SUBMISSION 9
Memorandum submitted by Carousel Leisure
(UK) Limited
Carousel Leisure (UK) Ltd. is a company which
provides entertainment to social and working men's clubs via a
satellite TV network. Its major product currently is a daily televised
lottery game on behalf of the Working Men's Club and Institute
Union (CIU) which it transmits into CIU working men's clubs. Carousel,
through its management, has extensive experience in operating
lotteries for charities under the 1976 Lotteries and Amusements
Act.
Carousel wishes to comment on paragraph 4.43
which regulates the frequency of on-line lottery draws.
Frequency of on-line lottery draws:
1. The original recommendation that only
one draw per day should be permitted arose out of concerns the
Government had following the launch of "Pronto!" in
1997 (Pronto! was a rapid draw lottery game for pubs based on
the fixed odds game "Keno" widely in use internationally,
particularly in Australia and the USA). This game featured draws
every five to ten minutes and the Government's concerns, stated
at that time, were that the rapid draw lotteries would encourage
players to chase losses.
2. If Pronto! had been successful, the number
of these rapid draws per day could have been as many as 100 per
day. However, it was a commercial failure and soon closed. A similar
game, `Hotspot', was started in January this year by the same
individuals that were involved in Pronto! and this game is still
running in several hundred pubs. It is not clear whether this
game will be successful in the long term.
3. In its pure form, Keno, is a rapid draw
fixed odds numbers game with a high pay out ratio of 80 per cent
or more, similar to that used for slot machines and casino games.
This win percentage produces frequent small wins which encourage
players to keep playing.
4. However, in the society lottery format
the maximum pay out percentage is only 55 per cent by law and
as a consequence, the game pays small wins much less frequently.
As a gambling product, therefore, it is not competitive when compared
with fixed odds betting, slot machines and casino games and in
the long term is not attractive to serious or frequent gamblers.
Indeed, it is far less likely to encourage loss chasing than National
Lottery scratch cards which offer much higher jackpots and pay
out higher percentages (often 65 per cent or more).
5. Notwithstanding the above, if the Government
wishes to prohibit rapid draw lotteries it can do so by limiting
the number of on-line draws per outlet to a number well below
the 100 in paragraph 2 above—eg 10 draws per day—without
going to the other extreme of allowing only one per day.
6. Alternatively, the timing of draws could
be regulated so that any number of co-terminous draws would be
allowable but there would have to be a minimum time between consecutive
draws. Obviously players cannot chase losses if draws are co-terminous
because they all happen at once and if the law required at least
thirty minutes between consecutive draw times, then rapid draw
products would be impossible.
7. The White Paper proposes a limit of one
draw per day for on-line lotteries but does not detail to whom
this is directed—one draw per day per charity, or one draw
per day per outlet or one per day per lottery game. If the limit
were one per day per outlet then the outlet could only offer an
on-line lottery for one charity to the exclusion of all others.
This would favour major national charities over local causes and
as technology increasingly becomes the norm, smaller charities
would be excluded altogether.
8. The White Paper does not explain what
is meant by an on-line lottery. "On-line" has come to
mean activities on the internet rather than the simple transmission
of data by phone line that it meant five years ago.
9. Social and working men's club organisations,
such as the CIU, British Legion, Labour Clubs, Miners and Conservative
Clubs operate lotteries for their members on a regular basis.
These lotteries take place at lunchtime and in the evenings and
although most of them are currently off-line, in due course their
technology would be expected to progress so that the lotteries
could use a network of some sort. If this was then defined as
"on-line" because a data transmission system was involved,
a limit of one on-line lottery per day would prevent these organisations
from upgrading the technology for their existing lotteries. Clearly
this is not the intention of paragraph 4.43 of the White Paper.
10. Although the White Paper states that
joining up the policy is a consideration, the National Lottery
already operates more than one on-line lottery per day—indeed
it offers three on a Saturday and is planning to add several more.
Restricting societies and charities to one per day would be discriminatory
and anti competitive.
11. Society lotteries compete with the National
Lottery in the soft gaming marketplace and both products contribute
to good causes. This contribution to good causes reduces their
prize payouts and thereby their attractiveness as serious gambling
products. The good cause element reduces the addictive risk and
hence provides the logic for why these products can be sold to
the public through general distribution channels. However, football
pools (sold through general distribution channels), bingo and
fixed odds numbers games (sold through the post, the telephone
and on the internet as well as in licensed premises) are also
part of the soft gaming market. These products are not required
to contribute to good causes and are increasingly accessible.
The White Paper does not set any limits on the number of draws
per day for these products (indeed it removes them for link bingo)
leaving society lotteries the sole product singled out for this
regulation.
12. The purpose of this submission is to
ask that paragraph 4.43 be removed or modified and that what constitutes
an on-line lottery and to whom the regulation is to apply be properly
defined.
2 May 2002
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