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Gambling Act 2005 (Horserace Totalisator Board) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Gambling Act 2005 (Horserace Totalisator Board) Order 2007. The noble Lord said: With the leave of the Committee, I will speak also to the Gambling Act 2005 (Amendment of Schedule 6) Order 2007 and the Gambling Act 2005 (Horserace Betting Levy) Order 2007. The context for today’s debate is the coming into force on 1 September this year of the Gambling Act 2005. Your Lordships will recall that this Act establishes the Gambling Commission as a regulator for gambling in Great Britain, thus creating a unified, streamlined licensing regime for gambling operators and premises. In general terms, the Act requires those offering facilities for gambling to obtain an operating licence issued by the Gambling Commission. Where premises are used to provide gambling facilities, the Act requires a premises licence to be obtained from the local authority. Generally, a person can be granted a premises licence only if they hold an operating licence authorising the activity. I will begin by summarising the purpose of the three draft instruments. The first two allow two specific bodies—the Horserace Betting Levy Board and the Tote—to continue to operate for the time being. The Levy Board would continue until a satisfactory alternative commercial mechanism is identified; and the Tote would be retained in its present form until such time as its sale is completed. The Gambling Act was drafted on the basis that neither body would exist at the time that the Act came into force; hence the need for these orders. The third instrument ensures the effective continued operation of the Levy Board by permitting information to flow between it and the Gambling Commission for the purpose of carrying out their respective functions. It also adds the British Boxing Board of Control to the list of sports bodies contained in the 2005 Act for the purposes of information sharing, thus helping to ensure openness and integrity in betting on boxing matches. I turn to the detail of the instruments. The first that we have to consider is the draft Gambling Act 2005 (Horserace Betting Levy) Order 2007. The horserace betting levy was established under the Betting, Gaming and Lotteries Act 1963 to collect money from bookmakers and the Tote for three statutory purposes: the improvement of breeds of horses; the advancement of veterinary science and education; and the improvement of horseracing. The Horserace Betting Levy Board was set up as a public body to receive the levy and administer payments from it, including race prize money and integrity payments. In March 2000, the Government announced their intention to abolish the Levy Board and the levy mechanism. This was in response to the racing industry’s view that a more modern, commercially based funding mechanism was available, whereby TV coverage of races and data on runners and riders, fixture lists and so on could be sold to bookmakers at commercial rates. Provision was made for the abolition of the board in the Horserace Betting and Olympic Lottery Act 2004. However, a European Court of Justice ruling in November 2004 cast serious doubt over racing’s ability to secure adequate payment for the use of its data, and therefore over the viability of the proposed replacement funding model. As a result of that ruling and the recommendations of the Future Funding of Racing Review Group, my honourable friend in the other place, Richard Caborn, the then Sports Minister, announced in December 2006 that the levy and the Levy Board should be retained until such time as a secure alternative commercial funding arrangement could be identified. The main purpose of the order is therefore to allow the Levy Board to remain in existence and continue to carry out all its functions after 1 September. In due course, we intend to repeal Part 2 of the 2004 Act, which provided for the abolition of the levy system. That will ensure that Parliament can debate a measure to abolish the levy in the light of circumstances which may prevail at the time. The order has a secondary purpose. Under the 2005 Act, the Gambling Commission issues operating licences to bookmakers. This replaces the system under the 1963 Act, which required bookmakers to hold bookmakers’ permits. Under the old system, the relevant authority could refuse to renew a permit if the Levy Board provided evidence that a bookmaker had repeatedly failed to pay the levy. Article 3 of the order allows the Levy Board to continue to take a role in the review and revocation of licences by requiring the commission to carry out a review of an operating licence if notified by the board that the holder of the licence has failed to pay the levy for at least three months, and to revoke the licence if appropriate. It also allows the bookmaker the opportunity to make representations to the commission before any decision to revoke their operating licence for non-payment of the levy is made. I now turn to the second draft instrument. As the Committee will know, the Horserace Totalisator Board—the Tote—is a statutory corporation established by the Government under the Racecourse Betting Act 1928 to provide pool betting services on horseracing. In line with the Government’s commitment to disengage from areas of life where it is no longer appropriate for central Government to have a role, legislative provision was made in the Horserace Betting and Olympic Lottery Act 2004 for the Tote to be removed from the public sector. Specifically, Part 1 of the 2004 Act enables the Government to dissolve the Tote and create a successor company to receive its assets and liabilities for onward sale to a commercial operator. The Act also enables the Government to direct the Gambling Commission to issue this third party with an exclusive seven-year licence to offer pool betting services. It is now clear that the dissolution of the Tote and the issuing of the exclusive licence will not have been achieved by 1 September, the date on which the 2005 Act comes into force. That is because our initial intention to sell the Tote at a fair price was challenged by the European Commission. The consortium of racing interests with which the Government were in negotiations then found it difficult to meet the higher, market price. However, now that the staff and management of the Tote have themselves joined the consortium, negotiations are proceeding and the Government hope to be able to announce how we intend to proceed shortly. The order is designed to enable the Tote to continue to operate on its current basis from 1 September until such time as those negotiations are concluded or the Tote is otherwise disposed of. The order therefore allows the lawful continuation of the 1963 Act arrangements for pool betting on horseraces. The order also amends Section 33 of the 2005 Act to ensure that the Tote, and others acting under its authority, can exercise its exclusive statutory right to offer pool betting without requiring an operating licence. That mirrors the position under the 1963 Act, under which a bookmaker’s permit is not required to authorise such activity. The order also ensures that a person commits an offence if they infringe the Tote’s exclusive right to provide pool betting. A consequential amendment to Section 163 of the 2005 Act enables the Tote to obtain a betting premises licence without holding a betting operating licence. Finally, Sections 336 to 338 of the 2005 Act enable the Gambling Commission in certain circumstances to void bets accepted by the holder of a betting operating licence. The order modifies these provisions to ensure that they also apply where bets are entered into with the Tote, or a person acting with the authority of the Tote. It therefore subjects the Tote to the same controls as other betting operators in this regard. The Gambling Act 2005 (Amendment of Schedule 6) Order 2007 concerns the exchange of information between the Gambling Commission and other authorities. For the Horserace Betting Levy Board to fulfil its statutory functions and to be in a position to object to the issuing of an operating licence or call for the withdrawal of such a licence, it must have access to an up-to-date list of betting operators and to bookmaking information that is not in the public domain. Part 2 of Schedule 6 to the 2005 Act lists enforcement and regulatory officials and bodies to which the Gambling Commission is empowered to supply information and which may themselves supply information to the commission. The order amends Part 2 to include an entry for the Levy Board, thus allowing the board to have access to information on bookmakers held by the commission and to provide information to the commission. The order also includes a measure designed to extend the Gambling Commission’s information-sharing powers to boxing, which is among the sports other than horseracing on which British betting operators increasingly take bets. The British Boxing Board of Control, the governing body for professional boxing, has asked to be added to the list of bodies in Part 3 of Schedule 6 to the 2005 Act, which lists sports governing bodies to which the Gambling Commission is empowered to supply information. The Gambling Commission supports boxing’s inclusion, and the order amends Part 3 to include an entry for the British Boxing Board of Control. Information-sharing is part of a suite of measures introduced by the Act that are intended to help to uphold high levels of sports betting integrity. Other measures include voiding of bets and a new offence of cheating. Information-sharing is vital for the effective investigation of alleged breaches of a sport’s governing body rules or the placing of illegal bets. All three orders before us today are practical measures. The first two are designed to ensure that the modernised, improved betting environment that is created by the Gambling Act and by its precursor, the 2004 Act, comes into force in respect of the Horserace Betting Levy Board and the Tote only when the time is right. Specifically, on the first order, it remains our wish to find a commercial alternative to the levy to finance the expense of the racing industry on horse breeding, veterinary science and the improvement of horseracing. Nevertheless, it is clear for the present that the retention of the levy is the most satisfactory means to fund this legitimate and desirable expenditure. The order allows the levy board to continue to operate while a more satisfactory commercial arrangement is being sought. The second order provides the extra time that we need to ensure that the dissolution of the Tote and the sale and licensing of its assets and functions proceed smoothly and in the interests of punters. The third order provides for the free flow of information between the Gambling Commission and the Horserace Betting Levy Board, and it extends the list of sports regulatory bodies that enjoy a free flow of information with the commission. The former action will help to ensure that the Levy Board remains properly equipped to carry out its functions; the latter will help to maintain high integrity standards in betting. All three measures are sensible and, I hope, commend themselves to noble Lords. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Gambling Act 2005 (Horserace Totalisator Board) Order 2007. 20th report from the Statutory Instruments Committee.—(Lord Davies of Oldham.)