Select Committee on Culture, Media and Sport Minutes of Evidence



Memorandum submitted by the British Casino Association (BCA)

 

BACKGROUND

  The British Casino Association (BCA) welcomes the Government's Response to the Budd report. We support the Government's vision of a modern regulatory system, which will maintain the current high standards of honesty and integrity and offer protection for children and vulnerable adults.

  The British Casino Association (BCA) is a trade association for the casino industry. The operators of 112 (over 90 per cent) of the licensed casinos in Great Britain are members of the Association. The BCA does not look after the interests of the on-line casino sector.

  The BCA appreciates this opportunity to make a written submission to the Culture Media and Sport Select Committee.

  This submission is set out under the headings of the five subjects specified by the Committee. A summary of the Submission is set out below.

A SUMMARY OF THE SUBMISSION

Impact on the users of Machines:

The currently authorised machines are so unattractive to our customers that they contribute only 1 per cent of our turnover. International Standard Machines will be much more attractive. They can incorporate programmes to reduce problem gambling, and also to provide the Regulator with on-line access to ensure continued probity.

Economic Contribution:

  We agree that the industry will grow by at least 50 per cent in the five years after a new Act, but we are concerned that it could be 2007 before the Customer, the Treasury and the Industry see any significant benefit from the proposed changes. We believe that earlier deregulation of machines, advertising, and the membership requirement would accelerate those benefits without prejudicing the Government's overall objectives. The sensible legal proposals need to be supported by a sensible taxation framework if the full benefits of employment and economic regeneration are to be achieved.

Preventing criminal infiltration:

  The Government's Response states that British Casinos "are free from money laundering and other financial crime". It is very much in the Operators' commercial interests that it should remain so.

Social Impact:

  We support the prohibition of under 18 year olds and the observance of a code of social responsibility as a licence condition. The BCA has been instrumental in establishing the Gambling Industry Charitable Trust, and will continue to show its commitment to the highest standards of social responsibility.

National Lottery:

  We agree with the Government's decisions.

 

THE FULL SUBMISSION

  The Impact of the proposals on the suppliers, lessors and the users of gaming machines

  The BCA does not have any suppliers or lessors of gaming machines in its membership.

  Users—The BCA considers that the introduction of modern gaming machines will have a number of beneficial impacts:

    (a)  we shall be able to meet our customer's wishes to play on modern machines, which are already available in many foreign jurisdictions. Those currently approved, are so unattractive to players that they contribute only about 1 per cent of an average casino's turnover.

    (b)  these international standard machines can accept various payment methods, and are much more technically advanced and flexible in their product offerings. As a result they are more attractive to players, and easier to use.

    (c)  modern machines can incorporate programmes to reduce the risk of problem gambling, and provide abundant accurate information upon which research can be based into the social impact of increased numbers of gaming machines.

    (d)  machines of this type will be much easier for the Regulator to monitor since on-line access can be provided to immediate real time data, which would reduce the need for site visits.

THE POTENTIAL ECONOMIC CONTRIBUTION OF CASINO DEVELOPMENT TO THE ECONOMY, BOTH NATIONALLY AND LOCALLY

  The casino industry is an important part of the British leisure industry, employing over 11,500 people, and has a turnover equivalent to the cinema industry. British casinos received over 11 million visits last year. 97.5 per cent of the sums staked by players were paid out as winnings, leaving British casinos with a gross gaming yield (sums staked less winnings paid out) of 533 million in 2000-01 (source Gaming Board Annual Report for 2000-01). Twenty-five per cent of that total (129.5 million) was paid to the Government in gaming duty.

  We agree with the Government's forecast that the gambling industry will grow by at least 50 per cent in the five years following the proposed legislation coming into effect.

  We are sceptical about the indicated timetable for this growth in expenditure. The Government's Response forecasts a growth in net expenditure on gambling of at least 500 million per annum for five years from 2004-05. Ministers have said that the legislation is unlikely to reach Parliament until the 2003-04 session. If so it will not become law before 2004 and is unlikely to be brought into force until 2005, after the necessary administrative arrangements have been put into place. Operators will then need to obtain planning permission and invest in property and equipment. That means it could be 2007 before the customers, HM Treasury and the operators see any significant benefit from this proposed change.

  The BCA believes that a number of the proposed changes could be achieved by earlier deregulation, in addition to the Government's proposal to allow live entertainment. They would not prejudice the Government's overall objectives, but they would accelerate the benefits to the economy and the Treasury:

    —  The removal of the restriction on advertising, would eliminate completely the considerable amount of time spent at present by Gaming Board Inspectors checking that current activities do not constitute advertising.

    —  The introduction of modern gaming machines, could also be achieved by deregulation. If the number of machines permitted per casino is increased from 10 with unlimited stakes and prizes, as an interim measure, it would enable early arrangements to be put in place to test their affect on the level of problem gambling, and it would also enable the Regulator to test out on-line monitoring arrangements.

    —  The removal of the membership requirement and the removal of the requirement for a new member to wait 24 hours before entry, could also both be achieved by deregulation.

  The Government's Response says that the proposals would create an internationally competitive gambling industry (p 70). That is unlikely to happen for the casino sector within the present taxation framework. There has been plenty of publicity about Las Vegas coming to Britain, but Britain will not be internationally competitive if some operators are still required to pay up to 40 per cent marginal duty on their gross gaming yield. It would be more attractive to run an off-shore on-line casino and pay no duty at all, or stay in Las Vegas where the duty rate is only 6.25 per cent. For these reasons, the BCA invites the Committee to urge the Government to embark upon a review of the current taxation framework to maximise, both for the Treasury and the Industry, the opportunities presented by the proposed new legal framework, and to make the British casino industry truly competitive internationally.

  Experience abroad has shown that if the Government's sensible legal framework is supported by a sensible taxation framework, they could together form an effective vehicle for economic regeneration and employment particularly in depressed areas.

  We accept the Government's intention to transfer local licensing functions to local authorities, but we are concerned that this could result in widely different approaches being adopted by individual Councils. That would seriously undermine the economic potential of the Government's proposals. We therefore attach great importance to the Government's intention to draw up clear statutory criteria against which all premises licensing decisions should be made.

THE PREVENTION OF CRIMINAL INFILTRATION OF GAMBLING

  4.1  The BCA welcomes the Government's commitment to keep gambling crime free. It is very much in the operators' commercial interests that it should remain so.

  4.2  In particular we believe that entry to the industry must be subject to the most rigorous tests of integrity. Regulators can then have confidence in the conduct of gambling operations within a more liberal regime. Honest people run honest businesses. The BCA strongly supports the measures proposed to strengthen relationships with the Criminal Records Bureau, the National Criminal Intelligence Service and Customs and Excise to ensure the integrity of all operators and their staff.

  4.3  The Government's Response to the Budd Report states that casinos are "free from money laundering and other financial crime". Members and their guests are identified on entry, and CCTV cameras are in constant use. All suspicious transactions are reported to the National Criminal Intelligence Service. That Service recently circulated to interested parties, briefing material on money laundering with 100 case examples, not one of which involved a casino. Nobody has been prosecuted for money laundering in a British casino, since the Money Laundering Regulations came into force. The anonymity provided by electronic financial transactions, for instance in the world's financial markets, offer much more attractive avenues for the launderer, than casinos.

  The BCA fully supports the Government's aim that British casinos maintain their international reputation for probity and integrity.

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

  We welcome the Government's recognition that gambling has become a mainstream leisure activity and we take very seriously the social responsibilities that this confers. It is right that gambling will still only be available to those demonstrably over the age of 18. Moreover, because casinos have other very stringent identification requirements imposed upon them, this rule is far simpler to enforce in casinos than in other premises where entry is less well policed. We support the ban on under 18s in casinos.

  The BCA has been instrumental in establishing the Gambling Industry Charitable Trust, which has raised initial funding of 800,000 (from eight trade associations and 22 companies) to help those who have problems with their gambling, and to research and limit problem gambling. The Trust has appointed a Steering Group of experts to include the Department for Culture Media and Sport, the Gaming Board, the Economic and Social Research Council, the British Association of Counselling and Psychotherapy, and a member of the former Gambling Review Body to advise it on the briefing and appointment of Consultants to develop the Trust's future strategy. Meanwhile the Trust has agreed to pay grants totalling 562,500 to GamCare and Gordon House, which are the two main service providers.

  The Trust will work closely with the DCMS, and its advisors, to ensure that the Industry meets its responsibilities in this regard. The BCA has for several years made it a condition of membership, that operators provide leaflets and assistance to those seeking help and that casinos operate a self barring scheme.

  The BCA supports the Government's intention to adopt a cautious approach to the scale and pace of deregulation and also supports the need to monitor problem gambling levels, as the new legislation becomes effective.

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

  The BCA is content with the decisions concerning the National Lottery set out in the Government's response. We agree with the Government that the proposed changes to the legal framework for casinos, are not likely to divert income from the National Lottery. We support the Government's intention to review the scope for bringing the National Lottery Commission's regulatory responsibilities into the proposed Gambling Commission.

3 May 2002

 


 
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