Annex
Response To The Joint Statement By Minister
With Responsibility For Gambling And Planning Minister
INTRODUCTION
1. The COA(UK) responds to the Joint Statement
made on 7 August by Ministers Lord McIntosh and Mr Keith Hill
MP. It is acknowledged that the statement was offered as a basis
for consultation. However, this Association considers that it
misses substantially its declared core aim of a balanced, predictable
way forward which both encompasses workable "grandfather
rights" for existing casinos, as well as opening the doors
to unprecedented expansion without unacceptable risk.
BACKGROUND
2. The factors which go to make up the nature
of the British casino industry are complex and mostly inter-related,
and the COA(UK) has already commented upon most of them in previous
submissions. However, this response seeks to address as closely
as possible the specific issues that the detail of the Joint Statement
raises. In so doing we recognise the difficulty of consistency
and logic of approach that the Departments have sought to resolve
within the conundrum of seeking to minimise any harmful effects
whilst contemplating much larger and re-shaped industry. Further,
this is to be done whilst still trying to retain the characteristics
of table-game orientated casinos rather than machine palaces.
3. The Statement recognises that the addictive
nature of machines is driven by two major factors; numbers and
accessibility. These, together with table-game floorspace and
planning input (both local and regional) are the major ingredients
of the mix put forward to regulate proliferation, limit collateral
damage, and at the same time promote the supersize resort or destination
casino.
4. One further area of uncertainty needs
clarification; how the chosen, implemented system would be changed
equitably should the proposals fail to achieve the desired outcome,
whether proliferation or undue constraint. In short, will we be
left with a series of changed situations with unfair and different
parameters or various grandfather rights? We need clarity of retrieval,
in addition to well thought-out entry conditions.
5. Our response therefore addresses the
likely effectiveness of the proposals in achieving these disparate
goals, tries to identify anomalies and, where possible, suggests
modification to the proposals.
6. Currently it is difficult to reconcile:
— massive expansion but no increase
in problem gambling as a declared startpoint;
— insistence on a Gambling Industry
Charitable Trust to counter problem gambling whilst ensuring that
the NHS involvement is peripheral; both must be involved;
— the suggestion that small casinos
per se are hard to regulate effectively does not seem to be borne
out by the major irregularities in recent years predominantly
occurring within large companies. However, it is readily acknowledged
that proliferation will in itself produce problems unless the
capacity of the Gambling Commission is sufficient and the industry
can generate sufficient staff members of quality; and
— hence the constant advice from this
Association that a strong Commission and controlled expansion
are fundamental to success, if success is in part to be measured
by not destroying the current industry.
7. The statement that government wish to
enable consumer choice to be widened with the ability to compete
in an increasingly global market is laudable in itself. However,
an expanded industry would need a greater expanded customer base
to provide the servicing of the investment. How that will be provided
is perhaps a commercial decision, but,
— despite an increase in gambling awareness
stimulated by the National Lottery, there is no groundswell of
public clamour for more and larger casinos;
— the Lottery itself is waning; would
the same happen to casinos?
— gambling is not an industry that
can be left solely to market forces;
— the conditions which have allowed
the take-off of casinos in other jurisdictions are not readily
available in the UK, such as:
— favourable, discriminatory, very
low taxation; and
— willingness of customers to travel
(15 miles is about the current UK average).
— It is obvious that despite restrictive
current regulations, some towns are already, in terms of viability,
over-provided with casinos; and
— a complete change in the British
public psyche is needed to support a strong casino industry which
is capable of underpinning in turn an internationally aligned
element of its customer base.
8. There is therefore the danger that, instead
of a smooth transition to an enlarged industry, it is beset with
a series of speculative openings and unnecessary closures in the
early years, followed about 10 years later by a further shake-up
as investors pull out from an over-expanded estate. The key must
lie in the balance of the control measures to be implemented from
the outset.
TAXATION
9. The as yet unknown taxation policy is
crucial in assessing the effect of other measures.
The Proposals
10. The Joint Statement, in putting forward
the way in which the control and targeted impact of casinos can
be achieved when the current cross-section of controls is swept
away, is couched in cautious and restrictive terms. That in itself
is a rewarding position which has moved markedly from the "Las
Vegas everywhere" when Budd was first announced. The COA(UK)
is pleased to see this measured style, but regrets that at the
same time the proposals do not provide the balanced startpoint
that the Statement seeks.
11. The proposals focus on the extremes
of the sector and in effect leaves no graduated response available
to the markets and customer preferences in between. Saying that
the market will determine the number, size and character of casinos
save the very largest complexes, requires the highest levels of
knowledge and understanding by planners of the casino industry
and its effects if the market is not to produce the very thing
that legislation up to now has achieved—minimum business
failures and the subsequent recovery of the local economy. There
is the capability for good if we get it right, and considerable
pain if we get it wrong.
12. This appraisal must also be looked at
in time frame because the striving for expansion can only occur
successfully if a much larger proportion of the British public
change their lifestyle to embrace the casino package—and,
if it is to happen, it will take time measured in years. It would
be irresponsible to damage the existing industry and its growth
whilst seeking to put in place a reliable, large-scale series
of resort or destination casinos with unproven performance within
the UK environment. This is why the balance of restrictions and
freedoms within the anti-proliferation measures is so important.
CASINO SIZE
Large Casinos
13. In promoting the large-scale end of
the market and seeking massive inward investment, the Joint Statement
has consciously upset the balance that was emerging to provide
controlled, measured change, and in its place put forward the
formula favourable to big business. Whether it is favourable to
the British public who, directly or indirectly, would have to
pick up the pieces should things go wrong, does not appear to
register quite so highly. Of course such large projects need serious
consideration and encouragement if they are worthwhile and are
to succeed. But part of that formula is the culture change recognised
by the Ministers in putting forward the magic ingredient of unlimited
machine numbers relative to small numbers of tables—and
its attendant problem gambling dangers.
Smaller Casinos
14. Happily for large casinos, the other
end of the equation provides further incentive in that smaller
casinos are proposed to be restricted to three machines per table.
This overturns the years of deliberations and concurrence of concerned
agencies such as GamCare and Gordon House that eight machines
per table was an acceptable initial balance between providing
for the market and maintaining a sensible "non-machine palace"
development.
15. As such machines will provide an impact
on casino operations in this country hitherto unseen, the effect
of these new proposals will be to reduce the competitive capability
of current casinos, leaving the door open even wider for the big
companies.
16. In one stroke, under the banner of reducing
the accessibility of machines on the high street, a huge surge
in machines is provided for and the irritation of large companies
with small competitors—an acknowledged feature of big business,
especially when the competition is successful—is removed
by denying the small operator a major means of his competitiveness
in the new market. Why should the current customers be denied
their choice of a smaller, hands-on casino operation which is
attuned to their preferences because, for the wrong reasons, the
casino can no longer compete?
17. Not surprisingly, independent operators
within the "grandfather rights" proposals, especially
those without the ability to expand their casino size, see the
3:1 machine table ratio not as a relaxation but as a means to
drive them out. Further, those with the capacity to expand their
tablegame floor area to meet the required standard for new casinos
of 5,000 sq ft should not be penalised by having to go through
the planning process for permission. They have proven their operation
and should not have further embargos or restrictions put upon
them in meeting new standards
18. Equally, the proposals, with the "precipice
bond" approach to machine and table numbers below 41 tables
and the 5,000 to 10,000 square feet table gaming areas, do not
(as presently understood) provide the flexibility to permit a
graduated mix of casino facets as well as providing a credible
deterrence against casino proliferation.
PLANNING FOR
CASINOS
19. The circumspection with which the casino
industry views the move from Licensing Justices to Local Authority
licensing needs no reiteration here. The proposed involvement
of Regional Planning Bodies could be a step towards a more coherent
expansion of the industry, but equally it could also prove to
be another layer of conflict and planning hurdles. The relationship
with and authority of the Gambling Commission again becomes crucial
in the role that planning can play. That inter-relationship will
need further definition at local level where disparate views on
the local implementation of differing policies for the blend (or
restriction) of smaller, larger and resort or destination casinos
may be contemplated.
COA(UK) PROPOSALS
20. It is therefore proposed that the startpoint
for current operations and the introduction of new operations
be rebalanced as follows:
— grandfather rights be implemented;
they should also include the right to expand the table gaming
floor area up to 5,000 sq ft if they so wish;
— thereafter the 5,000 square feet
minimum table games area be introduced exclusively for table games.
It would not be necessary to fill the area with tables but neither
should it be utilised for other elements such as machines, bars,
bingo, entertainment etc;
— above 5,000 and up to 10,000 square
feet the area must contain the minimum 5,000 square feet dedicated
to tables but thereafter the remaining area may be utilised in
a mix at management's discretion to meet their specific market;
— if the casino wishes to deploy a
table gaming area in excess of 10,000 square feet, then the first
10,000 square feet must be filled with tables at the average table
area of, say, 160 square feet each ie 62 tables. Again the remainder
may be utilised at management discretion;
— at the above three levels the table
to machine ratio should be at the 1:8 level until the nominal
62 table level is exceeded when it moves to unlimited. This would
have the effect of moving the onset of unlimited machine casinos
from 40 tables to 320 machines to 62 tables to 496 machines—large
enough for any major investment short of resort/destination casino
size where a minimum of 1,500 machines may be expected;
— all tables to be manned at manning
levels capable of proper operation. The purchase of tables alone
should not provide the basis of meeting table to machine ratios;
and
— the role of the Gambling Commission
in the planning process be again considered. There would appear
to be a continuing advisory role of which planning should take
account. The strengthening of those powers in certain circumstances
to a mandatory function seems necessary if a national overview
is to be sustained.
DIFFERING POSITION
21. One COA(UK) member, Aspinalls, does not
agree that the transitional level to unlimited machines should
be 62 tables, but should be 40 tables.
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