Further supplementary written evidence submitted by the National Casino Industry Forum (GA 103)

Since NCiF gave evidence and the Committee concluded its sessions, Aspers' new Large casino at the Westfield Shopping Centre in Stratford in East London has opened. We understand that the Committee has visited the casino. This development and some ambiguity in other evidence presented to the committee persuade us that there are a number of points of clarification we should address.

There was written evidence from the 'Casino network'- the organisation representing the 16 Local Authorities (LA's) that hold the right to issue the 16 2005 Act licences, which is blatantly protectionist, wrong in fact and with which we profoundly disagree.

The economic mechanism which controlled the supply of casino licences under the 1968 Act - the `Demand Test' - was effectively abandoned in 2001. This followed the government's acceptance of the recommendation of Sir Alan Budd's committee that the demand test should be abolished in favour of a free market approach. In anticipation of broad deregulation the Gaming Board ceased objecting to applications for 1968 Act Casino licences on the basis of an absence of a proven unmet demand. The outcome was that between 2000, when 123 casino licences were in existence, to the end of the 1968 application process in April 2006 around 60 of the extant 186 licences were granted in the 53 permitted Areas without consideration of demand.

Currently, 146 of those 186 licences are in operation. A further 10 of the 40 non-operating licences are in various stages of development and may open in the coming months. Some existing operations may close. At least 18 licences have operated in the Permitted Areas in which they were granted and have closed, trapped in areas where the supply side is saturated, the local demographic has changed or some other factor - including the grant of a 2005 Act licence - has eroded the economic basis for their development. Licences are 'locked in' while other interested local authorities are 'locked out' causing the market to fail. Only 13 licences have never opened.

Meanwhile, demand for casinos in other non-permitted areas, which would generate investment, jobs and tourism is unmet because licences are not portable.

There was also oral evidence from the Casino Network, in response to a question from the Chair, that is simply not credible;

One witness said; terms of the process itself, a lot of the authorities are moving forward and we are confident that the 16 will be developed.'

'I think there is one authority that obviously did not get to the competition stage but the rest are all proceeding to stage 2.'

Those statements are at best optimistic in the extreme and at worst totally misleading. At least six of sixteen LA's have stated that they have no plan to progress the licence process at all. Only one licence was subject to a proper competition and is operating. Of the remaining nine; two LA's have just begun their process, three have gone to legal challenge, four licences have been granted but have not been developed and of that four only one is in a genuine development process.

Considering the Act passed into law in September 2007, and only one of the 16 licences has opened in over 4 years, we suggest any optimism is misplaced. The existing industry is being held back to await the outcome of an 'experiment' which is never going to be concluded because there never was a realistic mechanism to ensure it would begin.

The failure in the market was compounded by the Independent Casino Advisory Panel process. As Richard Caborn MP, acknowledged this panel was a failure; the industry would say an unmitigated disaster. The ICAP identified the 17, subsequently reduced to 16 areas for new casino developments as part of an ill-defined experiment to test the regenerative benefits of casinos.

The primary criteria for selection of locations as defined by the DCMS were:

· to ensure that locations provide the best possible test of social impact (which may require a range of locations of different kinds such as seaside resorts, edge of town developments or inner city centres);

· to include areas in need of regeneration (as measured by employment and other social deprivation data) and which are likely to benefit in these terms from a new casino;

· to ensure that those areas selected are willing to license a new casino

The ICAP included no less than 10 existing Permitted Areas with operating 1968 casinos in the 16 locations it identified.

The outcome of the ICAP choice is negative both to the commercial health of the industry and has proven unfit for on all three of primary criteria of the DCMS published intended purpose.

· No mechanisms have been established, planned or even suggested either by DCMS or the Gambling Commission to determine how a LA is supposed to measure the social impact of a new 2005 Act casino from existing gambling products. Where a new casino is established in an existing Permitted Area with other casinos and licensed betting offices (LBOs) offering the same products - albeit in fewer numbers - any chance of separating out the causal effects is less still.

· Benefit, in terms of investment and employment, can only be identified and quantified if it is incremental and does not displace or replace existing benefits. For that to happen the market must be prepared to make additional investment in the identified areas without damaging existing businesses. That has not happened.

· The willingness to licence must be aligned to both the LA's expectation of economic benefit and the industries willingness to invest. The fact that only one licence has been developed and six LA's have de facto opted out of the process is evidence of the failure of the choice to meet the third criteria.

The industry would assert that the evidence is clear: the market has failed, and in our opinion can only be reinstated by introducing the portability of licences and a single style of casino.

This artificially constrained and flawed market also fails the consumer.

The legislation has created within casinos a very limited number of the safest (Richard Caborn's evidence) environments in which to gamble, but has failed to redistribute the most popular products in sufficient numbers to meet the demand. Less than 1% of gaming machines are to be found in the safest place to gamble casinos. Recent changes to legislation mean that the percentage of machines in casinos is likely to decrease further as the betting industry, bingo and the arcade sectors increase the supply of higher stake and prize machines on the high street.

Not only is the percentage decreasing but the offer to consumers is increasingly confusing, with some casinos premises (1968 Act) being able to offer no more than 20 machines, whether or not they offer table games at all and others offering either up to 80 (2005 Act Small) or 150 (2005 Act Large) machines with bewildering ratios of machines to tables.

It cannot be right that a casino in a shopping centre in East London can offer facilities to local shoppers that are significantly different to those attempting to meet the demand of tourists in, for example, Central London.

We believe a simple ratio of five gaming machines to one table for all casinos would clarify the consumer offer and to begin to rebalance the market failure.

We have noted the evidence from on-line operators and other witnesses about the growth in popularity of on-line and other electronic products and repeat that casinos are recognised as the safest places in which to gamble and should therefore have access to the products that are attracting the largest audiences.

The benefits are that casinos offer real, not virtual, environments, in which conduct can be monitored, and consumer protection can be at its most stringent and the return to the exchequer most rewarding.

We believe that casinos should be allowed to offer the most modern gaming products in keeping with other jurisdictions and market forces.

Finally, when the Minister, John Penrose MP gave evidence he said, in response to a question from Damian Collins MP, that the increase in stakes and prizes for B3 machines was a manifesto commitment by the Conservative Party which he felt obligated to honour. It is not clear that such a manifesto commitment exists in the public domain. Our concern is that the hierarchy of values and protections has been eroded unnecessarily.

In our opinion the hierarchy of stakes and prizes and products be re- established, with casinos at the top of the pyramid, and a more appropriate and swifter stake and prize review process be established.


We believe that if our key proposals outlined below were implemented then the land based casino industry could make a significant contribution to the Government's growth agenda:

· Portability of licences and a single style of casino

· A simple ratio of five gaming machines to one table for all

· Casinos are allowed to offer the most modern gaming products

· Casinos are re established at the top of the pyramid of stakes and prizes and a more appropriate and swifter review mechanism is established

February 2012

Prepared 1st March 2012