POOL COMPETITIONS BILL

HC Deb 12 May 1971 vol 817 cc563-88

10.30 a.m.

The Under-Secretary of State for the Home Department (Mr. Mark Carlisle)

I beg to move, That if the proceedings on the Pool Competitions Bill are not completed at this day's Sitting the Committee do meet on Wednesday next at half-past Ten o'clock. In moving this Motion I hope very much that we shall be able to finish the Committee's proceedings on the Bill at this one Sitting. I felt that it was a necessary precaution, nevertheless, to move this motion.

Question put and agreed to.

Mr. Carlisle

I beg to move. That the Chairman do now report to the House that the Committee recommend that the Pool Competitions Bill ought to be read a Second time. I am afraid that anyone looking at the Bill will come to the immediate conclusion that its provisions are somewhat

complicated and its language somewhat technical. Inevitably, my speech explaining it to the Committee is likely to be equally complicated.

Although the Bill's provisions may be complicated its purpose is simple. It is to safeguard the position of certain charities and sports which in the recent past have derived a substantial part of their income from what have become known as charity pools. It is a Bill which meets the wishes of hon. Members on both sides who have made substantial representations to the Home Office that legislation in this form should be enacted.

No doubt the Committee will be aware that for some years a considerable number of competitions, inevitably based on the outcome of football matches and in many ways akin to football pools, have been operating, from which charities and sports have derived considerable financial benefit. These competitions purported to operate as lawful pool betting, but the decision of the House of Lords in November of last year in the case of Singette Limited and Others v. Martin held that these competitions did not amount to lawful pool betting and were in fact unlawful lotteries.

The purpose of the Bill is to restore, to a limited extent, and for a limited period set out in the Bill as five years, the position which was believed by the charities and sporting bodies to obtain before the decision of the House of Lords. It does no more than make the necessary changes to enable competitions to continue by treating them for a limited period as if they were lawful pool betting.

I should emphasise at the outset that this is the limit of the extent of the Bill. It is important to realise that these operations will continue to be subject to the full control of ordinary pool betting law contained in the Betting, Gaming and Lotteries Act, 1963, in addition to special controls contained in this Bill.

I have tried to explain the purpose of the Bill. I have referred to the fact that its provisions are somewhat complicated. I have said that its intention is merely to restore the position as it was believed to be before the recent House of Lords decision. I cannot help commenting on the fact that in a leading article on 23rd February of this year The Times said: Possibly the best way of meeting this need would be a Bill of one Clause in effect to reverse the decision of the House of Lords. Regrettably, although we agree with the proposal and the purpose, we have not found that that is the simplest way. That is why we have a Bill of eight pages and 10 Clauses, some of them fairly long and complicated.

To explain how the situation has arisen perhaps I should say a few words about the existing law on lotteries and pool betting.

The two operations are similar in many respects. Both are based on the principle that a number of entrants make a certain payment comprising either entrance money or stakes. The payments are then put into one pool from which deductions are made to cover administrative expenses. What is left in the pool is then divided among the winners. That is common to both lotteries and pool betting. The essential difference is that, in the case of a lottery, the winners are determined by lot or chance, whereas in the case of pool betting, entries must comprise a forecast involving at least the possibility of the exercise of a certain element of skill, the winners being determined by the success of their forecasts.

By our law, apart from certain exceptions allowing small lotteries to be conducted provided that they comply with certain conditions, lotteries are unlawful.

Pool betting, where a forecast is involved, is lawful provided that it complies with the requirements of the pool betting law. The requirements are aimed at preventing fraud to which the character of pool betting is very susceptible. Whereas in the case of an ordinary bet between two people the amount of the stake is known, the odds are known, and the winnings can be calculated and checked, in the case of pool betting the amount of winnings available for distribution depends on the size of the pool. The size of the pool depends on the number of entrants, and, consequently, when the number is very large, the prize may be considerable and the total amount of money handled substantial. Without strict control, it would be easy to organise a pool and deduct from it a substantial proportion before dividing the rest as the winnings, and without its being readily checked by the people involved.

That is why we have the pool betting laws, aimed to prevent fraud. The object is to ensure that pool betting may only be conducted by promoters who are registered with a local authority for that purpose and who have satisfied that local authority that they are fit and proper persons, that all entry moneys are put into the pool, that the pools are administered so as not to favour any particular entry, and that the whole is subject to the scrutiny of an independent accountant appointed by the local authority. The law also requires full publication of the promoters' profits and expenses, which is normally effected by the publication of a statement expressing them as a percentage of the pool. Those are the requirements of the pool betting law aimed at ensuring the fair running of pools.

I should emphasise that, other than that, the law imposes no limit on the profits which a promoter may take from the conduct of a pool, provided that they are disclosed. It is up to the entrants, in the light of the information available to them, to decide whether they are getting fair value for money for taking part in any type of pool betting.

The schemes which the House of Lords found to be unlawful lotteries had many similarities with legitimate pool betting, but there were important differences. The principal difference was that the overwhelming majority of those who took part in this type of charity pool made no forecast. The necessary ingredient for lawful pool betting, namely, that the outcome would depend on a forecast involving the exercise of a certain degree of skill, was missing. As a result, they became unlawful lotteries.

Most of the schemes were operated by issuing each person taking part with a set of numbers, normally at the beginning of the football season. Different numbers were applied to different football teams. They were changed each week, so that an entrant's set of numbers represented a different combination of teams each week. Prizes were distributed according to various criteria, such as the team with the highest or lowest aggregate score; or according to various other factors. Although it was open to any entrant to ask for different numbers in any week so as deliberately to choose a combination of teams for that week, so that one could say that he was making a forecast, this option, in practice, was so rarely exercised that the House of Lords held that the whole amounted to a lottery instead.

One consequence of this system of giving people numbers at the beginning of the season was a substantial reduction in administrative costs, in that it was unnecessary then to check weekly entries. All that was needed was to look up the names of the possessors of the various sets of numbers to see who had won. It is that difference which rendered them lotteries and unlawful.

Leaving aside the question of their legality as a lottery, whether they could ever have constituted lawful pool betting is not clear. The House of Lords de- liberately left the point undecided. The problem was whether the possession by an entrant of four numbers, and the payment of a weekly entrance fee, could be properly described as making a bet. However, that is one technicality which it will not be necessary to pursue further, since the Bill is drafted so as to deem entries made in this way to be bets for the purpose of the pool betting law.

The schemes had other features which distinguished them from ordinary pool betting, the most important being that they operated to provide financial contributions to charity and sport. It seems clear that the attraction for many of those taking part was the feeling that, in addition to the possibility of making a substantial personal win, they were also making a regular weekly contribution to a good cause. Since the success of the schemes depends on the number of entrants they can attract, the financial benefits accruing to charity and sport is undoubtedly a strong selling point.

Another feature distinguishing the schemes from ordinary pool betting is the greater reliance placed by them on the collection of weekly entry moneys by local collectors organised under a system of regional supervisors. This is a system which is used by ordinary pool betting promoters, but it is used more by the types of schemes dealt with by the Bill. The advantage of the system is that it enables new entrants to be introduced by the effective method of direct contact, coupled with the fact, I assume, that it is made clear to the entrant that part of what he is giving will go to charity, to induce him to take part in the scheme. It also enables the interest of existing members to be maintained, and provides an easy machinery to distribute cheaply the necessary literature to make the scheme work.

It has, however, the disadvantage that these collectors, who are paid on commission, add considerably to the administrative costs, although this is weighed against the savings, because the weekly checking of the pools is not required.

Another important feature is the combination of these schemes with other forms of distribution of prizes which do not purport to be pool betting and accordingly do not come within any part of the existing system of control. These collateral benefits are an important part of these schemes. Some proved to be lotteries and unlawful on that account. In other cases distributions are made in such a way as to avoid their being unlawful lotteries. Some of these schemes are also combined with modest weekly insurance schemes which act as a further inducement to the entrant to maintain his regular weekly payments into the schemes.

These collateral schemes are of importance in considering the provisions which have to be made in the Bill. It has been the practice for some promoters to run a whole scheme by a series of separate companies, one company running the pool competition and others being responsible for the related benefits. In some cases the contribution to charity for sport has in fact been made out of the turnover of the companies concerned with the related benefits and not out of the turnover of the company running the pool as such. Therefore, we cannot deal with the pool competition in isolation—this is one reason for the complexity of the provisions—and it is necessary to take into account the whole system by which these schemes have been operated.

From the information made available it would seem that the financial pattern of these schemes is subject to a great deal of variation, and the benefits obtained by certain charity and sporting clubs have been substantial. For example, in one scheme 25 per cent. of the entry money goes into the pool and 75 per cent. goes into the related benefits scheme. Other competitions have been differently organised, with a much greater proportion of the entry money going into the competition proper. Equally, the proportion or amount of benefit going to charity and sport has varied substantially from scheme to scheme. In some schemes it has averaged 10 per cent. of the total turnover; in others it has reached a higher figure.

We should realise the kind of figures with which we are dealing. The annual turnover of one of the largest schemes is about £15 million. A 10 per cent. contribution of that sum represents about £11 million going to charity out of the running of that scheme alone.

I should stress that we have received the fullest assistance from the charities and from the promoters of the schemes in drafting the provisions of the Bill. Basically, we believe that there are about six major charities which gain fundamentally from schemes of this nature.

The size of the benefit to charity and sport, so strongly emphasised by various hon. Members on both sides of the House who came to see me at the Home Office, and in letters which I have received, led the Government to decide that they could not afford to allow them suddenly to lose incomes of this size. It would clearly be impracticable in the short term for the interests concerned to find comparable sources of money to replace what they would lose by the ending of these pools. Equally, it would have been impossible to have introduced comprehensive permanent legislation to regulate the situation in time to save the income on which these charities and some sporting clubs so largely depend.

We therefore decided that the right course was to introduce temporary provisions, in the nature of indemnifying legislation, to enable those charitable and sporting interests concerned, which had come to depend on this form of income, to continue to enjoy it while the whole of the law in this sphere is reviewed. It is that end which is achieved by the Bill.

I mentioned the need to review the whole of the law regarding lotteries and betting. Pool betting is widely accepted. It is not only a question of these particular types of pools. The Committee will be aware that proposals have from time to time been made for a national lottery, for municipal lotteries, for lotteries to support the Arts, and for lotteries to support sport and charitable causes. There is tremendous doubt about the variations between the law on lotteries and the law on pool betting, and it is clear that we cannot make piecemeal changes in this sphere. Therefore, the Government have set up an inquiry into the whole matter.

At the same time I should point out that to legalise large scale lotteries generally could bring about a situation in which a number of good causes would be so much in competition that the final benefit to each of them might be small in relation to the resources deployed.

In the meantime, while that review is going on, the Bill will enable the charities and sporting interests affected to continue to derive income from this source. I hope that the organisations concerned will take a warning—namely, that the Bill is allowing them a breathing space, and that, during that breathing space, they should seek to diversify their sources of income. The Government, pending the review, would not wish it to be assumed that, because the Bill has been introduced, more permanent legislation will be prepared which will necessarily guarantee the continuance of these competitions in their present forms—for the reason, as I mentioned earlier, that we have to consider what in the end the benefit would be if all charities were able to take part in large scale lotteries of this kind.

Mr. Dan Jones (Burnley)

Will the Minister tell us when that review is likely to appear?

Mr. Carlisle

I cannot tell the Committee when the review is likely to be completed. It is starting shortly. It is to be an internal review by Home Office officials, who will welcome any written representations and suggestions about the highly complicated mass of law involving lotteries and pool betting as such.

It has to be remembered that, in addition to the benefits to charity and sport. these promotions have comprised a simple commercial operation which has operated, clearly in breach of the law, over a number of years. The Bill enables these activities, which were operating in breach of the law, to continue for another five years, but it will not allow any further new entrants to come into this area of operation. The only justification for favouring these enterprises in this way is the catastrophic result which the ending of their incomes would have on the charities and sporting interests which benefit as a result of what, we accept, they believed were lawful competitions.

I should now like to deal briefly with the individual Clauses. The Bill, as its Title implies, deals with schemes which are described as pool competitions. The phrase, "competition for prizes", with which we are concerned, is defined in Clause 7. It has been necessary to introduce this new term to describe the schemes with which we are dealing, which are not pool betting but are in most respects to be treated under the Bill as if they were pool betting. The definition of "competition for prizes" is important and is to be found in Clause 7(2). That makes it clear that the allocation of prizes must depend on the outcome of a sporting event, that there is a right for everyone taking part to forecast the outcome, even though it is not exercised, and that prizes can be won whether or not a forecast is made.

The Bill operates to legalise the competitions in question by providing a procedure, first, for identifying those existing schemes which are intended to be covered by the Bill, and, secondly, by providing a scheme by which they can be licensed. When they are licensed they will be deemed to be lawful pool betting, and can continue to operate in the way in which they have operated in the past, subject to certain additional new controls.

The pivot of the new procedure is the Gaming Board. We are extremely grateful to the Chairman and members of the board for taking on this additional task. It has been necessary to introduce a central authority of this kind, which will have considerable discretion in operating the scheme, because of the wide variations which exist from scheme to scheme and the difficulty of knowing, without further full information about the various schemes, what general or particular provision ought to be made. Accordingly, the Gaming Board is given wide powers, first, to issue certificates identifying the schemes which will benefit under the Bill, and, secondly, to licence those schemes to continue, subject to controls which it may impose upon them.

The procedure for issuing certificates, which is the first step, is contained in Clause 1. This sets out the criteria which must be satisfied before a pool competition can obtain a certificate. The essential criteria are, first, that it must have been conducted by a registered pool promoter registered under the local authority, and. secondly, that it must have held at least 26 competitions during the year preceding the House of Lords decision. The purpose of those criteria is to make sure that the Bill benefits only those pool competitions which existed at the time of the decision and cannot be taken advantage of by new entrants coming into this sphere.

We are not sure whether we are right in laying down the condition of at least 26 competitions over a one-year period. It may be necessary to reduce the qualifying period prior to the date of the House of Lords decision. If we did, we should have to reduce the number of individual competitions which took place during that qualifying period. That is a matter which the Home Office is discussing with the various interests which have made representations about it.

Also, the competition must have benefited some charitable, sporting or other organisation not established for private gain. To a certain extent, those are saving words, because we believe that the vast majority of the schemes have been for the aid of charity or sporting organisations. These criteria are set out in the Clause. When an applicant has satisfied the board on those criteria the board must issue a certificate to him.

The licensing provisions are contained in Clauses 2 and 3. In addition to issuing the licence the Board is given wide powers to impose conditions under which the schemes can operate. The primary object which the board must satisfy in exercising its powers is set out in Clause 2(2), to secure that each of the societies named or identified in a certificate under this Act will derive financial benefit from competitions for prizes authorised by a licence under this Act. In addition, the board is required to impose conditions which will ensure that full information about the whole operation of the scheme is made available to those who take part. The board has powers to impose what other conditions it thinks fit.

There are two particular aspects of these powers which I should mention. The first is that under the present pool betting law a pool promoter is required to make a statement about his commission and expenses. This requirement is not apt to the much more complicated operation of the schemes dealt with in the Bill. Accordingly, that provision in the existing law will not apply to these competitions. Instead, this aspect will be dealt with by special conditions tailored to meet the individual scheme and imposed by the board under the powers which I have already mentioned.

The second is that there is some reason to believe that the system of door-to-door collection on which these schemes have been based has contravened the provisions of the house-to-house collections legislation which requires, among other things, that every collector of money for charitable purposes has to be authorised and carry a badge, and that the accounts of the promoter be scrutinised.

Mr. Dan Jones

What is the issuing authority for those badges?

Mr. Carlisle

I believe that the local authorities are, for the house-to-house collections; I am not sure of the position of the badges.

That house-to-house collections legislation is inappropriate to this Bill, not from the point of view of the wearing of badges but from the point of view of the scrutinising of accounts. The kind of scrutiny which that legislation imposes will be provided for these competitions by the Gaming Board. So provision has been made for collectors in these competitions to be exempted from the house-to-house legislation. That is in Clause 3(5).

The Gaming Board will be able to require any information it needs from the promoters; that is under Clause 4. This information will supplement the information already available to the individual accountant appointed by the local authorities, whose role will, of course, continue unchanged in relation to these competitions in so far as the Bill treats them as pool betting. So they will still be subject to that independent scrutiny.

In obtaining this information, the board will see that the operation is properly run and the maximum income made available to the benefiting society. The Committee will realise that this gives it wide discretion in the conditions which it imposes. We believe that, with the wide variety of schemes, this is the only way to see that they are properly run, instead of attempting to lay down a rigid legislative procedure.

Licences under the Bill will run for a year. The board is given wide powers to extend or revoke a licence. The intention in the first place is that the board should issue licences with as little delay as possible, so as to enable the schemes to continue. Because of this, facts may later come to light which, had they been known in time, would have led the board to a different conclusion either about the issue of a licence or about the character of the conditions to be included. These powers will enable the board to keep licences continually under review.

The financing of the new procedure will be covered by fees payable by applicants for certificates and licences. The amount of these fees will be prescribed by the Secretary of State under Clause 5, and any order will be subject to negative resolution procedure. The scale of these operations varies substantially, and the appropriate fee will not be apparent till the board has begun its work. This is why figures have not been included.

To prevent difficulty between the date of application for a certificate and a licence and the date of the grant, Clause 6 provides that no proceedings in respect of certain offences shall be instituted in England and Wales except by or with the consent of the Director of Public Prosecutions. Clause 6 relates to the time between the application and the grant.

The effect of the grant of a licence will be to treat these competitions as lawful pool betting. This will remove them from the lottery law and ensure that they are subject to the ordinary provisions of pool betting law. The special procedures in the Bill will, however, ensure that the proper control is exercised in respect of special features of these schemes.

I said that this was a complicated Bill, dealing with a highly technical part of the law, and inevitably my speech has been complicated and somewhat longer than one might wish in a Second Reading Committee, but I hope I have managed to explain the purpose of the Bill and the way in which that purpose is achieved, and to explain, if only briefly, its provisions. I am satisfied that the Bill will make it possible for those operations which have been in existence and of substantial benefit to certain charities and sporting clubs to continue for the time being, while a more permanent solution to the whole problem of lotteries and pool betting is found. I therefore commend the Bill to the Committee.

11.7 a.m.

Mr. Elystan Morgan (Cardigan)

The Under-Secretary of State has done the Committee the courtesy of dealing with this matter with all the care and lucidity which the House regards as characteristic of him. This Bill does not divide us on party lines, and I am sure that, in general terms, we can support its purpose. It may be just as well that it is not politically controversial. If it were, I fancy that it would be a Valhalla for many months for lawyers and obstructionists—always supposing that those represent two different categories.

When, on 25th November last year, the House of Lords decided, in the case of Singette and Martin, that football pool competitions on a numbers basis between members of a club were illegal, the bottom fell out of an industry which had grown popular over recent years and part only of whose profits had been paid to a number of charities. Some of these charities were almost absolutely reliant upon that source of income. A fair warning of the ultimate result had been given in October, 1969, when the Cardiff Stipendiary Magistrate found in the Singette case that such pools were illegal, and later, in April, 1970, when this case came, by way of case stated, before the Divisional Court. As we have heard, the coup de grace was administered to any lingering hopes when Lord Pearson, delivering the judgment of the House of Lords, said that, where only 1 per cent. of the participants actually made any attempt at exercising skill in forecasting the result of a sporting event, … for the 99 per cent. in any week who make no forecast but win prizes if their numbers happen to be lucky numbers, for that week the competition has the character of a lottery. Many deserving charities which have given noble service to the community found that they were deprived of many millions of pounds per annum. About £4 million or £5 million was involved a year or two ago, and it may well have increased since. One society in particular, the Spastics Society, which received between £1½ million and £2 million per annum, according to Press reports, probably would not have been able to operate but for this source of income.

The oases of Singette Limited and Others v. Martin not only pointed to a major flaw in the 1963 Act but also to a certain—rather, an uncertain—ambivalence towards lotteries in our society. Faced with this situation, some people advocated that lotteries law should remain immutable on the basis of the 1963 Act, but others took the opposite, extreme view and advocated almost the total abolition of lotteries legislation.

When I was a Junior Minister in the Home Office, eighteen months ago, consideration was given to this problem, although at that stage it was more a case of finding fatal flaws in propositions put forward by hon. Members than being able to hammer out any concrete plan. I warmly congratulate the Under-Secretary on having achieved a practical solution. I remember thinking at that time that there were two main directions from which to approach the problem.

The first was to redefine in wider terms the making of a forecast and the result of a sporting event; but the impression which I had then, and which I certainly still have, is that this would be much like trying to insert a large rock into a pyramid of loose stones, and that, if this were done, there would in practice be very little left of the generality of prohibition against lotteries in Section 41 of the 1963 Act.

The alternative seemed to be to leave lottery legislation substantially as it was, but to exempt certain charities from its operation. Of course, it would have been invidious to have included in a Bill a schedule of charities. That would have been far too inflexible. I believe that tackling the problem from this general direction is more desirable than from the other direction. We certainly support the Government's general method. It would be impossible for them to decide what charities should be the objects of this bounty.

It may be rather hard to confine the benefits of the Bill to charities which received these funds during the 12 months ending 24th November, 1970. After all, these competitions have been running for many years, and charities which were particularly interested in this form of revenue, it can be argued, have had their chance. On the other hand, it could be very unjust on a charity which one might regard as an ad hoc charity, coming into existence on account of a tragedy or disaster, the character or magnitude of which might not be envisaged at this stage. If that happened, perhaps the Government would consider amending legislation. But there is a fault here, on account of the rigidity of the system, although I am willing to admit that all other alternatives would have been less wholesome than this one.

I am glad that the power of decision has been vested in the Gaming Board, and on behalf of my hon. Friends I wholeheartedly endorse the thanks given by the Under-Secretary to the board for its willingness to take on this task. I believe that it is well suited to discharge this duty, and the manner in which it has carried out its duties over the last three years has built up a stock of public confidence in the way the board operates.

At the same time, although the board is well qualified to deal with the betting lottery side of the problem, I do not think the board itself would lay claim to any particular knowledge of the operation of charities. We can discuss this further at the Committee stage of consideration of the Bill, but perhaps the Under-Secretary will consider incorporating in the Bill some provision which would allow the Gaming Board to consult the Charity Commissioners in certain necessary cases. There may be problems to be considered which are firmly in the sphere of charity matters.

There are a number of small points which will be more appropriately discussed at the later Committee stage, when refinements might be made to the Bill. However, it may help if I merely mention some of them. The first is a very small one. The date mentioned in Clause 1, defined in Clause 7, is 24th November, 1970, which, I presume, was intended to be the date of the decision by the House of Lords in the case of Singette Limited and Others v. Martin. However, that decision occurred not on 24th but on 25th November, as reported in the Weekly Law Reports.

Mr. Carlisle

The hon. Gentleman is being slightly unkind to the Parliamentary draftsmen. If he looks more closely he will see that the Clause refers to the period of twelve months ending with 24th November 1970 and, therefore, includes 24th November and goes up to midnight on that day. It therefore goes to the point of the decision on the 25th.

Mr. Morgan

I should have realised from a previous incarnation that there is always a good defence to be made on behalf of the Home Office draftsmen, and I am happy to withdraw the point I made in this connection.

In Clause 1 there is mention of at least 26 competitions during the qualifying period. I presume that the answer will be in the negative, but I would like the Under-Secretary to consider whether it is possible for a single competition to be run on the same date but organised on a local basis in such a way that 26 different areas could be interpreted as 26 competitions. It might be wise to have the hon. Gentleman's views on this, because we need to know precisely what will constitute 26 competitions within the meaning of the Bill.

Clause 1(2) gives the conditions, and we are told that each of the … competitions … has been to the financial benefit of a society established and conducted wholly or mainly for one or more of the following purposes and that the three purposes are

1. "(i) charitable purposes,
2. (ii) participation in or support of athletic sports or games or cultural activities"

and then the one to which I particularly wish to refer, (iii) purposes which, not being described in paragraph (i) or (ii), are neither purposes of private gain nor purposes of any commercial undertaking". Is it intended that that third proviso should be construed ejusdem generis with sub-paragraphs (i) and (ii)? I trust that is not the intention and I hope that, if there is any doubt about it, the necessary Amendments will be made.

After all, if it were the intention, we would find ourselves back with some of the ironic cases, relating to charities, which students will recall from their reading of Snell's "Equity". Hon. Members will recall some of the gruesome distinctions which were then made. For example, a trust to promote "Conservative principles combined with moral improvements" was held to be charitable, while a trust for patriotic purposes, or for helping to carry out the work of the Church in Wales, were held to be other than charitable. We do not want to perpetuate any such distinctions which were laid down in a decision of some 80 years ago and which echoed many of the inconsistencies of Elizabethan charity law.

Can the Under-Secretary give an indication whether the Gaming Board, which, after all, will be exercising very wide discretion in this matter, though obviously it will not exercise it in a capricious or arbitrary way, will make some public statement as to general lines of policy which will be pursued in relation to the granting of licences under Clause 1? Will art annual report be prepared? If so, will it be debated in Parliament?

I assume that "Spot the Ball" competitions will in no way be affected by this legislation. However, under Schedule 2(13) of the Betting, Gaming and Lotteries Act, 1963, we are told: Subject to paragraphs 14 and 19 of this Schedule, the pool betting business carried on by any registered pool promoter shall comply with the following requirements— (a) it shall take the form of the promotion of competitions for prizes for making forecasts as to sporting or other events". If one is dealing with an event already past, then afterwards a competition about it can by no stretch of the imagination or use of language be regarded as a forecast. If so, I ask the Under-Secretary to consider between now and the next stage of the Bill whether in legislating to bring about within a narrow compass a limited legislation on lotteries it is right to leave out these "Spot the Ball" competitions. Now that society accepts that, within the defined sphere relating to charities, it is right and proper that substantial exemptions should be made in the generality of the law relating to lotteries, is it any the less moral to conduct "Spot the Ball" competition lotteries for charitable purposes within the football lotteries with which we are dealing in this legislation?

The hon. and learned Gentleman said that it was the intention of the Home Office to set up a study. The Under-Secretary was presumably referring to a Departmental committee which will scrutinise the whole sphere of legislation relating to lotteries. May we be given the terms of reference of that body? When is it likely to report?

I warmly congratulate the Under-Secretary on the Measure. It stems from, a genuine compassion with worthy charities which have been deprived of a significant part of their income. It is in the public interest that they should be protected within the limits of the Bill. It is, I believe, also in the public interest that they should be free from the threat of private prosecution either at the hands of assiduous zealots or rival promoters. The system proposed in the Bill is, in general, a flexible, albeit a rather arbitrary one. However, it would have been difficult to have improved substantially on the basic features of this legislation. I have no doubt that when it is given its Second Reading, as I trust it will be, and is debated in Committee, a number of small refinements will be proposed. In general, therefore, on behalf of my hon. Friends I wish the Bill well.

11.26 a.m.

Mr. Alan Fitch (Wigan)

We have heard two excellent and lucid speeches from the Under-Secretary and my hon. Friend the Member for Cardigan (Mr. Elystan Morgan). While I do not intend to detain hon. Members for long, there are some observations of a general nature I wish to make.

In my constituency I have two teams, Wigan Athletic Football Club and Wigan Rugby League Club, both of which are at the top of their respective tables, I am glad to say. From being present at their games and from my knowledge of these matters I accept that sport generally has done a great deal to enrich our lives. It would be a sad day indeed if clubs had to go out of existence through lack of money. I therefore welcome the Bill.

During the 1969–70 season, of the 92 clubs in the four football leagues, only 11 made a profit. This illustrates once again the need for the opportunity which the Bill will give to clubs to continue with the necessary job of raising funds.

There is the same picture in cricket, and I pay tribute to the Warwickshire County Cricket Supporters Association for the tremendous job which its members have done in giving help on a nationwide scale to the Cricket Council, the County Cricket Club, the M.C.C. and countless village and small cricket teams. The same applies to organisations which are raising money for polio and cancer research. Their work would be greatly inhibited but for this Bill.

This Measure does not encourage heavy gambling. I accept that heavy gambling can bring with it a degree of social irresponsibility. In this case, the stakes are one or two shillings a week, which in no way can be claimed to be encouraging people to go in for heavy gambling.

There are two points which, while they do not worry me—"worry" would be a term of exaggeration to use in this context—should be reconsidered. One is the qualification of at least 26 competitions in the 12 months prior to 24th November of last year. If this operates as it stands, without Amendment, I know of two well-known First Division clubs which will suffer greatly, and I am sure that there are other, not only sporting, organisations which will also suffer. Therefore, I hope that the Under-Secretary will introduce an Amendment at least to lessen the time and the number of competitions required.

The activities of the Gaming Board are undefined to a certain degree, and there appears to me to be no right of appeal by any organisation which has its application for a licence refused or revoked.

Those may appear to be only small points, but I think that the first is considerable. I do not want to press the Minister too much, because, obviously, representations have been made along these lines. The Bill is good, but perhaps it could be made a little better if we consider at least two of the things I have mentioned.

11.31 a.m.

Mr. Dan Jones

I, too, support the Bill for the reasons which have already been given.

I think that my hon. Friend the Member for Wigan (Mr. Fitch) said that only 11 out of all the football clubs in the country can pay their way. He has made a very valid point which all people, not only those of a sporting character, should appreciate. The country took a very distorted view of what happened at Wembley last Saturday, when two very powerful teams attracted about 40 million spectators throughout the world, and earned an immense amount of money in the process. It is not generally realised that the Cup competition begins in the August of the preceding year. The little clubs which keep good communities going can do so only in the manner outlined by my hon. Friend. In my constituency for many years we have had a Division 1 club running on a gate of about 15,000, which is totally inadequate to meet the financial demands. We have managed to survive in the way my hon. Friend described.

I hope that these considerations will be borne in mind, particularly in relation to the Minister's reference to the House of Lords decision, as a result of which, unless there is a regulator such as the Bill provides, those very happy facilities may be prejudiced.

There is throughout the country a large number of working men's clubs which do yeoman service for their members and others. Old-age pensioners are taken for outings to the seaside, and provided with teas and concerts, and the same good work is done for children at various times of the year. Those clubs do a remarkable job. This work changes the whole character of clubs. They cease to be like public houses, places where people go only to drink. There is a community spirit. Many churches and chapels, too, are involved in various kinds of what are called, for want of a better word "sweeps". Some of us may be aware of this with certain misgivings, but their position also deserves to be acknowledged.

I do not gamble. I have never had the means whereby I was entitled to do so. If, however, the gambling instinct is prevalent in the nation I would strenuously support those agencies which turn to the benefit of society that human characteristic. The Bill is a move in that direction.

The Minister mentioned a forthcoming review, and he and my hon. Friend the Member for Cardigan (Mr. Elystan Morgan) turned their legal minds to the matter. When the legal boys are talking, others listen with some degree of apprehension. Being a non-legal man I can thoroughly understand that apprehension: nobody can be sure which way those chaps are going. If as a result of the Bill schemes are to develop along perhaps more ambitious lines, those concerned have a right to know what bearing the review will have on the legislation, so that those who, by and large, do a very stout job within our social fabric can plan along lines which are coordinated, and understood by them.

11.37 a.m.

Mr. Carlisle

With the leave of the Committee, perhaps I may reply very briefly to the points made, and thank hon. Members for their welcome for the Bill. I thank the hon. Member for Cardigan (Mr. Elystan Morgan) for the very kind things he said about the Home Office and about me for bringing the Bill forward.

The hon. Member for Burnley (Mr. Dan Jones) and the hon. Member for Wigan (Mr. Fitch) rightly made the point that as well as the charities which benefit from the Bill a number of major sporting clubs also benefit. I shall say something about Warwickshire County Cricket Club in a minute. It is only the major, substantial schemes which are saved by the Bill. I think that lotteries run by the working men's clubs or any forms of charitable club are all run under the existing provisions for small lotteries which were allowed in the Betting, Gaming and Lotteries Act, 1963, whereby any club, provided that it is not for private gain or commercial purposes, can organise a small lottery, that being one in which the entrance fee is not more than a shilling a ticket, in which any individual prize does not exceed £100, and the total value of the tickets must not exceed £750. It is under that provision that the vast majority of the lotteries which we come across in our everyday life, in religious and political organisations, clubs and so on, exist.

Certainly, within the review we shall also be considering the adequacy or otherwise of the law relating to small lotteries. There have been substantial representations to the Home Office in recent months that the limitations laid down by the 1963 Act should be increased. We would prefer not to consider this piecemeal, but in relation to the whole question of the law on lotteries and pool betting as well.

Mr. Elystan Morgan

I had intended in my speech to ask the hon. and learned Gentleman whether the findings of the Departmental committee would be made public. Since it deals with a matter of considerable interest, they should be published.

Mr. Carlisle

My immediate reaction is to say that I would have thought not, but I note what the hon. Gentleman has said. I think that it would be a report for the Home Office. It is a Departmental inquiry into the law, and will contain recommendations or alterations. It would be unusual for it to be published, though it may be. I shall bear in mind what the hon. Gentleman says, and what publicity may have to be given to any later permanent provisions.

The purpose of the Bill is, pending the outcome of that review, to continue in existence for a temporary period the major schemes already existing from which certain clubs and charities make substantial sums. The Government believe that those charities and major sporting clubs which rely substantially on income from this source should look at alternative sources of income during this breathing period. We cannot guarantee that the permanent legislation we hope to introduce as a result of the review will necessarily continue to legalise these types of pool competition.

We shall look at the question of the qualifying period. I probably have in mind the names of the two concerns which have approached the hon. Member for Wigan. They recently made representations to the Home Office, and we have agreed to consider whether the qualifying period is too extensive. This is purely to preserve the position of those which clearly were at that stage heavily financially dependent on such schemes, and not to cover those who suddenly thought at the last moment that it would be a good idea to try to get on the bandwagon.

The hon. Gentleman is right, I think, in saying that there is no right of appeal against the refusal of a licence. He also referred to what he called the undefined activities of the Gaming Board, and the hon. Member for Cardigan also made a comment about the board's role. In opening I conceded at once that the discretion left to the board is wide.

The hon. Member for Cardigan asked whether it would make any public statements about its future policy. I am sure that the answer to both hon. Members is that the board will take careful note of Parliament's intention in passing this legislation, and will see that this intention is carried out in the way in which it exercises its powers and its discretion.

Clause 2(2) says that in licensing the competitions The Board shall, so far as practicable, exercise their powers of granting licences under this Act so as to secure that each of the societies named or identified"— those which up to then have established that they were in the past bodies intended to be saved by the Bill— in a certificate under this Act will derive financial benefit from competitions … In other words, it is clear that the intention of Parliament on which the board will act is to continue the existing schemes which it has identified as those which the Bill is intended to save.

Clause 2(3)(b) says that one of the matters it should take into account in deciding any conditions is the amount of the financial benefit which the society derived from competitions for prizes held in the qualifying period. In looking at schemes, I am sure that the Gaming Board will take into account the percentages which went to charity in the way in which the schemes were operating, and bear them in mind in deciding whether to lay down conditions about percentages. In other words, the board will take into account the benefit which a society was deriving from a competition while the competition was being run without these additional controls.

The Gaming Board reports annually, and I imagine that reference will be made in subsequent reports to the board's work of administration under this Bill.

With two exceptions, the hon. Gentleman's remaining questions are Committee points. He asked why, if it be the fact, we have left out "Spot the Ball". Secondly, he asks on what basis we justify a Bill which continues what, until a certain date, has been held to be unlawful.

The Bill does not legalise "Spot the Ball". A variety of "Spot the Ball" has been held to be unlawful. We do not attempt to legalise it in the Bill. We are concerned to save the charity or sporting organisation which has been dependent on the income which it has received from a pool competition, whereas, on the whole, the financial benefit of "Spot the Ball" was going to some form of commercial undertaking, often a newspaper. The question of what is a lawful competition with prizes raises all sorts of problems. It is part of the law in which it would be impossible to legislate piecemeal. Although representations were made to me I was not satisfied that a case had been made out on the grounds of financial dependence which justified an exceptional piece of legislation of this nature in the case of bodies running competitions based on "Spot the Ball". I accept all the arguments. For example, it is said that it is not harmful. Why, therefore, is it unlawful? It illustrates the real mess that competitions with prizes have got into, and it can only be sorted out by a fundamental review.

Finally, the hon. Gentleman asked on what basis I commend a Bill which deliberately sets out to preserve the status quo which is held to be unlawful but does not allow other charities or sporting bodies to enter the same field. My answer is simply that the Bill is based on expediency far more than on principle. It is necessary if the incomes of such bodies as the Spastics Society are to continue, and if the work done by the Warwickshire County Cricket Supporters Club, which, to my knowledge, helps numerous amateur clubs, is not to cease. If those incomes are not to be lost overnight, it is necessary to pass legislation of this kind. It is based on expediency in indemnifying what has been held to be an unlawful form of lottery. I concede at once that it is on the basis of expediency that I comemnd the Bill. I feel that that basis is the only one on which it can be justified.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:
Russell, Sir R. (Chairman)	Lipton, Mr.
Bagier, Mr.	Monks, Mrs.
Carlisle, Mr.	Morgan, Mr. Elystan
Fitch, Mr.	Rossi, Mr.
Haselhurst, Mr.	Soref, Mr.
Jones, Mr. Dan	Taylor, Mr. Frank
Latham, Mr.	Taylor, Mr. Robert
Leonard, Mr.	Wilkinson, Mr.

Mr. Dan Jones

Clause 2(2) says: The Board shall, so far as practicable, exercise their powers of granting licences under this Act so as to secure that each of the societies named or identified in a certificate under this Act will derive financial benefit from competitions for prizes authorised by a licence under this Act. Does that mean that the board has to take on responsibility for accountancy for these people?

Mr. Carlisle

I should like to consider that before we come to Clause 2 in Committee later. I think that what it means is that the board has a duty to exercise its power to grant licences, where it is satisfied that the societies named have been receiving previously sums of money, in order to secure that they continue to receive them. Clearly, it follows that the board is entitled to lay down a condition about the percentage of the overall money going into the pool which must go to the charity. Certainly the board can do that, and it will be responsible for scrutinising the accounts of the pools promoters and ensuring that they accord with the conditions.

Question put and agreed to.

Ordered, That the Chairman do now report to the House that the Committee recommend that the Pool Competitions Bill ought to be read a Second time.

Committee rose at eight minutes to Twelve o'clock.