Examination of Witnesses (Questions 402
- 419)
THURSDAY 15 JANUARY 2004
VISCOUNTESS PENELOPE
COBHAM, MR
ROY RAMM,
MR BRIAN
LEMON AND
MR ANDREW
LOVE
Q402 Chairman: Welcome, everybody, and
this morning can I particularly welcome Lady Penny Cobham, Chairman
of the British Casino Association, Roy Ramm, Chairman of the Technical
Committee of the British Casino Association, Andrew Love, who
is Chairman of the Casino Operators' Association, and the General
Secretary of the Casino Operators' Association, Brian Lemon. Can
I ask you all to note that Elliot Grant of the Bill Team is present
at the meeting on a "speak if spoken to" basis. A transcript
of the meeting will be produced and placed on the internet within
about a week. In the unlikely event of a division, the Committee
will suspend and the public gallery will have to be cleared, but
I do not expect a division this morning. A full declaration of
interests of Members of the Committee was made at the beginning
of the first meeting, and for the information of the public, a
note of Members' interests is available for those who wish to
have it. I should mention at this point that the Committee recently
visited the Grosvenor Victoria Casino in December, where we paid
for our own supper. Can I also remind witnesses and Committee
Members to speak up because these rooms do not have particularly
good acoustics. Given that there are four of you, and later there
will be five, it is not necessary for you all to answer every
question individually. Some questions will be put specifically
to some particular witnesses. Only speak again if you have something
else to add to a question that another member of the panel of
witnesses has answered. In terms of interests, two of our Members,
Lord Brooke and Lord Wade, I am sure may wish to remind the witnesses
of their own interests in this field. From my point of view, I
would just say that I have known all four of you for a very long
time, and regard three of you as personal friends. Whether that
is a declaration of an interest or not I am not sure, but we will
endeavour to conduct our session with the normal propriety. Can
I begin by asking you how you see the future development of the
casino market given the proposals in the draft Bill? Do you expect
your members to extend the range of gambling products they offer,
or just carry on pretty much as they are?
Mr Love: I will allow the Viscountess,
as a lady, to answer your first question, if I may, Mr Chairman.
Viscountess Cobham: Chairman,
I think the issues surrounding the taxation of casinos will determine
to a very large extent the development of the market, but my members
see no reason to demur from the 240-250 casinos in the foreseeable
future that both the recent Ernst & Young report suggested
and the Gaming Board are suggesting. The question of what will
be in casinos in the future I am sure will expand dramatically,
and there will be the opportunity for casinos to provide the sort
of leisure provision that other clubs in other countries have
done in the past. But I have no doubt that casino operations will
be at the heart of these new leisure facilities.
Mr Love: May I add something further,
Mr Chairman? We concur with the views of Lady Cobham. We do believe
there will obviously be new premises and also new entrants. Much
will depend upon the public's attitude to the new style of casinos.
There will be a rise, but I also believe that after a period of
something like five years we will see almost a certainly a diminution
in the numbers as well, as market forces take over, in terms of
profitability.
Q403 Chairman: The sum total of your
answer is that the style of casino presentation will change and
rather than being a club where people go and take part in gaming,
it will be part of a mix of other leisure facilities.
Mr Love: I certainly think the
new entrants will be, Mr Chairman, but I think there will be a
band of existing casinos that cater to a selected marketplace.
Q404 Chairman: That will continue?
Mr Love: Yes.
Q405 Chairman: We will talk later about
the issues of "large" and whether the Government has
got that part correct, but on the specific issue of size in relation
to proliferation, do you think that the size requirement for the
new casinos will achieve the Government's aim of preventing proliferation,
for example, by having this 5,000 sq ft minimum requirement?
Viscountess Cobham: I certainly
think that 5,000 sq ft is a significant barrier and will achieve
the objectives of precluding what have been termed as "street
corner" casinos. It is worth reminding ourselves that 5,000
sq ft of gaming floor is probably 25,000 sq ft including the services
needed for the premises. When one thinks of the size of the Chamber
of the House of Commons at 5,000 sq ft, one begins to realise
that 5,000 sq ft of gaming floor suggests pretty large operations,
and many millions of pounds of investment. So I certainly think
that that is the barrier to what nobody wants in this country,
which is small and potentially unregulated casinos.
Mr Love: I am ashamed to say I
am at odds with my colleague. I think the simple answer to the
question is no, it will not stop proliferation. The minimum requirement
of 5,000 sq ft I accept, but it will depend upon the amount of
other related leisure activities that are placed alongside the
5,000 sq ft minimum space. There are many people around that can
finance such a project. When we had a free market, in the true
sense of the word, before 1968, there were over 1,000 casinos,
so I do not believe, or our Association does not believe that
the size will prevent proliferation.
Q406 Chairman: You mentioned, Lady Cobham
that 240-250 is the sort of figure which has been suggested in
the Ernst & Young report and other reports, but should an
overall cap be imposed on the number of casinos to avoid what
Mr Love is saying, and how easy would it be for the Government
to reign in if proliferation proved to be a problem?
Viscountess Cobham: Certainly
the regulator, which will be known, of course, as the Gambling
Commission, will need to be a worthy successor, which I have every
confidence it will be, to the Gaming Board, and will need to have
all the powers and more that the Board has to achieve its three
objectives, of keeping crime out, protecting the vulnerable and
giving a fair deal to players. I certainly think that the ratio
of machines to tables is going to have an influence on how many
new players there will be in the market, and perhaps we will be
coming back to that later on. I myself do not believe, and nor
do my members, who are some 90 per cent of the British casinos
in this country, that a cap is a necessary or desirable way of
proceeding.
Mr Ramm: Just to follow on to
what Mr Love said, there were 1,200 casinos, but most of those
were tiny, and none of them had a gaming floor of anything like
5,000 sq ft. When you look at the existing industry, there are
very few casinos with that kind of level now.
Q407 Chairman: This thought occurs to
me: given that there is this difference of view, do you think,
then, that the Gambling Commission perhaps ought to have the power
to recommend to the Government that the 5,000 sq ft threshold
be adjusted upwards if it began to prove to be inadequate? Would
that be a sensible solution?
Viscountess Cobham: I certainly
think the Gambling Commission should be given fairly extensive
powers, yes.
Mr Lemon: That the Commission
be able to alter things is obviously desirable and necessary,
but the reason we have put so much emphasis up to now on addressing
the problem of proliferation is because whatever mechanism is
introduced, we then start introducing a further set of rules.
We already had one set of rules with grandfather rights. Does
that in turn start generating further grandfather rights for a
new range of casinos, or a past range of casinos, which is then
superseded? We approach the problem with great caution. This is
why we feel we should get it right initially, as closely as we
can, rather than look to the future for change.
Q408 Lord Mancroft: The issue, if I am
right, is not actually table space at all, or the overall space;
it is about machine space, is it not?
Viscountess Cobham: The ratio
will determine that.
Q409 Lord Mancroft: If you go to what
Lord Falkland just described to me as the "high roller"
casino, with very few machines, the square footage is irrelevant
really, is it not?
Viscountess Cobham: It is, but
I would suggest, Chairman, that there are unlikely to be many
more of those in the future. I think the market is well serviced
by one or two wonderful clubs in London. What we are talking about
in the future are rather different sorts of club.
Q410 Lord Mancroft: Machine clubs?
Viscountess Cobham: No, I would
not accept that. I think what we are talking about are clubs which,
as I was saying earlier, are offering a wide range of facilities,
including all sorts of entertainment. Of course, clubs can currently
have entertainment.
Chairman: We are coming to that in a
moment, but on a point of clarification, the Minister, Lord McIntosh,
made very clear that the 5,000 sq ft threshold had been introduced
as a means of preventing proliferation, so the question the Committee
has to determine is whether that is the right square footage,
and if it is not, then what it should be, so if any of you have
any further thoughts on this, please do write to us. We still
have time to consider it. We are moving on to the issue of larger
casinos, the definition at the other extreme.
Q411 Janet Anderson: The draft Bill and
the associated guidance, as currently drafted, would have large
and resort casinos both falling into the same category. Do you
think the Bill and the guidance should distinguish between "large"
and "resort" casinos?
Viscountess Cobham: I do not think
that it is for the Gambling Bill to deal with such matters because
I think it is really a planning issue that we are talking about
here. So I think that when we look at the very largest resort
casinos—and, as has been said about other things, you know
one when you see one, in that you have hotels and a huge range
of facilities, an extension to what I was starting to talk about
in terms of new clubs as such—when you are talking about
resort developments—and you are interviewing people later
on this morning who can talk again about this—you are talking
about a completely different animal, and my suspicion is that
there will be very few of these. But I think that in the Gambling
Bill it is not necessary to determine the difference between the
two. However, when we look at the question of machines, at the
moment, we have what I would call a cliff edge situation, where
above 10,000 sq ft of gaming floor and a certain number of tables—40—then
you can have unlimited machines, and the BCA feel that you might
consider putting a limit on the number of machines until you get
to resort casinos, to, say, a cap of 1,000 machines.
Chairman: We will come on to that shortly
as well.
Q412 Janet Anderson: Would any of the
other witnesses like to add anything?
Mr Love: Yes, I would just like
to say, if I may, that our Association believes that there is
no reason why a large casino should be any different, frankly,
from a resort casino. If you are having a large casino, it may
as well be a resort casino, or vice versa. We believe that all
large casinos should have unlimited gaming machines.
Q413 Mr Page: I wonder if I could follow
on Janet Anderson's question and ask your thoughts on what might
be appropriate thresholds. At the moment, as Lady Cobham said,
there is the 10,000 sq ft cliff edge, and it is an area that actually
concerns me greatly. I would like to ask if there are only going
to be a very few resort casinos, then would it be appropriate
to establish a bigger gaming floor threshold than the difference
between those and the smaller casinos, say we have a 15,000 or
20,000 sq ft threshold coming in. I would like your thoughts on
that. Would that address those commercial concerns of the smaller
operators?
Mr Love: We do not believe that
a greater gaming floor threshold for resort casinos would address
the commercial concerns of the smaller operators. The smaller
operators are not, in the main, concerned about resort casinos,
apart from those, obviously, who currently operate in resort areas,
because in practice there will not be, we assume, that many.
Mr Lemon: They are a quite different
animal, catering for a different clientele. Small casinos, vis-a"-vis
resort casinos, are catering for a different clientele essentially,
unless they are in a resort area, of course.
Q414 Mr Page: Then how would you deal
with this cliff edge, taking it down to the 10,000 sq ft? Do you
think that there is a cliff edge problem here?
Mr Lemon: On the machine side,
in our submission, Chairman, we did point out that we thought
that it was the precipice upon approach, a drop off at 10,000
sq ft, and we proposed a sliding scale of a table mix relative
to the machine ratio, but ultimately, at round about the 400-500
machine mark, we decided that beyond that was the time for the
unlimited machine allowance to come into play.
Q415 Mr Page: The very purpose of me
asking the question was for you to put your submitted evidence
on to the record, so I wonder if any of the others would like
to comment.
Mr Ramm: I would just like to
endorse what Lady Cobham said in relation to a resort casino:
you know it when you see it. I do not think actually having an
enlarged floor specification is what is required. The overall
size of the premises, with all the additional facilities, will
be quite clear to local planners and to regional planners, as
to the impact and significance, and therefore it quite rightly
is a planning issue. I think the danger of having a floor area
of 15,000 or 20,000 sq ft, with the kind of regulations that are
proposed for the 10,000 and 5,000 sq ft areas, would make the
place very difficult to manage, and would be very difficult to
lay out. I think you may hear from operators later that they would
find constructing this kind of premises with those kinds of restrictions
very inhibiting.
Chairman: We are coming on to planning
now.
Q416 Viscount Falkland: I wonder if I
could just ask Mr Lemon to be a little bit more specific, so that
it is on the record, because people are interested in this. You
say the resort casino is a different animal and attracts a different
clientele. Can you elaborate on that a little bit so that it is
on the record, so that people understand. I think you are talking
about a destination for tourists and all the other aspects of
a resort casino as opposed to the local aspect.
Mr Lemon: There is a tradition
in this country, which I do not think will change, that people
do value having a casino close to them, and it is their local
casino, and evidence has shown that yes, they do occasionally
venture abroad to see the new premises that are now being offered
on the market, but the chap or lady who plays in a casino locally
values that local element, and they come back to that casino.
The resort casino is offering quite a different product. It is
a tourist destination. The independent operator or the individual
local casino is offering a different product, much more hands-on,
much more involved locally with a known clientele, with specific
offerings of what the management knows its clientele wishes to
have. It is a niche, a personalised approach, which the resort
casino cannot hope to match.
Q417 Viscount Falkland: Can I deduce
from what you are saying that the resort casino, which links in
to what Lady Cobham was saying earlier, need not necessarily be
gambling-led? It could be entertainment-led. I understood Lady
Cobham to say that across the board large casinos, resort casinos
and others, it is gambling that will be the core of it, but it
seems to me there is a possibility that with a resort casino,
as one sees in France, for example, gambling plays an important
part but is not necessarily the core part.
Mr Lemon: I would not agree with
that premise, sir. For the resort casino to be successful, it
must have gambling input at its core, and particularly the machine
side, because that is the driving element which they seek. So
I could not agree that the gambling was not the core element to
a resort casino. Yes, there will be all sorts of bolt-on things,
different gambling forms, entertainment forms, restaurants, etc,
but at the core of it will remain the gambling side, and in particular
the need for very large numbers of machines to drive that project.
Viscount Falkland: That is a very interesting
piece of evidence.
Q418 Chairman: Are you saying people
would not go unless they wanted to go and gamble, or would people
go and use those other facilities and not gamble?
Mr Lemon: Both are equally likely.
Q419 Chairman: So some might, like the
non-drinker in the restaurant?
Mr Lemon: Yes, indeed. Quite.
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