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Gambling (Licensing and Advertising) Bill

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Gambling (Licensing and Advertising) Bill House of Commons Culture, Media and Sport Committee Pre–legislative scrutiny of the draft Gambling (Licensing and Advertising) Bill Sixth Report of Session 2012–13 Volume I Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/cmscom Ordered by the House of Commons to be printed 25 April 2013 HC 905 Published on 1 May 2013 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Culture, Media and Sport Committee The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Culture, Media and Sport and its associated public bodies. Current membership Mr John Whittingdale MP (Conservative, Maldon) (Chair) Mr Ben Bradshaw MP (Labour, Exeter) Angie Bray MP (Conservative, Ealing Central and Acton) Conor Burns MP (Conservative, Bournemouth West) Tracey Crouch MP (Conservative, Chatham and Aylesford) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Steve Rotheram MP (Labour, Liverpool, Walton) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South) The following members were also a member of the committee during the parliament: David Cairns MP (Labour, Inverclyde) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Alan Keen MP (Labour Co-operative, Feltham and Heston) Louise Mensch MP (Conservative, Corby) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Mr Tom Watson MP (Labour, West Bromwich East) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/cmscom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some of the written evidence are available in a printed volume. Additional written evidence is published on the internet only. Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Grahame Danby (Second Clerk), Kevin Candy (Inquiry Manager), Victoria Butt (Senior Committee Assistant), Keely Bishop (Committee Assistant) and Jessica Bridges-Palmer (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected] Pre-legislative scrutiny of the draft Gambling (Advertising and Licensing) Bill 1 Contents Report Page Summary 3 1 Introduction 5 Current Regulatory System 6 Non-UK licensed operators 7 The Advertising Codes 7 The case for change 8 Prevalence of online gambling 8 The Government’s concerns: risks to British consumers 9 Our view of the remote gambling regime 9 2 Rationale for legislation 11 The Government’s proposals 11 Consumer protection 13 The Government’s response 16 Match-fixing 19 Enforcing the law 22 3 Provisions of the Bill 24 Licensing 24 Advertising 25 Other issues 26 Conclusions and recommendations 27 Formal Minutes 29 Witnesses 30 List of printed written evidence 30 List of additional written evidence 30 List of Reports from the Committee during the current Parliament 32 Pre-legislative scrutiny of the draft Gambling (Advertising and Licensing) Bill 3 Summary Around 80% of remote (that is, online) gambling in the UK is conducted with operators which are not licensed in the UK. In December 2012 the Government published a very short draft Gambling (Licensing and Advertising) Bill to require overseas gambling operators to obtain a Gambling Commission licence in order to provide services or advertise to British-based consumers. We have scrutinised that draft Bill. The overseas-based remote gambling operators generally opposed the Bill, on the grounds it was unnecessary for consumer protection, might drive consumers to cheaper unlicensed operators and was principally intended to bring overseas operators within the UK’s tax regime. Much of the UK-based gambling industry, sports bodies (concerned about match- fixing) and organisations working to combat problem gambling supported the principle of the Bill. Almost all those who gave oral or written evidence to us raised the issue that the enforcement regime would have to be rigorous in order to provide any of the benefits to consumers that the Government intended should be derived from the legislation. We support the principle that gambling should be regulated on a ‘point of consumption’ basis: where the consumer is. We note the concerns raised about taxation of the online industry. The Government stated that the ability to bring all operators serving UK consumers within the tax net is a consequence, but not the prime motivation, of the draft legislation. We note in this regard that, in setting a tax rate for remote gambling, the Treasury should bear in mind that too high a rate would be liable to drive customers and companies into the unregulated, black market. The Government and the Gambling Commission assured us that the Commission had at its disposal all the tools it needed for effective enforcement; and that the extra income expected from the extension of the licensing regime would produce sufficient funds to pay for the extra work of enforcing that regime, without the need to raise licence fees. We intend to monitor these areas. We recommend a change to clause 1 of the Bill to make it clearer that the operators affected are those providing remote gambling services to customers in Great Britain. We also suggest that the Government amend the Bill to address the anomaly that it is illegal for casinos to provide online gambling on their premises. Pre-legislative scrutiny of the draft Gambling (Advertising and Licensing) Bill 5 1 Introduction 1. In 2009, the Department for Culture, Media and Sport (DCMS) and the Gambling Commission conducted a joint review of the regulation of remote (that is, online) gambling. The review considered the regulation of overseas operators, including ways to ensure that they contributed fairly towards the costs of research, education and treatment of problem gambling in the UK. The review proposed that overseas gambling operators should be required to obtain a Gambling Commission licence in order to transact with, or advertise to, British-based consumers. 2. This preferred option was put out for consultation between March and June 2010. There were 38 responses. Just over half the respondents (approximately 57%) favoured the proposals. In December 2012, the Government published a very short draft Gambling (Licensing and Advertising) Bill which is intended to implement the proposals. We conducted pre-legislative scrutiny of this Bill, building on our recent wider-ranging inquiry into the operation of gambling legislation.1 3. The current legislation, the Gambling Act 2005, is based around three key licensing objectives: • Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime; • Ensuring that gambling is conducted in a fair and open way; and • Protecting children and other vulnerable persons from being harmed or exploited by gambling. In addition to creating a new regulator, the Gambling Commission, the Act introduced a new licensing system requiring operators, key personnel and the premises on which gambling takes place to be licensed. It also lifted the prohibition of remote gambling on the grounds that the prohibition was neither desirable nor enforceable and that it was more sensible to license and regulate sites than to leave customers to gamble with operators who might be subject to less stringent, or no, regulation. The then Government decided that remote gambling should be deemed to take place wherever the gambling operator was based (‘place of supply’). The advertising regime was also relaxed, enabling—for example— television advertising of online gambling. The Act created a distinction between operators based in EEA Member States,2 those based in other jurisdictions with broadly comparable standards of regulation (‘the White List’), and those in all other jurisdictions. 4. It was hoped that a freer approach to advertising would provide maximum reciprocal benefits for British businesses both within Europe and more widely. It was also expected that by demonstrating best practice in gambling regulation in relation to operators, Great Britain would be influential in improving standards of regulation across Europe and internationally. However, from the first, the UK-based gambling industry (both online and 1 Culture, Media and Sport Committee, The Gambling Act 2005: A bet worth taking?, First Report of Session 2012–13, HC421 (hereafter ‘CMS Committee report’) 2 The EEA consists of the European Union plus Norway, Iceland and Liechtenstein 6 Pre-legislative scrutiny of the draft Gambling (Advertising and Licensing) Bill offline) considered itself disadvantaged in comparison to the offshore industry, primarily due to the issue of taxation. The then Government made a number of changes to the tax regime for gambling in successive Budgets after 2005, with the result that the UK currently levies a tax of 15% on gross profits for the gambling industry, plus other taxes for different parts of the industry (casinos, bingo, gaming machines). The offshore industry avoids UK taxes. Since 2005 almost the entire online gambling industry based in the UK has moved overseas.3 The main exception is Stoke-on-Trent based bet365, whose sports betting operations have remained onshore, and are regulated by the Gambling Commission.
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