Examination of Witnesses (Questions 900
- 919)
TUESDAY 27 JANUARY 2004
MR TIM
BATSTONE,MR
PHIL JARROLD,
MR RAY
STONE, MR
JOHN WIMSETT
AND MR
FRANK FAHRENKOPF
JR
Q900 Lord Faulkner of Worcester: There
is no way in which our code of practice—and I know BACTA
have worked very hard at developing that—operates in areas
like the fish and chip shop and taxi-cab offices, or motorway
service stations?
Mr Batstone: Motorway service
stations should be easier because there are less of them and there
is a concentration of machines and it should be a properly supervised
business; but with thousands of fish and chip shops and taxi-cab
offices it is harder for us to do.
Q901 Lord Faulkner of Worcester: Would
it be sensible for your code of practice to have statutory backing
and be included in the Bill?
Mr Batstone: We are looking to
see that it is in the Bill and we are looking to see that our
code is transferred. We have been asking to see what is going
to be transferred.
Q902 Lord Mancroft: The Gaming Board
Annual Report, last year or the year before, points out that the
Gaming Board have no idea how many machines there are in the UK.
It is clearly unsatisfactory from their point of view, and clearly
unsatisfactory from your point of view. Do you agree? That appears
to be a lack of control, does it not?
Mr Jarrold: I am surprised at
the comment because actually the Gaming Board phoned us before
putting their report together to ask what the number of machines
in the UK are and, since we have a Henley Report done most years,
we are usually able to give them a fairly thorough breakdown.
They ask about the number of machines in the marketplace each
year before they put their report together. There is nothing confidential
about it. There are circa 411,000 gaming amusement machines, of
which circa 210,000 are gaming machines, and we can break those
down.
Q903 Lord Mancroft: Is it not rather
extraordinary for them to ask you? Should they not know?
Mr Jarrold: You would have thought
the wherewithal was there for them to be able to work it out,
because obviously the vast majority of machines have amusement
machine licence duty. That is part of why the amusement machine
licence duty is a good thing. It actually tells people where machines
are, which if you moved to a Gross Profit Tax System would become
more difficult.
Q904 Lord Mancroft: When you say
"the vast majority" the implication is that there is
a significant minority that do not?
Mr Jarrold: No, what I meant by
that not all categories of the 411,000 machines are required to
have AMLD. The vast majority are but some of the lower prize skill
machines are not. Certainly in terms of the number of machines
in the marketplace and how that has changed is available both
from the work we do and, more specifically, is available one would
hope from Customs & Excise. It is interesting, going to an
earlier question, it is one of the reasons why we have suggested
staying with the current mixture of amusement machine licence
duty and VAT because it is one of the ways in which Customs &
Excise, and anybody, can work out where the machines are.
Q905 Lord Mancroft: How many machines
of the 411,000 do you think are in pubs and clubs, in alcohol-licensed
premises?
Mr Jarrold: There are about 210,000
gaming machines so I would have said something like 80,000. The
vast majority of gaming machines that go into the UK market go
into pubs.
Chairman: We will have a chance of asking
witnesses about that later. We need to make some progress now.
Q906 Lord Faulkner of Worcester: Why
do you not like the proposal in the draft Bill for a ban on link
machines?
Mr Wimsett: We feel that the logic
which saw the restriction imposed was flawed. The policy paper
suggests that there is overseas material which supports the contingent
that wide area progressive machines lead to a greater incidence
of problem gambling. We, through our best endeavours and through
Mr Fahrenkopf's organisation, have failed to find any such material.
I think Mr Fahrenkopf can comment on material perhaps to the contrary.
Mr Fahrenkopf: There is a tremendous
amount of peer reviewed research that has been done in the United
States, and elsewhere around the world, in the last ten years
on the whole question of responsible gaming, and whether or not
for example a particular type of machine is more addictive than
another type of machine, or whether or not linked machines or
linked lotteries promote more problem gambling. I think it is
very, very clear that most experts in the United States believe
today, on research done by the National Research Council of the
National Academy of Sciences, and Harvard Medical School's Division
on Addiction, that the rate of pathological gambling in the United
States is about one per cent of the adult population. That is
pretty consistent actually around the world with other studies
that have been done. The important thing to realise is that research
also shows that the majority of that one per cent are people who
suffer from what is called co-morbidity; gambling is not their
only difficulty. The majority either have problems with alcohol,
drugs, depression and mental instability. There is some real research
going on now particularly at Harvard as to whether or not pathological
gambling is a distinct problem in and of itself and not linked
with others. There has been a tremendous amount of research also
done by various states and countries as to whether or not the
increased availability of gambling (which is something you should
be looking at if you are talking about expanding here) will automatically
lead to increased incidences of problem or pathological gambling
in Great Britain, should you go forward here. We would be willing
to provide you with copies of studies done in Connecticut, Louisiana,
South Dakota, Michigan, Minnesota, Oregon, Texas, Washington,
New Zealand, British Columbia and South Africa, that show clearly
(and this is peer review research) that prevalence remains stable
or decreases despite an influx of more gaming availability.
Q907 Lord Faulkner of Worcester: One
country you did not offer was Australia, where the incidence of
gambling is two or three times what it is here on the stated figures?
Mr Fahrenkopf: Absolutely. The
Australia report stands alone, when you compare it with New Zealand
and other countries. I have my own reasons about why that happens.
Q908 Lord Faulkner of Worcester: The
Australians will tell us it is because of the huge explosion in
gambling machines, particularly in bars and clubs?
Mr Fahrenkopf: The system they
have over there is so distinct from anywhere else in the world.
They call the bars "hotels", I think. With the hotels
and club system over there the concentration and penetration is
all over. It is very, very different from anywhere else. Maybe
that is the reason.
Q909 Viscount Falkland: You make
the distinction between problem and pathological gambling, which
I think is a sophisticated distinction which we have not yet arrived
at. The figure you give of 1 per cent, that is pathological?
Mr Fahrenkopf: Yes.
Q910 Viscount Falkland: Could you
give us a view about problem gambling as opposed to pathological?
Mr Fahrenkopf: When Lord McIntosh
visited us in the United States we suggested that the person they
really should consult, and you should get the benefit of his wisdom,
is Professor Howard Shaffer of the Division on Addictions of Harvard
Medical School who has done more work in this area than anyone
in the world, and I think it is recognised now by even the anti-gaming
people that the work and research they have done is the best that
there is. There may be another two to three per cent whom you
would categorise as problem gambling. These are people who may
have a number of traits that could possibly lead them to become
pathological gamblers. Dr Shaffer and his research people of Harvard
would tell you there is just as much likelihood that they will
go the other way and will not have a problem. There has been some
suggestion that we might get Dr Shaffer to do a paper in the area
where he is clearly the world leader, and would be happy to assist
in that request.
Q911 Viscount Falkland: Would Dr
Shaffer's work tell us—with the problem gambler who may
go one way or the other as you have described it—during
the period that he or she is a problem gambler, what effect that
might have on their close family, their efficiency at work and
that kind of thing?
Mr Fahrenkopf: Most of the evidence
and studies show that you really do not get into the disruptions
that involve perhaps committing a crime to finance a gambling
habit, bankruptcy, financial difficulties, destruction of the
marriage itself until you move into the pathological area—there
these people cannot control what they do.
Q912 Chairman: Would you care to
tell us whether you think the Category C, £25 on cash machines,
are less effective than £500 or unlimited prize machines?
Is the pathological addiction all the greater the more monetary
prizes the machine can offer?
Mr Fahrenkopf: The evidence is
to the contrary. There is no question if there is a bigger prize
available that people will want to play for the bigger prize;
but neither, in lotteries nor in linked machine instances, is
there any evidence, because they want to play for the bigger prize,
that prevalence of pathological gambling rises because of their
existence.
Q913 Mr Wright: In the context of
machines with non-cash prizes, you state that "it is illogical
to allow the stake to remain at the same level (30p) but reduce
the prize from £8 to £5". Why should non-monetary
prize machines have higher stakes and prizes than cash-only machines
and what limits would you suggest?
Mr Batstone: I have to declare
a particular interest here, in that I am a third generation seaside
amusement operator, a business started by my grandfather in 1928.
We are talking here about machines that have been amusing families
for generations. All we are asking to do is to keep them. I have
children and I want them to be able to play these types of machines,
and for their children to play them. We are talking primarily
about machines paying out things like teddy bears; and we are
talking about something that happens now; and we are talking about
the levels which exist now. There is already a distinction between
the prize level for cash machines, the £5, and the prize
level for the non-monetary prize machines of £8. We are saying,
let us maintain that distinction. We do not want to deprive customers
of value which they are used to. We surveyed a thousand people
and 93 per cent said they did not want the prize to go down, which
is not really surprising either. The DCMS is now recognising the
importance of maintaining a stake of 30p in terms of the crane
machine, and we are saying the prize is equally important and
we need to maintain our product and our livelihoods and our future,
otherwise that industry is going to go.
Q914 Mr Wright: I represent seaside
constituents and I think most seaside MPs have been lobbied specifically
on this particular issue. With family entertainment centres, as
we like to call them, they consider these (formerly a large proportion,
in terms of the non-cash machines) a part of that family entertainment.
We were shown an example in Blackpool where there was a machine
with very large furry elephants and they said that would cost
an awful lot of money to purchase and would probably price themselves
out. Do you think that would probably decimate the whole of that
particular industry and ruin the family centre image in that particular
respect?
Mr Batstone: Yes, I would have
to agree with you. If you are going to undermine the product then
people are not going to come. If they do not come the product
will gradually wither and centres will disappear over time.
Q915 Mr Wright: Do you consider that
the customers, the users, get value for money for the current
levels of play?
Mr Batstone: They do at the moment.
The danger is if you reduce the size of the prize then they will
not.
Q916 Jeff Ennis: My question is also
directed towards our BACTA witnesses. How did your members react
to the FOBTs deal?
Mr Jarrold: It is probably fair
to say that they were annoyed and felt a bit misled and mystified
by it all.
Q917 Chairman: Do not mince your
words!
Mr Jarrold: At the macro level,
the government for some time said to us, as did the Gaming Board,
that such high stake and such high prize machines were only ever
going to be allowed in casinos (and this was a consistent line
we were told for a long time). Indeed, at our convention in November
2002 the then Chairman of the Gaming Board publicly asked our
members to do nothing to proliferate these type of machines, which
basically meant that our machine suppliers, other than those who
already had existing contracts, were asked to take no new contracts
at all. Indeed, in the spirit of the request, that is exactly
what happened, and lots of new contracts went to overseas suppliers
because of that. The deal that has been put together to put a
brake on proliferation and public policy interest on the matter,
in our opinion, will do exactly the opposite. It is our informed
opinion that by the end of this year there will be about 20,000
machines in the marketplace, which is approximately double the
amount there were at the beginning of this year. As you can imagine,
the reaction has not been good. The effect on membership has been
quite dramatic. Traditional high street locations (and by that
I am essentially talking about adult gaming centres, possibly
bingo halls and indeed some pubs) would quote if they happen to
be within a quarter of a mile of bookmakers where these machines
(which are very popular) are in existence, they have probably
lost 15-30 per cent of their turnover; and indeed, following the
deal, are now seriously considering the viability of many of those
businesses. If you are a machine supplier your reward for not
supplying these machines, as requested, is that you are right
now withdrawing hundreds, if not thousands, of AWP or all cash
machines from bookmakers to make all space for FOBTs. If you are
a UK manufacturer you are probably forecasting that you are going
to be making about ten per cent less machines this year. All of
that obviously has left a difficulty we have to live with; and
what we would hope, looking forward, is that in the short-term
when we come to the forthcoming round of review of stakes and
prizes that what has happened is taken into account, so there
is a more level playing field out there on the high street than
currently exists. In the longer term, which is where we really
need to turn our attention, the original White Paper, A Safe
Bet, indicated that adult gaming centres, bingo halls and
bookies would all have the same number and type of Category B
machines, and that is what we would like to see occur. If these
machines are to be allowed in over-18 premises on the high street
there are other over-18 premises equally well regulated on the
high street which we feel should be allowed to offer these machines.
If they are not to be allowed then, fair enough, none of them
should be allowed.
Q918 Jeff Ennis: Do you think the
effect on turnover of the AGCs within a quarter (say it is between
15-20 per cent effect on turnover) would be even greater over
the passage of time?
Mr Jarrold: I think in the passage
of time it would be interesting to see, but if you are losing
turnover at those sorts of levels (and some are quoting as high
as 30 per cent) I do not think there will be any businesses to
make that judgment.
Chairman: We need to explore some questions
on social implications. Some of these questions you have touched
on already in some of your answers.
Q919 Viscount Falkland: In your submission
you cite as one reason you cannot "fully support the Bill"
the fact that "it fails to achieve the necessary balance
of safeguards anticipated by the publication A Safe Bet for
Success". In what way does it fail in achieving a balance
of safeguards?
Mr Jarrold: The balance of safeguards,
as outlined in the White Paper and the Bill as we understand them,
basically say we are looking for a balance between a safe, crime-free,
fair and protected environment, on the one hand, and a successful
British gambling and leisure industry responding to technology
and customer needs on the other. That is what we understand by
"balance". That balance, in our view, has gone wrong,
in that the traditionally predominantly UK-based businesses, in
the main, are to have extra controls imposed upon them, whether
that be machine numbers, reductions in stakes and prizes or whatever,
while most of the commercial opportunities in this new Bill are
tending to fall into what I would call the "new gambling
areas", which would be new style casinos, remote etc. It
is the existing traditional sector of the UK that has helped to
build and maintain what I think is a reputation that is envied
around the world in the way we manage our gambling industry. I
think it is the new sector which should probably receive the greatest
level of control. We would also argue that we are in favour of
sensible deregulation. We are not against the Bill. We are in
favour of sensible deregulation, but we would like to see the
controls and opportunities equally balanced between the existing
traditional markets and the new opportunity markets. At the moment
we do not believe that balance is there.
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