Select Committee on Culture, Media and Sport Minutes of Evidence



Memorandum submitted by British Amusement Catering Trades Association (BACTA)

 

INTRODUCTION

  BACTA represents the manufacturers, operators, suppliers and owners of coin-operated gaming and amusement equipment, who collectively account for over 90 per cent of the gaming machines operated in the United Kingdom. It is the recognised voice of the gaming machine industry in its dealings with Government at all levels.

  BACTA welcomes this inquiry by the CMS Committee into gambling reform and the recently released paper by the DCMS. BACTA's submission will follow the Committee's terms of reference, bearing in mind however, that some of them are more relevant to the gaming machine industry than others.

WELCOMING THE GOVERNMENT'S PROPOSALS

  BACTA had many concerns over the recommendations of the Gambling Review Body, which presented its report on 17 July 2001. BACTA wishes to place on record its thanks to the Government for listening to many of those concerns and rejecting or modifying some, if not all, of the GRB recommendations which, if implemented, would have adversely affected the gaming machine industry.

  BACTA welcomes the intention to create a single regulator for the industry—the Gambling Commission—with enhanced powers. This should lead to more robust enforcement of the law against any illegal operations and remove current confusions. It should buttress the prevention and detection of any attempts at criminal infiltration of the industry, which the potentially liberalised gambling landscape might encourage.

  Deregulation of the gambling industry is long overdue and BACTA supports the Government's intention to carry it though. However, it should always be borne in mind that the 1968 Act, whilst appearing unnecessarily restrictive and inadaptable to technological and other changes, has served both the gambling industry and society very well. Therefore any changes of the magnitude contemplated by the DCMS (and this applies especially to the top end of the gambling market) need to be implemented cautiously and prudently to avoid an unacceptable rise in problem gambling, which may accompany any increases in hard gambling opportunities.

  The DCMS have acknowledged that there will be a need for on-going dialogue and consultation with the industry. Several specific issues will require interpretation and clarification and this will be sought during the course of consultation. It is not proposed to burden the Select Committee with these details.

EFFECTS OF THE GOVERNMENT'S PROPOSALS ON THE GAMING MACHINES INDUSTRY

  Many of the Gambling Review Body recommendations were originally negative and potentially damaging to the industry. However, the Government's proposals, appear to be more neutral, but are currently expressed in very general terms. There is no clear indication of the detail that will be required to achieve implementation and therefore without this, it is difficult to gauge their effect on the industry.

  The removal by the Government of the GRB threat to jackpot machines in members clubs (GRB Recommendation 70) is applauded.

  BACTA welcomes the DCMS's proposed new machine classification, which categorises seaside machines (Category D) as amusement only and thus non-gaming machines. The reality is that these low stake and prize penny falls, novelty, reel-based, redemption and crane machines are amusement machines which have been played and enjoyed by families for generations and BACTA welcomes the Government's recognition of this fact.

  However, the proposal to freeze the stakes and prizes of Category D machines at 10p/5 for the indefinite future (Paragraph 4.10 of DCMS Paper) is unreasonable. Common sense would dictate that some review mechanism should be put in place, if only to take account of future inflation. Not to do so is unfair and would put Category D machines at a disadvantage against competing leisure products which are not subject to such restrictions. BACTA proposes that the Gambling Commission should be empowered to periodically review the stakes and prizes of Category D machines.

  BACTA welcomes that the Government has agreed to keep crane machines within Category D. However, both cranes and redemption machines are not viable to operate on 10pstake/5prize. Currently most cranes operate on 25 or 30p stake/8 prize and most ticket redemption machines on 20p or 30p play. BACTA believes that the solution is to split Category D into cash prize machines which should be limited to 10p stake/5 prize and machines paying out only non-monetary prizes which should be allowed to retain their current stake and prize limits of 30p/8 non-monetary prize.

  BACTA would point out that there is no evidence whatsoever of any harm caused by these Category D machines and that the proposed legislation would have a severe and adverse impact on both seaside amusement operators and the manufactures that supply them. BACTA believes that both the Gaming Board and GamCare would be sympathetic to these arguments.

  BACTA has concerns over GRB Recommendation 23.74 which has been accepted by the DCMS. This recommendation could potentially affect those Category D machines which have multi-player positions such as penny falls and Derby Racers.

  The lifting of the Gambling Review Body's five year "sword of Damocles" (GRB Recommendation 60) which was causing uncertainty and affecting investment and the rejection of blanket banning powers for local authorities on all or any types of gambling (GRB Recommendation 43) are welcome.

  However, BACTA believes that grandfather (ie established) rights be granted to protect existing machine numbers in respect of current FEC, LGC and liquor licensed premises.

  The proposed level playing field by allowing Licensed Gaming Centres (who operate an over-18s only admission policy) to have up to four club jackpot (Category B) machines and a similar entitlement for Licensed Betting Offices, is likewise welcomed.

  BACTA submits that in respect of properly constituted and operated Licensed Gaming Areas being separate, clearly defined adult only areas within Family Entertainment Centres (effectively "premises within premises"), that such areas should be permitted a similar right to operate up to four Category B machines.

  In the case of pubs, BACTA believes that the numbers of machines granted as of right to licensed premises should be more than the two proposed by the Government. BACTA's original representation was for a minimum of four machines as of right. Well-validated reasons were produced to support this request. Initial research shows that by restricting the number to two machines this would result in some 11,000 applications for additional machines being made by pubs seeking to maintain their current machine numbers. This would create a significant, unnecessary and avoidable administrative burden on local authority licensing bodies and pub operators.

  BACTA suggests that this can be resolved by (a) The granting of "grandfather rights" for existing machine numbers in pubs and (b) increasing machine entitlement on the liquor license from two to three machines in line with the proposal for Clubs.

  BACTA whilst fully supporting the principle that gaming machines (Categories A,B and C) should not be played by children requests that clear guidance on the requirements for an "effectively controlled and clearly identified area" in respect of liquor-licensed premises (paragraph 4.16 of DCMS Paper), be agreed with the DCMS or its nominated representative as quickly as possible and implemented without delay. This will remove uncertainty due to lack of information.

  In addition to maintaining the Category B machines market for members clubs, new markets will be created with the entitlement to four Category B machines for both Licensed Gaming Centres and Licensed Betting Offices. The recent deregulation permitting mixtures of Categories B and C machines in bingo halls is already helpful in this respect.

  The effects on the market and the industry of the introduction of Category A (ie the new casino slot machines) is more problematic. Machines with unlimited stakes and prizes, linked jackpots etc are not currently manufactured in the UK. The specialised manufacturing expertise lies in the USA and Australia. BACTA is currently seeking to quantify the likely effects of Category A machines on UK manufacturing. Additionally, issues such as changing markets and the introduction of Category A machines which could lead to declines in numbers of Category B and C machines, need to be addressed. Player migration from relatively low pay-out Category C machines (maximum 25) to the potentially unlimited pay-out Category A ones is possible, as players are introduced to Category A machines in the new casino environments, which will offer a walk in no membership package covering all aspects of leisure, gambling and entertainment.

  Finally the Deregulation Order to modernise machine payment methods, supported by the Gambling Review Body and promised by the Government to be enacted by the end of this year, should be progressed immediately. It is a sensible measure that will benefit both the industry and its customers.

CONTRIBUTION OF CASINO DEVELOPMENT TO THE ECONOMY

  4.1  This is a complex subject where opinions differ and the evidence conflicts. Whilst the evidence indicates that casino development on the scale proposed in Blackpool can, in the short-term, regenerate run-down local economies, there is considerable concern as to the long-term effects on existing local businesses. Detailed research, including overseas studies, into cause and effect needs to be undertaken.

  In any event, full research into potential increased social and health costs should be considered, as well as into benefits to the local and national economies in terms of employment and economic contribution. No legislation should be introduced until this cost/benefit analysis has been carried out by a reputable and independent resource. It is recommended that members of the Select Committee visit Las Vegas, Atlantic City and Australia.

PREVENTION OF CRIMINAL INFILTRATION OF GAMBLING

  As stated in paragraph 2.2, BACTA welcomes the proposed enhanced powers of the Gambling Commission to prevent criminal infiltration of gambling. Very strict licensing and permit controls should form the framework for an equally rigorous policing system to prevent criminal elements from becoming the scourge of this industry that they were in the past.

  Certification should cover the manufacture and supply of all categories of machines, including Category D machines, because it is possible that rogue elements could interfere with and supply them to illegal sites.

SOCIAL IMPACT OF THE CHANGES PROPOSED AND SAFEGUARDING OF THE YOUNG AND OTHERWISE VULNERABLE

  The current system works well and no changes should be made without similar detailed research to that recommended for casinos.

  Whilst much concern is being rightly centred on children, there is little or no evidence of harm being caused to them within the existing regulatory framework.

  However, there is considerable concern that vulnerable adults will be subject to greater pressures because of increased hard gambling opportunities. This is recognised in the Budd report. It should be noted that the 2000 Gambling Prevalence Study showed on international comparisons, that the current gambling regime in the UK produced one of the lowest rates of problem gambling in the world.

  However, if the Government's proposals are implemented, there will be major changes in the offering of gambling opportunities. The "gaming shed" concept (where all types of gambling from the most trivial to the hardest, plus drink, food and live entertainment are provided) could adversely affect the traditional British leisure offerings and these changes could lead to a rise in problem gambling as stated in the Budd report.

  Clearly the recently established industry-funded Gambling Charitable Trust will help in researching problem gambling and providing problem gamblers with help and advice.

  In respect of children, BACTA has developed and implemented on a voluntary basis, a well-recognised and respected Code of Practise to protect young people from gaming machines. It is suggested that this Code be adopted as legally binding. BACTA believes that independent research into behavioural tendencies and recreational activities relating to young people should be undertaken, as part of the general research that will be commissioned by the Gambling Industry Charitable Trust. However, to be of value, such research needs to address a wide range of activities, which naturally occur as part of growing up such as tobacco, alcohol, drugs etc. Consideration should also be taken of the value of controlled family supervised exposure, such as occurs in respect of alcohol on the Continent.

POTENTIAL IMPACT ON THE NATIONAL LOTTERY OF INCREASED COMPETITION FOLLOWING THE DEREGULATION OF CASIONS, BINGO, POOL COMPETITIONS AND SOCIETY LOTTERIES

  The gaming machines industry accepts the public attraction of the National Lottery, though maintains that competitive advantage is skewed greatly in the Lottery's favour. This may change a little—eg the potential freeing up of current restrictions on the advertising of gambling. However, it seems likely that the Lottery will continue to enjoy a privileged position vis-a"-vis the rest of the gambling industry. For example it was deliberately excluded from the remit of the Gambling Review Body and it will not be regulated by the Gambling Commission.

  Although independent attitudinal research is needed, informed opinion suggests that the National Lottery is the triumph of hope over expectation that lives will be changed by "a big win", with smaller prizes being merely a marketing incentive to continue playing. Gambling is indulged in for many different reasons. Properly directed research is needed to indicate motivational and social impact, acknowledging that such research can determine whether the incidence of problem gambling is likely to be greater than the generally held view that the impact caused by the proposals would be minimal. It is also crucial that any such research is properly benchmarked against existing evidence.

  7.3  In any event, the commercial interest holding the National Lottery franchise at any given time should contribute to the Gambling Industry Charitable Trust.

CONCLUSION (s)

  No legislation should be introduced until full and meaningful research has been undertaken and studied, and progress should follow in the prudent and measured manner indicated by the proposals.

3 May 2002

 


 
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