise these comments to mark the card that there are a number of issues that we need to consider and resolve. Further, however, there are wider factors which would need proper consideration and assessment, such as the impact on financial institutions and internet service providers.

I assure your Lordships that we are not, and will not be, complacent about the issue of enforcement. We will keep this under continuing review. The Gambling Commission is working with a range of organisations that have a shared interest in not knowingly facilitating illegal activity.

Amendment 14 would require a consultation on the existing use of IP and financial transaction blocking. Should Ministers consider a consultation necessary, they already have the powers to undertake that. The Gambling Commission continues to build links and share information with regulatory bodies across the world. The Gambling Commission and the FCA are working together to tackle the issue of British financial transactions with illegal operators.

The Government do not want to rule out the use of blocking tools in future; should they become appropriate, necessary and demonstrably effective, that may well be a route. Until such a time, we do not consider that it would be appropriate to seek those powers. I can assure your Lordships that we are keeping these important matters under review. However, the Government remain rightly cautious when it comes to taking reserved

14 Jan 2014 : Column GC95

powers. Should we consider such powers to be appropriate, necessary and demonstrably effective, it is right, as I said, that Parliament has time to scrutinise those fully as part of the primary legislation process. However, for the reasons I have outlined, I very much hope that the noble Baroness will withdraw her amendment.

Baroness Howe of Idlicote: My Lords, I am very grateful indeed to all noble Lords who have participated in this debate: to the noble Lord, Lord Morrow, and perhaps particularly to the noble Lord, Lord Clement-Jones, who made some very interesting points and produced some additional evidence. However, of course I am particularly grateful to the Minister, who very kindly met some of us earlier last week to discuss these issues. He will of course realise that I am still very disappointed by what he had to say. Referring to my rather hard talk about half a Bill rather than a whole Bill, I sadly feel that if only he could have moved quite a long way in the direction we were proposing, it would have been very much a relevant and full Bill. However, I am reassured to some extent by his assurances that genuine enforcement mechanisms will be considered very carefully when rather more evidence has been gathered together on that issue. However, as we know, it is far too much carrot, and we are lacking on the stick side of the argument.

Again, I thank everyone, and I hope that we will continue to look hard at this area. I wish only that the Government could have delayed, done a bit more research and then come to the conclusion that would have satisfied us all rather more than we have been by what he has said. However, in the mean time I beg leave to withdraw my amendment.

Amendment 5 withdrawn.

Amendments 6 and 7 not moved.

6.30 pm

Amendment 8

Moved by Baroness Jones of Whitchurch

8*: After Clause 1, insert the following new Clause—

“Licensing powers in relation to Category B gaming machines

(1) In Part 8 of the Gambling Act 2005, after section 166 insert—

“166A  Review of licence

(1) A licensing authority may, at any time after the granting of a remote operating licence in conjunction with a betting premises licence, review the terms of the licence and—

(a) revoke it with regards to Category B gaming machines; or

(b) reduce the number of Category B gaming machines that the licence authorises the holder to make available to use.

(2) In exercising its discretion to review a licence under subsection (1), the licensing authority may have regard to the views of those in the local community.”

(2) In Part 10 of the Gambling Act 2005, after section 240 insert—

“240A Circumstances of use for Category B gaming machines

(1) The Secretary of State shall make regulations controlling the circumstances in which a B gaming machine is made available for use in accordance with the provisions of a remote operating licence in conjunction with a betting premises licence.

14 Jan 2014 : Column GC96

(2) Regulations under subsection (1) shall, in particular, make provision to—

(a) increase the minimum time between plays on category B gaming machines;

(b) require category B gaming machines to display information constituting a warning about the amount of time the machine has been used by the user and the aggregate amounts paid to use the machine, including amounts won and lost as prizes;

(c) require category B gaming machines to enforce breaks between periods of play; and

(d) require that where category B gaming machines are made available for use, at least two members of the licence holder’s staff are present on the licensed premises while machines are in use.””

Baroness Jones of Whitchurch: My Lords, Category B gaming machines are otherwise known as fixed-odds betting terminals. I very much hope that, following the example given by the noble Viscount, Lord Falkland, today, raising this issue is not going to land me on the front page of the Daily Sport.

The massive expansion of these machines in high street betting shops has been a cause for concern right across the political spectrum. For example, last week at Prime Minister’s Questions, in response to a Question on this issue from Ed Miliband, the Prime Minister said:

“I absolutely share the concern about that issue … There are problems in the betting and gaming industry, and we need to look at them”.—[Official Report, Commons, 8/1/14; col. 294.]

I also understand that taking action on FOBTs is Lib Dem conference policy so I hope that we can have a cross-party response to this today. We have therefore tabled these amendments linking this question to the issue of remote gambling licences as an opportunity to debate this issue and to probe whether the Government are taking sufficient steps to curb the unwelcome growth of these machines.

Our amendment would effectively give new powers to local licensing committees to prevent betting shops providing these machines or to reduce their number, taking into account the views of the local community. It would also allow for regulations to make provision for increasing the minimum time between plays; requiring the machines to display a warning of overuse; building in enforced breaks between plays; and requiring at least two members of staff to be present when such machines were in use.

These protections are essential to protect local communities from the clustering of high street betting shops in areas of high social and economic deprivation. Regrettably, betting shops are becoming increasingly reliant on the income from these machines rather than from traditional forms of betting, and it seems that this income is being drawn from poor and often desperate individuals who can least afford to gamble in this way. Meanwhile, local councils from around the country report that they feel powerless to prevent the expansion of these shops, even when they are opposed by the local community. Indeed, a Local Government Association survey in 2012 found that 68% of people wanted the planning laws changed to address this issue.

These machines are the source of some of the worst examples of gambling addiction. It is possible to lose up to £100 every 20 seconds, which is £18,000 an hour.

14 Jan 2014 : Column GC97

The speed of play is faster than a roulette table and it can happen without any staff contact or intervention. All this is happening on high streets in a fairly unregulated way. I do not think that anyone foresaw that betting shops would be dominated by these machines when the Gambling Act was passed in 2005. Our responsibility is to provide greater consumer protection from the magnet of compulsive gambling that these machines represent. This is not about imposing a blanket ban but about enabling local communities to have a greater say in what should happen on their high streets and, if necessary, to limit or reduce the preponderance of these machines.

There are other steps that would help. Extending the time between each play would allow the user more time for reflection between games, breaking the spell of compulsive behaviour and allowing staff members to intervene if they had become concerned about the amount of time that a player had been spending on the machine. It would also set more sensible limits on how much time could be spent and lost in a given timeframe. A requirement for the machines to interact with the player, to give warnings about addiction and about the cumulative sums being spent, might also break the addictive cycle. Requiring more than one member of staff to be available is an essential feature of staff safety, as there have been a number of violent incidents involving punters who have lost large sums of money on these machines. It would also enable a staff member more effectively to supervise the use of these machines, and there is an added need for better staff training in this respect.

There is a separate issue about the level of stakes and prizes. I rehearsed these arguments with the noble Lord, Lord Bates, in November when we were considering the latest gaming regulations. At that time, the noble Lord, Lord Moynihan, who contributed to the debate, made the important point that local sports clubs quite often rely on the income from these machines. However, here we are talking very specifically about the regulation of betting shops on local high streets—which, if you like, are walk-in betting shops—rather than about the provision in local sports clubs. I continue to feel that the Government should have used the triennial review to act on the high stakes offered by these machines.

At that time, the Minister referred to the review being carried out by the Responsible Gambling Strategy Board, which is due to report later this year. However, there is a concern that this report will not give a decisive lead on the issue. There is rather a history of inconclusive reports in this sector, which in the past seem to have been used as an excuse for doing nothing to intervene. I agree with my noble friend Lord Lipsey that the evidence base is rather difficult to decipher—noble Lords will note that, for that reason, I have not quoted a great deal of statistics on the scale of the problem—but there is enough anecdotal evidence to show that there is a significant problem here which needs to be addressed.

I hope that the Minister is able to reassure us that the Government are planning to get a grip and to act to regulate the sector more effectively following the example shown by the leader of the Labour Party, who has already made it clear that he will take action to sort out this problem. I look forward to hearing what the Minister has to say.

14 Jan 2014 : Column GC98

Lord Lipsey: My Lords, like the noble Viscount, Lord Falkland, I do not very often have a bet these days. I, too, am a problem gambler, except that my problem is that my horses lose more often than they win. But I am not anti-gambling in any sense. I declare an interest as a member of the Starting Price Regulatory Commission. I have been involved in all four racing disciplines—greyhounds, harness racing, point-to-pointing and National Hunt racing. Indeed, I have written a whole novel about betting, Counter Coup, which is out this spring. Please queue to buy it; price to be fixed.

Having said that, I admit that I am not very keen on FOBTs. If horserace betting is the full sexual intercourse of the betting world, FOBTs are a form of masturbation. It is a solitary activity about which people do not chat in the shops or have a communal experience. They just go on on their own in a way which I think is rather dehumanised.

Having been involved in the discussions on the 2005 Act, I do not think for a moment that Parliament would have considered allowing these machines if it had known that they would, as they do now, account for around half of betting shop turnover. The deal is now shrouded in history but basically they were supposed to be a little top-up revenue for the bookmakers in return for which the bookmakers would put extra resources into some good things, including tackling problem gambling. Instead, they have become the dominant product in betting shops, which I regret. It is tempting to go on from that and to say “Ban the bloody things” but we in this House should be very wary about banning things that people like doing even if we disapprove of them doing it. We found that with the Hunting Act, which has proved to be such a tragic mistake. The noble Viscount, Lord Falkland, is not here to appreciate me saying yet again “as a socialist”, but I add as a socialist that it would be a great pity if a great fuss was made about fox hunting, which is basically a sport for people wearing pink jackets and uniforms, and an activity much liked by people who wear cloth caps was banned simply because no one was standing up for it.

6.39 pm

Sitting suspended for a Division in the House.

6.48 pm

Lord Lipsey: As I was saying when I was rudely interrupted, I am quite pro-gambling and quite anti-FOBTs, but I would not ban them.

The third thing I wanted to say was that—and I have had good friends in and good relations with the bookmaking industry for many years—I am frankly disappointed with its reaction to the increasing social concern at the rise of FOBTs. I make no secret of the fact that I have had a number of meetings with bookmakers at which I have pressed on them the desirability of making a concession voluntarily—my preference would be to reduce the £100 limit on bets—as a sign that they are genuinely concerned about this. I know there has been a bit of flapping about with measures to deal with self-exclusion.

14 Jan 2014 : Column GC99

Overall, and it pains me to say this, I have been reminded rather of the tobacco industry in its dying days, except now we are all alert to the tactics that it used. I do not think that the bookmaking industry is helping itself, and I very much hope that even at this late stage it will come forward, more positively recognising the scale of the problem that it faces, recognising the political consensus that now stretches from David Cameron to Ed Miliband that something has to be done about it, and working positively in a way that enables a solution to be found without more conflict.

The amendment is designed—I hope—to be probing. It is a long way from clear yet that a local authority-based scheme for licensing is the only way of tackling this problem. I have a considerable concern about what happens when you have one local authority that allows, let us say, eight FOBTs per betting shop while the authority next door allows none. That will lead to a huge proliferation, beyond anything that we have seen so far, in the “Come here and fill our slots” borough and none at all in the one run by the Liberal Democrats.

This needs further looking at. Local authorities’ planning powers, which are not covered by this amendment, also need looking at in order to find a robust policy. A measure of localism has a great deal to be said for it. It is also necessary that any scheme that we eventually come up with also embodies a strong measure of statutory guidance that sets the basis of the argument.

Most of all, I hope to see the consensus that exists now in the political class and among politicians spread more widely to the bookmakers, to the betting industry and among the public. I hope to see even more concentration on methods to exclude those who abuse this form of gambling. I also hope to see a frank recognition of the reality and not just a single-minded focus on short-run profits, because if the bookmakers focus entirely on short-run profits they will find in the long run that they make much less money.

Lord Clement-Jones: My Lords, I am glad we are having this short debate today. It is quite interesting that this has become a topic of current debate. I followed closely the debate that took place last week in the Commons on the subject.

I notice, and indeed I regret, that the noble Baroness herself does not express any regret for the legislation that was passed in 2005. After all, it was the Labour Government who introduced these FOBTs, and now we have had the proliferation of what appear to be highly damaging and addictive gambling machines in our high streets. Prefacing remarks along those lines would have been quite useful, because they were clearly introduced by that legislation.

However, I share her concerns about these machines. Indeed, it is all very well for the noble Lord, Lord Lipsey, to say what he said, but we have been warning of the dangers of these machines ever since the passing of the 2005 Act because we thought that it would lead to the proliferation of these high-stakes machines. I will come on to the level of stakes in a minute because that is one of the key issues surrounding them.

14 Jan 2014 : Column GC100

Even though there is, in a sense, a cross-party view about the impact and danger of FOBTs, there is a level of disagreement because some of us feel that the evidence is already there that they are addictive, and that something should be done in the very short term. I am not going to adumbrate all the research that is out there but it includes that from GamCare, the Salvation Army, the National Problem Gambling Clinic, the Campaign for Fairer Gambling, Professor Gerda Reith at the University of Glasgow and even the European Journal of Public Health—a series of different reports can be prayed in aid to show that these machines really are a source of problem gambling, and that the problem is rising over time.

Clearly, the evidence is disputed by the Association of British Bookmakers; I am sure that we have all had its briefing, which heavily disputes some of the points that are being made about FOBTs. The association questions the validity of the evidence put forward by the British Gambling Prevalence Survey, for instance, and so on. The Government did not have much of a choice other than to say, “Right, let’s remit this to the Responsible Gambling Strategy Board and see what comes out of that”. I very much hope that that will be conclusive on the matter and lead to further action, although probably not through this Bill because I do not believe that any of this needs primary legislation. I do not believe that it is the planning system that is essentially at fault here. We heard during the Commons debate last week that Southwark Council is employing perfectly proper legal means to restrict the further spread of FOBTs and betting shops in its borough, and that sort of remedy is open to other councils to adopt.

I do not think that it is about that side of things; a lot of this problem boils down to stakes and prizes—something that can be remedied very straightforwardly by political will through secondary legislation, through regulations and through altering the stakes. At the moment you can put in £100, which is a huge amount of money for these machines in the high street. Some of the campaigns are saying that this should be reduced to £2—I think that that is somewhat drastic—but I certainly hope that when the Responsible Gambling Strategy Board reports it will make a recommendation about the appropriate level of stake that should be the limit for these machines. That will go a long way towards making sure that they are no longer as addictive as they currently are, and will also mean that bookmakers have to think very carefully about the profitability of their premises and we do not have the kind of proliferation that we appear to be having as a result of the ability to install these FOBTs. I appreciate the subject having been raised and I share the noble Baroness’s concerns but, ultimately, I hope that quite soon we can adopt a remedy by secondary legislation that could be relatively straightforward.

Lord Gardiner of Kimble: My Lords, I thank the noble Baroness for her amendment, which gives us a timely opportunity to set out what the Government are doing. The Government acknowledge the harm that gaming machines cause for some people and have set out clearly what we are doing to address this. As part of our review of gaming machines last year, the

14 Jan 2014 : Column GC101

Government looked very closely at the available evidence about category B2 gaming machines—FOBTs. The review found that there are real concerns about these machines and that some players have experienced considerable harm from using them. However, it is currently not clear that a reduction in stake or prize would be effective in reducing gambling-related harm.

The Government therefore concluded that the future of these machines was unresolved. We are undertaking urgent work to establish how these machines can be made safer, especially to those individuals who may be at the greatest risk of harm. Enhanced player protection measures will be introduced from 1 March, and research is under way by the Responsible Gambling Trust to identify where there is robust evidence that consumers may be experiencing harm. The Prime Minister confirmed last week that the Government will report on this issue in the spring. The Government will take whatever action is necessary to make these machines safer, and have very clearly set out our evidence-based approach to determining their future.

Amendment 8 raises a number of important points about the controls on gaming machines. I assure the Committee that the existing legislation already provides licensing controls on the provision of gaming machines as well as technical requirements about their operation. The amendment calls for new powers under which the Secretary of State may make regulations about the speed of play on a gaming machine, the messages that must be displayed and breaks in play.

Technical matters in relation to gaming machine operations are rightly a matter for the Gambling Commission and are controlled by the commission’s technical standards. These standards specify the minimum speed of play, which is twenty seconds for a FOBT, and also make clear what information must be displayed on the machine itself, or on screen, to enable players to keep track of their gambling.

7 pm

It is right that technical matters about the operations of gaming machines are dealt with by the Gambling Commission. However, the Government already have reserve powers to require the imposition of licence conditions, and indeed have direct regulation- making powers that could cover messaging. In the meantime, the player protection measures being introduced from 1 March include enhanced responsible messaging and pauses in play, and the Government have demanded that the industry demonstrates the effectiveness of these as soon as possible. The Government do not rule out reducing the speed of play but it is not clear that such a change would have an impact on problem gamblers. It could simply make machines less attractive to occasional players who are in control of their gambling.

Amendment 8 also calls for powers which would allow a licensing authority to review and revoke a betting premises licence. The amendment also proposes that a minimum staffing level of two people be required where category B gaming machines are available. Licensing authorities already have powers to control gambling in their areas, including the provision of gaming machines and the number of staff in betting shops. Local authorities can reject an application for a gambling premises

14 Jan 2014 : Column GC102

licence, or grant one with additional conditions, should that be necessary. These powers allow licensing authorities to tackle problems in local communities. In making these conditions the licensing authority must—quite rightly—demonstrate why the conditions are necessary to uphold the licensing objectives of the Gambling Act 2005. It is important that the obligation on licensing authorities to build an evidence-based case is not undermined by legislation which removes requirements on them to justify their action.

There are very good examples of licensing authorities imposing conditions which are necessary and justified to control gambling in their areas. The Government urge licensing authorities to utilise fully the powers at their disposal to tackle issues of problematic gambling in local communities.

I want to emphasise that the Government take concerns about category B gaming machines very seriously and are prepared to introduce precautionary measures to make them safer, if necessary. Work is in hand. It is a very good thing that there is, I hope, not too much of a divide among parliamentarians on this matter, because it is very important for local communities that this work is in hand. I hope that, in the circumstances, the noble Baroness will withdraw her amendment.

Baroness Jones of Whitchurch: My Lords, I thank my noble friend Lord Lipsey and the noble Lord, Lord Clement-Jones, for their comments and support. I say to Lord Clement-Jones that I said in my opening comments that no one foresaw what was going to happen to fixed-odds betting terminals, and that was also acknowledged in the debate in the Commons last week. We accept that we have learnt from that experience. No one had envisaged that we would be where we are now, so I think he is being a bit ungenerous in not accepting that learning experience.

I said, too, that this was a probing amendment. I do not think that we got the wording exactly right; there is obviously more work to be done. I heard what the Minister said about existing licensing regulations but I therefore do not understand why local authorities up and down the country are saying that they are finding it impossible to get a grip and to control the number of betting shops and fixed-odds betting terminals on the high street. There is a challenge that we need collectively to address.

My concern remains that the Responsible Gambling Strategy Board will produce an inconclusive report; there is a tendency for that to happen. It has been set quite a challenge in being asked to show the relationship between the use of fixed-odds betting terminals and compulsive gambling, and I am not sure that it is going to be able to produce a coherent piece of work between now and the summer that proves that one way or the other. The last thing we want is for further work to be necessary—for everyone to say, “It is inconclusive and we need more research”—when we can all see what the problem is and the issues that need to be addressed.