British Horseracing Conference
25th February 2008
Brian Pomeroy, Chairman, Gambling Commission
Minister, Chairman, ladies and gentlemen – it’s a pleasure to be asked to speak today, particularly as this is my first speaking engagement as the Chairman of the Gambling Commission, a role I took up at the beginning of this year.
Although new to role I have actually been a Commissioner since last October – and I’ve been undergoing a pretty intensive induction programme that means I am spending an unusual amount of my time out and about getting to know the gambling industry – this has included a very informative visit to the British Horseracing Association (the BHA) last month where both Jenny Williams, our Chief Executive, and I were most impressed with the systems that the BHA has put in place for monitoring the betting markets.
Today I would like to give you a brief outline of the Commission’s approach to regulation and then touch on some of the challenges facing the industry and how we are working with the sports governing bodies and the BHA in particular to address some of the issues.
The Commission’s approach
As you will be aware the Gambling Act 2005 established the Gambling Commission as an independent body with a clear remit to permit (as distinct from promote) gambling as long as the gambling is consistent with the three licensing objectives:
• To keep crime out of gambling
• To keep gambling fair and open and
• To protect children and the vulnerable from being harmed or exploited by gambling
We do this by licensing all operators who offer gambling and also certain key employees. No operator gets into the industry without first undergoing tough scrutiny to obtain a licence. Once an operator has passed such scrutiny and been given a licence, our working assumption is that it intends to be law-abiding and compliant with regulation. We prefer to help licensed operators comply but it must be remembered that we have been given considerable powers by the Act including unlimited fines and the power to suspend or even revoke a licence. We will not flinch from using these when it is necessary in order to discharge our statutory duties.
We will also be tough in dealing with illegal gambling operations. We know the industry is keen to work with us on this, and where possible supply us with the necessary intelligence to enable us to do our job.
The betting industry is large – around 700 off course bookmakers employing about 40,000 people and around 700 on course bookmakers. The challenge for both ourselves and the industry is to ensure that the new Act is understood and that the objectives are embedded into the way businesses operate. This is particularly important where our licence codes and conditions of practice place new requirements on operators, such as the social responsibility codes that require operators to demonstrate that they promote socially responsible gambling.
Since the first of September last year, when the Act came fully into force, there has been a strong drive by the Commission to inform and educate and we are grateful to the BHA for the part they have played in this.
Integrity in sports betting
This leads me nicely on to the broad issue of integrity in sports betting. And the first point I would like to emphasise here is about the new offence of cheating at gambling (section 42).
We do not propose to provide a non-statutory definition of cheating – the Act goes some way to defining what constitutes cheating and the
Commission does not intend to define the offence any further, believing that each case should be treated on its own facts.
Licence Condition 15 places an obligation on betting operators to report suspicion of an offence under the Act or possible evidence that will lead the Commission to void a bet. This includes reporting suspicious betting patterns to us where a potential cheating offence has been committed. And in addition betting operators must report any potential breach of a sports body’s rules to that sports body.
The Commission looked at the issue of integrity in sports betting last year and, following consultation and a workshop (with interested parties), a paper was published in October. At that time little evidence of serious widespread risk to integrity in sports betting was shown to us and we are therefore keeping the situation under review through the following activity.
Firstly we encourage increased cooperation and partnership working between the sports governing bodies and the betting industry through, for example, information exchange, sharing of best practice and regular meetings.
Secondly we keep a watching brief on activity in this area. This means that we welcome evidence from sports bodies and actively seek intelligence from betting operators (under Licence Condition 15) about threats to integrity.
And thirdly, we continue developing our strategic approach (to integrity in sports betting) based on the evidence and information received from all parties with an interest in this area.
While our clear preference is for sports bodies to take appropriate action themselves, we have not ruled out using our regulatory powers to adopt a more interventionist approach in the future if we believe that necessary to ensure the integrity of sports betting.
When we do get involved the underlying principles of our enforcement action for cheating at gambling are the same as any form of gambling offence. This means we work on a case by case basis. We will build evidence, share information with our partners, build the case and then take appropriate action based on the evidence and our regulatory priorities.
So, how do we proceed from this point? It is clear to me that working together – by that I mean the Commission and sports governing bodies – is key.
Since our inception we have had invaluable meetings with the BHA that have helped to develop our approach – it is one of a number of organisations with which we can share intelligence under the 2005 Act. In fact, we are already building intelligence around integrity in sports betting and have begun to share knowledge and expertise in a range of areas. – just last week BHA staff and mine met to walk thorough a number of scenarios to see how we would work together. In addition we are working on a formal information sharing agreement with the BHA that will provide a template for our work with other sporting bodies. This will establish protocols on key areas of collaboration and working practices including information sharing, joint operational activity and multi-agency working and knowledge building.
We are pleased to hear that, following the recommendations put forward in the Integrity in Sports paper I mentioned earlier, the BHA has undertaken significant work with ABB on information sharing and will be participating in a session hosted by ABB on 18 March on best practice. Paul Scotney’s team has also led in helping other sporting regulators such as the tennis governing bodies to understand the issues better as they themselves come to terms with the new legislation.
Having said that I should also stress that there is a clear demarcation in terms of regulation – the BHA regulates the sport, the Gambling Commission regulates sports betting. The BHA has its rules and we have ours.
To turn now briefly to some of our current activity.
Delivering proportionate enforcement action requires close working knowledge and understanding and we have already said we will continue to improve and develop our suite of rules. We work to the (Hampton) better regulation enforcement principles and carry out comprehensive risk assessments to concentrate resources in the areas where they are most needed. Since the first of September 2007 the signs are good – operators generally have been happy to embrace the new regulatory regime and many operators, especially the larger ones, have strengthened their compliance regimes and devoted significant resources to developing effective policies and procedures and implemented systems and controls to ensure regulatory compliance, particularly with respect to the new social responsibility codes.
To date we have concentrated enforcement activity in a few areas where it appears there has been a breach of the licence conditions. One example of this is the issue of bookmakers taking bets, operating out of a pub. The practice appears to be widespread and we have recently commenced enforcement action in this area.
Currently we are responding to concerns put to us about aspects of in-running betting by launching a discussion of the issues it raises in relation to fairness and openness; (eg differential access to information because of different speed feeds); the possibly increased incentive to race or match fixing. With such betting becoming more and more popular we think the time is right to consult on whether the current arrangements pose any particular problems for the licensing objectives and if so what if anything should be done about it. (an issues paper is due out in early April)
I mentioned earlier our licence codes and conditions of practice that all operators must comply with – although we are not looking to make major changes at this early stage we are consulting on what changes are needed with the emphasis more on clarification and development. That said, however, we will not hesitate to make changes at short notice if this proves necessary.
Fees are obviously a subject of considerable interest to the betting industry and I am sure you are already aware that we are working with DCMS on a review of the fees. Consultation will start shortly with a view to the revised fees being in place for the beginning of August. The review will take into account the experience we have gained in our first few months of operation. All I would like to say now is that we are determined to continue to manage costs in line with better regulation requirements. But we do need to make sure that we have the right resources to do our job, and also to keep an eye on the way that the effort needed for the different components of our work changes over time.
And I can’t finish without mentioned FOBTs. The Commission has a number of research projects in train and planned for the next financial year, funded by a DCMS grant. One of these is a review of the risks associated with high stakes machines and ways of reducing them. In the light of growing popularity of the FOBTs and concern that this might lead to increased problem gambling, DCMS have asked us to give priority to this work. We are looking at the available evidence and considering what further work needs to be done.
In conclusion, the Commission has made progress in developing its knowledge and understanding of the betting industry – helped greatly by the growing relationship with the BHA.
We are not complacent and realise there is still a lot to be done. The licensing objectives are new and require a new approach by operators, particularly with regard to social responsibility. Our goal as the independent regulator is to ensure that regulation is firm, fair and proportionate and we will continue to work with the industry to that end.