UK civil servants challenged on motives for new internet gambling law

Tuesday’s DCMS Select Committee second hearing on the Draft Gambling (Licensing & Advertising) Bill  produced some interesting exchanges as civil servants Jonathan Stephens of the DCMS and Jennifer Williams from the UK Gambling Commission faced members of parliament.

Philip Davies MP, who appeared well versed on the gambling industry, repeatedly suggested that the proposed new law, which seeks to introduce secondary licensing and taxation on offshore internet operators wishing to access the British market, was more about a ‘nervous’ national government trying to raise additional tax revenues than using regulations to protect British gambling consumers.

Davies commented that if this was the case the government could find itself in conflict with European Union law, which allows for national governments of member states to pass laws controlling online gambling, but only if it is necessary in the interests of public and social protection, and provided it is not discriminatory or disproportionate.

The MP said that there were already signs that the law would be challenged in the courts, necessitating great care on the question of motivation.

Stephens several times denied that the government’s motive was focused on creating new tax revenues, but Davies was unconvinced, commenting that from a regulatory perspective, the new law was “a solution looking for a problem” which did not really exist.

“We’ve got no particular public protection risks that have yet arisen, we have two cases a year of illegal advertising, the biggest operator has given you all the information you need about match-fixing. All this points to is that this is a Treasury-driven piece of legislation”, Davies asserted.

The MP also questioned UK Gambling Commission chief executive officer Jennifer Williams, and opined that the explanations for the government’s action given by both witnesses did not “ring true.”

Stephens remained steadfast in his claim that the government initiative was primarily driven by the need for consumer protection through regulation, and voiced the view that litigation against the proposed new law would not be successful; nor would it delay its implementation by the target date of December 2014.

Both witnesses seemed to find it difficult to present firm and substantiated examples of the alleged threat to British consumers or of failures in the existing UK regulatory system, with Stephens appearing to ‘flannel’ his response with general statements like:

“The government thinks there is a risk here, one of the reasons we are taking action is to make sure that risk doesn’t become a problem.”

Williams surprisingly appeared to concede that at present there were no serious and specific public protection risks, and said that she was “not unhappy” with the manner in which the Gibraltar Regulatory Authority supervised its licensees, many of whom were major operators active in the British market.