Examination of Witnesses (Questions 228
- 239)
THURSDAY 16 NOVEMBER 2000
MR STEVE
ROBERTS, MR
ROGER WITHERS
AND MR
RICHARD BOARDLEY
Chairman: Gentlemen, we would like to
welcome you here this morning. I am sure that you recall that
when the National Heritage Committee conducted its original inquiry
into the Lottery the effect of the Lottery on the pools was one
of our prime concerns. Therefore, we are particularly interested
to find out how you got on during that period.
Mrs Golding
228. Do you think that all gaming should be
regulated under one body or do you think it is acceptable that
the Lottery should be excluded?
(Mr Withers) I think—and certainly you will
see the competitive element between Vernons and ourselves this
morning, but I am sure we would agree on this—that there
should be a single regulatory body, because we are all competing
for the leisure pound, the gambling pound. Certainly in any form
of gambling, particularly the small stakes gambling which we are
involved in, the harmless flutter, we are on the same playing
field, level or not, and anything that one of us does actually
impacts on another, and we do believe that they should all be
managed and overseen in a sensible, coordinated manner.
229. Why do you think the Gambling Review excluded
the National Lottery then?
(Mr Withers) I think you heard a more than adequate
answer from Sir Peter Fry, the last witness. I think that they
were specifically told to exclude the National Lottery. It is
illogical that they should exclude the National Lottery. The Gaming
Board of Great Britain, in their evidence to the Gambling Review
Body, has strongly supported the formation of a single regulatory
body, because it just makes sense. It would make your life a lot
easier for a starter, I think.
(Mr Roberts) I think gaming should be regulated by
one body and the Gaming Board of Great Britain are well placed
to do that.
230. Can I ask you about tele-betting and the
tele-betting business, which is growing at an enormous rate? Can
you tell us, have you any idea if these are new people who are
betting or if they are people who are changing their betting habits?
(Mr Roberts) In the case of Vernons our turnover has
moved from £173 million in 1994 to £26 million this
year. There is a huge reduction in the overall market we are seeing.
What that has meant is that we have had to concentrate on post
and telephone operations, and by concentrating on post and telephone
distribution we have invested in the systems that carry out those
functions. What we are actually seeing is the slowing down of
the rate of decline. The rate of decline this year will be between
13 and 15 per cent. We are not able to show any growth in the
business, but we are actually slowing the rate of decline down.
231. Do you know if these are new people who
are coming into the betting market or is it old people changing
their habits?
(Mr Roberts) Almost certainly they are people who
have bet before with Vernons and we are able to regenerate their
interest in the pools.
(Mr Withers) In Littlewoods we have two forms of tele-betting.
We have a similar situation to that which Mr Roberts has described,
whereby we use telesales techniques and other direct contact,
telecommunication with our customers, even the Internet, to actually
provide other methods whereby people can enter the pools. Certainly
we are experiencing, this year, a small increase in that side
of our business, which is being more than offset by the other
side. We also have a genuine tele-betting business, whereby we
have actually targeted, as a market group, the sort of people
who like to have a small bet occasionally, not every day, not
in large sums, and not so much on horse racing, and we established
a business to cater for them. Initially we used the mailing lists
and the database we had from our pools operation to see if we
could attract those people. I think we now have over one million
people still entering the pools every week, but we have 135,000
people who are actually using the telephone to make small bets
on other than the pools.
Derek Wyatt
232. Good morning. Forgive my ignorance here,
but did it ever occur to either of you, or both of you, to bid
for the National Lottery at any stage, or were you not allowed
to?
(Mr Roberts) In 1994, Ladbrooke, our parent company,
were actually involved in the consortium that did make a bid for
the Section 5 licence. In 1998 Vernons made a bid for the Section
6 licence where we were successful. Unfortunately the game did
not prove to be popular and we had to withdraw it.
233. Is this the "Easy Play Game"?
(Mr Roberts) That is right.
234. Why do you think that was unsuccessful?
(Mr Roberts) I think it was very difficult to actually
generate a prize which customers could actually see to be of value
against the prize that they are actually playing for on a Saturday,
which is in the order of £7 to £8 million. It was very
difficult to generate that prize.
(Mr Withers) Can I answer the Littlewoods side of
that? The fact was that Littlewoods concluded at the time of the
original bid that we actually, effectively, already ran the unofficial,
what might now be called "the people's lottery", but
I think we would have all described the football pools in those
days—Littlewoods having the largest share of the market—as
the quasi National Lottery. I think it was determined that
it was not appropriate for us to try and run both. If we had actually
been successful in bidding for the National Lottery we would have
had to give up the pools and, therefore, it did not seem to be
a good commercial thing to do.
235. Are you saying that your turnover and profit
is much higher as a consequence of not running the Lottery?
(Mr Withers) I think that our turnover and profit
is fairly publicly known. If we can relate it to the prizes, which
our consumers would, I think in the weeks before the National
Lottery was launched our first dividend was £2.9 million.
Our first dividend in recent weeks would be less than £500,000,
so the turnover has dramatically decreased.
(Mr Roberts) The pools being seen as the National
Lottery prior to 1994 is a very valid point. The market was worth
about £1 billion and this year it is worth about £180
million, an 82 per cent decline. In 1994 we employed about 6,000
people in the industry, and in addition to that we had around
100,000 collectors on a part-time basis. We were generating over
£300 million in tax for the Revenue and generating about
£80 million in good cause money. So we were very much "the
people's lottery" up to 1994.
Mr Maxton
236. With all due respect, you were not a "people's
lottery", because you were not running the pools industry
in order to give money to good causes. That you might give money
to good causes is fine, but you were running a commercial operation
in order to make money for your shareholders, is that not the
difference?
(Mr Roberts) I would not argue with that point, but
we did generate £70 million a year for the Foundation for
Sport and Art, which is a well known body, which the Chairman
referred to earlier, and I am actually a trustee of that body.
In addition to that we gave about £12 million to the Football
Trust, now called the Football Foundation.
237. That is fine, I do not disagree with that.
The fact that you gave money to good causes, I accept, but the
fact is that the National Lottery was established for the sole
purpose of raising money for good causes. That is not your primary
purpose, is it?
(Mr Withers) We are not disagreeing with that at all.
238. You are attempting to try and confuse the
balance between the two.
(Mr Withers) We are not confusing it, sir, but if
we put ourselves in the consumers' place, the consumers' view
is that before 1994 the consumer entered football pools and they
could win a large sum of money on a Saturday night, we all used
to crowd around the radio, in our youth, listening to those results.
It was effectively the dream ticket of those days. It has been
replaced. I do not disagree at all where the money goes.
239. That comes back again to this idea that
there ought to be one regulatory body. The National Lottery, unlike
your pet and any other gambling organisation, was established
by this place, by Parliament. It is regulated by this place. At
the end of the day it is accountable to this place. You are not.
Therefore, why on earth should the National Lottery be governed
in the same way as other gambling, because we already govern it?
(Mr Roberts) We are regulated by the Home Office.
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