Jockey Club Submission to the Joint Committee On the Draft Gambling Bill

Published: 19 January 2004

1. The Jockey Club is the Regulatory Authority for horseracing in Great Britain.

2. In our submission to the Gambling Review Body we called for greater regulation of betting and changes to the criminal law. Our key recommendation was that a single Regulatory body be appointed to regulate all gambling. We, therefore, warmly welcome the draft gambling bill which will put into effect the sort of regulatory framework for betting for which we have been calling since 1999.

3. Horseracing is vulnerable to criminal behaviour and cheating as a consequence of the betting with which it is inextricably linked. Both activities require firm regulation. Those vulnerabilities have been exacerbated by the emergence of betting exchanges, which enable any person to lay a horse to lose and are thus potentially attractive to those with inside information detrimental to horses’ chances or who wish to corrupt an event.

4. In its policy document the Government states that “it is only right that sports regulators take the leading role in controlling the betting behaviour of participants in their sport. The Gambling Bill cannot relieve regulators of their prime responsibility, but it might usefully complement these measures and strengthen the deterrents to malpractice.”

5. Lord McIntosh speaking shortly after the publication of the draft bill went further. He said “The Government wants racing to show itself beyond reproach… So it is for racing and the betting industry to work together to rid themselves of these allegations. The Government will give racing every support in this work.”

6. While we accept prime responsibility for the regulation of racing, including the actions in certain circumstances of direct participants in relation to betting, the Jockey Club does not regulate betting; that is a matter for the Gambling Commission. Furthermore, the Jockey Club has limited powers of investigation, for example we have no powers of search or seizure of documents and our authority beyond those whom we licence or register is limited to excluding persons from racecourses or trainers’ premises. As we see it criminal behaviour linked to racing is a matter for the Police and for the Gambling Commission when it is linked to betting malpractice.

7. We have nevertheless recently taken a number of further actions as deterrents to malpractice.

• We have extended the ban on jockeys betting to include a ban on trainers, stable staff and owners laying horses under their control or ownership.
• We are significantly expanding our Security Department, following an independent review, to increase our ability to monitor and investigate unusual betting movements that may be indicative of an attempt to corrupt an event.
• We have negotiated voluntary agreements with a number of betting organisations for the provision by them of detailed betting data (an audit trail) on races which are a cause for concern.

8. However, while we have to rely on voluntary agreements with the betting industry and continue to be constrained by limited investigatory powers, racing will remain more vulnerable than is inevitable in any case to corruption through betting. The recent measures taken by us represent an interim expedient to cover the period before the Gambling Commission is in a position to lay down appropriate rules for the conduct of betting.

Licensing

9. In this regard we recommend that conditions of operating licences for betting organisations include:-

• Strict client verification rules to ensure that betting organisations know precisely with whom they are dealing. Compliance with money laundering standards would be a deterrent to cheating.
• A duty for betting organisations to report to the Gambling Commission any activity which it suspects on reasonable grounds to be potentially criminal or corrupt.
• A duty for betting organisations to honour the rules of a sport on betting by reporting to the Gambling Commission where they believe the Rules of sporting bodies may have been breached by individuals betting or laying in prohibited circumstances.
• A duty for the provision of comprehensive audit trails of betting including the provision of information to the Regulator on request from the Gambling Commission where, for example, there has been concern that an event may have been corrupted.
• A duty for betting organisations to advise their clients about insider trading, the new criminal offence of cheating and of the consequences of committing an offence.
• A requirement that betting organisations do not provide any preferential terms, payments or other advantages to participants in sport (who may have inside information or be able to influence the outcome of an event).

Betting Exchanges

10. The problems associated with the misuse of inside information and the potential corruption of sports events are exacerbated by the emergence of betting exchanges (Betting Intermediaries) which have expanded the ability to lay a horse to lose. Whilst strict adherence to the licence conditions proposed above should act as a useful deterrent, it is for consideration whether further licence conditions should be applied in respect to layers on betting exchanges to reduce the vulnerability of the public to being on the wrong side of insider trading or of cheating. It is suggested in the policy document that Licence conditions for betting intermediaries might include “the flagging of certain categories of customers.” It is for consideration whether, in addition to licensed betting operators, it would be practicable (and indeed helpful to the public) to flag on the exchanges any person directly involved in the sport on which bets are laid or offered. As far as racing is concerned, and subject to any data protection restrictions, the Jockey Club would be prepared to make available to the Gambling Commission, for integrity purposes only, the identification details of those persons licensed or registered under the Rules of Racing. However if too large a proportion of accounts are flagged, frequently with no connection to the relevant horse, the purpose of the exercise will be vitiated.

11. There is obviously great difficulty in identifying in advance the potential betting cheat or insider trader. One suggestion that has been made to limit exposure to cheating is by differentiating between “recreational” and “non-recreational” layers, restricting the former to low levels of activity by transaction or value. Betting Intermediaries could be required to monitor the activities of “non-recreational” layers and to make reports to the Gambling Commission or the “non-recreational” layers could themselves be subject to a “fit and proper” licensing regime.

12. The Jockey Club would welcome any steps taken within the bill or in licence conditions which genuinely do reduce the damage that cheating at betting will usually represent to the integrity of racing itself.

Enforcement

13. If we are to achieve effective regulation of horseracing and the betting thereon, a partnership approach will be required between the Jockey Club and the Gambling Commission. The most effective deterrent to malpractice will be successful prosecution of offences, either by the Gambling Commission in the case of criminal offences or by the Jockey Club in cases of breaches of the Rules of Racing.

14. To date the success rate in prosecuting alleged conspiracy cases has been low. The reasons have been often stated – the Jockey Club’s lack of powers of investigation, the lack of access t