Examination of Witnesses (Questions 580
THURSDAY 18 JANUARY 2001
580. You cannot revoke it?
(Mr Harris) Ultimately we can.
581. In theory you can but in practice you cannot.
(Lord Burns) I would rather not speculate about exactly
how we would face those circumstances. There is a clear programme
that is set down and there is a set of penalties. That would be
the case either with a new operator or with the existing operator.
We have no reason to believe that the programme will not be carried
out on time.
582. If the existing operator has a need, he
can do this more easily, if you like?
(Lord Burns) Yes. It should be a more straight forward
process because there are fewer things to be done and, furthermore,
they can do it on an ongoing basis.
583. What I am trying to suggest is that regulation
of a monopoly is very difficult, is it not?
(Lord Burns) Regulation of a monopoly is always very
difficult in whatever area one looks, which is why regulators
are always searching for competition where they can possibly generate
584. One of the problems that a lot of the state
lotteries have in the United States is keeping the income level
up and sustaining it with the existing games. Therefore, the pressure
is always on to introduce new games. One of the problems with
that again, of courseand these new games may shift into
harder gamingis both in terms of not being able to supervise
them in terms of age and also in terms of creating a situation
where people become compulsive gamblers?
(Lord Burns) Yes.
585. How do you intend ensuring that this does
not happen as Camelot comes to you and says, "If you want
to keep it up, you are going to have to introduce new games"?
(Lord Burns) I think it is very important to monitor
very closely what the playing habits are. If there are problems
of under-age playing or of excessive play, a very important part
of the role of the Commission is to be looking at that on an ongoing
basis. These are very much issues that are in mind in terms of
licensing new games.
(Mr Harris) The Commission licenses each game that
is brought forward to it. Part of that licensing process is to
require the operator to have done research to identify what the
likely impact of that game is. The Commission then monitors the
impact of the game, if it is licensed. It is only licensed when
the Commission is satisfied that it will not encourage excessive
or under-age playing. The Commission also carries out other research,
both in terms of keeping in touch with how games operate in foreign
jurisdictions and through its own research programme, to identify
how much people are playing generally across the piece and also
to look at specific areas, such as under-16s.
586. New technology will allow what one might
term machine-operated games played by possibly a coin into a slot
in shops or stores where they already have an existing terminal.
Would you accept that form of game?
(Mr Harris) I think you are referring to video lottery
terminals. The Commission made clear in the invitation to apply
that it did not expect to see anyone bidding for this seven-year
licence coming up with that sort of game and that it did not believe
that that sort of game was appropriate to be introduced over the
next seven years.
587. What if Camelot say, "Sorry, but the
sales are dropping off. Unless we introduce this sort of game,
then we are not going to be able to sustain the levels of income
that this entails"?
(Mr Harris) The Commission would then have to make
a judgment about whether those games could be introduced in a
way that enabled the Commission to be certain that there were
adequate controls over those particular games when being introduced
in this country. The Commission's fundamental responsibility to
protect against under-age playing and excessive playing would
have to be met. It is quite clear from the legislation that those
are overriding responsibilities. The Commission is not in a position
of saying that they can be much less met because returns are down.
588. Lastly, one of the interesting things we
found in the States was that in all the lottery games, each of
the states we saw had along the bottom of the ticket a warning
that said, "If you think you have a gambling problem, or
you think you have a friend with a gambling problem, here is a
number you should contact". Would you be prepared to introduce
that sort of thing into the Lottery?
(Mr Harris) I think if the Commission was concerned
that there was excessive play, it would look for more of that.
The Commission does support GamCare. There are within the playing
codes, I believe, references so that players ringing the help-line
to Camelot and things like that would be referred on if they felt
they had a problem.
589. Do you actually do any research? Are you
financing any research into compulsive gambling with the Lottery?
(Mr Harris) The Commission has its own research programmes.
It has also contributed towards the major study that was carried
out by GamCare last year, which looked at gambling as a whole.
The National Lottery was very much part of that study. That looked
at patterns of play, how people play and the proportions of excessive
play, addicted play, and found that the National Lottery was very
low in those regards. Very low numbers of excessive play were
reported. That was from a very large sample.
590. You have already explained, and we certainly
had the experience when we went to America, that the biggest problems
whenever there is a hand-over are in the loss of sales, in organisations
and in the view of the public. We are not really going to have
a hand-over from one operator to another but there is going to
be a massive change in the technology and the kinds of products
that they are going to be marketing. Are you now confident that
there will not be any operational difficulties in the transfer
to the new licence? How do you feel that the sales and the income
that would go to good causes would be affected over the period
of the seven years?
(Lord Burns) We said in our statement of reasons that
we are satisfied that the changes can be put in place and we think
that they will happen to the time scale. The introduction of new
games will be done on a phased basis. I do not think that the
people who are playing the Lottery are going to see any major
change in terms of what it looks like from their point of view.
It is a similar game which will be played. The odds will remain
the same. Their numbers can remain the same. One is putting in
place more updated and better terminals. Obviously there will
be a question of re-launches and the whole marketing side of it,
which will be a matter for Camelot. We are not anticipating any
major adverse effect on sales during this period of transition.
591. From the other point of view, if there
is going to be improved technology and the phased introduction
of new products into this, what is your forecast for the projection
of both sales and income from the Lottery over the seven-year
period from Camelot?
(Lord Burns) Our interpretation of what has been happening
recently is that basically the level of sales has settled down.
It has been running at something like £5 billion a year.
If you look at any 12-month period during the first licence period,
it has been anywhere between £4.5 billion and £5.5.
billion a year. We took it that that was probably the range at
which we should be looking. I have no reason at this stage to
speculate about any major shift from that type of level. As we
see, individual games sometimes have the pattern to deteriorate
in terms of levels of sales, and then we have the gradual addition
of new games, which has kept the overall level of sales running
at about £5 billion. My best guess at this stage is that
over the course of the next licence period one will be looking
at sales of maybe £35 billion.
592. But when we went to the States, and I am
sure that when Ms Spicer went on her visit, we found that the
biggest problem that all the lotteries that we met had was that
there is a rise in the lotteries they have introduced, then there
is a platforming out, people get bored, and then there is a fall-off.
Many of them were genuinely disturbed about the level of fall-off.
It is perceived to be an older persons's game; it is not as sexy
and exciting as other forms of gambling. So there is this problem
and even the introduction of scratchcards cannot really tip the
balance, unless you go for the harder game that Mr Maxton was
talking about. What is your view about how, over the seven-year
period, because we are now into the second period of the Lottery,
the British public will react?
(Lord Burns) My interpretation, from what I have seen
so far, is the same as yours. For any individual game there is
a tendency for the level of sales to fall off, for whatever reason,
whether it is to do with familiarity or the fact that people gradually
begin to realise that the odds really are quite long in terms
of winning the Lottery. On the other hand, in this country the
Lottery is played by a very high percentage of the population
in terms of quite small average sums of money. There is scope
for individuals to play a bit more without running into the problems
of hard gambling that you mention. Clearly for all lottery operators
it is an ongoing challenge as to how you sustain interest and
how you refresh this on a basis that does enable you to achieve
an ongoing level of sales. You want to avoid introducing too many
things too quickly, as this becomes confusing to people and they
do not quite understand it. I think people probably have the same
problems with the changes of games as they have sometimes with
their video controls, which is that they gradually become more
and more out of reach of understanding what all the functions
are. That is a question of balance and it is an issue which the
operator has to face. We have then got to respond to that in terms
of the proposals that they bring forward.
(Ms Spicer) To add to that, there is one distinct
difference between our approach to this and that of the States,
in that they are not welcoming the Internet in any way, shape
or form. Their legislation is against it.
593. We are looking quizzical only because when
we went to the presentations of both technical operators they
were very much on board about the opportunities.
(Ms Spicer) They are, but not in the States. You saw
the UWIN people from GTech. That is not the precise point I was
going to make. That is one of the avenues that we have and that
we welcome for increasing sales, as long as they are carefully
controlled and monitored using best practice from the jurisdictions
in which Internet play already exists, Austria being one place.
That is a way of trying to achieve increased sales, without excessive
play or hard gambling.
594. They know the odds, they are not suckers,
and they know that the likelihood that it could be you is pretty
slim. How much do you think the public play the Lottery because
they do feel that this money is going to the regional theatre
or the identifiable item that they can grab hold of because it
is coming from the Lottery money in its disposable forms? How
much do you think people are playing the Lottery because they
do think it is going into something useful; it might go into the
cancer scanner or whatever?
(Lord Burns) My interpretation of the evidence I have
seen on that is that people who play the Lottery think this is
a small investment in a dream. That basically is what drives them
and they regard their investment as being relatively modest in
relation to their income as a whole, but there is the possibility
that they will be able to change their lifestyle very considerably.
This is the dream. That is simply my reading on what I have seen
in terms of the research that has been done. It suggests to me
that is the dominant factor, rather than what is happening to
the money that they are spending.
595. Lastly, are you intending to continue the
arrangement with the BBC for the draw? When we went to the States
there were certainly different arrangements on local TV stations
about who paid and how for the slot.
(Mr Harris) The arrangements for televising the draw
are ones that the two bidders put forward in their bids.
596. Were they the same?
(Mr Harris) No, they were different. I believe Camelot
is going to look at its whole portfolio of games and how those
can best be televised. It will make a judgment based on the return
that it can get from television rights, because that is the return
that goes to good causes, against the need for draw shows to be
accessible, so that people can watch the draw, which will therefore
597. Do you think the financial arrangements
that we have at present with the BBC for the draw are acceptable?
(Lord Burns) Yes.
598. Even though the BBC is getting licence
(Lord Burns) Presumably the BBC has come to the view
that this is in their interests as the suppliers of television
programmes and Camelot have come to the view that this is a good
deal for good causes. My observation is that the Lottery continues
to be a very high profile activity. The fact that it is on television
and is part of the Saturday night schedule in my judgment adds
599. Camelot at present has a restriction as
to its outlets and which retailers or local post offices can have
it. I represent a rural constituency that has lots of little retailers
and post offices that would love to have the opportunity of an
outlet through Camelot because of the footfall that would come
into their village shop. Many are very aggrieved at what they
would consider to be the high level threshold. In the next licence
period is there going to be any adjustment to that so that we
can have the opportunity for rural retailers and post offices
in particular to have an outlet?
(Mr Harris) Ultimately, the number of outlets is a
commercial decision for the operator to put forward.