APPENDIX 16
Memorandum submitted by the Gambling Consultancy Limited
If I may take the opportunity of introducing myself, my name is Steve Donoughue and I am the CEO of The Gambling Consultancy Limited. We are a management consultancy that specialises in providing strategic advice to the gambling industry. In the 15 months that we have been operating, we have been fortunate enough to have as clients; Arena Leisure plc, Grey Archer plc, Sportingbet.com, bet365.com, KPMG and from abroad, Crown Casino, Australia, Sonera, Finland and Grand Casino de Mallorca, Spain to name but a few.
Prior to setting up my own business, I was KPMG's gambling consultant and advised on some relatively important pieces of work such as: the privatisation of the Tote study for the Home Office, how the Gaming Board should regulate and monitor gaming in the future for the Gaming Board of Great Britain, the financial plan for the British Horseracing Board, the acquisition of the Coral's chain of bookmakers for Deutsche Morgan Grenfell Private Equity, the unsuccessful bid for the National Lottery licence by The People's Lottery and a report on The Economic Impact and Public Perception of Gambling in the UK for Business in Sport and Leisure (BiSL).
Prior to joining KPMG, I was a research fellow at the University of Salford Centre for the Study of Gambling and Commercial Gaming. Under the tutelage of my professor, Professor Neville Topham, we produced the first report on the size of the UK gambling industry that has been subsequently used in numerous government publications.
My reason for writing is that I was lucky enough to be in the audience of the first Select Committee meeting on Gambling on the morning of Tuesday 11 June 2002 where you were receiving evidence from the likes of: Centre for the Study of Gambling; Professor Orford, University of Birmingham; Churches Together in Britain and Ireland; the Bishop of Blackburn; GamCare, British Amusement Catering Trade Association (BACTA), Business in Sport and Leisure, Blackpool Challenge Partnership and the British Casino Association.
While I was not surprised that the main focus of the Committee's questioning was surrounding the issue of the funding of research into problem gambling. I was surprised (and so forced to write) that two issues that I consider interlinked to this and in my mind, even more important than who funds research into problem gambling, were not really covered at all.
My first point of concern is the proposal in paragraph 4.10 (page 15) of the White Paper. A Safe Bet for Success, to allow for a new category of machine to be developed which would be called Amusement With Prizes machines and would have a maximum stake of 10p and maximum prize of £5. These AWPs would be allowed to be located in amusement arcades and more importantly, in unregulated and unsupervised locations such as cafe«s, taxi offices and take-away food outlets.
My concerns about this proposal are as follows:
— the total removal of gaming machines (for that is what AWPs are regardless of their change of name) from such unregulated and unsupervised locations as cafe«s, taxi offices and take-away food outlets has been recommended in the BiSL study on The Economic Impact and Public Perception of Gambling in the UK, by GamCare (the problem gambling charity) and the Gaming Board for Great Britain's submissions to the Gambling Review Body and subsequently by Budd in his final report of the Gambling Review Body. The fact that DCMS feel they can quite simply overturn such esteemed advice is very concerning;
— the removal of gaming devices from unregulated and unsupervised locations is part of the whole ethos of the Budd Report. Budd was arguing that if we are to deregulate gambling we should do so responsibly, allowing adults to gamble on whatever they like in supervised locations and removing such danger from children in unsupervised locations. This seems to me to be both logical and socially responsible. I fear that should this error be allowed to make it to the floor of the House, it would make for valuable ammunition to those opposed to gambling deregulation;
— the majority of studies on problem gambling (what little there are) and evidence from GamCare show that problem gambling starts with young children and later young adults playing gaming machines. The fact that we, as a country, allow unregulated and unsupervised play of such gaming machines still beggars belief. To allow the continuance of such activity in such locations is basically inviting harm to young people and the Government will be forced to take responsibility for that as the level of research into problem gambling grows and this phenomenon becomes more apparent;
— by re-classifying these machines as AWPs with a maximum stake of 10p and maximum prize of £5, DCMS are basically implying that problem gambling is linked to monetary value. They are saying that gambling at these "low" values does not impact on the individual, something we all know not to be true.
— a cynic could argue that DCMS may have been swayed in its deliberations by the lobbying power of BACTA. The fact that machines found in locations such as cafe«s, taxi offices and take-away food outlets are machines at the end of their working life cycle (an average gaming machine lasts for about two years, working itself through about 10 different locations and then being sold off as a cheap secondhand machine) and so represents the product of the bottom end of the machine sales industry who BACTA has promised to support. These machines were once, with maximum stakes of 10p and maximum prize of £5, the premier machines in the industry and would have been found in pubs and arcades across the UK, it is no coincidence that these limits on stakes and prizes allow for the majority of the secondhand stock to remain where it is. All the AWPs have done is worked their way through the system and found their last home in these locations. DCMS has found a rather simple answer to the fact that if they had been asked for their removal, they would have economically impacted the companies who sell these machines as well as having to answer the question of who removes them and more importantly and linked to my next concern, where are they?
— an even more cynical observer could comment that by enforcing the removal of these AWPs, it would highlight the fact that not only does no one really know where all of these machines actually are, but also it would show up the numbers of such machines that are unlicensed and in some cases being operated by terrorist organisations. I would suggest you contact the Gaming Board to confirm these allegations.
My second point of concern is about the lack of any statistics that any part of the industry (apart from the Gaming Board and the National Lottery) is forced to produce. If we are to be concerned about the need for more research on problem gambling, surely we need the data to conduct this research with. No other gambling country in the world (to my knowledge, having done a number of world comparison studies) produces less statistics about gambling than we do. Surely, if we are to monitor the impact of gambling deregulation we need the raw materials to do so? To show the extent of the data vacuum in this industry, it may help if you know that at present:
— the officially reported number, turnover and location of gaming machines in the UK is provided by BACTA, the machine operators/suppliers/manufacturers trade association, hardly an unbiased source;
— a more effective method of finding the number and location of gaming machines would be through checking their Amusement Machines Licence Duty (AMLD) licences details, unfortunately, these are administered on a local licensing district basis and centralised aggregation of data was discontinued many years ago;
— other gaming products such as bingo and casino games are only publicly reported in a very consolidated manner. Countries such as Spain, France, the USA and Australia report turnover figures by outlet and then break it down by game. In the UK there has always been a reticence to do this due to "commercial sensitivity" reasons;
— with betting, off-course betting figures were either supplied by the bookmakers themselves or calculated from the Betting Duty receipts, neither being as accurate as one would hope. On-course betting figures have always been purely estimates as a percentage of off-course turnover. The move to Gross Profit Tax is not expected to help furthering our levels of knowledge regarding the amount bet.
It does not seem to me to be very far fetched to expect that in any post-Budd legislative environment, where all forms of gambling will be licensed by the Gambling Commission, that as part of their licensing requirements, operators are forced to provide annual statistics. The argument of commercial sensitivity does not seem to hold water in any other part of the world and the advantages of having such data—an ability to loosely monitor the gambling environment—seems to far outweigh these concerns.
How can we as an industry, or even as a country concerned about this industry, not realise that if we don't have the proper data regarding gambling then all attempts to research and prevent problem gambling will be pointless.
I hope that I have not unnecessarily bothered you with my concerns, but having been a fairly independent part of the gambling industry for the last eight years, I would hate to see the great opportunity that the new gambling laws provide us with, wasted or abused.
21 June 2002
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