The UK Joint Scrutiny Committee Speaks

7 April 2004

England's Joint Scrutiny Committee for the draft Gambling Bill today delivered a 306-page report of its findings to Parliament. Though the committee has made 139 suggestions as to how to improve the bill, it maintains that the bill is not fundamentally flawed and therefore urges the government to introduce the bill into the current legislation as soon as possible.

The committee embraces the opportunity to regulate remote gaming and to begin administering licenses. It also welcomes betting exchanges, but advises the government that professional punters should be distinguished from others and then levied accordingly.

Before writing its report, the committee examined the clauses of the gambling bill, the bulk of which were published Nov. 19, 2003, with two other sets being published Feb. 5, 2004 and March 12, 2004. The committee also took written evidence from 170 parties with an interest in the bill and held 17 sessions to hear oral evidence between December 2003 and March 2004. After its thorough investigation of the bill's clauses and the evidence of the various concerned parties, the committee wrote its detailed report.

The committee has also published all of the written and oral submissions in a massive 750 page document.

The committee concluded that the overall framework of the bill and its objectives is appropriate and should be instituted as quickly as possible. A passage from the report's summary reads:

Almost all the witnesses we heard from stressed the need for legislating quickly - including GamCare, the charity looking after people with gambling problems, and the Gaming Board, which currently regulates parts of the industry. We agree. This legislation is necessary and urgent. If the legislation were delayed we anticipate that there will be a sharp increase in gambling of doubtful legality. We see no reason why our comments could not be incorporated and the Bill introduced before the end of this session of Parliament, for carry over to the 2004-05 Session. This will ensure that the potential social and economic benefits of the provisions are not lost.

One of the committee's major suggestions involves the regulation of betting exchanges, which received much attention in the written and oral evidence as well as in the media lately because of the potential danger they are seen by many to present to the integrity of sports. The committee advises the government to create new laws to regulate punters that use betting exchanges professionally.

As the committee put it:

We believe that the best way of achieving a balance between these points is to ensure that those using the exchanges to lay bets professionally are identified, regulated, made subject to the appropriate levy arrangements, and have their status checked. There is an opportunity here in that the audit trail produced by betting exchanges is far superior to that produced by ordinary bookmakers, as acknowledged by the Chief Executive of the Association of British Bookmakers. . . .

. . . The Committee recommends that DCMS should consult the exchanges on whether a ceiling on the sum which may be laid "recreationally" would be appropriate. We are also attracted to the idea that all transactions above a certain level should automatically be reported to the Gambling Commission to assist the Commission's monitoring of integrity. Such arrangements could be included either in regulations or codes of practice. . . .

. . . We therefore recommend that betting exchange operators should be made responsible, as part of the conditions attached to their operating licences under Clauses 62 to 65 of the draft Bill, for the operation of a system of registration of Non-Recreational Layers and the transmission of information to the Gambling Commission about such users. We note that if betting exchanges are also to be treated as a collecting agency, their own accounting practices will become more expensive, costs which they may have to transfer to those using the exchanges, though we think this cost would be marginal.

Betting exchange operators Betfair and Betdaq immediately released press statements expressing their disappointments with the committee's findings. Betfair "questioned the logic and workability of seeking to impose thresholds above which its customers might require some form of registration for integrity purposes, or licensing and taxation, on the grounds that they are acting as 'de facto bookmakers,' because they are not."

Furthermore, Betair argued, "Betting exchange users are no different than any other punters, and no British punters are currently licensed or regulated.

Betdaq's Rob Hartnett echoed that sentiment, stating, "We are disappointed, however, by the joint committee's comments on the subject of non-recreational layers. We strongly share the DCMS' original view that such a defined category was neither necessary nor workable in legislation."

The committee was pleased with most of the proposals dealing with interactive gambling and had this to say:

We congratulate the Government on its decision to regulate the remote gambling industry within the United Kingdom and to enable the Gambling Commission to issue remote gambling licenses under Clause 55 of the draft Bill. Not only could this have significant fiscal advantages but it also recognises the fact that, even if it were desirable, it would be impossible to prohibit the use of remote gambling services by U.K. citizens effectively. The proposals would create safe areas for gambling on the Internet and give U.K. consumers the option to use well-regulated services.

The report outlines a code of social responsibility for I-gaming related companies to follow and recommends that the government immediately begin consulting with parties in the industry.

The Interactive Gaming, Gambling and Betting Association (iGGBA), which was among the bodies submitting evidence to the committee, was very pleased with the committee's comments on remote gaming.

Andrew Tottenham, iGGBA's chairman, said, "iGGBA is fully supportive of the main recommendations made by the committee. . . . We are pleased that the committee recognizes that the regulations and subsequent license should be made available as soon as possible.

"We are also very pleased with the Scrutiny Committee's upholding of the country of origin principle for providing services across borders and with the government's vision of the U.K. 'as a global market where a well regulated British based industry is able to establish itself as a world leader."

The committee also emphasized a worry that the bill does not adequately address problem gambling and makes several suggestions to reduce the potential impact of the new gaming rules.

One of those recommendations is that large casinos not be able to have an unlimited number of gaming machines. The committee suggested that they have no more than a 3-1 machines-to-gaming tables ratio.

Click here to view the Joint Scrutiny Committee's report.