Select Committee on Culture, Media and Sport Minutes of Evidence



Memorandum submitted by the Gaming Board of Great Britain

 

THE GAMING BOARD

  The Board is the regulatory body for casinos, bingo clubs, gaming machines and the larger society and all local authority lotteries in Great Britain. It has five Board members and 78 staff (36 in its Inspectorate and 42 administrative staff): its annual grant-in-aid for 2002-03 is 3.9 million. The industries for which it is responsible contribute just over one-third of the total UK gross gambling yield of around 7.5 billion. Annex 1 to this note gives more details on the Board's purposes and functions and the size of the industries which it regulates.

 

THE NEED FOR REFORM OF THE GAMBLING LAWS

  The Board has believed, and argued, for some years that a thorough review and reform of the gambling laws is needed. The reasons are encapsulated well in the second sentence of the opening paragraph of the press release issued by the Committee at the start of its inquiry. Annex 2 gives extracts from the Board's Annual Report for 1998-99 setting out why it believed a review was urgently needed.

  The Board therefore welcomed the establishment of the Gambling Review Body (of which the Board's Chairman was one member), its report published last July (the Budd report) and the Government's response document which forms the focus of the Committee's deliberations. The Board's position can best be summarised by the following:

    "[The Budd] report eloquently sets out the case for legislative change, which is something for which the Board has been arguing for some time. Taken as a whole the report covers the issues that needed to be addressed comprehensively and the Review Body has produced a well-balanced and sensible set of proposals. Its recommendations will, if implemented, bring about long overdue modernisation of British gambling legislation.

    The Board particularly supports the proposals in the Review report for a single regulatory authority for gambling (which the report calls the Gambling Commission) which would encompass and build on the Board's work. The need for a strong, coherent system of regulation for gambling remains as strong as ever if the industry is to maintain its enviable reputation for integrity".


  (From Board response to DCMS invitation to comment on the Budd report, 30 October 2001).

    "The Gaming Board for Great Britain gave a warm welcome to the Government's decision document announcing its policy on the modernisation of the gambling regime.

    Commenting on the policy statement, Peter Dean, Chairman of the Gaming Board said:

    `Our gambling laws are out of date and the Board has been advocating an overhaul for some time. I am very pleased that the Government has decided, after consultation, not only to endorse the general principles set out in the Gambling Review report but also to accept the great majority of the report's 176 specific recommendations.

    The package of reforms now proposed will in my view achieve an appropriate balance between increasing consumer choice for adults; affording greater protection for young people and for the minority who have problems with their gambling; and ensuring that those who provide commercial gambling observe high standards of probity and social responsibility.

    The Board looks forward to working with the Government to implement the reforms'." (Board press release, 26 March 2002)

  In short, the Government has produced a balanced set of proposals. Where appropriate the proposals remove those controls and restrictions (for example in respect of casinos and on-line gambling) which are out of date and no longer considered necessary for either regulatory or social purposes. But, to balance this, the Government proposes to strengthen those areas where the current provisions are already inadequate or may become so when restrictions are eased. Hence the proposals will provide greater protection for children and those persons who may be vulnerable to problems with their gambling and will strengthen regulation through the establishment of the Gambling Commission with enhanced powers. It will be crucial that the proposed legislation maintains the balance and that liberalisation is not pursued at the expense of the necessary safeguards.

ISSUES BEING ADDRESSED BY THE COMMITTEE'S INQUIRY

  The Committee Clerk's letter to the Board's Chairman says that, in hearing from the Board, the "Committee will be interested specifically on the potential impact of the proposed deregulation on the gaming industry, the potential social impact, and the role of the proposed Gambling Commission". The Board comments on each of these below, concentrating particularly on their relevance to the five main areas which are given in the Committee's terms of reference as the focus of its work.

IMPACT ON THE GAMING INDUSTRY

  Others may be better placed than the Board to offer evidence on this. The Board's assessment in the areas for which it is responsible is as follows:

    (i)  Casinos The Budd report gave some estimates produced by the Board of the possible impact of its proposals. These suggested that there might be in time some 450 casinos in Great Britain, a figure which was made up as follows:

    —  the existing 123 casinos

    —  a further 100 casinos as a consequence of abolishing the current limitations on the permitted areas in which casinos can be located

    —  a possible further doubling of numbers as a result of abolishing the controls on advertising, the requirements for membership and a 24 hour wait before gaming and the demand test but more particularly as a consequence of permitting unlimited prize casino slot machines.

        Some suggest that this estimate is too high believing that, because of the investment in infrastructure etc needed for a modern casino operation, there will be a smaller number of perhaps 250 larger casinos. In either event, the Board is content that, with adequate resourcing, an industry with such numbers will be capable of effective regulation. What will however be important will be to ensure that there is not a proliferation of small casinos which would not be capable of proper regulation because it would be unrealistic to expect the necessary resources to be provided. In this respect, the Board has some concern that the proposed minimum table gaming area of 2,000 square feet may on its own be inadequate in order to prevent such proliferation.

    (ii)   Bingo The general trend in recent years in the figures available to the Board has been of a declining number of bingo clubs but of increases in total amounts staked. There are now just under 700 bingo clubs operating in Great Britain. The Gambling Review Body said that it did not expect its proposals to make a big difference to numbers. The Board agrees although the trend towards greater concentration may nonetheless continue.

    (iii)   Gaming machines Under the proposals, casino slot machines would be permitted for the first time. Again, estimates of numbers must be uncertain but if there were to be 450 casinos, the Board thinks there might be an average of 200 machines per casino. If there were instead 250 larger casinos, each might average 400 machines. Either way, there would be perhaps 90,000 to 100,000 new high prize slot machines in Britain. Because such machines have not previously been allowed, all the major manufacturers are foreign based although increasingly in recent years such companies have formed links of various sorts with, including in some cases a controlling interest in, British machine manufacturers. The current British market has around 250,000 amusement with prizes and club jackpot gaming machines. The other changes in the Budd report seem unlikely to alter this greatly, although licensed betting offices would be permitted up to four machines each rather than the current maximum of two.

    (iv)   Lotteries Proceeds in society (mainly charity or sporting club) lotteries seem to have stabilised at around 100-110 million a year, down from the peak of 161 million in 1998-99. Of the 109 million proceeds in 2001-02, 57 million (52 per cent) went to the good causes. Such levels of proceeds are small in comparison to the National Lottery. The proposed increases in society lottery monetary limits should give a welcome boost but, as the Government says, not one which is likely to have a significant impact on the National Lottery.

POTENTIAL SOCIAL IMPACT OF DEREGULATION

  One of the three principal objectives of gaming regulation is to ensure adequate protection for children and vulnerable persons. Any deregulatory proposals must be scrutinised in the light of that objective.

  It is generally accepted that there is a link between the availability and accessibility of gambling opportunities and the numbers who have gambling problems. The large scale British Gambling Prevalence Study conducted in 1999 suggested that about 0.6 per cent to 0.8 per cent of the population, or between 275,000 and 370,000, aged 16 or over have problems of some sort with their gambling. Although a substantial number, this is low by international standards which may be a consequence of the restrictive regime applied to gambling here in the past.

  The Budd report acknowledged that its recommendations may lead to an increase in problem gambling. It therefore sought to balance this both by framing them in ways which would keep the increase to a minimum and by addressing the need for researching, limiting and treating problem gambling. The Board believes this was the right approach and that the Budd report's proposals provide a coherent programme which adequately addresses concerns.

  Hence, under the proposals accepted by the Government, there would be a Gambling Trust, financed by the industry, to fund research into problem gambling and to support programmes of education, prevention and treatment and gambling operators would be required to adhere to formal codes of social responsibility as a condition of their licences.

  The proposed Gambling Commission would have a significant and formal role to play. This is a major, and welcome, departure from the current position. The Gaming Board was given no specific statutory responsibilities in respect of problem gambling in the 1968 Gaming Act, although it has nonetheless supported efforts made in recent years to promote greater public understanding of the issues. The Commission thus would be responsible:

    —  for issuing, and ensuring compliance with, codes of responsibility covering such matters as provision of information to customers about problem gambling and what people who think they might need help should do; arrangements for players to bar themselves from gambling; and the display of clear information about the probabilities of wining and losing.

    —  for monitoring the social impact of the increased access to gambling products and services which new legislation would bring.

    —  for responding to findings concerning changes in problem gambling and, in the light of this, to make appropriate changes to its regulations and to advise the Government on any other necessary changes.

  In a similar vein, the controls on access to gambling by children will be strengthened considerably under the Government's proposals. Thus, those aged under 18 will be barred from all premises licensed for gambling (ie casinos, bingo, betting shops and gaming machine centres). Where gaming machines are to be available in premises to which children might have access (such as pubs), under 18s will either have to be excluded from the premises entirely or from the parts of the premises in which the machines will be sited. It will be crucial that these controls are effectively enforced. Casinos, bingo clubs and betting offices are already subject to strict rules and have a good record. Such strict requirements will however be new for many gaming machine centres and especially clubs and pubs. Adequate resources will be essential to ensure effective policing and to prevent the controls falling into disrepute. The Board is concerned that the Government has rejected the Review Body's recommendation that AWPs should not in future be permitted in outlets such as cafes, fish and chip shops, minicab offices etc. There are good regulatory reasons, including concerns about play by children, for supporting the Review Body's proposal.

THE ROLE OF THE GAMBLING COMMISSION

  The two other principal objectives of gambling regulation are to ensure the propriety of those involved in organising the gambling and to ensure that the gambling is run fairly and in accordance with the law. The Budd report confirmed that it is generally agreed that the Board has been successful in achieving these objectives for the industries for which it is responsible.

  The Board welcomes the proposed establishment of the Gambling Commission to build on the Board's work and to extend it into areas (such as betting and adult gaming machine centres) not previously subject to the type of rigorous supervision that the Board provides. The proposal will produce a single, strong and coherent system for securing and maintaining the British gambling industry's reputation for integrity.

  In brief, the Gambling Commission would take over the Board's current duties for casinos, bingo and gaming machines and would have enhanced responsibilities for society lotteries. In addition, it would assume responsibility for regulating bookmakers and betting shops, horse and other racetracks and sporting venues licensed to accept bets, adult gaming machine centres and football pools. Finally, and as well as the duties in respect of social responsibility mentioned above, the Commission would become responsible for investigating and pursuing illegal gambling and licensing of on-line gambling, neither of which have previously been within the ambit of any dedicated regulatory body. With regard to on-line gambling, there is an important need to address the current unsatisfactory situation, under which residents here are free to play on on-line casinos and other gaming sites situated abroad but no such sites can be established here.

  In its evidence to the Gambling Review Body, the Board identified a number of respects in which it believed its current powers were limited. The Review Body and now the Government have endorsed the need for enhancements. Examples are:

    —  an improved ability to share information with and receive information from all relevant law enforcement and regulatory bodies in Britain;

    —  improved exchange of information with, and the ability to make enquiries on a reciprocal basis on behalf of, gambling regulators in other jurisdictions;

    —  a wider range of sanctions to include formal cautions, endorsements and fines; and

    —  better powers of entry, search and seizure and to instigate, when necessary, prosecutions.

  All this means that the Gambling Commission will be a very considerably larger organisation than the Board is currently and will need to be adequately resourced, in particular with appropriately skilled staff. Preliminary estimates made by the Board in consultation with the DCMS suggest that, if all or most of the recommendations are implemented, the Commission will cost in the region of 10 million to 15 million per annum, compared with the current Gaming Board costs of around 4 million per annum. These costs would, as for the Board currently, fall to be recouped directly from the industry through the fees charged for certificates and licences. They would however be spread over a much larger number of operators than currently. Under the proposals, also, the Commission would be funded on a net running cost basis under which the fees would accrue directly to it. This is much preferable to the current position with the Board, under which the fees go to the Exchequer whilst the Board relies on a grant-in-aid from the DCMS.

  Successfully establishing the Commission will be a major project. The transitional arrangements will be very important. The Government's decision document expressed a clear determination to ensure that comprehensive transitional provisions were incorporated into the new arrangements. The Board has recommended to the Government that a shadow or embryo Gambling Commission should be set up, at the appropriate point in the lead up to implementation of the new legislation, to make and take ownership of decisions about the Commission's future role, structure and resource needs. In order to safeguard what the Budd report described as the enviable reputation for integrity enjoyed by the industry in this country, it is crucial to avoid any possibility of hiatus during the change-over. The Board will co-operate with the Government in implementing the reforms and in effecting as seamless a transition as possible.

3 May 2002

Annex 1

 

THE BOARD'S PURPOSES AND FUNCTIONS

  1.  The Board's purposes and functions under the 1968 Gaming Act and the 1976 Lotteries and Amusements Act can be broadly summarised as follows:

    —  to ensure that those involved in organising gaming and lotteries are fit and proper to do so and to keep gaming free from criminal infiltration;

    —  to ensure that gaming and lotteries are run fairly and in accordance with the law;

    —  to advise the Secretary of State on developments in gaming and lotteries so that the law can respond to change.

  2.  In pursuit of these purposes the Board:

    (i)  in respect of gaming,

    —  determines applications for certificates of consent without which an application cannot be made for the grant or transfer of a casino or commercial bingo licence;

    —  determines applications for continuance of certificates of consent held by casino operating companies where there has been a change in the control of the licence-holding company to the extent of l5 per cent or more of the voting power;

    —  determines applications for certificates of approval required by those who wish to be employed to operate, supervise or manage the gaming;

    —  determines applications for the grant of certificates to sell, supply and/or maintain gaming machines;

    —  supervises the conduct of holders of certificates and licences and takes action against those no longer considered fit and proper;

    —  makes representations to licensing authorities concerning the grant, revocation or renewal of gaming licences.

    (ii)  in respect of lotteries,

    —  determines applications to the Board for the registration of societies and local authority lottery schemes;

    —  determines applications for certificates from lottery managers;

    —  supervises the conduct of registered lottery schemes and takes action against those which have not conducted lotteries properly;

    —  supervises the conduct of lottery managers and takes action against those no longer considered fit and proper.

    (iii)  and in general,

    —  keeps under review the extent, character and location of gaming and lotteries in general and in licensed premises in particular, including public attitudes;

    —  makes recommendations to the Secretary of State regarding hours, charges and prizes in respect of gaming and monetary limits in respect of lotteries;

    —  initiates proposals for changes in the law and regulations on gaming and lotteries and advises Ministers on proposals from interest groups;

    —  maintains close contact with the gaming industry's trade associations with a view to informing itself about developments in the industry and encouraging the issue of appropriate codes of conduct and other co-operation in pursuit of the Board's aims;

    —  maintains contact with gaming regulatory authorities abroad to inform itself of relevant developments.

  3.  In carrying out its statutory duties, the Board seeks to ensure, so far as possible, that:

    —  licence and certificate holders know what is required of them;

    —  applicants, licence and certificate holders are treated impartially and with equal fairness;

    —  the Board's requirements and guidance do not impose unnecessary work or costs on the industry;

    —  the interests of the public are protected and through the Board's work and contacts with the industry players understand what they are being offered when they game;

    —  the work of the Board is carried out professionally, promptly, fairly and courteously.

THE GAMING INDUSTRY 2000-01: SOME KEY STATISTICS

 (TAKEN FROM APPENDIX I OF BOARD'S ANNUAL REPORT)

Casinos:

 

Number operating

117

Drop (money exchanged for gaming chips)

3.3 billion

Number employed

12,000

Duty paid

106.6 million*



Bingo Clubs:

 

Number operating

705

Money staked

1.12 billion

Number employed

c.20,000

Duty paid

107.4 million*



Gaming Machines:

 

Number of machines

250,000



Number certificated to sell,

 

supply or maintain machines

679

Money retained by suppliers

 

and site owner

1.5 billion

Number employed

c.23,000

Duty paid

160.4 million*



Charity Lotteries:

 

Ticket sales

107 million

Number of registered societies

 

and local authorities

657



Gaming Board:

 

Cost of operations

3.6 million

Number of staff

75


 

 

  * Customs and Excise figures for 1999-2000.

Annex 2

 

EXTRACTS FROM GAMING BOARD'S 1998-99 ANNUAL REPORT

 (i)   Chairman's introduction

  "Reform of gambling laws

  The process of deregulation mentioned earlier is useful as far as it goes, but it is slow and patchy and will be no substitute for fundamental law reform. The statutes governing the Board's activities were enacted 25 years or more ago and, because of the cultural and technological changes that have occurred in the interim, are now in significant respects out of date. Attitudes towards gambling have become generally more relaxed —as witness the Government-sponsored and heavily promoted National Lottery—and the policy on "unstimulated demand" mentioned earlier looks increasingly threadbare. At the same time microprocessors and the Internet are affecting the industry in ways undreamt of by the makers of the current laws. The Board has already called for a wide-ranging review of gambling legislation to be undertaken. Whilst acknowledging the pressures on the Parliamentary timetable, I would urge the Government to set a firm time-scale for the process of reform, rather than allow anachronisms to become more and more glaring to the point where the law risks falling into disrepute. Over the next year the Board will be developing its own suggestions on some of the areas in need of reform."

 (ii)   Chapter 1: introduction and general

  "Need for review of gambling legislation

  The principal Acts governing gambling are the 1963 Betting, Gaming and Lotteries Act, the 1968 Gaming Act and the 1976 Lotteries and Amusements Act. The youngest is therefore nearly a quarter of a century old. The last major review of the legislation was by the Royal Commission on Gambling chaired by Lord Rothschild which published its conclusions in July 1978 and few of whose recommendations were implemented. Whilst, as explained earlier in this chapter, the Deregulation and Contracting Out Act procedures have allowed some limited easing of outdated controls, this process of piecemeal amendment has complicated the legislation, highlighted inadequacies and left inconsistencies. The Deregulation Committees of both Houses of Parliament have commented on the complexity of the present law, the piecemeal attempts at amendment and the need for simplification and consolidation.

  Granted that the gambling industry remains, in the Board's belief, for the most part legitimate and crime-free, there are nonetheless a range of aspects of the current legislation which appear outmoded and outdated and would benefit from review. Some of the types of issues which the Board thinks could be addressed include the following:

    —  Strict separation still generally exists between types of gambling premises. For instance, no fixed odds betting transactions may take place in a casino. Many other parts of the world have moved away from such rigid demarcations.

    —  The certification and licensing requirements are different for casino and bingo clubs on the one hand and betting offices and bookmakers on the other. A single system might be more sensible.

    —  Much of the original legislation is based on the concept known as unstimulated demand': in other words, that gambling facilities should be sufficient, but no more than sufficient, to meet the unstimulated demand for them. Some recent changes, and in particular the introduction of the heavily promoted National Lottery, call into question the continued relevance of the principle.

    —  Gaming machines legislation was framed when machines were entirely mechanised, of the original one-arm bandit type. It is ill-equipped to cope with the modern electronic micro-processor driven machine. The legislation also uses the concept of a club as the distinction as to which types of premises may have higher prizes or jackpot machines. This may no longer be the appropriate distinction.

    —  As described in more detail below, there are concerns about the potential proliferation of uncontrolled and unregulated gambling on the Internet.

    —  Concerns about problem gambling and addiction, particularly amongst young people, are growing as gambling opportunities increase. In turn, this raises the question of whether there should be a single minimum legal age, of 18, for gambling.

  In the light of the foregoing considerations, as well as the continuing pressures for a range of deregulation measures from the gambling industry, the Board believes that the need has developed for a thorough review of all the gambling legislation by an independent review body. As reported last year, the Government has told the Board that it has a heavy legislative programme but the Board recommends the Government at least to decide soon what priority to give to a review of gambling and when it should be set in train."

3 May 2002

 


 
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