Gambling

Written evidence submitted by Nikolas Shaw Limited (GA 02)

1. Introduction and short summary

1.1 I think we are well placed to comment on the implementation and operation of the Gambling Act 2005 (GA2005) as we are a small company with 100+ employees engaged in three different gambling sectors; casino, betting shop and arcades. The owners Nikolas and Rebecca Shaw and their senior managers have wide experience of the industry having been hands on for 25+ years.

1.2 Our comments follow the terms of reference identified in the Select Committee Announcement.

1.3 Summary in bullet point form

· One agency takes the lead on enforcement with one annual fee

· Variations to gambling licenses should be low cost

· Single license for casino premises with ancillary approval for supply of alcohol

· GC should limit personal licenses to gaming manager and above

· Legislation should restrict advertising where the operation is in another jurisdiction

· Abandon the idea of "super casinos"

· Return to the Budd recommendation and let industry decide best locations for casinos

· Distinction of large/small is pointless

· Create relationship between available area and number of live tables to prevent casinos being machine emporiums

· Stake and jackpot for casino machines should be unlimited

· Playing on-line via computer terminals in a casino should be allowed to stimulate UK based on-line industry

· The playing field for GA1968 and GA2005 casinos should be the same to remove the built in advantage given by law for the GA2005 casinos

· All casinos should be allowed to offer betting and bingo

· Present categories of machines is confusing - further development will result in more categories

· All category D machines should be removed from control and not considered as gaming machines

· Machines should be categorized by where they are sited and reduced to 4 categories: casino, bingo, arcades/betting shops and other adult only environments

· Casino machines to be allowed unlimited jackpots and numbers linked to available area and numbers of live tables available for play

· Remaining levels should have numbers limited appropriate to where they are sited (further consultation will be required)

· AMLD for high value machines is best limiter for numbers

· Experience shows customers enjoy a range of jackpots and proposals would encourage this development.

· Prevalence studies suggest problem gambling has remained steady indicating existing controls, barring and voluntary exclusion works

· Government should accept gambling is main stream enjoyed by many without problem. It is a useful source of income for HMG and provides employment for thousands of people

2. How effective has the Act been in its core objectives

2.1 The new Act incorporated the core objectives set out in The Gaming Act 1968 (GA1968). Use of plain language has improved understanding and gateways with other agencies have strengthened enforcement. Gaming machines unlawfully sited, unlawful poker and other abuses of the former Act that were common have been curbed. Protection of children and other vulnerable people from adverse effects of gambling has improved and at the same time many of the petty restrictions on our operations, particularly the casino, has been removed.

3. The financial impact of the Act on the UK gambling industry

3.1 Why is there a separate annual fee for the operating license and premises license for gambling premises plus an additional annual charge for the casino liquor license? Why is there a substantial charge for simple variations of premises licenses such as adding or removing areas from the license in addition to the cost of the grant of the license? We can accept that the cost of a certificate of consent under the old GA1968 impacted unfairly on the industry because the high cost of the certificate subsidized enforcement but annual fees for the commission and local authority is a substantial cost that is difficult to justify.

3.2 Further the casino is subject to an additional annual charge for its liquor license. An analysis of our casino income shows that just above 5% is from the sale of alcohol clearly identifying the main activity as gambling. Why then is the casino treated in much the same way as a late night disco? Common sense suggests there should be a combined license for the main activity with an ancillary license to allow supply of alcohol rather than separate licenses for gambling and liquor.

3.3 I provide two examples where a license condition in one piece of legislation conflicts with another: Our casino liquor license has a condition requiring SIA certificated door staff on Friday and Saturday evenings and on a bank holiday yet The Private Security Industries Act 2001 (PSIA) exempts casino reception staff when working as door supervisors from the legislation. Section 170 GA2005 directs that a casino may not be subject to a membership requirement yet a condition for membership was imposed on the casino under the Licensing Act 2003 (LA) between 2am and 6am each day. Such anomalies are perverse and have never been fully justified by the local police or licensing authority.

3.4 All our gambling premises receive visits from enforcement officers from the gambling commission (GC) and the local authority (LA) both often looking at the same things. In addition because the casino has a liquor license we receive a further visit from LA reviewing liquor licensing matters.

3.6 Likely Early Morning Restriction Order (EMRO) and Late Night Levy (LNL) will further impact on the casino. Casinos do not normally cause problems, even in areas experiencing serious anti-social behaviour due to late night drinking, yet are likely to have to pay for policing after midnight via the LNL (although likely casinos will be exempt from an EMRO).

3.7 We recommend one agency takes the lead on enforcement with one annual fee paid to that agency. Further we recommend that variations to gambling licenses should be low cost. In respect of casino premises we recommend a single license for the main activity with ancillary approval for supply of alcohol.

4. The effectiveness of the GC its establishment and whether it represents good value for money

4.1 The GBGB appears to have made itself into GC without major problems. Our assessment is that it has done "ok" and we feel it is not the time for "commission bashing". The enforcement side has been active in tackling unlawfully sited gaming machines and appears to be putting resources into major betting scams which is welcome.

4.2 From our casino viewpoint we question the need for personal licenses to be held by dealers/inspectors and pit bosses particularly when staff members performing a similar function in the betting shop do not require a license. The cost of these licenses for 30+ staff in what is a small casino is both expensive and at initial recruitment of dealers stage can result in delays getting the license after training has been completed. This forces us to either send the potential dealer home without pay or employ the dealer on other duties until the license is received. Both options are a waste of resources.

4.3 We believe that personal licenses should still be required for those persons in authority, gaming managers and above. Dealers/Inspectors and Pit bosses should still be CRB checked but beyond that providing GC with the names and details of those employed should be sufficient for good regulation.

4.4 We recommend therefore that GC limit personal licenses to gaming managers and above.

5 The impact of the proliferation of off-shore on-line gambling operators on the UK gambling sector and what affect the Act has had on this

5.1 Compared to 5 years ago the betting shop business has declined in real terms, the arcade business has remained steady and the casino business has increased attendance but spend per head has substantially declined. We have no figures to measure the impact of off-shore operations but anecdotal evidence suggests many of our customers in all outlets are punting on-line.

5.2 In May 2010 the casino started operating an "open door" policy. This has increased attendance but spend per head has decreased. About the same time we joined with a well known on-line operator via a white license to provide our casino on line. A small number of our customers punted at both the remote and non-remote casino but the vast majority chose to ignore the option of on-line playing despite advertising and inducements to persuade them to try.

5.3 It is unfair that UK operators can site their business in other jurisdictions yet target UK customers. Company annual reports suggest their on-line off-shore operations are busy and profitable yet they pay almost no UK taxes and make no contribution towards the cost of the commission.

5.4 We recommend that legislation be introduced to restrict advertising for gambling where the operator runs the operation in another jurisdiction.

6. Why the Act has not resulted in any new licenses for casinos or "super casinos"

6.1 It is desirable both from an operator point of view as well as the general good of the population that there should be a limit on the number of casinos in the UK. Those provided should be well regulated and the number sufficiently few to allow GC to be aware of their operation and able to deal with any abuse quickly and effectively. We do not want a return to the pre GA1968 situation where casinos were set up in the back room of public houses and quickly became a focus for organized crime.

6.2 The best limiter on numbers is the likely cost of setting a casino up. The Budd report recognized this and suggested a minimum size that effectively meant that a casino had to concentrate on gambling with alcohol and food ancillary to the gaming rather than the other way about. At today’s prices with modest fitting out the likely cost of even a small casino is around £5 million. The casino provided by our company cost well over £8 million.

6.3 When GA2005 was before the House of Commons the author can recall many MPs saying they expected a casino at every street corner that was neither sensible nor likely given the cost of setting them up.

6.4 Budd was also against the regional or "super" casino because the committee felt it would destabilize the UK casino industry. We feel that was a sensible view because the geographical size of the UK prevents a "stand alone" operation. If for instance Blackpool was allowed a casino that could offer many things that the law prevented being available elsewhere then the Blackpool casino would act as a magnet drawing custom away from the big conurbations of Manchester, Merseyside and even Yorkshire which is well connected via the motorway system. It is an odd situation where the law inhibits the local market place to the very clear advantage of a competitor elsewhere.

6.5 We feel that limiting the number of new casinos to 8 large and 8 small was pointless; then deciding to put them in areas where, in most cases, no sensible operator would want to develop a casino, was silly. A small "lean and mean" casino operation perhaps just open during the summer months might work in Skegness but not one intended to gift the local authority all sorts of benefit in kind and attract people from major conurbations a long distance away.

6.6 We feel the best way forwards is to go back to the Budd recommendation and let the industry decide the best locations for the future. The high cost of build and fitting out the new type of casino is the best limiter of size and location so the distinction of large/small is pointless anyway.

6.7 We believe the best way to avoid casinos being massive machine emporiums is to create a clear relationship between area available for gaming and number of live tables available for use. This would do away with the anomaly of the new small casino requiring 40 tables but only allowed 80 machines as against the new large casino requiring 30 tables but allowed 150 machines.

6.8 The stake and jackpot for machines in casinos should not be limited by legislation and casino should be allowed a mix of machines that best suits their operation. Customers can win or lose large amounts at the tables or via touch screen games yet are limited to a maximum £2 stake and a jackpot of £4000 when playing a machine.

6.9 We believe it should be possible to play games online via computer terminals in a casino. If the recommendation at 5.4 above were followed this would encourage growth of a UK based on-line gaming industry

6.10 We believe an attempt should be made to level the playing field between existing casinos (those presently with grandfather rights) and new casinos by applying the same measure of available area/tables. This will allow some, but not all, existing casinos to increase the number of machines and do away with the present anomaly where a new type casino has a built in advantage provided by law as against the interests of the GA1968 type casinos.

6.11 Further we believe that all casinos should be allowed to offer betting and bingo as was intended for the large GA2005 casinos.

6.12 If our recommendations were followed economics would limit the size of the industry and the gambling commission would control concerns about vulnerability and problem gambling.

7. The effectiveness of the classification and regulation of gaming machines under the new Act

7.1 We believe there are too many categories of machines. This causes confusion and sometimes problems knowing which machine can be sited where. Further it is likely the industry will develop more machines resulting in further categories.

7.2 The situation in arcades where there is a mix of high and low value jackpots is divisive when comparing one area with another. Some local authorities have adopted a strict interpretation of the law and limited the number of high value jackpot machines to 4 per arcade. Others have taken a more liberal view and allowed arcades within arcades, all separately licensed (and attracting an annual fee) so that from a customer viewpoint the arcade is one unit yet from the legal viewpoint each separate group of 4 high value jackpot machines is a separate arcade.

7.3 Our company operates one inland arcade and one on the coast. The inland arcade runs well as an adult only AGC. The coastal arcade cannot operate like that because most of our customers are visitors with families. The sea-front arcade has a family entertainment centre at the front and a number of AGC’s at the rear of the premises.

7.4 The sea-front arcade would not be profitable as a stand alone AGC nor as a FEC. The mix of machines is what makes it profitable.

7.5 We would like to see the machines in the FEC (Cat D machines) removed from the legislation and considered non-gaming machines. In our experience they are played for entertainment and fun. People using them are happy with a prize or small money bonus if they win.

7.6 They are not used in the same way as the high value jackpot machines. We therefore recommend the entire group of category D machines be removed from control

7.7 In an attempt to reduce the number of categories of machine and makes things simple we believe machines should be categorized by where they are sited and numbers linked to square footage of floor area and related facilities. Thus there would be just 4 categories; casinos, bingo clubs, arcades/betting shops and adult only environments such as pubs clubs etc.

7.8 The categorization we have in mind is as follows:-

Casinos – Present category A and all other categories below


Bingo clubs – Present category B1 and all other categories below


Arcades/betting shops – Present category B2 and all other categories below

Adult only environments – Present category B3 and all other categories below

7.9 The concept of a family entertainment centre should be just that with any machines sited there accepted as family entertainment and not classified as a gaming machine. The family entertainment centre should be separated from adult gambling areas

7.10 Casinos would be allowed unlimited stake and jackpot machines that can be linked between themselves and between premises; their number related to the available area and number of live tables. The remaining levels would have limits on numbers as appropriate for where they are sited. In respect of betting shops, pubs clubs etc the numbers of machines should be limited to what is presently allowed.

7.11 If enacted, the above proposals would not result in a big increase in high value jackpot machines because a major factor in deciding how many machines to provide is the cost of the machine duty. AMLD for a high value machine is £2500 and that alone is the best limiter of numbers. We have also found that our customers enjoy a range of machines and the above proposals would encourage that development.

8. What impact the Act has had on levels of problem gambling

8.1 This is difficult for an operator to identify. GC prevalence surveys suggest that levels of problem gambling have remained steady indicating that existing controls, barring and voluntary exclusions work. The most recent survey suggested that approaching 75% of the adult population had a "flutter" on a regular basis, the National Lottery being the most popular punt.

8.2 We believe government should accept that gambling is a main stream activity that is enjoyed by many without problem. It is a useful source of government income via taxation, duty and levies and provides good employment for many thousands of people.

June 2011

Prepared 29th July 2011