Examination of Witnesses (Questions 1200
- 1219)
TUESDAY 3 FEBRUARY 2004
MS MOIRA
BLACK CBE AND
MR MARK
HARRIS
Q1200 Chairman: Touching back on
what Mr Page said, is the problem not this really? Initially the
National Lottery was granted this exclusive licence to have a
weekly draw, and that remains enshrined in the legislation. It
is not clear—we have not had the clauses—whether the
Government intends that there should be more than one weekly draw,
although we doubt that with separate operators, but that the National
Lottery per se, in its widest definition, should be involved in
other kinds of lottery products, but those lottery products are
offered by many other operators within the marketplace. Is that
not the difficulty that we are getting into now with the idea
that there would be several different types of games, possibly
with several licences, different operators, all designed to raise
money for good causes for the National Lottery fund?
Ms Black: We do not currently
envisage lots of licensees. We envisage, as I say, merely two
or three. What we certainly do not want is different operators
competing for your lottery pound, whether you spend it on this
jackpot from operator A or that jackpot from operator B.
Q1201 Chairman: Would the outlets
all be the same as where people go now to buy their National Lottery
tickets or their scratch cards?
Ms Black: They could well be.
We would expect them to be. We would expect them perhaps to have
common terminals, if we had two different licences.
Q1202 Chairman: Is there really any
likelihood that anyone will show the slightest interest in bidding
for the next licence round?
Ms Black: We sincerely hope so.
Clearly, the Government consulted before they proposed these changes.
I think our real concern, for example, listening to Simon Burridge
at the Culture, Media and Sport Committee two weeks ago, was when
he said he would not even consider bidding under the current structure.
That is our concern. We believe that if we have the flexibility
to do something different, we would then clearly need to consult
very widely, with all sorts of people who might bid, with the
retailers who might be faced perhaps with lots of different terminals
on their counters, which clearly would be unacceptable. We believe
we will have the flexibility to design something that will attract
more bidders in. If we do not do that, we fear we are faced with
no competition.
Mr Harris: It is important to
be clear that what we are asking for, and I think what the Government
intends from what I have seen of its policy document, is not to
require the National Lottery Commission to let a range of licences.
It is to give us the flexibility to do so. If we carry out work
that satisfies us that the best option for good causes and the
National Lottery generally is to have one licensee, there will
be nothing in the legislation, as I understand it, that will stop
us doing that, but if we come to the conclusion that actually
offering another competition very much on the same terms as the
last competition is unlikely to generate any real competition
at all, and that the incumbent holds a very strong position that
others do not wish to challenge, then it seems to us that there
is a real risk in that situation, and that is where we would like
to be able to apply flexibility to have more than one licence.
Q1203 Chairman: I have to ask you
this. The last licence round was not a spectacular success from
the Commission's point of view, and that was just a straightforward
two bids from two potential players for one licence. What you
are saying is that you may well be granting several licences.
How on earth is Parliament and the public to have any confidence
in your ability to do that more complex licensing process when
last time it was such a shambles? I am sorry to put it to you
so bluntly, but there is a real issue of confidence in the ability
of your Commission to do this task.
Ms Black: The National Audit Office
report clearly looked into this and concluded we had good reasons
for the things that we had done. In terms of ability to run a
competition which is more complex, we are not talking about lots
of licences; two or three maybe.
Q1204 Chairman: Only to run one weekly
draw. You do not intend to run more than one.
Ms Black: We currently expect—but
clearly we have not consulted—one licence for the main jackpot
draw, yes. We would not expect more than that, but that is obviously
a part of the National Lottery. But the other bit of the legislation
that we are anticipating is changes to the Commission itself,
certainly in terms of size and having an appointed chairman rather
than a selected chairman.
Q1205 Chairman: So it would be bigger.
Ms Black: We have the potential
to make it bigger, and also to have our chief executive and another
executive on the Commission, which we think is also important.
Lord Donoughue of Ashton: More jobs!
Q1206 Chairman: Carry on.
Ms Black: But in terms of the
complexity, with the right advisors, we do not see why that should
be a particular problem, because if we are offering more than
one licence, then each of them is going to be smaller.
Q1207 Chairman: Will these other
licences not be offering products which are available through
other outlets for other good causes? That seems to me to be the
confusion that you have not been able to clear up this morning.
It is very black and white. You have a weekly draw. Everybody
knows there is one National Lottery twice weekly, and there are
several variants of it. We all understand that. Nobody else does
that. They are not allowed to. The law does not allow them to
do that. Then there are potentially—this is what you are
saying to us—licences for other lottery games of the kind
which other good causes also offer. Is that not going to be a
recipe for confusion? Why should anybody want to buy those tickets
when the society lotteries offer more money back to good causes
than the National Lottery does?
Ms Black: Obviously at the moment
we already have scratch cards, which clearly other people provide,
but also it appears at the moment—and clearly this may change—that
the people who buy society lottery scratch cards know their money
is going to be channelled to a specific cause, of course, as you
alluded to before, but they tend to be somewhat more localised
and to get at a more specific audience rather than the wider scratch
card. But we take your point: there are lots of scratch cards
out there. That is in a sense government policy, that the National
Lottery ones are arguably protected.
Mr Harris: There are a range of
products that can be offered that fall within the definition of
a lottery, and certainly from the National Lottery perspective
those include scratch cards, they include the main draw games
and other games based on the main draw or on other draws. All
we are looking to do is to have the flexibility, instead of saying
one operator shall have to provide all these games, which includes
the main Saturday game, the Wednesday game, any other games that
are developed and the existing scratch card portfolio at the moment,
to have operators offering discrete parts of that range of things
that add up to the whole of the National Lottery. Certainly you
are right to say that there are other forms of lottery that are
not part of the National Lottery—society lotteries—that
are able to offer lottery products. Although I do understand the
limitations placed on society lotteries at present might make
it very difficult to run games that are offered through retail
outlets electronically—terminal-based games—there
is nothing to stop them doing that. Indeed, in the past some society
lotteries and society lottery managers have sought to offer those
games in specific parts of the country. We are simply saying there
is a range of things that add up to the National Lottery overall—a
range of different games—that are quite allowed to be part
of the National Lottery, and we would like to challenge the requirement
that they can only be run by one operator.
Q1208 Chairman: You referred to Simon
Burridge and his evidence to the DCMS Select Committee the other
day. He also said this: "Competition is a means not an end.
The idea of having lots of different people competing for lots
of different games does not necessarily make them better games,
more profitable games, or more popular games". How do you
respond to that?
Ms Black: We would agree with
his comment, but it is not an accurate reflection of what we might
be proposing. We are simply looking at a very small number of
licences, subject to consultation and so on, and we would expect
to license classes of games that, so far as we can ensure, do
not compete with each other. Equally, if we do succeed in licensing
different classes of games to different people, you can be jolly
sure that those licensees are going to want to make sure that
their games are going to be pretty independent and, therefore,
cannot be cannibalised by other operators.
Q1209 Chairman: Who is going to operate
the Olympic model?
Mr Harris: Under the present legislation
that would need to be Camelot, because Camelot is the only section
5 licensee.
Q1210 Chairman: That is likely to
be the best opportunity of creating a splash for the public to
really get interested in supporting the Lottery that we are likely
to see for some time?
Ms Black: You may well be right.
Q1211 Chairman: The purpose of asking
this is to suggest that after that it is potentially more difficult.
I think this Committee is not convinced that having other operators
is going to make a scrap of difference?
Ms Black: It is potentially more
difficult, I think we would probably agree. People tend to unite
around something big like the Olympics which, arguably, makes
it more important to talk to lots of other bidders and see what
innovation they can bring to the game design and to the marketing.
Q1212 Lord Walpole: I misunderstood
something you said a moment ago. You said that your scratch cards
are protected. Can you define for me "protected"? I
did not quite understand what you meant.
Mr Harris: Did I say that?
Ms Black: In the context of being
part of the National Lottery.
Mr Harris: They are protected
in the sense that they are part of the National Lottery.
Q1213 Lord Walpole: I am confused
about what "protected" means. Other people can do scratch
cards?
Ms Black: Yes.
Mr Harris: Yes, but they are only
available to organisations that support good causes; so they are
protected in the sense that Lottery scratch cards cannot be offered
by betting companies, for example; they can only be offered as
part of lotteries and lotteries have to be either society lotteries
or the National Lottery.
Q1214 Chairman: I think the answer
Lord Walpole may be looking for—and I understood your point
to mean this—that any game which has the National Lottery
label to it would have advantages in terms of potential pay-out,
where limits exist on society lotteries in terms of the amount
of money which can be paid in prizes; the National Lottery would
not have restriction; and it would also have advantages in terms
of distribution and in promotion and advertising?
Mr Harris: Chairman, I do not
think that was the point I had in mind when I used the word "protected".
I accept that the National Lottery scratch cards are subject to
different rules from those that apply to society lottery scratch
cards. Clearly, the National Lottery is the bigger enterprise
and the common branding and ability to offer throughout the whole
range of the country through the terminal system used by the operator
to promote scratch cards, as well as to promote its other games,
clearly means there is a imbalance between the National Lottery's
ability to promote scratch cards and probably society lotteries.
Society lotteries to some degree address that through use of lottery
managers who are able to group together lotteries and offer bigger
portfolios, but clearly portfolios that have constraints that
prevent them competing directly, if you like, or may limit their
ability to compete directly, with the National Lottery. As I indicated
before, those ultimately are policy decisions for the Government.
We are not fighting in favour of one or the other, but we are
saying for the National Lottery to be a success scratch cards
are part of it.
Q1215 Lord Faulkner of Worcester: Could
you comment on an allegation some of us heard that some retailers
are being pressurised by Camelot or its agents to remove the scratch
cards of other operators?
Mr Harris: We are not aware of
those allegations being raised with us recently. I know that allegations
were raised a number of years ago before the Commission came into
being. I also know the Director General looked closely at that.
I believe the current evidence is certainly that the agreement
which Camelot has with its retailers does not include any such
requirements. There are plenty of cases, I understand, where retailers
of the National Lottery also retail society scratch cards.
Q1216 Lord Faulkner of Worcester: If
there were cases of that you would investigate and take action?
Mr Harris: We would investigate
and take action, yes, because we do not believe that the Lottery
would be being run with all due propriety if the operator were
undertaking restrictive practices to try and stop other products
being offered.
Q1217 Lord Brooke of Sutton Mandeville:
Do you think the draft Bill provides an adequate distinction
between lotteries and prize competitions?
Mr Harris: This is an area where
we have liaised closely with the Gaming Board. I think our position
is the same as the Gaming Board's. We think there does need to
be a clear distinction. From my discussions with the Gaming Board,
I think we are reasonably clear about the free prize route and
that that, as far as we can tell from the policy documents we
have seen, is satisfactory. Where we have greater concerns is
on the use of skill. To our mind it would probably be a stronger
test if there needed to be a reasonable use of skill so that one
could not have the situation, for example, where skill encompassed
naming the capital of France—is it Paris, London or New
York?—which might well fall under a general skill test.
Certainly that is the concern that the Gaming Board has that it
would have difficulty dealing with that issue.
Q1218 Lord Donoughue of Ashton: First,
just to tie up a previous key discussion where you conceded you
had no gambling adviser. I wonder if I might suggest in the absence
of a gambling adviser your main de facto gambling adviser
might be Camelot itself. I wonder if you could not appoint an
independent gambling adviser? There is no need to comment on that.
I shall get a little more specific on scratch cards. Playing scratch
cards has been likened to playing gaming machines—because
both of them have the potential for instant gratification. Given
that gaming machines have been strongly linked to problem-gambling
in children, do you think it is appropriate that under 18s are
permitted to buy scratch cards?
Ms Black: I am not sure you are
going to like the answer to this. The question of the age limits
for the National Lottery products is really one for the Government
and we do not really have a view on that.
Q1219 Lord Donoughue of Ashton: You
do not have a view?
Ms Black: No, but having done
that we are aware of some research.
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