P2P Concerns Spawn New Provisions under UK Gambling Bil

9 October 2003

U.K. Gambling Minister Andrew McIntosh revealed Tuesday in a speech before the Future of British Gambling Conference in London that new consumer-protection measures will be included in England's new gambling bill.

"Exchanges do present an opportunity for those with 'inside information,' acquired improperly, to make a profit from the uninformed punter."
- Andrew McIntosh
U.K. Gambling Minister

The guidelines would empower the proposed Gambling Commission to freeze and sometimes even void bets that it believes to be unfair.

They would apply to all forms of betting, but McIntosh specifically spoke of his concern for fairness within betting exchanges. The fear is that since betting exchanges allow punters to make their own bets, someone who has acquired inside knowledge about the contest being bet on could place a bet and capitalize off of a dishonest advantage.

"I welcome the innovation that betting exchanges bring to the betting market," McIntosh said, "and I believe that the proposed Gambling Commission can regulate them effectively. But there is potential for consumers to be exploited. Exchanges do present an opportunity for those with 'inside information,' acquired improperly, to make a profit from the uninformed punter.

"Of course, information and intelligence is at the very heart of betting. But some information is obtained improperly, or is used improperly. So the government will bring forward proposals for the Gambling Commission to have powers to void bets that it believes to be unfair. We are acting now to help sports' regulators root out any cheating or improper conduct."

McIntosh did not specifically explain what sort of powers the Gambling Commission would be granted or what sort of actions it might take to insure fairness in betting. In all likelihood, in a situation where foul play is suspected, the winning funds would be temporarily frozen so that the commission can investigate. The proposals will be laid out in detail in the next draft of the Gambling Bill, which will be published in November.

Mark Davies, a spokesman for U.K.-based Betfair, the world's largest betting exchange, said his company has been communicating with McIntosh for a while about the proposals. Aside from the Gambling Commission having authority to oversee bets where it believes there is cause for concern, Davies doesn't expect the provisions to affect the operations of betting exchanges.

"What has been very badly reported is that the papers have come out saying this is an initiative aimed at us," Davies said. "It is nothing of the sort. It is aimed at all bookmaking operations. The trouble is that it is not very easy to do it in an ordinary bookmaker shop where you can pick up your winnings and then disappear out the door and never be seen again. That doesn't mean the government isn't looking at ways to get it done in bookmakers' shops as well."

"There are no issues that are raised by betting exchanges that are not raised by bookmakers as a whole."
- Mark Davies

"We're in favor of anything that can protect the punter," he added, "but we're insistent that when you're looking to protect punters, you have to make sure you protect them across the board because there are no issues that are raised by betting exchanges that are not raised by bookmakers as a whole."

Meanwhile, British Horseracing Board Chairman Peter Savill also delivered a speech Tuesday calling for more regulation of betting exchanges. Savill made a critically urgent plea to the government to establish an independent commission of inquiry into betting exchanges.

"It is hard not to conclude that there are unresolved issues relating to betting exchanges," Savill said. "The issue of their legality has been left in limbo; the status of what constitutes bookmaking remains unresolved; the correct nature of their regulation seems to be unclear and plans for regulating them even less clear. Their threat to integrity has not been properly reviewed; their impact on racing's finances has been ignored by the Levy Board, and the charging mechanism by which revenues are raised by both the Levy Board and government is fickle to say the least.

"Betting exchanges have, for the first time ever, suddenly and immediately enfranchised 30 million plus people in Britain to make money out of horses losing races. Previously there were only 3,791 people - the number of on- and off-course bookmakers with permits who had passed the 'fit and proper person' test - who were so enfranchised. But when you add to that 30 million figure every other person in the world with the desire to make money out of horses in Britain losing races--including, possibly, illegal Far East bookmakers and even organized crime--you have to wonder whether the decision was reached after appropriate research and analysis."

Savill asked Davies to endorse the enquiry, but he rejected it.

"There have already been three independent inquiries--two by Customs and Excise, and one by the Department of Culture, Media, and Sport--and all three have been independent and thorough, and all three have come out with an opposing view to Peter Sevill's," Davies said. "When he asks for an independent inquiry, what he means is that he wants an independent inquiry that conforms with his view."

The DCMS 's Greig Chalmers, who has worked with betting exchanges for 18 months, stated that the DCMS's inquiry was thorough and independent.