Memorandum from the Bingo Association
(DGB 49)
INTRODUCTION AND
BACKGROUND
1. The Bingo Association represents the
interests of 104 operators, who between them have 538 clubs. Our
members range from the largest companies, operating over 100 clubs
each, to many single-site operators.
2. The bingo industry supports moves to
modernise and overhaul gambling legislation to make it more flexible
for the future and in this respect accepts that a degree of deregulation
can be justified.
3. There are aspects of the Governments
proposals which, if implemented, could dramatically affect the
future structure of the gambling industry, and significantly increase
the risks of a rise in problem gambling.
4. Our main concerns centre on:
— The Gambling Commission.
TAXATION
5. The Government recently stated[1]
that raising revenue for the Government was one of its objectives
in reforming gambling legislation. The Association views this
with grave concern: gambling regulation is a matter of social
policy, not revenue generation. This places a new perspective
on recent moves by Government to impose a gross profits tax system
on a wider range of gambling products (betting, bingo and now
possibly machines), seemingly to achieve a uniformity of application.
It would now appear that this trend is to ensure the Government's
revenue targets, not to improve matters for industry. This would
explain the Government's insistence on moving to GPT, even where
industry indicates that it is inappropriate or unnecessary.
6. Whilst the Government states that social
responsibility will form the heart of new legislation, the policies
it is putting forward are in some cases incompatible with this
objective. Higher revenues for government will be generated by
a significant increase in the number of people taking part in
hard gambling—the Pion Report[2]
estimates an increase from 3 per cent of the population to 10
per cent—resulting in more problem gamblers. Indeed, bingo
will be making contributions to the Gambling Industry Charitable
Trust to address problems caused by much harder gambling products.
BINGO IN
CASINOS
7. The Association has stated its objection
to bingo being offered in casinos in every submission it has made
as part of the gambling review process. Although the two major
operators, representing nearly 300 clubs, support the policy of
bingo in casinos, seeing the potential to apply for casino licences
(they already operate casinos and identify a potential synergy
between casino gambling and bingo), the majority of the Association's
members are firmly opposed to this policy.
8. The 1968 Act intended to separate hard
and soft gaming to address the problems caused by the interaction
of the two in single premises, which had led to gambling spiralling
out of control[3].
The Government has offered no rationale for removing this central
plank of gambling policy. It is this policy that has led to the
development of bingo clubs with a "neighbourly" emphasis,
many of which form part of the social fabric of our communities.
Surveys have consistently shown that for players, the social aspect
of bingo is one of their main reasons for playing in a licensed
club.
9. The removal of bingo from casinos would
have no impact on the overall attractiveness of the casino offer.
Many players indicate that they do not believe the two products
mix[4].
Bingo in casinos could be run on a loss-leading basis to draw
players from the softer games (where the ability to play rapidly
and chase losses is limited) to the harder casino products where
stakes will be unlimited and players can stake repeatedly. The
Association would argue that a soft gambling product like bingo
is out of place in a casino.
10. The inclusion of bingo in casinos is
likely to result in the loss of a significant number of bingo
clubs, and the social amenity they provide, by 2007[5],
with the likelihood of a considerable number converting to casinos.
This would dramatically reduce the number of stand-alone clubs
that are likely to be operating. The Pion Report[6]
makes clear the extent to which revenue from bingo will be cannibalised
by casinos: on its figures, this would be £225 million per
annum, (30 per cent of bingo's current gross yield), an assessment
reinforced by KPMG[7].
Added to this will be the loss from bingo clubs of a proportion
of the £108 million of redirected machine gross yield. This
principle of "switching" is also recognised by BISL[8].
The remaining "stand-alone" bingo clubs will have a
lower prize offer (because of less money staked), the industry
will have less marketing spend, and the recent trend in admissions
decline is likely to accelerate. Significant market consolidation
is likely to follow, leading to less choice for the consumer.
Is the Government abandoning "neighbourly" for large-scale
hard gambling because it will generate more revenue, regardless
of the consequences?
11. The Government's intention is that the
relaxation on multiple bingo and limits for link bingo and added
prize money will improve competition and choice for the consumer[9].
Combined with bingo in casinos, this could well lead to exactly
the reverse: the National Game is likely to lose clubs through
closure, casino conversion, and the possibility of the large chains
playing in-house linked games. Stand-alone clubs will have lower
prizes and will be able to compete less effectively than before.
In fact, the new regime offers stand alone licensed bingo very
little to counteract the negative effects of significant growth
elsewhere.
12. A new regime should offer consumers
greater choice, not less. It is important that a genuinely soft
gambling product remains on offer for those who want it. For bingo
to fulfil this role—set out in the wider policies on bingo—it
must remain in its current environment and be excluded from casinos.
Whilst Government and legislation should not preach to people
on how they should spend their money, it nevertheless has an obligation
to ensure freedom of choice. The proposed inclusion of bingo within
casinos would inevitably remove that choice from a large number
of current bingo players who would either be forced to play bingo
in a casino, or stop playing.
PLAYER PROTECTION
13. The Budd report highlighted the extent
to which people's behaviour is influenced by environment and those
around them: "people's behaviour typically conforms to that
of others in the situation, particularly where behaviour is public
and unambiguous. Adults as well as adolescents and children are
influenced by their peers. If individuals are exposed to settings
in which people gamble, then behavioural norms, (what most people
in the situation actually do) will influence their gambling behaviour.
Thus the environments of, for example, casinos and arcades are
likely to have a reinforcing effect on an individual's gambling
activity, whereas buying lottery tickets in a newsagent's shop
commonly would not." [10].
In this way, bingo players used to playing in the soft gambling
environment of today's licensed bingo club could be adversely
affected by the harder gambling environment found in a casino[11].
14. A large majority of bingo players do
not want to play in a casino. In recent research[12],
69 per cent of those questioned felt that casinos would not offer
the same opportunity as their current club, with 71 per cent indicating
they wanted to make a positive decision to go to a casino, rather
than because it was a place that offered bingo. 63 per cent agreed
strongly that "my choice of where to go would be restricted
if this bingo club changed to a casino and bingo club", with
54 per cent saying they would not continue to play bingo in a
casino set up. 75 per cent of respondents felt that if bingo was
played in casinos it would result in more problem gambling, of
which 54 per cent said it would result in much more problem gambling.
The Research concludes that "it is apparent that a number
of substantive public interest issues arise from this research".
If a large number of clubs close as a result of new legislation,
players may not have the choice between stand-alone bingo or playing
in a casino, and many may simply stop playing as a result. Clearly,
bingo players do not feel that bingo's inclusion in casinos widens
or improves consumer choice.
15. Pion suggest that up to £800 million
of the growth in casino gross gaming yield will come from overseas
visitors[13],
but BISL is more cautious, suggesting that whilst tourist visits
to casinos might increase, resort casinos will not generate significant
additional inward tourism, or result in British people replacing
visits abroad with visits within the UK[14].
If the more conservative view is correct, casino operators will
need to increase individual spends per head in order to meet the
return on investment targets they have set. This could well put
more consumers at risk of spending beyond their means, or developing
a problem with gambling, particularly where they are new to hard
gambling products, with all the attendant social costs.
16. The Budd Report advocated a cautious
approach to deregulation[15],
but this does not appear to be reflected in legislation. Why has
the Government chosen to deregulate so extensively, so quickly?
In our view the Government's position on consumer choice versus
player protection is extremely confused. The Government states
that "it is appropriate to allow for a controlled evolution
in the choice of gambling products available to informed adult
consumers"[16],
arguing that the Bill does not "allow for an uncontrolled
expansion in the quantity or intensity of gambling products available
to the public"[17].
However, it is difficult to see how this can be reconciled with
even the most modest estimate which doubles casino numbers[18]
and the increase in the number of machines from less than 900
to between 30-50,000[19],
offering a significantly greater intensity and range of products,
accessible to members of the public. The policy paper highlights
the factors influencing problem gambling: "Individuals can
`chase losses' in the mistaken belief that if they keep playing
or betting they are more likely to be lucky and win their losses
back. Caught up in the adrenalin and momentum of the moment, they
forget that each event is quite unique, and the chances of winning
or losing relate only that event"[20],
but fails to reflect it in wider policy. This is a vivid description
of the potential impact on those exposed to hard gambling with
little or no previous experience, or whose expectations are based
on their experiences of softer gambling products where the ability
to chase losses is far less.
17. Whilst the policy paper argues that
"informed consumers" should be given greater choice
and access to gambling products, the BISL report demonstrates
that the public are clearly not "informed" about gambling
generally[21].
The Government states that the Bill is intended "to reflect
the view that some kinds of gambling, depending on how and where
they are organised, present higher risks to individual participants
and to the public as a whole than others; and that it is important
for the public to know, when they see different kinds of premises,
where gambling is available, what they may expect if they decide
to go in and start spending"[22],
but gives no indication of how this improvement in public information
is to take place. It is also difficult to see how this concept
of greater risk is actually reflected in gambling policy. The
massive expansion of hard gambling planned would hardly seem to
reflect concern over higher risk. How will a bingo player, accustomed
to the social atmosphere in their local bingo club, be "informed"
about the increased risk when they play bingo in a casino? At
the moment it is highly unlikely that such information will be
sufficient widely available to warn new players of the potential
dangers. The Nera Report[23]
warns of the difficulties of re-regulating after a process of
deregulation and recommends that the Government should seriously
reconsider its proposed legislation.
THE GAMBLING
COMMISSION
18. The Association is concerned at the
high projected costs for both the Commission and Local Authorities.
This will impose a significant additional tax burden, which will
fall particularly heavily on smaller clubs for whom it will be
a large fixed cost. In view of these increased costs, a graduated
licence fee system would be more appropriate. The detail of some
of the Commission's powers now suggests that some may be excessive:
the "authorised persons" in clause 223 cover an extremely
wide range, giving significant powers to those outside the Commission
and Local Authorities.
19. We are particularly concerned to note
that Local Authorities are being given the power (Clause 67) to
apply special conditions to a licence restricting the number of
playing positions in a club. Magistrates do not currently have
this power and we consider this to be unnecessary additional regulation,
which was not contained in Budd or "A Safe Bet for Success".
All matters relating to layout are a matter for planning, not
licensing. Further information is required on the anticipated
scope of conditions under this clause.
20. The Association is concerned to note
the imposition of a 10 year period for operating licences (Clause
87), in contrast to the current unlimited period for Certificates
of Consent. The proposed time limit imposes new and unnecessary
administrative and cost burdens on operators.
21. Whilst the industry welcomes the principle
of Commission guidance to Local Authorities, the requirement to
consult the industry contained in clause 17 should be mandatory,
not discretionary. In clauses 137-139 it is also unclear which
conditions are likely to be "mandatory" and which "default".
Without further information, we are unable to be certain whether
this will present the industry with difficulties.
22. The provisions of section 21 of the
Gaming Act do not appear to be contained in the draft Bill. We
have received assurances from the DCMS that these games would
be maintained: further clarification is required over their status
in the new legislation.
CONCLUSION
23. Whilst the industry continues to support
the wider principle of updating gambling legislation, the Association
believes that the future of many bingo clubs are threatened by
aspects of the Governments proposals. It would welcome the opportunity
to offer more detail to the committee in oral evidence.
1 Lord McIntosh, speaking at BACTA conference, 26
November 2003. Back
2
Gambling Deregulation Impact Study Pion Economics, Oct
2003 p 7. Back
3
Introduction to the Gaming Act, Home Office, 1968 p 1
". . . the intention underlying the Act is to reduce drastically
the number of commercial clubs providing games other than bingo;
to restrict bingo to a neighbourly form of gaming for modest prizes;
and to check the proliferation of gaming machines. Back
4
A Winning Hand, p55 ". . . those more aware of the
atmosphere and customers within bingo halls, casinos and bookmakers,
questioned whether this combination was desirable or even whether
it would work. There was a sense that bingo and casinos are best
kept separate as the atmosphere and clientele within each is perceived
as very different." Back
5
Henley Centre, research conducted as part of review of bingo
duty, 2002 Total clubs before reform by 2007 estimated at 633.
Including legislative reform, 548 including 138 casino conversions. Back
6
Gambling Deregulation Impact Study, p 5 "we have
assumed for modelling that, of the 75 per cent of spending not
accounted for from income growth and savings, 20 per cent is `switched'
from bingo (10 per cent), machine (5 per cent) and lottery (5
per cent) products." Back
7
The UK Gambling Market in 2003 & 2009, KPMG, December
2003, p 9. Back
8
A Winning Hand, p 10 "In the absence of large increases
in overall UK consumer expenditure on leisure, it is likely that
the majority of growth in the industry will be at the expense
of other leisure pursuits including pubs, clubs, cinemas and restaurants
. . . Similarly, the growth of casinos may be at the expense of
other sectors such as bingo and the National Lottery." Back
9
A Safe Bet for Success, DCMS, 2002, p20 "These measures
will provide greater choice and enjoyment for players, and more
options for the industry in designing bingo games and meeting
the needs of customers." Back
10
The Budd Report, 17.23, p 87, citing National Research
Council (1999) p 249. Back
11
Gambling Liberalisation and Problem Gambling, Nera Economic
Consulting, Nov 2003 p 10 "hybrid casino/bingo centres which
will initially operate on each side of a dividing wall but this
will be removed when regulation allows. This implies that bingo
players will be presented with hard gambling opportunities when
their intention was to play bingo." Back
12
Beaufort Market Research, Sep 2002. Back
13
Gambling Deregulation Impact Study table p 7, p 16 "existing
overseas visitors: 10 per cent of holiday, 10 per cent of business
and 5 per cent of miscellaneous visitors visit a casino once during
their visit and spend double the average spend; new overseas visitors:
new casino related visits are generated equivalent to 5 per cent
of existing holiday, 1 per cent of existing business and 2 per
cent of existing miscellaneous visitors . . . spend double the
average visitor spend (in total) and spend double average spend
per casino visit; import substitution visits: 5 per cent of UK
holiday and 5 per cent of UK miscellaneous travellers substitute
UK venues for overseas travel." Back
14
A Winning Hand p 6 ". . . given that the majority
of tourists, especially those from the United States, visit the
UK for its culture and heritage and that there is strong competition
for the proposed resort casinos from those provided in the US,
we do not believe that there will be significant numbers of visitors
coming to the UK for the primary purpose of casino gambling. It
is also unlikely that significant numbers of British people will
replace visits abroad with visits within the UK. Even those people
that travel abroad to resort style casinos (mainly in Las Vegas)
do so for a variety of reasons that include the warmer climate,
other tourist attractions and the unique gambling experience provided
that will continue to provide an attractive `pull' to British
tourists." Back
15
The Budd Report, July 2001, p 10 "since we are uncertain
about the effects on individuals and on society as a whole of
changes in regulation, we suggest fairly cautious moves in the
first place, with scope for further deregulation in due course
if the results seem acceptable." Back
16
Draft Gambling Bill: The Policy, DCMS, Nov 2003 p 27 Back
17
ibid p 12. Back
18
A Winning Hand, p 21 "Amongst the Industry people
we spoke to there is a widely held view that the UK will probably
have a total of approximately 230 to 250 casinos after the changes
in legislation." Back
19
The UK Gambling Market 2003 & 2009 p 22 "Casino
revenue forecasts imply that the number of machines might be anticipated
to be between 30,000 and 50,000, contrasting with the current
supply of less than 900 for the UK as a whole." Back
20
Draft Gambling Bill: The policy p 45. Back
21
A Winning Hand p 49. Back
22
Draft Gambling Bill: The Policy p 15. Back
23
Gambling Liberalisation and Problem Gambling, p 41 "This
raises the question of whether and to what extent it would be
realistic for the Gambling Commission to re-regulate casinos after
allowing substantial investment to go into the conversion of existing
gambling outlets of the development of brand-new `international
style' casinos, after a large number of USPMs have been bought
and installed in casinos, and after the Government has grown accustomed
to a higher level of taxes from gambling activities." Back
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