Gambling

Written evidence submitted by David Lammy MP (Labour, Tottenham) (GA 47)

This has been written in my capacity as the Member of Parliament for Tottenham.

1. Summary

1.1 Since the introduction of the 2005 Gambling Act, there has been a noticeable shift for betting shops to cluster in certain High Street locations in the London Borough of Haringey.

1.2 A perfect storm of weak licensing laws, poor planning laws and an incredibly competitive industry has led to these clusters forming.

1.3 New betting shops have opened in the places of well used local amenities like Post Offices and banks. The crowds outside can be intimidating to local residents and can drive down footfall to other local businesses. This is exacerbated when these betting shops exist in clusters.

1.4 There is widespread frustration that the 2005 Gambling Act does not allow local residents to oppose further gambling licenses on the basis that too many exist already.

1.5 Clustering is partly driven by the need for more of the incredibly profitable B2 Terminals, which are currently limited at just 4 per licensed premise.

1.6 There is entirely inadequate monitoring from either the industry regulator (the Gambling Commission) and the Department for Culture, Media and Sport.

2. Clustering

2.1 Despite the overall reduction in the number of betting shops in the London Borough of Haringey since the introduction of the 2005 Gambling Act, there has been a noticeable shift for betting shops to cluster in certain High Street locations.

2.2 The number of gambling licenses in operation on Green Lanes, Haringey has increased from 5 to 9 since the Act game into force. Tottenham High Road has also seen an increase.

2.3 There has been decisive shift of the location of gambling license from the more affluent West of the borough to the more deprived East. Today, 85% of gambling licenses are in the East of the Borough.

3. The problems of clustering

3.1 Where the new betting shops have opened, quite often they are in the place of highly regarded, well used local amenity. Two banks and one Post Office have closed on Green Lanes, each has been replaced by a new betting shop. It is frustrating for residents to have their lifestyle changed (needing to walk further to post letters/withdraw money) because one local amenity that catered for the majority of the community is replaced by a shop that caters for only one small section of the community (where there are already several other shops to cater for that interest).

3.2 As a result of the smoking ban, each new betting shop tends to have a group of punters outside the shop smoking and drinking, particularly during the evening. These groups can be intimidating to other users of the high street, take up much of the available pavement and contribute significantly to litter problems. Where many betting shops are clustered together, the combined effect of the above problems is the drastic change in the look and feel of a High Street. It suddenly feels less safe, less friendly and less familiar to many residents.

3.3 The increase in the number of betting shops and the prevalence of the above listed problems has detrimental effects on the other businesses that surround these clusters. Local traders complain that the diversity of footfall is reduced and that this turns away other businesses opening in the area.

3.4 There is also concern that the clustering of betting shops can have an adverse influence on impressionable teenagers. For the most part, there is a large mistrust amongst my constituents that the industry does enough to prevent underage users placing a bet. This fear is not without foundation: in 2009, a mystery shopper investigation into age-checks at the five largest bookmaking chain (who account for 80% of all bookmakers in the UK) found that 98% of stores did not prevent customers under 18 from placing a bet.

4. Local Determination

4.1 I am the Member of Parliament for Tottenham, the constituency with the highest rate of unemployment in London and currently the 10 th highest in the entire country. In my 11 years in Parliament, I am well placed to notice how the commercial areas in my constituency have evolved.

4.2 With regards to my engagement with constituents and community groups over those 11 years, by far and away the local issue I have received the largest amount of representation on is the clustering of betting shops.

4.3 The current 2005 Gambling Act does explicitly forbids local residents from opposing further licenses on the basis that there are too many already in a certain locality. Many residents are frustrated, and I share that frustration, that this effectively excludes them from contributing to the licensing process.

5. Why does clustering occur?

5.1 The 2005 Gambling Act specifically tells licensing authorities to "aim to permit". It also prevents residents (or any interested party) objecting to a license on the basis that enough exist already. These changes from the previous Gambling Act removed the requirement for prospective shops to demonstrate to magistrates that there was a need for an extra betting shop.

5.2 Where a licensing authority has attempted to reject a license, the decision is inevitably appealed against and the authority can be liable for over £10,000 in legal fees should their decision be overturned. In a time of severe local government cuts, there is a large incentive to avoid using the licensing system as anything more than a rubber stamp.

5.3 The current planning system classes betting shops in the A2 Use Class Order alongside banks and estate agents, despite their very different socio-economic impact. This means that betting companies that look to expand have a huge range of premises to choose from that do not require planning permission to open a betting shop. In the London Borough of Haringey, this means 45% of all shop frontage can become a betting shop without any planning permission.

5.4 The rise of Fixed Odds Betting Terminals (also known as B2 Terminals) as the main source of income for retail bookmakers means there is always an incentive to expand. According to the Gambling Commission’s latest Industry Statistics, B2 Terminals provided 44% of over the counter profits for bookmakers, making them by far the single biggest income stream in retail sales. Because the terminals are limited to just four per shop, there is an incentive for bookmakers to open more shops in order to maximise this income stream.

5.5 The bookmaking industry is incredibly competitive with several established operators but also many ambitious new entrants, such as Betfred, PaddyPower and MetroBet, that are looking expand into new high street locations.

5.6 These new entrants tend to recruit staff from within the industry and from established operators. These staff bring with them knowledge of what locations were and were not profitable. This cross-pollination of knowledge between firms leads to the clustering around particular high street locations.

6. Fixed Odds Betting Terminals

6.1 The Gambling Prevalence Survey estimates that 13.3% of all users of Fixed Odds Betting Terminals have a gambling problem. Yet almost all of the 27,000+ B2 Terminals in the United Kingdom are located in high street bookmakers without any substantial checks to monitor individual punters activity. They allow users to play casino-type games in a non-casino environment at three times the speed, without the strict entry procedures and high levels of supervision that one would find in an actual casino.

6.2 You need to be a member of a casino in order to play the real casino games, making it possible to monitor the frequency of a punter’s visits and whether they are of legal age to gamble.

6.3 The terminals exploit the gap in understanding between relative and independent probability. I know of many stories of punters continuing to gamble on the machines on the basis that it is "about to payout" even though no such automatic payout mechanism exists.

6.4 Should someone be able to walk off the high street and wager up to £10,000 in an hour, without any robust checks on your age or your mental health?

7. Planning Law

7.1 Current law, the Town and Country Planning Act (1987), groups betting shops in the A2 category alongside Banks, Credit Unions and Estate Agents.

7.2 The government defines the A2 Class as "Financial services such as banks and building societies, professional services (other than health and medical services) including estate and employment agencies and betting offices." – does the latter not stand out as different from the others?

7.3 A betting shop can open in any premise previously occupied by any of the above without the need for planning permission. Do we really believe betting shops have the same economic impact as Banks and Credit Unions? Do they really cater to the same broad range of customers? Do they both attract similar levels of anti-social behaviour? Is a social enterprise office likely to be able the same level of rents as a multinational bookmaking firm? They even have completely different hours of operation!

7.4 Current planning law allows betting shops to open in Restaurants and Café (Class Use A3), Drinking Establishments (A4) and Takeaways (A5) without planning permission. Over 45% of shop frontage in Haringey is open to Betting Shops to move into without planning permission being required.

8. Monitoring

8.1 As far as I am aware, the Gambling Commission do not actively monitor the issue of clustering. They do not collect data of individual licenses, this is left to the local licensing authority (the council). They appear to rely on these licensing authorities to communicate the existence of new or lapsed licenses.

8.2 I was able to obtain, through the House of Commons library, a list of betting shop locations known by the Gambling Commission. The quality of this data was questionable: In around 3% of cases, it is not possible to determine the status of the licence (granted, lapsed, revoked etc.). In around 3% of cases, no postcode is provided, so it is not possible to determine the local authority of the premises from a postcode lookup (this could be done manually, but it would be rather time-consuming). In around 0.5% of cases, it is not possible to determine the type of licence (betting, casino etc.).

8.3 It is safe to conclude that the industry regulator is in no position to monitor the extent to which gambling licenses have clustered since the Gambling Act came into power.

June 2011

Prepared 1st August 2011