Joint Committee on the Draft Gambling Bill

Joint Committee on the Draft Gambling Bill Minutes of Evidence

Memorandum from Casino Machine Manufacturers Group (CMMG) (DGB 22)

1. EXECUTIVE SUMMARY

1.1 This paper has been prepared for submission to the Joint Committee on the Draft Gambling Bill in order to aid the group in its examination of the Bill.

1.2 The Casino Machine Manufacturers Group (CMMG) is a body representing the interests of casino machine manufacturers operating in the UK. Member companies account for over 90 per cent of machines supplied to legal gaming jurisdictions worldwide.

1.3 The CMMG is encouraged by the Government's publicly stated commitment to reform the gambling laws and endorses the Government's wider objectives in reforming the law.

1.4 The CMMG would encourage the Government to publish the remaining clauses of the Bill as quickly as possible.

1.5 In responding to the Draft Gambling Bill, the CMMG would make the following principal observations:

Planning and Local Licensing Issues

Linked Machines—

Machine-Table Ratios—

Minimum Standards for Gaming Machines—

1.6 The CMMG broadly welcomes the remainder of the proposed changes outlined in the draft Gambling Bill. However there are clauses where we believe further clarification or consideration is needed.

2. INTRODUCTION

2.1 This is a response to the Government's Draft Gambling Bill. It has been prepared by the Casino Machine Manufacturers Group (CMMG), a body representing the interests of casino machine manufacturers operating in the UK. Member companies include WMS Gaming, Atronic, Novomatic, IGT, Bally and Aristocrat who, between them, account for over 90 per cent of machines supplied to legal gaming jurisdictions worldwide. The members of the CMMG are significant stakeholders in the reform process as deregulation of the UK marketplace will result in many new opportunities for the industry.

2.2 The group exists to enable more effective representation to Government of the interests of manufacturers, specifically in the context of gambling law reform in the UK. Potential changes to the regulatory and legal framework surrounding the gaming and gambling industry, in particular the role of casino slot machines, is of vital importance to the manufacturers.

2.3 Broadly, the objectives of CMMG are:

To responsibly promote further development of a well-regulated, high-integrity casino industry in the UK.

To promote the adoption of internationally recognised gaming machine standards and communication protocols.

To develop and implement a responsible code of business conduct, to observe the highest levels of business ethics and to strictly adhere to all legal obligations.

To work co-operatively with regulatory authorities and government agencies in the pursuit of these objectives.

2.4 It is the purpose of this group to assist Government and other regulatory authorities in their understanding of:

the commercial environment in which manufacturers operate;

the strong and rigorously enforced codes of practice operated throughout the world by each company represented in the group;

best practice in each world market in which member companies operate and beneficial comparisons which can be made with the UK; and

the strong commitment of the manufacturers to the adoption and maintenance of a socially responsible approach to the supply of leisure and entertainment services to the public.

3. GAMBLING LAW REFORM

3.1 The group is encouraged by the Government's publicly-stated commitment to reform the law as it stands. The proposed creation of a single Act of Parliament covering all categories of gambling activity, which is simple and flexible and without the need for future amendment in response to technological or commercial developments, is welcomed especially by manufacturers, for whom improvement of products and services through technology is an important aspect of our business.

3.2 More generally, the manufacturers endorse the Government's wider objectives in reforming the law, including the prevention of crime and disorder; fairness in gambling; and protecting children and the vulnerable. The creation of a new Gambling Commission, responsible for all licensing, regulation, supervision of social objectives and other constraints on the industry including codes of practice, will bring much needed transparency to the system. The group looks forward to working with the Government in establishing the terms of reference of the new Commission.

3.3 In terms of timetabling proposed reforms, given the high expectations which have been raised by the Government within the gaming industry, as well as the pressing need to update the law in response to rapid technological advances, the Group hopes the Government will be able to press forward as quickly as possible with primary legislation. The currently outdated nature of existing legislation fulfils none of the Government's own criteria of fairness in gambling, social protection or encouraging commercial development of the industry.

4. THE DRAFT GAMBLING BILL

4.1 We would encourage the Government to publish the remaining clauses of the Bill as quickly as possible. The manufacturers of machines will be affected by issues such as advertising, gambling in clubs and transitional provisions. The current lack of published information on how the Government proposes to tackle these areas in legislative terms means that the CMMG's response to those parts of the Bill which have been published is, to a certain extent, incomplete and subject to caveat.

5. DETAILED COMMENTS

The CMMG broadly welcomes the proposed changes outlined in the draft Gambling Bill but in accordance with the invitation of the Joint Committee offers the following initial comments and observations on the Bill.

5.1 Planning and Local Licensing Issues

The industry will be investing considerable sums in leisure regeneration projects. Therefore, it will want to be assured that a proper balance is struck between the considerable economic and social benefits, in terms of employment and new infrastructure, which will accrue to specific localities; and local consultation exercises which may give rise to opposition to these projects. It is important that developers are provided with clear and early guidelines on the way in which local opinion will be sought and measured for both the planning and local licence applications. Similarly, in the context of resort casinos, it would be helpful to know from the Government if any distinction is being proposed between the way in which local authorities should treat applications for resort casinos and those for smaller operations.

5.2 Linked Machines

Neither The Budd Report nor the subsequent DCMS document entitled "A Safe Bet for Success" proposed a ban on the introduction of Wide Area Progressive Jackpot Systems (WAPs) in casinos. In its position paper on casinos dated 7 August 2003 the DCMS expressed some concerns about "overseas evidence" which, it claimed, suggests that WAPs may influence the incidence of problem gambling.

Whilst appreciating and understanding the Government's intent to adopt a cautious approach, this group strongly submits that there is not any justification for a blanket ban on such products as proposed by section 201 of the Bill. We make the observation that we are not aware of any research material that creates a link between WAPs and an increased rate of problem gambling. We note further that our request to the DCMS for a copy of the material to which they alluded has met with no response.

Our contention is that the most prudent approach in respect of WAPs is to empower the Secretary of State to authorise such products by way of regulation. Such an approach is consistent with the position of the DCMS as published in August 2003.

In support of our submission me make the following additional observations:

— By limiting casino floor space and inserting a machine-table ratio, the Government's concerns over possible proliferation are already addressed. Limiting the availability of linked machines will serve no additional purpose.

per se

— It would be unfair and inconsistent of the Government to ban linked machines when UK casinos already offer Wide Area Progressive table games.

— Wide Area Progressive machine systems already operate in 12 United States jurisdictions and, without exception, they are subject to the most rigorous regulator-imposed control regimes. In the 17 years since their introduction there has never been a single significant security breach.

— In the future, non-linked casino jackpot machines will offer players significant prizes. So, by restricting Wide Area Progressives, the Government would not be restricting customer access to additionally large prize payouts.

5.3 Machine-Table Ratios

In its position paper of 7 August the DCMS suggested that the proposed ratio of three machines per table would be "kept under review in the light of advice from the Gambling Commission about their operation and effect." Contrary to this approach, section 140 sets out to specifically define the ratio. We submit strongly that the machine to table ratios should not be specifically defined within the Bill and that the power conferred on the Secretary of State in accordance with clause 140(10) should be used as the means to establish initial machine numbers by way of regulation.

Such an approach is consistent with the policy objective of allowing for a controlled evolution in the choice of gambling products. As to the most appropriate machine to table ratio, if any, this group invites the Committee to consider the various submissions of operator companies with an interest in the issue.

5.4 Minimum Standards for Gaming Machines

It is the norm internationally for regulatory bodies to specify strict minimum standards to which gaming machines and equipment must comply. The members of this group believe that the creation and imposition of strict standards helps provide regulatory control and preserve industry integrity. We do not believe that Part 10 of the Bill sufficiently defines such a right in favour of the Gambling Commission via the Secretary of State and strongly recommend that the Bill is amended accordingly.

6. GENERAL COMMENTS AND OBSERVATIONS

The CMMG broadly welcomes the remainder of the proposed changes outlined in the draft Gambling Bill. However there are clauses where we believe further clarification or consideration is needed.

6.1 The Gambling Commission (numbers reference the relevant clause number in the Bill)

16—Codes of Practice—We believe it is important for there to be consultation with representative groups before the Commission issues a code of practice. As with other sectors of the industry, we are working towards developing our own code of practice. We would hope that sufficient time is given to allow industry to engage with issues before a code is imposed from above.

17—Guidance to local authorities—We accept the need for local authorities to have a role in authorising the development of gambling opportunities in their areas. However we remain convinced that local authorities should not have the scope of powers to enable them to block all proposals in the area.

20—Consultation with National Lottery Commission—We would like further clarification as to the weighting that the opinions of the National Lottery Commission will receive. In the case that a direct conflict of opinion arises between the National Lottery Commission and the Gambling Commission, we would like clarification as to whose views would take priority.

6.2 Operating Licences

51—Nature of licence—We believe that there is considerable scope for confusion between the generic licence type known as Operator Licence and the specific operator licences defined by sections 51(2)(a), (b), (c), (d) and (e). Accordingly we recommend that Part 5 be renamed simply "Licences" and that all clauses within the sections covering licenses are amended appropriately. Alternatively the generic licence type could be renamed "Gaming Act Licence" or something similar.

55—Application—We believe the term "person" in subsection 1 should be extended to include "an organisation".

56—Consideration of application: General principles—(c) We see no need for the commission to take into account the suitability of gaming machines or other equipment in its consideration of licence applications. In the normal course of events a licence applicant is unlikely to have decided on equipment requirements prior to lodging an application. In any case the suitably of machines to be supplied to licensed operators will be defined elsewhere by the commission and suppliers licensed under section 50(2)(h) will be obliged to meet defined standards and specifications. This comment is predicated on the reasonable assumption that the Commission will be perfectly entitled to impose conditions that only machines and equipment approved by The Commission may be operated.

60-64—Conditions—We agree with the concept that the gaming industry needs to be well regulated and well controlled and that in pursuit of that objective The Commission should have the power to impose appropriate conditions on licence holders. We submit, however, that sections 60-64 provide insufficient detail as to the type of conditions which The Commission be authorised to impose and that further clarification is required.

79—Change of circumstances—We would welcome further clarification as to what will be considered as a relevant "changes of circumstance".

87—Initial Duration—We are concerned that this clause, as worded, may open the door to an ad hoc approach to the question of licence term. We submit that a standard term be established for each class of licence and that in doing so there should be recognition of the relevant degrees of certainty of tenure which applicants should be able to reasonably expect. Rights of review, termination and suspension contained elsewhere within the act will preserve the commission's capacity to protect industry integrity.

90—Forfeiture—We would welcome a definition of what is to be considered a "relevant offence" in this context.

92—Review—We believe that the provisions made in 2(c)(ii) are too strong, and that more appropriate wording would be "believes on reasonable grounds that a review would be appropriate.".

94—Revocation—(1) We believe that the phrase "the Commission thinks that" should be changed to "the Commission has evidence that". (3) We believe this section should be changed so that the section is disapplied if the holder of the licence can show that failure to pay was due to administrative error.

95—Financial Penalty—(1) We believe that the phrase "the Commission thinks that" should be changed to "the Commission has evidence that". (3) We believe that two years is too long a time period. There is no reason why it should take such a length of time between the Commission becoming aware of a breach and their taking action.

96—Levy—(5c) We totally support the establishment of a mechanism for the raising of funds intended for treatment, research and education. We submit that clause 596(5)(c) should be more specific as to the purposes for which funds raised by way of such a levy can be utilised.

6.3 Personal Licences

102—Exemption for small-scale operators—We believe that the Commission should not be deprived of the power to impose a conditions on small scale operators that they be personally licensed. Such a provision would seem to be counter to the purpose and intent of the legislation.

103—Application—We would like further clarification of this section. Sections 1, 2 and 3 imply that an applicant must have an employer in order to attain a personal licence. This will not always be the case.

110—Disqualification—Refer to our comment re section 90. We would like further clarification on what grounds a court can order the forfeiture of an individual's personal licence.

6.4 Operating and Personal Licences: Appeals

120—Rules—We would like clarification on what grounds the Secretary of State will have the right to intervene.

6.5 Premises Licences

124—Three-year licensing policy—(3c) We would like clarification as to how much weight interested parties will have. We strongly believe that due regard must be given to weighting interests. (4) We believe further clarification is necessary as to what regulations may be made.

128—Responsible authorities—(1)(i) We would like further information regarding who could be included as a result of this clause and for what reasons.

129—Interested party—(a) We would like clarification as to how it will be determined that a person lives "sufficiently close" and on what grounds they will be considered to be "affected by the authorised activities". (b) We would like further clarification on how it will be determined that someone's business interests are affected.

140—Gaming machines—We submit strongly that the machine to table ratios should not be specifically defined within the Bill and that the Secretary of State should be empowered to define them by way of regulation (see Section 5.3).

153—Initial duration—We would like further clarification regarding the length of the period between the Secretary of State issuing a prescription and the licence expiring.

155—Revocation for failure to pay fee—(2) We believe this section should be changed so that the section is disapplied if the holder of the licence can show that failure to pay was due to administrative error.

156—Lapse—(1a) We do not believe that a premises licence should automatically lapse if the licensee dies. Instead, there should be provision permitting business continuation pending licence transfer acceptable to the Commission.

159—Application for review—(3) —We would like further clarification as to the length of the notice period.

6.6 Temporary Use of Premises

We are unconvinced of the need for temporary licences. We are concerned the measures contained in this section could encourage the proliferation of gambling through the emergence of "mobile casinos". If these measures are included in the Bill, further clauses are necessary to specify the actions that can be undertaken by a person who possesses a temporary licence. At present, the existence of such a licence would seem to legitimise all forms of gambling and impose no restrictions.

6.7 Gaming Machines

192—Gaming machine—(2)(d) We remain slightly unclear over what is meant by this clause and submit that it should be reworded to more specifically define its intent.

193—Gaming machines: Categories A to D—(2) —We register our concern that regulations to be produced in accordance with this clause should be defined very early after establishment of the commission. The group records its willingness to work closely and cooperatively with the commission in pursuit of that objective.

We note that this clause does not make any provision permitting the Secretary of State to make regulations which relate specifically to the design, manufacture, and performance of any particular gambling equipment. It is the norm internationally for regulatory bodies to specify minimum standards to which gaming machines and equipment must comply. We believe that this clause should include wording which permits the Secretary of State to impose minimum standards consistent with those adopted internationally.

197—Use of machine—We believe that this clause will become redundant if the recommendation relating to clause 193 is adopted and worded appropriately.

198—Supply, etc—We would welcome further details about the likely nature of the regulations.

201—Linked machines—The group strongly submits that there is not any justification for a blanket ban on such products and believes that the most prudent approach in respect of WAPs is to empower the Secretary of State to authorise such products by way of regulation (see Section 5.2).

6.8 Schedule 6—Category D Gaming Machine Permits

Making of an application (3a) —We would like further clarification of this point as it is unclear why a permit cannot be applied for if an alcohol licence has effect in respect of the premises.

December 2003



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