Select Committee on Culture, Media and Sport Minutes of Evidence


Examination of Witnesses (Questions 580 - 599)

THURSDAY 18 JANUARY 2001

LORD BURNS, MS HARRIET SPICER AND MR MARK HARRIS

  580. You cannot revoke it?
  (Mr Harris) Ultimately we can.

  581. In theory you can but in practice you cannot.
  (Lord Burns) I would rather not speculate about exactly how we would face those circumstances. There is a clear programme that is set down and there is a set of penalties. That would be the case either with a new operator or with the existing operator. We have no reason to believe that the programme will not be carried out on time.

  582. If the existing operator has a need, he can do this more easily, if you like?
  (Lord Burns) Yes. It should be a more straight forward process because there are fewer things to be done and, furthermore, they can do it on an ongoing basis.

  583. What I am trying to suggest is that regulation of a monopoly is very difficult, is it not?
  (Lord Burns) Regulation of a monopoly is always very difficult in whatever area one looks, which is why regulators are always searching for competition where they can possibly generate it.

  584. One of the problems that a lot of the state lotteries have in the United States is keeping the income level up and sustaining it with the existing games. Therefore, the pressure is always on to introduce new games. One of the problems with that again, of course—and these new games may shift into harder gaming—is both in terms of not being able to supervise them in terms of age and also in terms of creating a situation where people become compulsive gamblers?
  (Lord Burns) Yes.

  585. How do you intend ensuring that this does not happen as Camelot comes to you and says, "If you want to keep it up, you are going to have to introduce new games"?
  (Lord Burns) I think it is very important to monitor very closely what the playing habits are. If there are problems of under-age playing or of excessive play, a very important part of the role of the Commission is to be looking at that on an ongoing basis. These are very much issues that are in mind in terms of licensing new games.
  (Mr Harris) The Commission licenses each game that is brought forward to it. Part of that licensing process is to require the operator to have done research to identify what the likely impact of that game is. The Commission then monitors the impact of the game, if it is licensed. It is only licensed when the Commission is satisfied that it will not encourage excessive or under-age playing. The Commission also carries out other research, both in terms of keeping in touch with how games operate in foreign jurisdictions and through its own research programme, to identify how much people are playing generally across the piece and also to look at specific areas, such as under-16s.

  586. New technology will allow what one might term machine-operated games played by possibly a coin into a slot in shops or stores where they already have an existing terminal. Would you accept that form of game?
  (Mr Harris) I think you are referring to video lottery terminals. The Commission made clear in the invitation to apply that it did not expect to see anyone bidding for this seven-year licence coming up with that sort of game and that it did not believe that that sort of game was appropriate to be introduced over the next seven years.

  587. What if Camelot say, "Sorry, but the sales are dropping off. Unless we introduce this sort of game, then we are not going to be able to sustain the levels of income that this entails"?
  (Mr Harris) The Commission would then have to make a judgment about whether those games could be introduced in a way that enabled the Commission to be certain that there were adequate controls over those particular games when being introduced in this country. The Commission's fundamental responsibility to protect against under-age playing and excessive playing would have to be met. It is quite clear from the legislation that those are overriding responsibilities. The Commission is not in a position of saying that they can be much less met because returns are down.

  588. Lastly, one of the interesting things we found in the States was that in all the lottery games, each of the states we saw had along the bottom of the ticket a warning that said, "If you think you have a gambling problem, or you think you have a friend with a gambling problem, here is a number you should contact". Would you be prepared to introduce that sort of thing into the Lottery?
  (Mr Harris) I think if the Commission was concerned that there was excessive play, it would look for more of that. The Commission does support GamCare. There are within the playing codes, I believe, references so that players ringing the help-line to Camelot and things like that would be referred on if they felt they had a problem.

  589. Do you actually do any research? Are you financing any research into compulsive gambling with the Lottery?
  (Mr Harris) The Commission has its own research programmes. It has also contributed towards the major study that was carried out by GamCare last year, which looked at gambling as a whole. The National Lottery was very much part of that study. That looked at patterns of play, how people play and the proportions of excessive play, addicted play, and found that the National Lottery was very low in those regards. Very low numbers of excessive play were reported. That was from a very large sample.

Mrs Organ

  590. You have already explained, and we certainly had the experience when we went to America, that the biggest problems whenever there is a hand-over are in the loss of sales, in organisations and in the view of the public. We are not really going to have a hand-over from one operator to another but there is going to be a massive change in the technology and the kinds of products that they are going to be marketing. Are you now confident that there will not be any operational difficulties in the transfer to the new licence? How do you feel that the sales and the income that would go to good causes would be affected over the period of the seven years?
  (Lord Burns) We said in our statement of reasons that we are satisfied that the changes can be put in place and we think that they will happen to the time scale. The introduction of new games will be done on a phased basis. I do not think that the people who are playing the Lottery are going to see any major change in terms of what it looks like from their point of view. It is a similar game which will be played. The odds will remain the same. Their numbers can remain the same. One is putting in place more updated and better terminals. Obviously there will be a question of re-launches and the whole marketing side of it, which will be a matter for Camelot. We are not anticipating any major adverse effect on sales during this period of transition.

  591. From the other point of view, if there is going to be improved technology and the phased introduction of new products into this, what is your forecast for the projection of both sales and income from the Lottery over the seven-year period from Camelot?
  (Lord Burns) Our interpretation of what has been happening recently is that basically the level of sales has settled down. It has been running at something like £5 billion a year. If you look at any 12-month period during the first licence period, it has been anywhere between £4.5 billion and £5.5. billion a year. We took it that that was probably the range at which we should be looking. I have no reason at this stage to speculate about any major shift from that type of level. As we see, individual games sometimes have the pattern to deteriorate in terms of levels of sales, and then we have the gradual addition of new games, which has kept the overall level of sales running at about £5 billion. My best guess at this stage is that over the course of the next licence period one will be looking at sales of maybe £35 billion.

  592. But when we went to the States, and I am sure that when Ms Spicer went on her visit, we found that the biggest problem that all the lotteries that we met had was that there is a rise in the lotteries they have introduced, then there is a platforming out, people get bored, and then there is a fall-off. Many of them were genuinely disturbed about the level of fall-off. It is perceived to be an older persons's game; it is not as sexy and exciting as other forms of gambling. So there is this problem and even the introduction of scratchcards cannot really tip the balance, unless you go for the harder game that Mr Maxton was talking about. What is your view about how, over the seven-year period, because we are now into the second period of the Lottery, the British public will react?
  (Lord Burns) My interpretation, from what I have seen so far, is the same as yours. For any individual game there is a tendency for the level of sales to fall off, for whatever reason, whether it is to do with familiarity or the fact that people gradually begin to realise that the odds really are quite long in terms of winning the Lottery. On the other hand, in this country the Lottery is played by a very high percentage of the population in terms of quite small average sums of money. There is scope for individuals to play a bit more without running into the problems of hard gambling that you mention. Clearly for all lottery operators it is an ongoing challenge as to how you sustain interest and how you refresh this on a basis that does enable you to achieve an ongoing level of sales. You want to avoid introducing too many things too quickly, as this becomes confusing to people and they do not quite understand it. I think people probably have the same problems with the changes of games as they have sometimes with their video controls, which is that they gradually become more and more out of reach of understanding what all the functions are. That is a question of balance and it is an issue which the operator has to face. We have then got to respond to that in terms of the proposals that they bring forward.
  (Ms Spicer) To add to that, there is one distinct difference between our approach to this and that of the States, in that they are not welcoming the Internet in any way, shape or form. Their legislation is against it.

  593. We are looking quizzical only because when we went to the presentations of both technical operators they were very much on board about the opportunities.
  (Ms Spicer) They are, but not in the States. You saw the UWIN people from GTech. That is not the precise point I was going to make. That is one of the avenues that we have and that we welcome for increasing sales, as long as they are carefully controlled and monitored using best practice from the jurisdictions in which Internet play already exists, Austria being one place. That is a way of trying to achieve increased sales, without excessive play or hard gambling.

  594. They know the odds, they are not suckers, and they know that the likelihood that it could be you is pretty slim. How much do you think the public play the Lottery because they do feel that this money is going to the regional theatre or the identifiable item that they can grab hold of because it is coming from the Lottery money in its disposable forms? How much do you think people are playing the Lottery because they do think it is going into something useful; it might go into the cancer scanner or whatever?
  (Lord Burns) My interpretation of the evidence I have seen on that is that people who play the Lottery think this is a small investment in a dream. That basically is what drives them and they regard their investment as being relatively modest in relation to their income as a whole, but there is the possibility that they will be able to change their lifestyle very considerably. This is the dream. That is simply my reading on what I have seen in terms of the research that has been done. It suggests to me that is the dominant factor, rather than what is happening to the money that they are spending.

  595. Lastly, are you intending to continue the arrangement with the BBC for the draw? When we went to the States there were certainly different arrangements on local TV stations about who paid and how for the slot.
  (Mr Harris) The arrangements for televising the draw are ones that the two bidders put forward in their bids.

  596. Were they the same?
  (Mr Harris) No, they were different. I believe Camelot is going to look at its whole portfolio of games and how those can best be televised. It will make a judgment based on the return that it can get from television rights, because that is the return that goes to good causes, against the need for draw shows to be accessible, so that people can watch the draw, which will therefore influence sales.

  597. Do you think the financial arrangements that we have at present with the BBC for the draw are acceptable?
  (Lord Burns) Yes.

  598. Even though the BBC is getting licence payers' money?
  (Lord Burns) Presumably the BBC has come to the view that this is in their interests as the suppliers of television programmes and Camelot have come to the view that this is a good deal for good causes. My observation is that the Lottery continues to be a very high profile activity. The fact that it is on television and is part of the Saturday night schedule in my judgment adds to that.

  599. Camelot at present has a restriction as to its outlets and which retailers or local post offices can have it. I represent a rural constituency that has lots of little retailers and post offices that would love to have the opportunity of an outlet through Camelot because of the footfall that would come into their village shop. Many are very aggrieved at what they would consider to be the high level threshold. In the next licence period is there going to be any adjustment to that so that we can have the opportunity for rural retailers and post offices in particular to have an outlet?
  (Mr Harris) Ultimately, the number of outlets is a commercial decision for the operator to put forward.


 
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