Examination of Witnesses (Questions 122-139)
PENELOPE, VISCOUNTESS COBHAM AND MR ROY RAMM
TUESDAY 11 JUNE 2002
Chairman: Good morning, or rather good afternoon, Lady Cobham. Good afternoon, Mr Ramm. Adrian Flook will open the batting.
122. We heard a lot earlier this morning about slot machines and I am aware that currently only one per cent of your turnover in casinos is slot machines. Will you be increasing them? Will that be customer led or driven by finance because they are more profitable? To what level do you think that number will get?
(Lady Cobham) What I think the whole development of the industry will be driven by is customer led. That inevitably then leads to a more profitable industry. I think that it would be foolish to imagine that, for example, any increase in machines would be at a level pace across all the clubs because there will be many London clubs, of which there are currently 23, where they probably will not have any machines at all, they do not now and they would not in the future, because the profile of their members is different from the profile of members outside London in many respects; not every respect. I think it will be largely driven by customers' desires and then it will be controlled by the sort of machines that people wish to play because the machines that are in casinos now, up to ten in each casino, are very old-fashioned and do not have a lot of the technological details which enable, for example, some of the points you have talked about this morning of problem gambling to be monitored. Perhaps I can ask Roy, as an operator, to add a little more to that.
(Mr Ramm) The machines which are currently available in British casinos in the main are converted AWP machines. Casino players around the world are used to, for want of a better description, Las Vegas style slot machines and in general they do not find the kind of machines which are currently in British casinos particularly attractive. They are looking for the kind of random machines, the video technology, which is available in places like Las Vegas, South Africa, in fact pretty well everywhere else in the world.
123. We also heard quite a lot about the need for a Trust and the fact that BCA and BACTA have made contributions. When we went to Las Vegas we also heard that the industry itself was very generous but the problem was in fact to do with the way in which the taxation which was being taken by, in Nevada's case, the State of Nevada, in Nevada it was well spent but in other states it was not particularly well spent. In other words the companies were contributing but states were not. Do you want to say something about that?
(Lady Cobham) If I may just say a few words about the charity which I was obviously looking in the wrong direction at the wrong moment and ended up being Chairman of. I hasten to say I need to be Chairman of another charity like I need a hole in the head, so in due course we will move to an independent chairman and the Trust is committed to that. We looked at the Budd proposals and saw immediately that this was an opportunity for the whole sector to get together, which in my two years or so with BCA had not happened on any issue. This was the first time that the whole sector got together and saw it as an opportunity to prove its commitment to social responsibility. As far as the industry is concerned we have now raised £777,000, of which over £600,000 has already been committed to the charities in existence. I have liaised with the Department to talk about the sort of government support that might come by liaising with the Health Department, for example.
(Mr Ramm) Every casino in the British Casino Association has contributed to that charitable fund and, indeed, was supportive of GamCare before the establishment of the charitable trust. I think as the industry grows certainly the Casino Association and the casino industry sees absolutely no problem about continuing to grow the funds available to any charitable organisation or any organisation providing the additional help that such bodies do outside the normal government structures.
124. We also seemed to be concentrating this morning quite a lot on the roughly one per cent who are considered to be problem gamblers and somebody did bring up that we should be looking at the 99 per cent.
(Mr Ramm) Absolutely.
125. What do you think that we should be concentrating on therefore? If it is not problem gamblers what sort of things do you think BCA should be concentrating on?
(Mr Ramm) I think there are other issues which the BCA are very keen to ensure are the focus of government attention. We have striven very hard in the industry to ensure that after 30 years it has a strong reputation for integrity recognised by the Gambling Board, recognised by Budd. We are very keen to see that the lead is taken off in a controlled manner. We are at one with the regulator and we believe that this industry should grow carefully and we should recognise that the integrity needs to be maintained, that the problems which may be associated can be monitored. It is very hard to get the genie back into the bottle, we see that. We see very great importance needs to be placed on just letting the line out carefully.
126. Going back to touching on the funding of perhaps helping problem gamblers, what is the level of tax you pay on gaming tables at the moment as against the slot machines?
(Mr Ramm) It is a banded tax which starts at the very bottom end at 2Ö per cent and then rises quickly to 40 per cent. That is on the table games. Slot machines are currently taxed at VAT rates and I think that raises another issue, that the whole area of taxation within casinos really does need to be addressed.
127. I notice from your representation you made you talked about going towards overall American levels of taxation and Nevada's is six and a quarter per cent, which is the lowest, and certainly Berlin's is the highest at 80 per cent. How can you justify going for that when the nearest European average is in excess of 40 per cent?
(Mr Ramm) I do not think even in our most optimistic and hopeful moments we see the Nevada tax regime but what we would like to see is some kind of balanced regime which allows casinos to grow as businesses, not to be punitive and held down, to offer other facilities that other good casinos around the world do offer so that there are alternative entertainment options, good restaurants, good facilities, and they are pleasant places for people to go. We do not want to see gambling dens or gambling sheds, that is not the BCA's ambition. We want to see good quality mainstream leisure facilities with a sensible tax rate that allows for comfortable, well funded, well managed buildings to be on offer to the public.
128. Could you ever envisage the Treasury allowing that money to be spent locally, ie if it was raised in Blackpool to be able to be spent in Blackpool because as I understand it at the moment that is not possible?
(Mr Ramm) No, it is not.
129. So what representations have been made and are you hopeful?
(Mr Ramm) It is not really part of the BCA's submission to suggest local revenue distribution, I think that really is a matter for central government. All our revenue at the moment is paid to central government through the Treasury.
130. We spoke earlier about the fact that casinos and bookies would not exist if the odds were in the punter's favour and I think Mr Bellringer when sitting here earlier said that it should be kept as a fun activity. Every time I have been to a casino it is actually quite serious, the blue ribband of gambling, it is not putting two bob into a machine. How are you going to get across the education in that much more serious environment without the fun?
(Lady Cobham) We already have leaflets in all casinos.
131. I have never seen any or felt compelled to pick them up either.
(LadyCobham) The leaflets are there giving the odds and on all machines are the odds displayed.
(Mr Ramm) There is a perception that casinos are for the very rich, the high rollers of this world. The average spend in a casino outside London is £21 and the average national spend in a casino including London is £47 per visit. I paid £47.50 for a ticket to take my wife to the theatre the other night. It is not completely out of sync, but that is a perceptual problem.
132. Those were obviously good seats I would have thought.
(Mr Ramm) They were good seats. I think it is a perceptual thing. One of the problems is that the casino industry has not been allowed to talk about itself. There is a ban on advertising which means that I think for many Members around this table and certainly lots of the Members of Parliament we have seen over the last six months, the first time they have learned anything about casinos is when we have taken them in or they have had a perception which is really based on fiction, on the media and what they see in the movies.
133. What is the size of town, and I obviously have in mind Taunton here? A local councillor went to Budapest last year and was impressed by the world class musicians and when asked "how can you afford this" they said "because at the end of this corridor is a decent sized casino and all the money that is generated, or a large amount of it, goes into subsidising other parts of the hotel so it attracts certain people". He has come back with this idea and planted it, created a huge amount of debate, that Taunton could have one of these things. We are a town that is very roughly 50,000 with a hinterland not particularly wealthy, Somerset is not a wealthy rural county. Could you see any of your members planting themselves in Taunton, being realistic?
(Mr Ramm) Well, being realistic, Mr Flook, it really does depend on what we are talking about. We are certainly not talking about putting a huge resort casino in Taunton, it would not fly and you would not want it.
134. There is not the space for one.
(Mr Ramm) There could be a casino that could offer dining, that could offer entertainment and would bring more than the 1.8 per cent of the public that currently go to casinos because they would find it a more attractive venue. Yes, I could see in the new regime somebody very keen to put a casino in Taunton.
Derek Wyatt: Good morning, as I have not had lunch, Chairman. I wonder if you could tell me what the implications would be for casinos that are on boats. If I was looking, I would be thinking of having a small luxury
Michael Fabricant: A paddle boat.
135. The Medway Queen, for instance, on the Medway could come back. What would be the implications? Say Manchester and Liverpool decided that they would like two or three luxury casinos on boats, how would that impact on a resort like Blackpool? How would you want that to work?
(Lady Cobham) As I understand it at the moment casinos on boats are not regulated in the same way as land based casinos so it will obviously be for the Gambling Commission to decide after the new Gaming Act whether they will actually be in control and will legislate for gaming on boats as well. In other legislation we know once you are something like five miles offshore you are outside any regulations at all. My view, and I am sure our members' view, would be that it would be good if it were, for example, to be kept within the environs of Manchester that it were considered by the local authority in the same way as land based casinos.
136. The idea would be that you would use the waterway.
(Lady Cobham) It would.
137. So, for instance, if there was one in London and you wanted to go down perhaps to Southend or across to Margate and back in the evening, have a splendid meal, have some entertainment and gamble, that crosses about eight or nine authorities at least. I can see that being terribly popular.
(Lady Cobham) Yes, I can too. I do not have any magic answers at the moment as to how they would be regulated given that we are moving to local authority licensing because, as you say, it passes through so many. I am sure there is a way that can be devised.
138. Can I come back to the Trust. You heard the discussions that we had earlier and the concerns about a major expansion or liberalisation of the gambling rules and the effect that might have in certain problem areas. You are the interim Chairman, and I accept what you said that it is a temporary job, and from Mrs Simmonds earlier it is clearly early days in the operation of the Trust, but in an industry which is turning over on the BISL's figures £7.3 billion a year, the figure that you have given us of £770,000 is a pretty mediocre response. I accept your evidence that BCA members seem to have contributed fairly well but can you do a lot better than that?
(Lady Cobham) I am sure that we can but I am not in the habit of jogging backwards. This was nearly 800,000 from a standing start. We reacted to that immediately and will be looking at increasing that as we move towards new primary legislation. It was the intention through Budd and through "Safe Bet" that the figures that both of those documents have floated would be achieved at the same time as deregulation came in. Certainly for my part as Chairman we will make every possible effort to achieve the amount that is recognised as to be the right amount. I think there is still some work to be done as to whether three million is the right amount. I am not for a minute sitting here suggesting that it should be less or more, I just think there is still more work to be done. Indeed, we are just in the process of commissioning a major piece of work to form a strategy for the Trust within which it will give its money in the future.
139. There were two concerns that I picked up in the evidence I heard earlier. One was that people outside the trade associations and organisations like your own are unlikely to contribute and the other was just the scale of the problem. Certainly from my own experience as a solicitor, and I used to practise family law and in the criminal courts, I saw some of the horrors and it is a real Cinderella issue as far as the health service and other services are concerned. Any increase in the outlets for gambling could only add to the problem in my view. The amount of money that we are talking about and the difficulty of reaching everyone suggests that there needs to be some more formal way of raising funds. What is your organisation's attitude towards a levy, whether it is one controlled by the industry, by an independent body or statutory?
(Lady Cobham) I think that it is actually a lot more encouraging that the industry has grappled with the problem itself, so I would like to think that it was the best and most responsible way that the industry could harness this issue and deal with it itself. You are absolutely right, there will be a lot of people who are not members of an association and, to be frank, I have taken a rather pragmatic view because I thought it was much better to get it going and then try and deal with some of these other issues of people falling through the net and not giving later on. I do think it is the right way that the industry should deal with it. Yes, there are problems and we acknowledge that there are and we recognise that these need to be dealt with in a proper, sensible way and all those charities that help those with problems need to be able to look forward into the future with some security. As I chair a very large UK charity, nothing is guaranteed well into the future but the Trust will certainly do its best. I think your point about the health service is a well made one and DCMS are doing their best to try to encourage a greater dialogue and we will certainly be doing that too. I have on the steering group for this piece of work I mentioned the British Association of Counselling and Psychotherapy and the Economic and Social Research Council, so I have got some good inroads through them.