Gambling

Written evidence submitted by Rileys (GA 14)

EXECUTIVE SUMMARY:

1) Rileys is one of the oldest names in British Sport dating its origins back to the 1870s and the City of Manchester.

2) Prior to the implementation of this Act, Commercial Snooker venues were able to offer the top prize of £500 on its machines which are critical to the profitability of these vital community facilities.

3) After the Royal Assent was granted Rileys and other clubs were unable to offer these prizes as new competitors entered the market such as Bookmakers and competed for Snooker’s customers.

4) Coupled with the dramatic effects of the Smoking Ban; credit-crunch and later the recession as well as the slow economic recovery the damage has been serious and devastating.

5) A proposal to amend the Act to create a new Operators’ Licence under Section 65 (point 4) of the Act is backed by the sport, by industry and by Parliamentarians across both Houses. The Gambling Commission is ‘Positively Neutral’ i.e. ‘relaxed’ about the changes and feels it will have little impact on problem gambling in the UK.

6) Yet the Coalition Government has been slow to act and the damage to the sport has increased and its proposed changes to the Stakes and number of B3 machines available in AGCs (Adult Gaming Centres) and Bingo Halls will intensify competition and further disadvantage Snooker.

7) Rileys believes that the Act’s authors and DCMS have been slow to amend and respond when clear mistakes have been identified and a stronger mechanism to deal with such disputes should be introduced in further legislation.

8) Therefore: we strongly urge that the simple and traditional route for remedy i.e. appeals for change by Statutory Instrument to the relevant Minister or Secretary of State may not be enough in the gambling arena; we would argue that future legislation should allow an independent panel assessment to be established to monitor the workings of the Act and if such a panel feels that short term considerations are inhibiting the successful running and implementation of the Act or if clear mistakes need rectifying then the panel should have powers to force Ministers to alter the legislation.

9) Rileys believes that Act has worked successfully in many ways across the piste but believes there were a number of missed opportunities (see specific replies).


RILEYS SUBMISSION TO HOUSE OF COMMONS’

CMS SELECT COMMITTEE

OVERVIEW:

Rileys was founded in the 1870s by an individual entrepreneur based in Manchester, England; E J Riley. It grew into one of most recognised brands across the Empire with Rileys’ tables and equipment exported worldwide. The first clubs opened in 1879 also in Manchester.

The game plays a vital and important socially cohesive role in society especially among young men teaching them discipline, etiquette and providing a real opportunity to develop skills and play the professional game at home and abroad.

Rileys is the largest single commercial operator in snooker clubs today with 116 venues across England, Scotland and Wales and with half a million members.

More than 3m people play Snooker every year in the UK making it one of the Top Ten Participation Sports. Rileys business was severely damaged by the Smoking Ban which wiped more than £6.4 (m) NET from revenues between 2005 and 2009.

The credit crunch nearly drove the company to the wall, as its main bank was wound –up (Icelandic Bank Kaupthing); the recession and slow recovery have added to the issues facing Rileys over the last few years. Introduction of the 2005 Gambling Act removed the right for commercial snooker to offer the top prize of £500 on its jackpot machines. This was a ‘Mistake’ according to Richard Caborn who piloted the Bill through the Commons and later campaigned for the law to be amended.

DCMS has stated that it was the intention of the legislation to restrict the B3, £500 machines to premises where the ‘primary purpose’ was gambling but Rileys has argued that this would remove their presence on Motorway Service Stations where gambling is far from the key purpose. Either way the effect has been devastating: £888,000 NET was wiped away from revenues immediately and the decline has continued.

The company has seen the closure of 65 clubs; more than 200 job losses and many clubs remain ‘marginal’.

Rileys and commercial Snooker were grouped together with the non-for-profits Working Men’s club sector and restricted to jackpots of £250 only. Though the non-for-profits sector can offer £500 prizes on their lottery machines.

The company has campaigned for two years to amend the Act through the introduction of a Statutory Instrument under section 65 point 4 of the Act which would create a new form of Operators’ Licence allowing £500 machines inside commercial Snooker venues which adhere to strict licensing conditions and receive a licence through the double-lock of Gambling Commission approval and Local Authority approval. In March 2010, Gerry Sutcliffe MP agreed to launch a public consultation on this issue.

The new Government have resisted. They have argued that they wish to help Snooker but fear the effects of ‘flood gates’ from other sectors.

It has been argued in turn that Rileys has no substantial commercial competitor and that Working Men’s Clubs have never asked for B3 machines and indeed can offer the top prize now on the lottery machines (B3A). There is no real evidence of any ‘flood gates’ existing and any new entrant would have to meet strict criteria and undo the double lock of both the Commission and Local Authorities.

It is feared that the new changes to the stakes and number of B3s in AGCs (Adult Gaming Centres) and Bingo Halls will increase competition for Snooker and make the sector more uncompetitive and more unprofitable: risking jobs and investment to a sport which is watched by hundreds of millions across the globe and needs its UK based community facilities to keep the game alive.

Overall there is reluctance by Ministers to make significant changes or re-visit this Act, even when Mistakes are identified.

It is common parlance that the problem here rests with a fear of attracting hostile and controversial press and media coverage which the Act did originally because of the plans to create Super and regional casinos. Therefore: we strongly urge that the simple and traditional route for remedy i.e. appeals for change by Statutory Instrument to the relevant Minister or Secretary of State may not be enough in the gambling arena; we would argue that future legislation should allow an independent panel assessment to be established to monitor the workings of the Act and if such a panel feels that short term considerations are inhibiting the successful running and implementation of the Act or if clear mistakes need rectifying than the

panel should have powers to force Ministers to alter the legislation.

In the UK of late, this principle of independence has been designed to avoid short term political interference over the Bank of England’s Monetary Policy Committee and of course, over the office of Budget Responsibility.

SPECIFIC DCMS SELECT COMMITTEE QUESTIONS:

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

1.1 (ensure that gambling is maintained crime-free and conducted in a fair and open manner)

• The key word here is maintenance – gambling was already crime-free and the Act has not changed that for better or worse.

• There is no evidence that the Act has helped to reduce crime as there was not a problem in the first place.

• The Budd report recognised the crime-free nature and this has been maintained.

• Gambling is probably more free and open as a result of bookmakers being regulated by the Gambling Commission.

1.2 (protect children and vulnerable people from the adverse effects of gambling)

• Important work has been done in protecting children – much heightened awareness on operators’ part.

• The removal of machines in unlicensed premises such as taxi ranks fish & chip shops is to be welcomed and has addressed the proliferation of gambling.

1.3 (update the legislative framework with regards to online gambling)

• The Act is not to blame but the ambition of making the UK home to a burgeoning online gambling market has been made redundant and impossible due to an inappropriate tax rate.

• The Act’s ambition and the legislation itself have been overtaken by events.

• Many have moved offshore as a result of tax imbalances.

• What is needed is a level playing field across Europe.

2 (The financial impact of the Act on the UK gambling industry)

Although costs have gone up there have been few or no liberalisations to offset these increased costs – any developments could have happened under the old Act.

3 (The effectiveness of the Gambling Commission since its establishment and

whether it represents good value for money)

We have found the GC to be constructive and able to recognise strengths and weaknesses in the implications and running of the Act.

4 (The impact of the proliferation of offshore online gambling operators on the UK gambling sector and what effect the Act has had on this)

• The tax rate in the UK has to be competitive for offshore operators to be attracted back to the UK.

• Rather than additional barriers in the UK, we need to work for a level playing field across the EU.

5 (Why the Act has not resulted in any new licences for casinos or "super" casinos)

This is not an area of operation for Rileys.

6 (The effectiveness of the classification and regulation of gaming machines under the Act)

The Minister who piloted the Bill through the House of Commons has acknowledged that a ‘mistake’ was made in relation to commercial snooker venues which were prevented from offering the £500 top prizes which they had been able to operate prior to the 2005 Act. DCMS has claimed that there was a policy decision made here: either way the effect has been destructive to this important sport. Members of clubs simply moved to new high street competitors such as bookmakers. The effect, along with the smoking ban, credit crunch and recession has been to throw the local community clubs into crisis. Rileys, the biggest UK operator has had to close 65 clubs and lose hundreds of jobs. The last Government accepted the problem and was ready to move to a public consultation with a view to amend the Act by Statutory Instrument. Such a change is urgently needed.

7 (What impact the Act has had on levels of problem gambling)

• As John Penrose MP has said, the increase is ‘just into the area of statistical significance’ as identified in the latest Prevalence Survey study.

• We would urge more research into the causes and categories where problem gambling thrives.

June 2011

Prepared 29th July 2011