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Gambling Act 2005 (Horserace Totalisator Board) Order 2007

Before I say anything on the subject I should clarify some declarations of interest. I own horses—or at least one very expensive and rather ailing animal—and some very healthy and enthusiastic dogs. I used to manage casinos. I suspect that I am the only Member of your Lordships’ House who has ever done so. I emphasise that it was probably the only loss-making casino in the history of the world. There are not many that make a loss. I had the disadvantage to find when I took over that all my croupiers had broken fingers. It is very hard to spin a ball with broken fingers. The previous management had taken the precaution of breaking all their fingers to try to stop them stealing the money at the end of each day’s play. For some years I have also been the executive chairman of the Jockey Club’s own racecourse-owning company, which owns 13 of the 59 courses in the country. Therefore, I have had experience of running the structure of complex racecourses, such as Aintree with the Grand National, Cheltenham and Newmarket, which has given me an insight into how the funding of racing has to apply. The Jockey Club racecourses in the last year that I was there committed to £125 million worth of expenditure on building new stands in the same year that it put up £34 million worth of prize money for the races run on its courses. Such money does not come easily into the racing community. It can come in one of several ways. It can come from the levy that we have been talking about; it can come from the fees paid by owners to run their horses, which is probably the largest component of prize money—owners race for their own money; and, finally, it comes from the entrance fees paid by the 1.5 million or so people who go to those racecourses in a year, and the corporate entertaining. So it is a very carefully balanced mechanism; and it should be because we are talking about one of the largest single economic units in the country. It has a total employed workforce of over 150,000, which is heavily slanted towards the countryside community, and therefore a rarity in our modern day and age. It presents great opportunities for the employment of young people, particularly young people from migrant communities who provide very fine horse-handling skills. When you include the staff in the 10,000 betting shops in the country and the people connected with the catering and the provision of services and ground maintenance you come to well over 150,000 secure jobs, which, if lost, would make a big hole in the countryside’s employment. These instruments today are very important to us. I was very largely the cause of the comments made in the Merits Committee, which have already been quoted. I regret that only three of these instruments are being looked at today rather than as an entity with the other three, which will come in a few days’ time. I believe that they are a package and that they should be seen as a package. The instruments bear directly on the fairness and the potential profitability for bookmakers in certain respects of the services provided in betting shops, which in turn, as we have heard, already impact directly on the amount of funds that could be available for the levy. There are some glaring errors in the instruments which in aggregate are coming before your Lordships’ Committee. There are some really big mistakes in them and some glaring omissions in them which would ensure a level playing field for everybody engaged in gaming in a betting shop. We have heard that there are elements involving FOBTs—the fixed-odds betting terminals—and we have heard about cartoon racing, which the noble Lord, Lord Davies, will be delighted to know, in the context of our previous exchange on the subject, does not include Donald Duck,. I shall start with what I consider to be an example of a glaring error in one of the instruments. A FOBT will include a roulette machine and a blackjack machine. On the basis that your Lordships have not been into betting shops recently, the principle method is that you place a flat £20 note into a slot and the machine will register 20 £1 units available to bet with. You can keep on putting in as many £20 notes as you have the ability to do or wish to do, and it will continue to clock up 20 £1 units each time. In front of you will be a keypad, and you can then touch the numbers you wish to bet on before you press the start button to commence either cards being dealt for blackjack or the roulette wheel beginning to revolve. The screen shows an extremely realistic replica of an ivory ball spinning for the minimum of four times around the rim of a wooden wheel. According to betting psychologists, the sound of the ball spinning in the wheel is one of the big adrenaline triggers that gets a gambler hooked. The keypad allows you to put £1 on a number each time you want to place a bet, and I do not know of any of the current FOBTs which have a restriction to prevent you betting £1 time and again on the same number. So when we are given an instrument requiring that there should be a limit of £1 per stake to a maximum odds of 35:1, as stipulated in one of the instruments, that is a fiction because it cannot be made to work on the available technology. In answer to a question put by the Merits Committee, the department acknowledged that that is the case. Given that, I have some difficulty in understanding why we are passing any form of law which the department with the task of policing it acknowledges is unworkable. That particular order should be revisited as a matter of some urgency because there is no reason why you cannot feed £20 into the FOBT and bet the whole lot on number 33 simply by pressing 33 on the touch pad 20 times. Similarly, when playing blackjack, you can split the cards and double the stake. There is no way of limiting the stakes on these machines as they stand to £1. If the department seriously wants to put a limit on the amount that can be bet on a single spin of the wheel or a reveal of hands, they have not got it and they have specifically not provided for it in these instruments. That is my first objection. I turn now with much more concern to cartoon racing, because this is where we come to address the issue of the viability of horseracing. Cartoon racing is completely free of any form of control, to the extent that while definitions are now being provided of what constitutes an electronic gaming machine, cartoon racing does not fit into any of them. It is very important for noble Lords to understand this because it is a hugely important matter in the context of the levy and everything that might come from that. Let us imagine ourselves to be in a betting shop. There we will see a screen which purports to be showing the racing for a place called Portman Park—a leg-pull at the Jockey Club’s old offices in Portman Square. Portman Park will declare that it is going to run six to eight races during the afternoon at approximately half-hourly intervals. Every race will include 18 runners, each of which will carry a name. But these horses and jockeys exist only in terms of the computer software. They do not have a track record in terms of form, and there are no variables in the circumstances that might give one horse a distinctive and identifiable chance over and above another. As a leading executive bookmaker said to me last week, ““What on Earth am I complaining about? It is only the equivalent of another form of roulette being played with images of horses instead of a little ivory ball””. No, it is not. In the matter of roulette, the FOBT offers odds of 35:1 for a single number being hit correctly, like any other roulette wheel in the world, and it offers even money for a colour, an odd, an even, a high or a low. However, the 18 horses being offered in conjunction with a cartoon race should all, strictly speaking, have odds of 17:1, but they do not. That is because, on a parallel screen, the bookmakers will be offering their market prices on the cartoon race, subjectively arrived at by some assessment of their own which cannot reflect the interest of a form book or any other yardstick by which one measures one chance against another. This, I believe, is completely wrong. It is illusory, misleading, and sucks unsuspecting punters in a betting shop into making a bet based on what the bookmakers will then manipulate so as to quote one, two or three horses at shorter prices than the others to create the impression of market favouritism. Punters in betting shops tend always to follow and bet on the horses which are being backed at the shortest prices. So, instead of the fair 17:1, bookmakers are gaining the advantages of taking money on horses which are 17:1 shots on any basis of random selection and are taking money at odds of 2:1, 3:1 or 4:1, which is grossly unfair and, in my view, usurious. At present, bookmakers have a rule which prohibits them from having more than four roulette FOBTs in a shop at any one time. Usually, one or two cartoon racing machines are going at the same time. Because the analysis has been carried out by the bookmakers themselves, undoubtedly the greatest utilisation of the FOBTs and the cartoon racing occurs during the time when conventional racing is taking place. The analysis shows that 85 per cent of the entire stakes on FOBTs and cartoon racing is taking place during the hours when the correct conventional racing is in hand. Therefore, it is entirely due to the footfall created by conventional racing, which supports the point made the noble Viscount, that this is driving in the turnover on which the bookmakers would expect to depend from conventional racing. A FOBT roulette wheel is averaging £500 per week profit on each of the four machines operated by bookmakers in every shop. There are 10,000 shops in this country, each making on that basis an average of £2,000 per week. On that alone, a very high proportion of bookmakers’ profits in a year are excluded from the calculation of anything to do with the levy. We should pay tribute to the huge amount of work done by the noble Lord, Lord Donoughue, in trying to arrive at a solution to the conundrum of the levy. The noble Lord got very close to coming up with a workable solution, only for it to be torpedoed emphatically by the bookmakers refusing to provide the data required for the calculation. I am wholly in support of the extension of the levy arrangements. I want to see them enforced rigorously and emphatically by the DCMS without favour or mercy to the bookmakers. We need that money back into racing as quickly as we can. You have my full support for that.