Written evidence submitted by Praesepe plc (GA 04)

Praesepe plc, through its Cashino Gaming brand is one of the largest operators of high street gaming venues in the UK, with over 170 trading outlets. It also operates 6 traditional bingo clubs including the Beacon Bingo in Cricklewood which is the largest bingo club in Europe.

The company employs approximately 1400 people.

Praesepe is fully committed to engaging with policy and decision makers in order to ensure proportionate regulation and welcomes the opportunity to give evidence to the Select Committee.

The key points of our submission are:

· The 2005 Gambling Act has continued in maintaining the position of the UK gaming industry as a well regulated and crime free sector.

· Far greater effort needs to be made by both the DCMS & Gambling Commission in regulating online gambling, which continues to operate with an unfair advantage compared to the highly regulated land based sector.

· We strongly urge the regulator to consider re-introducing the Triennial Review process which reviewed machine categories along with stakes and prize levels. The Triennial Review encouraged new products and innovation and its loss has shattered the UK machine manufacturing sector.

· We support the principle of a single regulator for all gambling activities (other than the National Lottery) and believe that the effectiveness of the Gambling Commission is a work in progress.

1. How effective has the Act been in its core objectives to:

(i) Ensure that gambling is maintained crime free and conducted in an open and fair manner;

A. It has been effective in maintaining the position that was already well established prior to the introduction of the Act. UK operators already worked very hard to ensure that gambling was crime free – as was recognised by the Budd Report – and the Act has not had any impact on that one way or another.

B. However, it was generally and widely accepted that the UK gaming industry was well regulated prior to the introduction of the 2005 Act and therefore it is difficult to judge the specific effectiveness of the new Act other than the regulator now covers Licensed Betting Offices in addition to all other forms of UK terrestrial gaming.

C. It has ensured that the Industry has continued to be crime free and conducted in a fair and open manner.

(ii) Protect children and vulnerable people from the adverse effects of gambling;

A. It has continued the strong foundation of regulatory control that commenced with the 1968 Act.

B. There has been wider age testing since the introduction of the 2005 Act, but due to the lack of any prior evidence it is again impossible to make a suitable comparison to judge the specific effectiveness of the new Act. We do believe strongly that the introduction of a longitudinal study, as opposed to the three yearly prevalence study ‘snapshot’ would be a much more effective way of monitoring any adverse effects of gambling in the UK.

C. The UK gambling industry has amply demonstrated its commitment to tackle the small levels of problem gambling that exists, by raising over £5million for each of the last 2 years to fund research education and treatment – despite the fact that the Budd Report suggested that the industry need only contribute £3million. It should also be noted that the UK Gambling Industry was making significant contributions towards research & treatment well before the introduction of the 2005 Act, via GICT and RIGT.

(iii) Update the legislative framework with regards to online gambling;

A. The 2005 Act has been wholly ineffective in controlling access to any type of online gambling by UK citizens. Online gambling continues to be completely accessible and offshore operators can and do compete unfairly with regulated UK operators across the entire spectrum of gambling entertainment. This means that the playing field is not level and also that the exchequer is losing hundreds of millions in revenue.

B. Football grounds (and therefore television) feature huge banners and electronic advertising for online gambling offers – none of which carry the ‘gamble aware’ message.

C. All sectors of the gaming industry raised concern at the time of the introduction of the Act that due to the lack of a clear picture on levels of taxation it would be impossible to put in place a system of effective regulation of the online sector. This has proved to be the case with the main target of the "remote gambling" provisions, namely online gambling operators, remaining outside the scope of UK regulation because the regulatory and tax regime that applies to it are commercially unviable. In contrast, products such as linked bingo in clubs, which previously had operated successfully and without concern for many years, were burdened with additional, costly and unnecessary requirements to hold remote operating licences. However, despite holding these ‘remote’ operating licenses the ability of bingo clubs to offer access to their own online products is very limited indeed.

D. The ‘remote’ provisions have caught products and operators who were already regulated under the provisions for land based gaming by imposing a further, unnecessary layer of regulation, while those who were outside the UK regulation at the time have remained outside, with others choosing to relocate offshore.

2. The financial impact of the Act on the UK gambling industry:

A. There has been a 12 fold increase in fees for the majority of operators since the introduction of the new Act.

B. The Act has stultified the gambling entertainment sector. AGC’s and Bingo Clubs suffered specifically and significantly when the Act caused them to remove Section 16 and Section 21 machines respectively – despite there being no evidence that these machines were in any way harmful.

C. The Gambling Commissions own statistics show a reduction in the number of both AGC and Bingo operators for each of the last 2 years. Whilst it is impossible to put the blame for this reduction solely at the door of the Act it is an undeniable fact that the increase in fees for operating and premises licences along with the removal of certain categories of machines and the proliferation of unregulated online gaming has had a huge impact on the bingo and AGC sectors particularly.

D. The removal of the Triennial Review from the regulatory regime has had an enormous financial impact. The Triennial Review both controlled and encouraged new products and innovation. It was an inclusive process of liaison with the Industry and its loss has shattered the UK machine manufacturing sector

3. The effectiveness of the Gambling Commission since its establishment, and whether it represents good value for money:

A. We support the principle of a single regulator for all gambling activities, other than the National Lottery. Like any new regulator the Gambling Commission has experienced growing pains and a steep learning curve for its staff.

B. The decision to relocate from London to Birmingham was part of a wider move within Government to save money and decentralise. However, there has certainly been no evidence of reduced costs for the Commission, which covers broadly the same role (other than the addition of betting) as its predecessor. The relocation resulted in a significant loss of key staff, many of whom had a wide understanding of gambling issues and the intricacies of the different sectors, at a time when this experience was desperately needed.

C. We regard the effectiveness of the Commission as work in progress. We can see that as levels of experience grow then effectiveness will grow also but we also feel that in some instances local Compliance Officers do not ‘see the wood for the trees’. There is a continuing inconsistency in the interpretation of Regulations by Compliance Officers which is both confusing and frustrating for operators.

D. It is difficult for many in the Industry to understand why at times the Gambling Commission has seemed to be reluctant to use its considerable powers of enforcement to swiftly deal with transgressors, while spending what appears to be a disproportionate amount of time (and therefore cost) on dealing with administrative minutia.

E. The Commissions web site continues to frustrate almost everyone that uses it. Whilst designed to be industry rather than consumer facing it is difficult to navigate and has a Search Engine that still does not list results or documents in date order. Even a simple everyday search for sector or category fee rates is a laborious and time consuming process.

4. The impact of the proliferation of off-shore online gambling operators on the UK gambling sector and what effect the Act has had on this:

A. There is no perceptible impact, off shore operators continue to provide very high stake gaming with no effective controls or protection for the vulnerable.

B. These operators have found themselves able to operate with impunity whilst at the same time evading the UK tax and licensing regimes.

C. UK land based retail operators remain at a considerable disadvantage due to the strict controls in place (machine stake and prize levels and the numbers of machines allowed are an obvious example) when compared to off shore online gambling and the taxation to which they are subjected. There is a clear case to further liberalise the rules around high street operations to ensure a more consistent and coherent approach. This case is further bolstered by the increasing demand to merge on and offline products as new technologies enhance the customer experience and enjoyment.

5. Why the Act has not resulted in any new licences for casino or "super" casinos:

A. The previous Prime Minister effectively banned any applications for super casinos.

B. The process of applications for small and medium size casinos has so far been so problematic, so as to discourage most operators (and particularly any new entrants to the sector) from making applications.

C. This, coupled with a punitive tax regime for provincial casinos (which are often less profitable than a large bingo club), has discouraged most operators from applying for a new licence.

D. We would support and welcome a proposal from the Casino Sector that sought to allow the relocation of a Casino Premises Licence to an alternative Local Authority area, providing the receiving Local Authority were willing to consent to the Transfer.

6. The effectiveness of the classification and regulation of gaming machines under the Act:

A. Given the relaxation of the admission controls for casinos it is very hard for ‘the man on the Clapham omnibus’ to understand why an age regulated business such as an AGC or Bingo Club is prevented from operating the full spectrum of slot games in the UK.

B. The removal of Section 21 and Section 16 machines, together with the suspension of the effective Triennial Review process has shattered the once vibrant and successful UK gaming machine manufacturing sector. The production of gaming machines in the UK has fallen from circa 85000 machines in 2004 to just 12000 in 2011, resulting in a significant number of job losses. There is no clear reason why the Triennial Review was seen as no longer fit for purpose and we therefore call for its immediate reintroduction.

C. The Act has failed in its effective management of slot machine gaming in the UK and has failed to allow the industry to move ahead by embracing new technologies and game designs to such an extent that as an industry sector it has almost gone out of business and the UK is now lagging behind other countries in Europe, where once it provided the gold standard.

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

A. The most recent Gambling Prevalence Survey showed a slight increase but as the Minister responsible, John Penrose said, the increase is "just into the areas of statistical significance". It is therefore hard to judge what impact the Act has had. We would reiterate our view that all stakeholders should press for the introduction of a longitudinal study.

B. Recent Government statistics clearly show that the UK has one of the lowest rates of problem gambling in the world.

C. Whilst one problem gambler is one too many the most recent Prevalence Study showed that less than 1 in 100 of the adult population has a problem with their gambling. The same survey showed that gambling is an increasingly mainstream leisure activity in the UK.

D. It is clear that great efforts are being made by operators to address problem gambling both through the direct annual contribution of £5 million worth of funding to research, education and treatment as well as the operators’ own programmes designed to work with those in need of help. Much of this work however was already ongoing prior to the introduction of the Act.

E. Over the last twelve years, possibly irrespective of the introduction of the Act, the number of problem gamblers has come close to flat-lining statistically. The most recent Gambling Prevalence Survey showed a slight increase but as the Minster responsible, John Penrose, said, the increase is ‘just into the area of statistical significance’. It is likely that this rise is related to the increased availability of gambling products. Although it is the case that the compulsive gambling figure remains stable, the industry recognises that it has an absolute responsibility to tackle this problem and to try to reduce this number.

June 2011

Prepared 29th July 2011