Scrutiny of the Draft Public Bodies (Merger of the Gambling Commission and the National Lottery Commission) Order 2013

Written evidence submitted by National Casino Industry Forum (NCiF) [GLC 001]

Introduction

The National Casino Industry Forum (NCiF) welcomes the opportunity to respond to the CMS Committee’s call for evidence for the Scrutiny of the draft public bodies (Merger of the Gambling Commission and the National Lottery Commission) Order 2013.

The National Casino Industry Forum is the major trade body representing the land based casino industry. NCiF represents all the major operators in the UK and most of the smaller independent operators. Together our members hold 90% of all casino licences.

1. In broad terms, NCiF welcomes the proposal for the merger of the Gambling Commission and National Lottery Commission, assuming that the opportunity referred to in paragraph 2 can be taken up. Regulatory efficiencies and cost savings are desirable for any industry and our welcome is based on the assumption that these efficiencies and savings can be delivered to the benefit of the industry.

2. That said; NCiF is conscious of the quite different constitutional arrangements for the two Commissions. The Lottery Commission, with its single regulated operator, has an obligation, subject to securing propriety and participant protection, to do their best to secure that the net proceeds of the National Lottery are as great as possible. This in turn leads it to a concern for the commercial success of the National Lottery in addition to its propriety etc. In contrast the Gambling Commission has no direct concern for economic outcome and is charged with having regard to the licensing objectives.

3. NCiF was clear, in its written and oral evidence to the CMS Committee in June 2011, that the industry believed that the Gambling Commission should have some concern for the economic health of the casino industry. We, along with witnesses from other sectors, cited the Hampton Review in support of our suggestion. The review stated that:

Regulators should recognise that a key element of their activity will be to allow or even encourage, economic progress and only to intervene when there is a clear case for protection.

The industry’s contention was strongly resisted by the Gambling Commission’s witnesses. Philip Graf, Chair of the Gambling Commission, on 19th January 2012 responded to suggestions that the Commission should "champion" the gambling sector by saying that:

‘I do not think it is a regulator’s job to promote an industry [...] we are not an economic regulator [...] If we were to end up promoting an industry, it would cause real issues for our credibility with wider stakeholders and our ability to be properly objective and to fulfil our duties. I think our job is to provide solid, good regulation, which encourages a responsible industry and ensures a competitive industry.’

4. NCiF remains of the view that the Commission should have ‘regard to’ (i.e. falling some way short of championing) the industry’s wellbeing. NCiF recognises that the Gambling Commission’s expressed stance is strictly consistent with the language of the Gambling Act 2005 but consider that its interpretation falls short of the practical. We believe the Gambling Commission should have a concern for the regulated industry’s financial health, not least because a healthy industry is by definition one that is better able to advance and improve upon the licensing objectives.

5. While this observation is not directly relevant to the proposed merger, it does serve to underline that, if the merger proceeds, it will bring together under one roof regulatory objectives which are very different in character. If the merger can be seen as an opportunity for the Gambling Commission component of the merged Commission to take greater heed of the financial strength of the industry it is to be welcome. Further, NCiF has some reservation as to whether the Minister’s confidence that the two quite different objectives for the regulator can in practice be reconciled as readily as he suggests is well founded. We encourage the Committee to explore carefully the governance and other implications of what may result from the merger. For example, how will a merged commission arbitrate between a new innovative wagering product, promotion or mechanism that is positive for the Lottery (and therefore for good causes) but negative for another sector or vice versa.

In summary, NCiF supports the proposed merger on the assumption in paragraph 1 and that the opportunity described in paragraph 2 can be fully seized by the merged Commission.

May 2013