Select Committee on Deregulation Fourth Report


III

PROPOSAL FOR THE DEREGULATION (BINGO AND OTHER GAMING) ORDER 2001

Introduction

43. On 26 March 2001 the Government laid before Parliament the proposal for the Deregulation (Bingo and Other Gaming) Order 2001 in the form of a draft of the Order and an Explanatory Document from the Home Office[29].

44. The proposed Deregulation Order would—

      (i)  amend the Gaming Act 1968 ("the 1968 Act") to remove the requirement for licensed bingo clubs to give at least 14 days notice to the licensing authority of changes in their charges;

      (ii)  amend the 1968 Act to allow the licensing authority to permit a mix of two kinds of gaming machines ("jackpot" machines and "amusement with prizes" machines) on the same bingo club premises; and

      (iii)  amend the Gaming (Bingo) Act 1985 ("the 1985 Act") to allow a greater number of individual prizes (although not an increase in the total prize money) when "multiple bingo" is played in linked bingo clubs in different locations.

The first proposed change would also apply to card room charges at licensed casinos.

45. The House has instructed us to examine the proposal against nine criteria and then, in the light of that examination, to report whether the Government should proceed, whether amendments should be made, or whether the order-making power should not be used[30].

We now report on the proposals against the criteria set out in Standing Order No. 141(5)(A) as follows:

Do the proposals appear to make an inappropriate use of delegated legislation?

46. This is one of the latest in a series of proposals for changes in the law relating to betting and gaming which have been initiated by the Home Office since the deregulation procedure was established by the Deregulation and Contracting Out Act 1994[31]. All three changes proposed to be made in the draft Order are in themselves relatively minor, and individually they appear to represent no major shift in central policy towards betting and gaming.

47. In assessing the "appropriateness" of a deregulation proposal we have in the past avoided laying down hard and fast rules (and no precise definition of the term is provided either in the Act itself or in Ministerial pronouncements on the original Bill); instead we have sought to make a pragmatic judgement taking account in each case of the proposal's significance, contentiousness and complexity[32]. None of the three changes (separately, or taken together) is of sufficient significance (in the sense of making major alterations to the law of gambling), contentiousness (in the sense of arousing impassioned public debate) or complexity to warrant a recommendation that it should be pursued by means of primary legislation, and to that extent all three therefore pass the test.

48. However, despite the overwhelming (and unsurprising) endorsement of the proposed changes by the bingo industry itself, there is evidently some disquiet amongst others about the cumulative effects of the series of changes already made by this route, and about the possible resulting distortion to competition within the betting and gaming industry as a whole of decisions introduced in this piecemeal manner. Both the Betting Office Licensees Association (BOLA) and the Brewers and Licensed Retailers Association (BLRA), for example, drew attention to their wish for similar relaxation and deregulation of the provision of gaming machines in their members' premises, and their disappointment that while their own proposals had been left "in abeyance" pending the outcome of the work of the Gambling Review Body those favourable to the bingo industry were already being progressed by the deregulation route. BOLA regarded their own proposals as "no more significant than those under discussion", the BLRA expressed concern that the pub industry "should be treated equitably with other comparable sectors" and should not be "further disadvantaged in comparison to bingo halls", and the National Lottery operator (Camelot) recorded its concern "about any further moves to deregulate some sectors of the gaming industry, whilst not addressing inconsistencies in other gaming sectors".

49. We have to admit to some disquiet ourselves about the determination of the Home Office to pursue further individual changes in gambling legislation while a full-scale review of the industry as a whole is close to completion[33], both for the largely commercial reasons adduced above by other sectors of the industry and for other reasons:

  • First, there is clearly a risk that a series of small changes, none of them of great significance when standing alone, may taken together result in alterations of a more significant and wide-ranging character which would—if taken together—be more contentious and the subject of much greater public debate;

  • Second, the process of amending gambling legislation in small bites is likely ultimately to add to the complexity of the regulatory regime even if carried out in the name of deregulation and the easing of burdens; and

  • Third, it is not unreasonable to question the value and purpose of establishing a wide- ranging review of an industry's regulatory regime if its conclusions are to be routinely anticipated or pre-empted by continuing legislative changes while it is in progress: it would seem to us that there must be strong arguments for suspending legislative activity in the area concerned unless there are very clear grounds of urgency. Moreover, if the industry review were to lead to more wide-ranging legislative changes, as seems not improbable, the industry itself may come to regret — and, perhaps, complain about — the frequency with which its regulatory framework has been tampered with: it is, after all, a regular complaint of industry not only that it is "over-regulated", but also that the regulatory regime is in constant flux, creating a "burden" of instability on those affected.

50. In view of the fact that further piecemeal changes in this sector still appear to be envisaged[34], we asked the Home Office to explain why there was a need for the proposals in the current draft Order to go ahead at this time. The Home Office replied[35] that they would not "cut across the work of the review", that they would result in "immediate benefits to the bingo industry", and therefore they "need not await the enactment of comprehensive legislation". Although we accept that the first of the proposals does remove a genuine administrative burden, we are not entirely convinced by the argument: urgency, at least, does not seem to have been demonstrated. And while the Home Office fairly argue that the first proposal will simplify the law, and the third proposal is a very simple amendment, they concede that the second and most substantial change (regarding the mix of gaming machines) involves changes to the statute book which "are already difficult to follow and ....this change adds a further layer of complexity to the statute book". They add that "While the statute book itself may be more difficult to follow, the overall effect of the law will not be".

51. We conclude that the three changes set out in the proposal can in themselves be regarded as suitable to be proceeded with as delegated legislation. However, we give notice to Ministers that any further proposals for Orders under the more far-reaching powers of the Regulatory Reform Act will be scrutinised by us with particular attention to the possibility that the cumulative effect of further changes is such as to represent a "substantial" or "manifestly controversial"[36] change in the law which would be better proceeded with by way of primary legislation; and we recommend that any successor committee should adopt the same critical approach. We also intend (and we recommend accordingly to our successor committee) to invite the relevant Home Office Minister to attend later in the summer to explain the Department's future strategy towards the use of the new regulatory reform procedure.

Do the proposals remove or reduce a burden or the authorisation or requirement of a burden?

52. Proposal (i): notice of changes in charges: Section 14 of the Gaming Act 1968 requires casinos, in relation to their card rooms, and bingo clubs to give notice of changes to their charges to the licensing justices in England and Wales, and to local authority licensing boards in Scotland, 14 days in advance. The licensing authorities have no power to delay or question the changes. The Home Office argues that the requirement to notify serves no useful purpose. Casinos and bingo clubs are put to the expense of notifying changes to charges and licensing authorities are also faced with the burden of dealing with the correspondence. The mere notification of changes to charges does not provide any worthwhile information to assist licensing authorities in their regulation of casinos and bingo clubs[37].

53. The Home Office expects that the abolition of the requirement to notify changes to charges would not only permit bingo clubs and casinos to adjust their charges more quickly and at any time, but would also permit them to respond more efficiently to market conditions. The bingo industry estimates a total annual cost saving directly attributable to this change of something like £50,000; savings to casinos (who generally do not charge for use of their card rooms) would be minimal; but the regulatory authorities would also benefit from being relieved of the task of dealing with notification correspondence[38].

54. Although the overall administrative savings consequent upon this provision would appear to be quite small, we are persuaded that the existing requirement for the mere notification of charges constitutes an unnecessary and unproductive obligation on bingo clubs and casinos. We therefore conclude that the first part of the proposal would remove a burden as defined in section 1(5)(b) of the Deregulation and Contracting Out Act 1994.

55. Proposal (ii): Allowing a mix of gaming machines: The Gaming Act 1968 permits the installation of two types of gaming machines in bingo clubs. The first type, amusement-with -prizes gaming machines (or "AWP" machines), pay a maximum prize of £15 for a 30p stake whereas the second type, "jackpot" gaming machines, pay a maximum prize of £500 for a 50p stake. Bingo clubs are restricted to either a maximum of four jackpot gaming machines, or the number of AWP gaming machines decided by the licensing authorities. The proposal would permit clubs to combine the two types of gaming machines in order to increase the choice given to customers. However, the maximum number of jackpot machines would continue to be restricted to four in any one premises, and approval of the licensing authorities to the number of AWP machines would still be required[39].

56. The Department contends that the present limitation under the 1968 Act restricts the manner in which bingo clubs can best use the space in their clubs for the benefit of their members. Customers would also be offered a wider choice by the provision of different types of gaming machines. The industry's own estimate is that any club taking advantage of the proposed relaxation should see an (average) increase in annual income of £10,000 (which would amount to £7.3 million for the industry as a whole)[40]: so there can be little doubt that the present rules constitute a restriction on the bingo industry's current trade, and therefore a burden. We accordingly agree that the second part of the proposal would also remove a burden as defined by the 1994 Act. It is however evident that if the bingo industry is to increase its takings to the extent estimated, the cost will fall on somebody else, who may be less able to afford it. We return to this issue in our discussion below of "necessary protection".

57. Proposal (iii): more prizes for "multiple bingo": Multiple bingo, as governed by section 1 of the Gaming (Bingo) Act 1985, allows bingo players in clubs throughout the country to play simultaneously to a single set of computer-generated numbers. However, clubs are currently prevented from offering more than one national prize per game, more than one regional prize per region per game and more than one house prize in each club when a game of multiple bingo is being played. The Department argues that the restraints on the number of multiple bingo prizes curtails the ability of bingo clubs to satisfy customer demand, and to that extent constitutes a burden. The proposal would simply amend the existing provision to allow for "prizes" (of an unspecified number) at each level of the multiple game, but would not allow any expansion in the total prize pool, nor compromise the principle (set out in section 2(2) of the 1985 Act) that the total prize fund must be drawn from the players' stakes (and therefore may not be augmented —for example by a commercial sponsor, or by the bingo club operators). In permitting more prizes to be offered the Department suggests that the game would be made more enjoyable for players.

58. The Department's Regulatory Impact Assessment suggests that there will be no administrative or other cost savings directly as a result of the implementation of this small change. Based on industry estimates, a slight increase in ticket sales is likely to be generated, of the order of 0.25% (about 650,000 tickets generating up to £250,000 in additional sales). We accept that the restriction on the number of national prizes constitutes a small burden as defined by the Act.

Do the proposals continue any necessary protection?

59. Proposal (i): notice of changes in charges: According to the Department, the proposal does not involve any reduction in necessary protection since notification is a mere bureaucratic formality. Existing controls over bingo clubs and casinos, such as the Gaming Board's access to the financial records of clubs, are not affected by the proposal, and none of the consultees directly challenged this assertion. However, we felt that before accepting that this burden really did amount to nothing but unnecessary red tape, we should seek some further explanation from the Home Office of the original purpose of the requirement for notification contained in section 14(4)(b) of the 1968 Act. The Home Office reply concedes, as we had suspected, that the original provision appeared to be intended "partly by way of information .... partly to facilitate enforcement and to inhibit too frequent alterations". They point out, however, that subsequent Regulations (most recently the Gaming Clubs (Hours and Charges) (Amendment) Regulations 2000) not only require the prominent display of all charges but also lay down maximum fees. Moreover, if a club were to exceed the latter limits "they would quickly become apparent on routine inspection by the Gaming Board", who would have sufficient powers to require compliance. This is an entirely acceptable explanation, and we therefore agree that this part of the proposal will not remove any necessary protection.

60. Proposal (ii): Allowing a mix of gaming machines: The Home Office points out that both kinds of gaming machines have been operated in bingo clubs (although not both kinds on the same premises) for many years without causing significant problems, and maintains that a mix of machine types should not give rise to additional problems. Necessary protection would be maintained in the continued restriction of the number of jackpot machines to four and the requirement that the number of AWP machines should be determined by the licensing authorities. The Department also states that the Code of Conduct agreed between the Gaming Board and the Bingo Association incorporates a clause that where under-18s are permitted in the club, they should not be allowed to use any gaming machines.

61. In view of GamCare's emphasis on the latter point (they recognised the logic of allowing a mix of machines, but drew attention to recent evidence of negligence on the part of some clubs in failing to exclude children from gambling areas) we expressed our own concern to the Home Office about the need to retain proper protection for children and young people in bingo clubs. The reply from the Home Office[41] provided more information about the Code of Conduct, which goes beyond the law in preventing under-18s from playing machines in clubs to which they are legally admitted[42]. We were re-assured to learn that although the Bingo Association (the co-signatory of the Code) represents only about 75% of clubs, the Code of Conduct itself applies to non-member clubs also, and that Gaming Board inspectors have reported no breaches of the rule since the Code came into force. However, our own concern extends not only to children and young people, but also to the elderly and other vulnerable groups who may, as the Police Federation noted, "be tempted to gamble beyond their, in some cases, meagre means". We believe that the more widespread provision of the higher-value "jackpot" machine may give an added incentive to such groups to gamble, and no additional protection appears to have been provided (as in the case of under-18s) to discourage that. In the light of this we are not convinced that necessary protection is maintained in respect of the second part of the current proposal.

62. Proposal (iii): more prizes for "multiple bingo": The Home Office asserts that necessary protection is maintained by the preservation of existing limits on the size of the total prize pool. Clubs could only fund prizes in games where stakes were laid by players. Thus while there may be a rise in the number of prizes, the value of individual prizes would fall. We have heard no arguments against this contention, and we accept that this part of the proposal is a small measure under which existing necessary protection is likely to be unaffected.

Have the proposals been the subject of, and take appropriate account of, adequate consultation?

63. The consultation document was issued in November 2000 to a relatively small number of organisations, and we noted that these did not include organisations specifically concerned with the welfare of children and young persons, and the elderly, and we were concerned lest that might have distorted the small, but almost entirely supportive, response. We are grateful for the clarification in the Department's subsequent reply[43], and accept that a number of the organisations consulted have interest in these areas.

64. Apart from the concern expressed by a few of the consultees about the need for full enforcement of the new Code of Conduct (referred to above), none of those who responded challenged the logic of the proposals. As discussed earlier, in respect of the appropriateness of the draft Order as a deregulation measure[44], the main dissenting voices came from those in other sectors in the betting industry concerned with the allegedly favourable treatment being offered to the bingo industry and the need for changes of this kind to be considered in the wider context of the industry as a whole. However, we remain unhappy about the limited nature of the consultation, and in particular the failure to consult organisations specifically concerned with the welfare of children, the elderly and other vulnerable groups, or representatives of a number of non-Christian faiths.

Do the proposals impose a charge on the public revenues or contain provisions requiring payments to be made to the Exchequer or any government department or to any local or public authority in consideration of any license or consent or of any services to be rendered, or prescribe the amount of any such charge or payment?

Do the proposals purport to have retrospective effect?

Do the proposals give rise to doubts whether they are ultra vires?

Do the proposals require elucidation or appear to be defectively drafted?

Do the proposals appear to be incompatible with any obligation arising from membership of the European Union?

65. We have no concerns to raise under any of these headings.

Extent

66. The three parts of the proposal extend to England, Wales and Scotland, but not to Northern Ireland.

Report Under Standing Order No. 141

67. In view of our concerns about the need for protection for vulnerable groups and about the limited scope of the Home Office consultation in this regard, we have concluded that the proposal for the Deregulation (Bingo and Other Gaming) Order 2001 should be amended by the deletion of the second part of the proposal (which would allow a mix of two kinds of gaming machines on the same club premises) before a draft Order is laid before the House.


29  Copies are available to Members from the Vote Office and to members of the public from the Home Office. Back

30  Standing Order No. 141 (the text of which is set out at the front of this volume). Back

31  Others include the Deregulation (Gaming Machines & Betting Office Facilities) Order 1996, the Deregulation (Betting Licensing) Order 1996, the Deregulation (Casinos) Order 1997, the [draft] Deregulation (Casinos & Bingo Clubs: Debit Cards) Order 1997, the Deregulation (Football Pools) Order 1997, the Deregulation (Betting and Gaming Advertising) Order 1997, and the Deregulation (Casinos) Order 1999. Back

32   Sixth Report, Session 1994-95 (HC 817), paras 7 to 9. Back

33   Sir Alan Budd's report is expected to go to the Home Secretary "within the next few weeks", according to the Home Office [Appendix 3]. Back

34  At almost the same time as the current proposal was laid before Parliament the Home Office launched yet another consultation, within the wider scope of the Regulatory Reform Act, on proposals to liberalise methods of payment for playing gaming machines, proposals which in themselves are likely to arouse some dissent (Gaming Machines: Methods of Payment (Home Office Consultation Paper, March 2001)). Back

35   Appendix 3. Back

36   Procedure Committee, Fourth Report (Parliamentary Scrutiny of Deregulation Orders), Session 1993-94, Q 16 (Rt Hon Tony Newton MP, Lord President of the Council): Mr Newton went on to confirm that "we are not seeking to make large, controversial changes in important bits of primary legislation by this method". Back

37   Explanatory Document, para 6. Back

38   Regulatory Impact Assessment (attached to the Explanatory Document), paras 12-16. Back

39   Explanatory Document, para 7. Back

40   Regulatory Impact Assessment (attached to the Explanatory Document), paras 17-19. Back

41   Appendix 3.  Back

42   Explanatory Document, para 3.15. Back

43   Loc sitBack

44   Paras 46-51 above. Back


 
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