SUBMISSION 7
Memorandum submitted by the Bingo Association
On behalf of The Bingo Association I am pleased
to submit our representations to the Committee with regard to
their inquiry.
We understand that the Association will not
be invited to appear before this initial inquiry, whose terms
of reference are more oriented to machines and casinos. Notwithstanding
that, we do have some relevant observations to make within those
terms of reference, as the enclosed submission shows. Should the
Committee require any further information, we shall be pleased
to assist.
In any event, we hope to have the opportunity
to give oral evidence at any subsequent inquiry into the proposals
for gambling which the Committee may hold.
INTRODUCTION
The Bingo Association represents 111 operators
with 540 clubs, accounting for 74 per cent of the industry as
a whole. Our members come from across the spectrum, from the very
large operators with over 100 clubs to many single site businesses.
As bingo operators, we are proud of our industry,
and justifiably so. Bingo has grown into a unique leisure experience,
providing our players with excellent facilities and a good night
out, as well as the chance to win significant prizes. Every bingo
game has a winner: the shared experience of anticipation and then
winning is what sets us apart from all other gaming activities.
Our players form part of a community: men and women of all ages
who come together to meet and make friends and share a night's
entertainment.
The Association supported many of the recommendations
in Budd, and welcomes the Government's proposals to implement
them. We recognise the importance of achieving a balance between
freeing gambling from unnecessary constraints but ensuring effective
regulation, and the need to address concerns over problem gambling.
Indeed, it is in this respect which the Association made its strongest
criticisms of Budd's restructuring of the gaming sector: many
of our members believe that the proposed expansion of casinos,
to include other activities such as bingo, will result in increased
levels of problem gambling. Many of our members question why no
reference is made in the White Paper to the serious concerns we
expressed for the future of bingo, and in particular the problem
of bingo players being drawn into harder forms of gambling.
PLAYER PROTECTION
AND CHOICE
One of the most fundamental changes introduced
by Budd's proposals, and implicitly accepted by Government, is
never specifically identified, receives no analysis or comment,
and is ignored in the consideration of "dealing with the
downside". Yet it removes a key plank of current legislation,
implemented because gambling was spiralling out of control. The
physical separation of hard and soft gaming was considered essential
to restore effective regulation in 1968, and is at the core of
legislation governing casinos and bingo clubs. Whilst many of
the controls built up around this principle, such as membership
and the 24-hour rule, are now no longer required to ensure effective
regulation, the majority of the Association's members believe
that retaining the separation between hard and soft gaming remains
vital for future legislation. Without it, there are likely to
be increased levels of problem gambling, plus the very real threat
that many bingo clubs, offering a valuable social amenity at the
heart of many communities, will close.
Consider the differences between bingo and casinos,
and then the likely impact of exposing players used to playing
in one environment to the activities offered in the other. Bingo
is as much a social occasion as it is the opportunity to win money:
people go to meet and make friends in comfortable surroundings.
It is a pari-mutuel type game, where stake is limited to the ticket
price set by the operator, the speed controlled, with little or
no ability to chase losses. The vast majority of gaming machines
have a maximum payout of £25, with a maximum of four offering
prizes up to £500. Casinos are hard gaming: they permit unlimited
stake, offer the opportunity for repetitive play, and the ability
to chase losses and reinvest winnings. Combined with this will
be large numbers of linked unlimited stake and prize slots, following
the lead of Las Vegas and other large gambling centres in the
US. Bingo clearly does not sit comfortably within such an environment,
and its introduction into casinos here would result in a significant
change in the gambling habits of the British population.
Although bingo players have the opportunity
to play gaming machines in licensed bingo clubs, the primary activity
which attracts them is a soft gaming product. Those who wanted
to play only machines would not go to the trouble to become a
member and have to wait for the interval sessions to play. They
would simply choose a premises more suited to their gambling preferences,
such as an arcade. However, placing bingo in casinos will significantly
increase the potential for players to "trade up" to
harder gaming.
Those visiting new casinos to play bingo will
be faced with banks of slot machines—a far cry from the
machines currently found in bingo clubs. Those who are unfamiliar
with a casino environment will easily be drawn into "trading
up" from bingo to the harder casino products. It is hard
to imagine that casino operators will not want to move players
from bingo to slots: it is well known that within licensed bingo
clubs at present, mainstage bingo provides only a small proportion
of overall revenues. Compare this with the fact that 80 per cent
of revenue in US casinos is generated by slots and it is clear
to see the motivation for moving players from one to the other.
In considering Budd's proposals, the Government
has failed to recognise the flawed assumptions which underpin
the proposals for casinos and bingo. Budd predicts that licensed
bingo club numbers will remain steady and the number of casinos
might double. However, this analysis is based on the assumption
that the increase in casino numbers will relate to new premises,
when in fact this is unlikely to be the case. It is far more likely
that existing bingo club premises, many of which have large floor
areas and scope to extend through mezzanine floors, will convert
to casinos. There are indications already that this is planned.
With no demand criteria to satisfy, no permitted areas to consider,
and several operators already established in the UK gaming market,
there is little to prevent this happening.
The proposed minimum floor area for casinos
will not act to stem a significant increase in casino numbers.
Indeed, licensed bingo as it is known now is likely to be squeezed
between casinos at one end and new, small, arcade style bingo
at the other. The removal of the demand criteria and membership
requirement is likely to mean the proliferation of small bingo
outlets, based in retail units, offering mechanised cash bingo
and machines. In fact, the primary purpose of such premises would
be the attraction of a licensed club's entitlement to £25
AWPs and £500 jackpot machines. Given the Government's intentions
on access to machines, the bingo industry is concerned that a
minimum floor area has not been proposed for licensed bingo.
Licensed bingo clubs currently make a significant
contribution to local and national economies. In 2001, bingo contributed
in excess of £235 million to the Exchequer and provided employment
for 20,000 people in clubs across the country. Bingo clubs are
part of the social fabric of many towns, providing a unique social
amenity. The majority of the Association's members believe that
if the Government's proposals are implemented, there will be a
structural shift in the bingo sector which in the medium term
will change the whole industry. There is a very real fear that
the previous downward trend in bingo admissions will accelerate
as players are moved into harder forms of gaming and a reduced
floor area is devoted to bingo.
If this were to happen, a reduction in bingo
marketing and promotion would inevitably follow. Bingo would be
submerged into an overall "casino" product, affecting
the entire sector. Those in the industry who envisage this pattern
of development fear that the choice will be between conversion
to a casino (despite a preference for remaining as stand-alone
bingo), or to sell out. Previous experience in the industry has
shown that pressures of this kind usually lead to consolidation.
Job losses would be likely.
The Government comments in the White Paper that
such concerns are matters of commercial judgement, and that the
market should be left to dictate. Many of the bingo players for
whom a visit to their local club is their only form of recreation
and relaxation might disagree.
Players currently have the choice between attending
a casino for hard gaming, or a bingo club for more social soft
gaming. Why should that choice be taken from them? Many people
will not want to be exposed to the pressures of hard gaming, but
merely want the opportunity to win money whilst enjoying a sociable
evening out. Bingo played in a casino will not be the same as
that currently enjoyed by our players. A valued social amenity
would be lost and replaced by a bingo product operating as part
of a hard, progressive, gaming environment.
To argue that the closure of stand-alone bingo
clubs as a result of casino development is merely the operation
of market forces ignores the fact that gaming cannot be treated
in the same way as other industries. If it were the same, it would
not justify a distinct legislative and regulatory framework. It
would be the responsibility of the DTI, not the DCMS, and would
be treated like any other service or leisure industry. Gaming
patently does not fall into this category, because of the potential
for harm.
The Bingo Association believes that the removal
of bingo from the proposed mix in casinos would have little or
no impact on the commercial opportunities offered in the White
Paper. However, it would ensure that a genuinely soft gaming option
remained for the playing public, and allow the licensed bingo
sector to develop within the new legislative framework. Whilst
government and legislation should not preach to people on how
they should spend their money, it has an obligation to ensure
freedom of choice. The proposed inclusion of bingo within casinos
would inevitably remove that choice from a large number of current
bingo players who would either be forced to play bingo in a casino,
or stop playing. Most stand-alone bingo clubs would find it difficult
to compete with multi-functional venues once there is no limit
to the amount of prize money that can be added and this was recognised
in "A Safe Bet for Success". Bingo could almost
be run on a loss-leading basis within such an operation in order
to secure volume, with the aim of translating bingo players into
casino customers. This pattern can be seen in Las Vegas, where
once there were premises offering bingo in much the same way as
in the UK. Now, bingo is found mainly in casinos because it cannot
compete as a stand-alone activity.
Indeed, Budd would appear to support the Association's
view that players used to the soft gaming environment of today's
licensed bingo club would be drawn into harder gaming if bingo
were located within a casino. In discussing the protection of
the vulnerable, the Report observes that:
"people's behaviour typically conforms to
that of others in the situation, particularly where behaviour
is public and unambiguous. Adults as well as adolescents and children
are influenced by their peers. If individuals are exposed to settings
in which people gamble, then behavioural norms, (what most people
in the situation actually do) will influence their gambling behaviour.
Thus the environments of, for example, casinos and arcades are
likely to have a reinforcing effect on an individual's gambling
activity, whereas buying lottery tickets in a newsagent's shop
commonly would not." .
Australia's experiences should serve as a warning
to the British gaming industry as it considers the way forward.
Following the relaxation of its gaming legislation, Australia
has seen the proliferation of gaming to the point where problem
gambling has increased significantly. The imposition of future
restrictions on the gambling industry would seem inevitable.
This is the view of the majority of members
of the Bingo Association, which has debated this issue at length.
However, there is a sizeable minority of operators (representing
over half the total number of clubs) who wish to take advantage
of the significant commercial opportunities presented by this
proposal and therefore support the Government's proposals. They
see the potential to apply for casino licences, and argue that
many of the concerns outlined are purely competition issues that
are not the concern of a gambling regulator. In addition, they
do not share the view that Budd's proposals will necessarily lead
to the decline in the independent sector feared by other operators.
Some of these operators already operate casinos, and are therefore
able to identify a potential synergy between casino gaming and
bingo.
These operators argue that customer choice is
best served by allowing the widest possible range of facilities,
and that as the most highly regulated level of gaming, casinos
should be able to provide all forms of gaming product. They disagree
with the argument that bingo will not mix with table games, citing
the situation which existed before 1968 when bingo clubs included
games such as roulette. This divergence of view was reflected
in the bingo industry's submissions to the Review Body, and has
remained broadly consistent since then.
The industry has never had a serious problem
involving under 18's taking part in gaming, as can be verified
by the Gaming Board. It has employed 16-18 year olds in various
capacities which has not given rise to problems, the suggestion
that this should not be allowed to continue will deprive teenagers,
and particularly students, of a valuable source of income. Provided
the work done by this age group continues to be properly supervised,
there would seem to be no danger of this encouraging under-age
gambling. We therefore hope that the proposed prohibition on the
employment of 16-18 year olds will not be proceeded with.
The Association does not believe that society
at large wants to see the proliferation of hard gaming in this
country. Concerns over the participation of under-16s in the National
Lottery have demonstrated society's desire to prevent under age
gambling, particularly because this age group is vulnerable. Whilst
addiction may in itself be an issue to be addressed, widening
access to gaming is likely to encourage it, whilst weakening the
structures designed to protect those who are vulnerable would
clearly be a retrograde step. Government has a responsibility
to ensure effective and appropriate regulation, and it is our
view that it is failing in this responsibility if proposals to
introduce "gaming sheds" are implemented.
IMPACT ON
THE NATIONAL
LOTTERY
The White Paper makes it clear that the Lottery's
current legislative advantage will be maintained in order to ensure
that funds for good causes are maximised. Licensed bingo clubs
have now adjusted to a gaming environment dominated by the Lottery,
and anticipate that a new gaming framework will enable all gambling
activities to develop and succeed.
The Association is aware of concerns expressed
over the possible impact of bingo deregulation, and in particular
removal of prize limits for multiple bingo, on the National Lottery.
Naturally, the industry supports the Government's view that the
possible risks to the Lottery are not so great as to justify rejecting
proposals for bingo. The attraction of bingo, played in a social
environment, is very different from that generated by the Lottery.
In scale they are vastly different: in 2000, bingo had total sales
of £1.4 billion, compared to just under £5 billion for
the Lottery (as stated in Camelot's results for the year to 30
March 2001). Sixty-five per cent of the population play the lottery,
compared to seven per cent for bingo.
The anticipated increase in spend on the National
Game of 0.5 per cent would amount to increased sales of £490,000
across the year. The main benefit of the change in legislation
is to improve admissions, which have wider benefits, rather than
necessarily increase spends by the player. Admissions could improve
without significant increases in overall spend, drawn by the attraction
of a bigger main prize.
In practice a £1 million bingo game once
or twice a year is unlikely to affect the Lottery, which offers
main draw prizes far in excess of this every week. Bingo jackpots
of this level would be as the result of accumulated stake (stake
retention), requiring periods in between games to generate the
prize pool. Whilst the industry is flattered that Camelot regard
bingo as competition, the statistics show this to be misjudged.
Overall, bingo gains less in terms of deregulation under a new
regime than many other sectors.
1 May 2002
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