Select Committee on Culture, Media and Sport Memoranda


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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