Joint Committee on the Draft Gambling Bill First Report


8 Casinos

335. The proposals relating to the regulation of casinos contain some of the most significant provisions in the draft Bill and could transform the casino industry in the UK and have a significant impact on the rest of the gambling industry. We received a substantial amount of evidence on this matter, much of it pointing in different directions. Our task was not assisted by confusion in the Government's apparent thinking on a number of key issues, namely the mechanism for preventing proliferation, the extent to which it sees casino development as an engine of regional regeneration, how planning gains will be achieved and the application of grandfather rights. We think it useful first to provide a summary of the principal changes in the regulation of casinos that the draft Bill proposes, followed by a resumé of the main issues to which they give rise. We will then turn to consider the evidence and to make our recommendations.

336. Under the Gaming Act 1968, casinos are highly regulated. They can only be located in designated 'permitted areas', of which there are 53 in the UK. Local authorities have a responsibility to consider demand before granting a licence. If the demand criterion is not demonstrated an application can be refused. Casinos are required to operate as private members' clubs with a 24 hours statutory interval between membership and play. This means that casinos in the UK tend to operate as small members' clubs serving specific and often local social groups rather than the general public.[501] They can only open between 2pm and 6am on weekdays and until 4am on Sundays. Advertising is currently restricted and casinos are limited to having a maximum of 10 gaming machines, offering a maximum prize of £2,000. As the policy document accompanying the draft Bill notes "the casino sector is restricted by a series of controls that unnecessarily discourage innovation and restrict consumer choice".[502]

337. Under the draft Bill there will be a significant deregulation of the controls governing casinos, including:

  • removing the requirement to operate as private members' clubs, with a statutory interval between membership and play;
  • extending the gambling products casinos can offer, including betting and bingo, and the linking of gaming machines within a casino;
  • abolishing the demand criterion and 'permitted areas' rules;
  • allowing large casinos to have an unlimited number of gaming machines with unlimited stakes and prizes; and
  • allowing casinos to offer live entertainment and to advertise.

Unresolved issues

338. The modernisation of the law relating to casinos represents a major area of change and uncertainty. The policy, as presented, lacks clarity in a number of areas. First, there are a number of issues relating to the development of casinos and the question of proliferation that could compromise the realisation of the licensing objectives. Second, there is an issue concerning the Government's policy regarding securing economic benefits that could accrue from casino developments. As we discuss below, this centres on whether, contrary to the provisions in the draft Bill for large and small casinos, the Government intends to create a third category of casino that is specifically intended to provide regeneration benefits. This could lead to the kind of casino developments that the Committee delegation saw in Australia, which are far more substantial than anything that the law currently allows, and which the Gambling Review Report suggested might be permitted by its recommendations.[503] Sometimes referred to as resort casinos, an essential question is how, if at all, they should be differentiated from large and small casinos. Unless resort casinos are differentiated, and given special treatment within the gambling environment, it is questionable whether the concept will succeed in the UK.

339. Another crucial element relating to the issue of preventing proliferation and securing economic benefits is the planning environment. We welcome the Government's intention to "make it possible for different parts of the country to consider how gambling developments might play a role in securing economic benefits for their area".[504] However, under the proposals in the draft Bill, it is not clear to the Committee how the Government expects planning authorities to achieve local and regional planning gains. As Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, conceded when he gave evidence to the Committee, "it is very difficult to know how to 'require' economic benefits".[505] The Committee is also concerned that planning applications that have already been made, many in anticipation of the likely expansion in slot machine entitlements, could compromise the possibility of securing both local and regional planning gains.[506] We are concerned at the lack of agreement between ODPM and DCMS on some of the key details in this area. Planning issues relating to casino developments are discussed in more detail below.

340. Finally, there is the question of grandfather rights. The Committee's understanding of the Government's position is that all casino operators holding certificates of consent from the Gaming Board and gaming licences issued by the licensing authorities, prior to the enactment of the Bill, will, in effect automatically, be granted an operating licence by the Gambling Commission and a premises licence from the local authority. This could lead to undesirable proliferation and local and regional planning authorities missing out on the opportunity to achieve local planning gains and regeneration benefits. There is a considerable urgency to this issue as plans for the development of a number of large scale casinos are well advanced. If permitted, such developments would seriously undermine the licensing objectives and whatever policy objectives on regeneration the Government decides to adopt.

The Government's proposals

341. On 7th August 2003, the Government published for consultation a joint position paper by ODPM and DCMS, "The Future Set out For UK Casinos"[507] which proposed new definitions for the size and type of new casinos which would be permitted under the draft Bill:[508]

  • small casinos, with a table gaming area of between 5,000 sq ft and 10,000 sq ft, with a minimum of 20 gaming tables and a maximum of three gaming machines for each table; and
  • large casinos, with a table gaming area of over 10,000 sq ft and an unlimited number of gaming machines provided the casino has more than 40 tables.

342. Currently casinos are only allowed to have up to 10 jackpot gaming machines with a maximum stake of 50p and maximum prize of £2,000. The gaming machines permitted under the draft Bill will be categorised as Category A machines with no limit on stakes and prizes.

343. The Government's proposal for new casinos to have a table gaming area of not less than 5,000 sq ft, with a gaming machine to gaming table ratio of 3:1, is designed to prevent the proliferation of small casinos. Lord McIntosh, Parliamentary Under-Secretary, DCMS, told the Committee, "our view is that as of 2003 we need greater restriction on the numbers of machines in smaller casinos, and we need a complete ban on new casinos below 5,000 square feet—[…] we do not wish to see the proliferation of small casinos on every street corner".[509]

344. However, many existing casinos have a gaming area of significantly less than 5,000 sq ft. The Government has proposed that existing casinos which do not meet the minimum size requirement for small casinos will be granted grandfather rights, and can continue to operate under the draft Bill.

345. Although the November policy document and the Government's 7th August Position Paper,[510] both refer to resort casinos, these are not separately defined in the draft Bill. The lack of a definition has generated speculation that the Government's policy implies three categories of casino. In written evidence to the Committee Leisure Parcs note "In relation to the definition of a large casino, we are unclear as to whether a distinction is intended between a resort casino development and other large casinos. In other words, is the Government proposing two sub-categories of 'large' casinos?"[511] It is not clear from the draft Bill how the very largest casinos will be separated, and treated differently from other casinos that also fall into the large category. The North-west Development Agency told the Committee that "the absence of a definition about resort casinos […] is unhelpful".[512]

346. A separate definition of resort casinos has been suggested as a means of overcoming this problem.[513] In its written evidence to the Committee, Gala propose "that the legislation recognizes the fundamental difference between the very largest Resort Casinos of 'regional significance' and other large (40+ table) casinos".[514]

Evidence received

347. While the clauses on casinos represent a small part of the draft Bill they have generated a large amount of evidence on a wide range of issues, including the proposals set out in the Government's 7th August Position Paper[515] and the policy document accompanying the draft Bill. The proposed size categories have prompted much of the evidence we have received.

Size categories

348. The size requirements proposed in the Government's Position Paper,[516] could lead to a major change in the size of casinos that currently operate in the UK, where "three quarters of British casinos are below the minimum size for a new-entrant Small casino".[517] The Committee received evidence from Rank suggesting that differentiating between small and large casinos will give a competitive advantage to large operators while smaller operators miss out.[518]

349. The Office of Fair Trading is opposed to the 5,000 sq ft threshold, believing that a minimum table gaming area for new casinos could restrict competition, "we believe that the proposal for a minimum size of 5,000 sq ft will be a significant barrier to entry for new casinos".[519]

350. However, in its Regulatory Impact Assessment the DCMS states that "the proposed casino reforms in the Bill assist the development of an open, well-informed and competitive casino market".[520] The 5,000 sq ft minimum size for small casinos is also supported by Gala who believe that it will be "sufficient to control proliferation without restricting economic growth".[521] The Committee is not minded to support the Office of Fair Trading's view and agrees with the Government that a 5,000 sq ft minimum size will aid the objective of preventing proliferation so as to avoid an unacceptable rise in problem gambling and thereby help to secure the statutory objective of protecting the vulnerable.

351. There has also been criticism of the proposed 10,000 sq ft threshold for large casinos and the entitlement that large casinos would have for an unlimited number of Category A machines. For example the Committee received evidence from the Hilton Group suggesting that "10,000 sq ft is too small and could result in an increase in the number of resort casinos which in turn could end up causing a number of social problems".[522] This view was echoed by Rank which noted that:

"a 10,000 sq ft casino is not a large casino by today's standards […] the Government has set the threshold much too low, and risks opening the way to the proliferation of large, machine-dominated gaming sheds, of the kind that have developed in Australia and certain parts of the US, and which carry an increased risk of problem gambling."[523]

The cliff-edge

352. The dividing line between small and large casinos prompted further evidence from various sources as set out below, suggesting that the proposals could lead to an unnecessary increase in the number of large casinos as firms seek to gain the advantage of having 40 gaming tables and an unlimited number of gaming machines.[524]

353. The Committee heard evidence from the British Casino Association that the threshold of 40 tables was too drastic. "We consider that the jump from a maximum of 120 machines in a casino having 40 tables, on a gaming floor of 10,000 sq ft or less, to an unlimited number at 10,001 sq ft is too great a leap".[525] Caesar's Entertainment (formerly Park Place Entertainment) believed that "the proposals in the draft Bill create a 'cliff-edge' between 'small' casinos which will be allowed a maximum of 120 machines, and the unlimited number of machines permitted in 'large' casinos".[526] The British Greyhound Racing Board referred to the "quantum leap into unlimited gaming machines."[527]

354. The cliff-edge situation could lead to a large number of developments of just over 10,000 sq ft, with only a small number of casinos between 5,000 sq ft and 10,000 sq ft in operation. Lady Cobham, of the British Casino Association, told the Committee "it is quite hard to imagine large numbers of applications for developments between the 5,000 and 10,000 sq ft gaming floor size, because if you go just over that, you can have unlimited machines".[528]

355. It has been suggested that this could be overcome by a combination of staggering the number of machines permitted for casinos of different square footage, increasing the floor space at which unlimited numbers of machines are permitted or removing the right for any casino to have unlimited numbers of gaming machines.

Alternative size formulas

356. The Committee has received several suggestions for formulas to determine the number of gaming tables and machines that different sized casinos should be permitted. Caesar's Entertainment (formerly Park Place Entertainment) suggest that "the maximum number of gaming machines permitted in any casino should be three times the number of gaming tables with the following exception: up to 30 gaming machines per table may be permitted in large casinos that incorporate more than 40,000 square feet of gaming area on one floor, of which a minimum of 40 table games occupy at least 10,000 square feet of the available gaming space".[529] Alternatives to the Government's formula have also been suggested by MGM Mirage,[530] the Casino Operators Association of the UK,[531] Gala,[532] the British Greyhound Racing Board,[533] the Casino Machine Manufacturers Group,[534] and London Clubs International,[535] amongst others.

The 3:1 ratio

357. The 3:1 ratio of gaming machines to gaming tables prompted much evidence. The aim of the 3:1 ratio is to address the issue of proliferation and to ensure that machines do not unduly dominate the gambling activities.[536] However, this represents a significant shift from the position that the Gambling Review Body took with respect to gaming machines in casinos. The Gambling Review Report recommended that "the maximum number of gaming machines in a casino is determined by the number of gaming tables that are available for play. We suggest that the maximum should be determined by a ratio of eight machines to each table, but that where the number of tables exceeds eighty there should be no maximum on the number of gaming machines".[537] The 8:1 ratio suggested by the Gambling Review Body remains popular with some. Leisure Link argue that "this ratio has the logic of maintaining a fifty-fifty balance between machine and table gaming, thus preventing casinos becoming dominated by machine gaming".[538] The Casino Operators' Association "feel strongly that the [3:1] ratio flies in the face of all previous proposals and understanding that it would be an [8:1] ratio".[539] We have already referred to evidence from the British Casino Association that the 3:1 ratio was encouraging casinos to be bigger than necessary. [540]

358. More significantly the Gaming Board expressed concern that the ratio of 3:1 gaming machines to tables may be too low to satisfy customer demand.[541] Gala argue that the proposal will leave small casinos at a competitive disadvantage.[542] The Casino Operators' Association also have concerns that the 3:1 ratio could be harmful to small casinos, "because of the low numbers of tables (40) after which the ratio moves towards infinity, the fairness of competition between small casinos and large ones would be radically removed".[543]

359. The Committee has also received evidence from Rank suggesting that the ratio of gaming machines to tables should be the same for all casinos, regardless of size; "a much more preferable and even-handed approach would be to maintain a fixed ratio of machines to tables, and maintain that ratio irrespective of the size of the casino".[544]

360. The Government's proposals for the 3:1 ratio did receive some support. MGM Mirage "believe the limitation of three slot machines to one table in casinos of between 5,000 square feet and 10,000 square feet in size is appropriate".[545] Kerzner International also supported this view, "we believe the increase to 3 machines per table […] will allow most existing 'small' casinos a significant increase over the existing number of machines as well as allowing higher machine stakes and prizes into this environment".[546]

Definition of 'gaming machine'

361. The Government's proposed ratio permits three gaming machines for every gaming table. The draft Bill, however, does not set out a definition of a gaming machine. In written evidence to the Committee, Gala note that "the Government is asking for a considered industry response on a 3 to 1 ratio without clearly defining what is captured by the term 'machine'".[547] Rank "requests the Government to establish a more robust definition of gaming machines, regardless of the level of stake or prize".[548] The status of electronic games has caused some concern from operators. Gala note, "we do not believe that electronic versions of bankers games in Casinos should be classified as machines, as they are clearly extensions of existing bankers game offers. If indeed they were, the 3 to 1 ratio would even further disadvantage existing operators".[549] Kerzner International also queried the existing position.[550]

362. We recommend that the Government should set out a definition of gaming machines which takes account of current and anticipated developments in the technology through which gaming products are delivered.

Three size categories

363. Given the evidence we have received, we believe that the Government's policy objectives would be better achieved if the draft Bill is amended to accommodate three categories of casino; small casinos; large casinos and resort or destination casinos.

Small casinos

364. We support the Government's intention to prevent the proliferation of small casinos. For this reason a minimum size threshold of 5,000 sq ft and a gaming machine to gaming table ratio of 3:1 seem on balance to be a suitably cautious approach. We note that even a ratio of 3:1 gaming machines to tables will result in significant additional availability of gaming machines in small casinos and the localities which they serve.[551]

365. We therefore support the proposal for small casinos to be defined in the regulations made under Clause 10(5)(b) as having a minimum table gaming area of 5,000 sq ft and a maximum table gaming area of 10,000 sq ft. We agree that casinos of this size should be permitted a 3:1 gaming machine to table ratio, as currently proposed under Clause 142(4)(a) of the draft Bill.

366. We are aware that retaining the 3:1 ratio will disappoint some sectors of the casino industry. The Committee therefore, supports a review of the 3:1 ratio by the Gambling Commission three years after Royal Assent, with a view to recommendations being made to the Government on whether the ratio set out in Clause 142(4)(a) should be adjusted. Such changes could be made pursuant to the delegated power contained in Clause 142(10) of the draft Bill and we agree that any such amendment should be subject to the affirmative procedure.

367. With respect to planning consent for small casinos Yvette Cooper MP, Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, told the Committee that this should be the preserve of local authorities.[552] We endorse this view and given the likely limits on floor space and gaming machine numbers we do not feel it is necessary for small casinos to be required to contribute to local planning gains. However, we do anticipate that most small casinos will include additional facilities such as restaurants or entertainment facilities. Provision for such facilities should be incorporated into guidance to local authorities.

Large casinos

368. Having confirmed our support for the Government's proposal for small casinos we now look in detail at the proposed regime for large casinos. We have already drawn attention to evidence from the British Casino Association and Caesar's Entertainment (formerly Park Place Entertainment) suggesting that the 40 table threshold for unlimited gaming machines in large casinos is too low.[553] Whilst the current total number of gaming machines in casinos in the UK is fewer than 900, recent research by the Henley Centre suggests that the proposals in the draft Bill if implemented could eventually lead to as many as 81,000 casino gaming machines.[554] This would present a significant change to the current casino landscape. The Committee has heard evidence from Rank that allowing unlimited numbers of gaming machines is unnecessary and risks creating "the very proliferation that government is seeking to avoid".[555]

369. Linked to concerns about proliferation are fears that unlimited numbers of Category A machines could encourage problem gambling. The Committee received evidence from Professor Jim Orford, Professor Mark Griffiths and Dr Emanuel Moran warning about this risk,[556] which was echoed by the British Beer and Pub Association (BBPA) and Operators of Adult Gaming Centres.[557] The BBPA argued that "the expansion of hard gambling will increase problem gambling chiefly through large numbers of unlimited stakes and prize gaming machines in casinos".[558] This concern was also shared by Helena Chambers of Quaker Action on Alcohol and Drugs: "What we would be looking for is no premises to have unlimited numbers [of machines]".[559]

370. Evidence from the British Casino Association suggested that unlimited numbers of gaming machines should be reserved for resort casinos. [560] Blackpool Council went further and proposed that casinos with unlimited numbers of gaming machines should be required to make a contribution to regional regeneration: "large casinos which could have an unlimited number of unlimited/big prize machines should be located only in areas where the Regional Economic Strategy (RES) and the Regional Spatial Strategy (RSS) identifies them as contributing to the regeneration and economic prosperity of the region and communities within which they are to be located".[561]

371. The Committee also heard opposing evidence from the Casino Operators' Association of the UK to the effect that "all large casinos should have unlimited gaming machines".[562] They believed that having an unlimited number of gaming machines was vital to attract the investment necessary to develop a very large casino. The Association noted that "machines are core to the operations [of resort casinos] and without them the entrepreneurs involved would not contemplate the project".[563] This view was shared by Ameristar Casinos: "in order to justify the level of capital investment to build this type of facility (large scale casino development) […] casinos must include a large number of slot machines to satisfy free market demand".[564]

372. We have received evidence in favour of a cap on the number of gaming machines in casinos. Stanley Leisure suggest "consideration of a cap at a maximum of say 1,000 [gaming machines] per location, to avoid a "machines dominated" Casino environment".[565] The Committee delegation to Australia observed that even the internationally renowned Star City casino in Sydney was limited to 1,500 gaming machines. Evidence from MGM Mirage shows that in casinos across several jurisdictions, including South Africa, California, and France, a maximum number of 1,500 machines in casinos is common.[566]

373. Having weighed up all the arguments, we feel that allowing unlimited numbers of gaming machines will conflict with the objectives set out in Clause 1 of the draft Bill.

374. Whilst we appreciate the significant contribution gaming machines can make to a casino's profits, and their ability to contribute to planning gains for local communities, we believe that allowing certain casinos unlimited numbers of gaming machines as of right will result in a damaging proliferation of gaming machines and risk a significant increase in problem gambling. We therefore recommend that no casino should be permitted an unlimited number of gaming machines and that Clause 142(4)(c) should be amended accordingly.

375. Having concluded that large casinos should not have an unlimited number of gaming machines the Committee considered whether large casinos should be entitled to a bigger ratio of gaming machines to gaming tables than that allowed for small casinos. Whilst we understand the view of small casinos that a bigger gaming machine to gaming table ratio might give large casinos a competitive advantage, large casinos are more likely to be situated in major cities and be part of much larger leisure developments than would be appropriate for a small local casino. It is unrealistic to expect large casinos to provide more gaming tables than the market demand will support, simply in order to gain an entitlement to an increased number of gaming machines which would meet market demand and generate the income required to support other leisure developments and planning gains for the local community. The Committee has therefore concluded that large casinos should be entitled to a greater ratio of gaming machines to gaming tables than that permitted for small casinos.

376. The Committee is attracted to the 8:1 ratio recommended by the Gambling Review Body as a more appropriate ratio for large casinos. We believe that there is merit in the rationale behind the Budd recommendation, that a gaming table accommodates up to eight playing positions.[567] Before confirming the precise ratio for large casinos we would want the Government to consult the Gambling Commission and the industry, on whether large casinos should have a statutory maximum number of gaming tables and the appropriateness of the 8:1 ratio applying to each table. This consultation should take into account the recommendation we make below about resort casinos and the outcome of discussions within Government as to which casinos should be considered to be regionally significant and might therefore, be termed resort casinos.

377. We therefore recommend that large casinos should be defined in the regulations to be made under Clause 10(5)(a) as those with a minimum table gaming area of more than 10,000 sq ft and a minimum of 41 gaming tables. We consider that a higher gaming machine to table ratio than that for small casinos should be allowed and that the ratio should be set by the Government following consultation with the industry and further policy development. Any agreed ratio should be subject to review by the Gambling Commission after three years.

Additional facilities for large casinos

378. During the Committee delegation visits to Australia and France, we saw the benefits that can be derived from casinos having additional leisure and cultural facilities, such as restaurants and theatres. A similar arrangement for casinos in the UK would help to create an all round leisure experience which could help to attract visitors and boost tourism. The Committee heard evidence from Professor Vaughan Williams that "if it (the plans for large scale casino development) is going to work properly […] then it has to be as part of the entertainment industry, not as part of gambling […] if we cannot make it an entertainment experience then the future is bleak".[568] Additional facilities, ancillary to gambling, could help to regenerate areas in which such developments are located through providing increased jobs and attracting visitors. During its visit to France the Committee witnessed the positive benefits that can be derived from establishing additional facilities alongside gambling developments which we discuss in more detail below.

379. At this point, and as part of the definition of a large casino, we recommend that large casinos should be required to provide leisure and cultural facilities ancillary to gambling.

380. The planning process for large casinos is dealt with below.

Resort casinos

381. The lack of a definition of resort casinos has led to confusion over how such developments will be dealt with in the planning process. We feel that a separate definition of resort casino is necessary to provide clarity and ensure that regeneration benefits can be achieved. ODPM and DCMS have not yet decided where the line will be drawn to distinguish between large and resort casinos.[569] The lack of a definitive policy in this area is regrettable and has made the Committee's work much more difficult.

382. Resort casinos will be large leisure developments consisting of a wide range of gambling activities as well as wider leisure facilities such as hotels, entertainment complexes and restaurants. The Committee accepts that they will be entitled to at least the same ratio of gaming machines to gaming tables as is agreed for large casinos, with the potential for a larger entitlement if considered appropriate by the Gambling Commission. The Committee has received evidence on the size of casinos located in other jurisdictions. Evidence from MGM Mirage shows that international casino sizes vary, from 14,000 sq ft of casino space in the Casino Barriere de Montreaux in France, to 110,000 sq ft of casino space in the Sunset Station Casino in Las Vegas.[570]

383. The Committee supports the need for a definition of resort casinos that will clearly differentiate them from large casinos, offering them a sufficient margin to ensure that the appropriate regeneration benefits can be achieved in the planning process. However, the Committee feels unable to recommend a minimum floor space for resort casinos because ODPM and DCMS have yet to conclude their deliberations in this area. This is an issue to be determined by ODPM and DCMS as a matter of urgency.

384. The Government proposes that "Regional Planning Bodies will set out planning policies for leisure developments of regional significance, including casinos".[571] A definition of what is regionally significant has yet to be agreed by ODPM and DCMS; an announcement is expected "by the summer".[572] When this happens we recommend that this Committee should be reappointed to help the Government determine the correct gaming machine to gaming table ratio for large casinos and the appropriate threshold at which a casino is considered to be a resort casino.

385. The Committee recommends that the draft Bill is amended by the inclusion in the regulations made under Clause 10(5) of an additional definition of a resort casino. Whilst we are not yet in a position to make a detailed recommendation on the definition of resort casinos, we nevertheless believe that the Gambling Commission should be given the discretion to allow resort casinos a greater ratio of gaming machines to gaming tables than that provided for large casinos. For the reasons outlined above regarding the issues of proliferation and risks associated with problem gambling the Committee believes that no casino should have an unlimited number of gaming machines. We recommend that the Government provides in regulations, for a statutory maximum number of machines for resort casinos, in the range of 1,000 or 1,250. We recommend that resort casinos must be subject to requirements to contribute regeneration benefits as discussed below.

386. Resort casinos will have a substantial impact on the economic and social environment of the regions in which they are sited, placing great importance on the way they are planned. The planning process for resort casinos is considered below.

387. We regret that we are unable to make a definitive recommendation on the definition of resort casinos. Given that the gaming machine to table gaming ratio and size thresholds are not in our view issues that should be on the face of the Bill, we do not believe that this should cause unnecessary delay to the progress of the Bill.

Regeneration: general issues

388. There has been much talk of the opportunities for regeneration which new casinos might bring, though much of this has been somewhat vague. We think it is useful, therefore, to begin our discussion of casinos and regeneration with an account of what regeneration means in this context and what different types of regeneration project are most commonly associated with casinos. This account is based on what we have learnt about other jurisdictions from our visits to Australia and France and from other sources.

389. Regeneration, in relation to casinos, refers to the economic benefits which accrue to a previously disadvantaged area as a result of locating a casino there. From the point of view of the residents of the area the benefits are of two types: those which enhance the opportunities for enjoyment by local residents and those which enhance their opportunities for employment.

390. Examples of ways in which the kind of additional non-gambling amenities and facilities which a casino may make available for enjoyment by locals are live entertainment, cinemas, museums, restaurants, subsidising by the casino of improvements to transport infrastructure, the restoration of historic buildings or the provision of facilities which would otherwise have to be publicly funded, such as recreational centres for the young, the elderly or the disabled. More generally casinos often deliver regeneration by utilising and rehabilitating previously derelict sites in rundown areas which subsequently become safe, attractive and popular.

391. The increased employment opportunities which a casino may generate are of two main kinds: those which occur during the development and construction of the project and those which result from attracting visitors to spend money in the area.

392. From the point of view of the casino developer, investment in regeneration projects is also of two main types: those which are undertaken in order to increase the profitability of the business and those which are undertaken in order to secure a licence. The former will include the additional non-gambling facilities mentioned above. The latter will typically include the funding of public interest projects identified by local or regional authorities which would otherwise have to be publicly funded. Most commonly these take the form of contributions to cultural and tourism-promoting infrastructure of which conference centres and conservation projects which increase non-gambling tourism, are good examples.

393. Successful regeneration projects associated with casinos of very different kinds include Melbourne, Australia where a derelict area was converted into a tourist attraction with many attractive amenities for locals; Sydney, Australia which saw the enhancement of its Waterfront; Biloxi, Mississippi where the previously impoverished town was transformed into a resort destination for casino gamblers; Cape Town, South Africa where a casino funded a conference centre and the building of a canal linking the waterfront to the city centre. As noted previously, casinos in France have to agree with municipal authorities what local projects, usually of a cultural sort, they will subsidise. It should be noted that it is also possible to point to examples where regeneration opportunities have not been successful. New Orleans is perhaps the most notorious example. Also, unless carefully planned, the benefits of regeneration may be offset by undesirable displacement as happened to some extent in Atlantic City.

394. The Government's proposals for the largest casinos have been seen by many as providing an opportunity to regenerate run-down urban areas and deprived seaside towns. "International experience suggests that the proposals in respect of casinos will have an overall positive effect upon the economy, with the attendant regeneration of local economies".[573] Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told the Committee that "they [resort casinos] create jobs themselves; they create ancillary jobs from people supplying them—caterers, hotels and so on; and the experience is that, if it is done well, there can be a very beneficial effect on the local economy".[574] His view was echoed by Brigid Simmonds of Business In Sport and Leisure who told the Committee that "there is no doubt that resort casinos will contribute to regeneration".[575]

395. The term resort casinos is used in relation to regeneration but the lack of a clear definition has caused confusion as to which size casinos would be expected to make regenerative contributions to the area in which they locate. Sun International suggest that "with respect to 'large' casinos with unlimited slots there will be a two-tier system: one for some 'very large' casinos which will make a contribution to regeneration, tourism and economic development and another for casinos which are merely large".[576] Sun International believe that the ability to regenerate areas will help to get public approval for the largest casinos.[577]

396. The creation of resort casinos has also been hailed as an opportunity for job creation. Mr Kelly of Gala told the Committee, "I have no doubt whatsoever that the expansion of the destination gaming business that might be facilitated by new legislation would have a beneficial effect on jobs. It is going to mean a significant amount of employment service in order to deliver the opportunity".[578] The Transport and General Workers Union, however, dispute claims that casinos can lead to job creation. "There is some data to suggest that, jobs actually created by casinos are minimal".[579]

397. The Committee also received evidence that cast doubt on the regenerative properties of the largest casinos: "resort and large casinos will be adult gambling environments providing scant impetus for social and tourism led regeneration";[580] "Experience elsewhere is that new gambling opportunities are developed by integrated companies who offer accommodation, leisure and gambling facilities within a single complex so that their visitors spend entirely within the complex and have no need to visit the remainder of the town."[581] Similar points were made by Councillor Steven Bate from Blackpool.[582] The Henley Centre Report for the British Amusement Catering Trades Association (BACTA) sounded a cautionary note that "regeneration is fundamentally very difficult to achieve. Though improving the economic situation may go some way towards statistically proving regeneration has been achieved, it often takes some time to change the attitude and perspectives of residents in those areas".[583]

Securing regeneration benefits

398. The Government is keen that local areas benefit from the creation of gambling developments. This objective is set out in the policy document accompanying the draft Bill,

"planning arrangements enable local authorities to ask for contributions towards any area that has a more than trivial connection to the proposed development. The scale and purpose of contributions will be negotiated with the developer but could include improvements to local transport arrangements or contributions to improved community safety. This means casinos can offer additional benefits to local communities".[584]

399. The Committee heard evidence from Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, that regenerative benefits could be secured in the form of planning gains from casinos through Section 106 agreements. "It is very standard practice to have Section 106 agreements which do exactly the kind of thing you are talking about, and would require investment in affordable housing, perhaps, or new community facilities and things like that as part of the agreement for getting planning permission on a particular site".[585] The Committee saw on its visit to France the extent to which local areas benefit from large casino developments. Economic benefits are derived in the form of facilities ancillary to gambling such as theatres, high quality restaurants and conference facilities. In its written evidence to the Committee, Accor casinos noted that "on an equal footing to gaming, the operator must develop tourism and cultural oriented activities, entertainment and an appropriate food and beverage offer".[586] We were given the example of a recent casino development that had been required to build a 700 seat theatre as part of the agreement to develop the casino. This can have a significant effect not only on the economy but also on the cultural life of areas in which casinos develop.

400. The Committee visited a casino in Enghien les Bains, where the casino operator makes a considerable contribution to the cultural life of the area through arranging festivals and staging an annual jazz show. The relationship between a casino and the area in which they locate was described as being like a marriage, and as Accor note in their written evidence, "Casinos are economic and social partners of their municipalities".[587]

401. As recommended in paragraph 379, the Committee recognises the potential benefits that can be derived from large casinos for a local community. We therefore recommend that, in addition to requiring large casinos to provide leisure and cultural facilities, local authorities should also seek appropriate planning gains from all large casinos, as part of the planning process.

Regional regeneration: Free market v. locational controls

402. In its 7 August Position Paper, the Government states that it envisages "that the market will determine the number, size and character of casinos, and where they will be located" but also notes that it is "keen to secure […] benefits where they can make the greatest contribution to its objective of encouraging economic development and creating sustainable communities".[588] London First Centre note that "the draft legislation appears to be unclear as to whether it allows for a free market system to determine location […] or whether regional planning bodies will have the right to determine the location of the (as yet undefined) 'casinos of regional significance'".[589]

403. The Committee received evidence suggesting that a free market would be incompatible with achieving regeneration benefits from large casino developments. "If you want to get significant regeneration benefits in any area then if there are too many casinos, the investment will be smaller and therefore consequently the regeneration benefits are going to be less. The Government has to decide what it wants out of it". [590] Research by the Henley Centre for the British Amusement Catering Trades Association (BACTA) supports this point:

"The efficacy of allowing the market to determine where investment is made, for example in new casinos and at the same time meet requirements for regeneration is uncertain. If they have a choice, operators will site the new casinos in affluent areas where their return will be higher. There is a significant risk therefore that market-determined growth may not occur in the areas most needing regeneration or that regeneration investment may be challenged by investment in a neighbouring area".[591]

404. Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, conceded that "there is a tension between an unfettered free market and a planning system - there is. Those tensions are in-built".[592] Research by Ernst & Young for Business In Sport and Leisure suggests that "demand for resort casinos will only be able to support a limited number [of resort casinos] in the UK as there is doubt regarding the size of the potential increase in tourist levels both from overseas and also from within the UK. Accordingly we believe the number of resort locations is more likely to be closer to 3 than 20".[593] It is not clear from the Government's proposals how the number of large casinos could be limited. Experience from overseas has shown that auctioning of licenses and the granting of exclusivity is one way of limiting the number of casinos and achieving regenerative benefits.

405. The Committee received mixed views on the possibility of limiting the number and location of casinos. Lady Cobham of the British Casino Association told the Committee, "I do not think the BCA could support what might be termed exclusion zones".[594] Other witnesses suggested that exclusion measures would be necessary for resort casinos to succeed.[595] But Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, told the Committee that there would not be a national strategy for the location of casinos, "I do not think it would be appropriate for us to have pinpoints on a map strategy from a national level as to where a casino should go".[596]

The viability of resort casinos

406. While having a national plan for the location of casinos may not be the most appropriate way of deciding where such developments are sited, the Committee has heard evidence expressing concern over the viability of resort casinos if there are large casinos located nearby. This point was made by Leisure Parcs, who questioned the viability of a resort casino development in Blackpool, if there are large casinos in, for example, Manchester and Liverpool.[597] Blackpool Council note that

"the major UK and international casino operators are excited by the ambition and vision in Blackpool's Master Plan and will participate in its realisation but only if investment in Blackpool is not threatened by competition in locations more convenient to the region's urban populations".[598]

407. In oral evidence Mr Love of the Casino Operators Association told the Committee, "if you put a major resort casino costing millions of pounds in Blackpool, I find it very difficult to believe that it will work unless they have an area of non-exclusion or non-commercial intervention."[599] This is another area where the Government's policy lacks clarity. It is unclear from the proposals in the draft Bill how Government policy would resolve this dilemma.

Regional Planning Bodies

408. The ODPM has confirmed that it would be for "Regional Planning Bodies to set out, where they deem it appropriate, planning policies for leisure development of regional significance, including the largest casinos, which identify suitable locations within the region that would optimise their contribution to tourism and regeneration."[600] Ameristar Casinos are opposed to "giving regional planning bodies the power to mandate the location of casinos".[601] The Government's view was reinforced by Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, who told the Committee that "big-scale resorts which are going to have a massive impact need to fall into the category of those that should be dealt with at the regional level, and should be considered as part of the regional spatial strategies and so on".[602] Local planning bodies will also be involved, with responsibility to "develop policies and identify sites for such development in their local plans which are consistent with regional policies".[603]

Planning for resort casinos

409. The Committee heard evidence that in order to achieve regenerative benefits from the largest casinos, "investment must be guided and directed. Without it, we will not see the regeneration benefits".[604] Harnessing regenerative benefits will depend greatly on how the largest casinos are planned for and located. The Henley Centre Report notes that "the siting of these new casino developments is a critical issue, whatever their size".[605] Evidence from Mr Anthony Jennens indicates the importance of the planning process in this regard: "The large casino is an extraordinary animal which is entirely new to the Planning system and special provision must be made if it is to prosper".[606] This view was echoed by the Local Government Association, "casino developments of the scale envisaged are unprecedented in this country and therefore has not been tested through the current statutory planning process".[607] John Kelly of Gala expressed the importance of the planning system in relation to attracting investment, "if the planning regime around the new legislation was not investment encouraging, that would again impact almost inevitably on that £5bn estimate of inward investment".[608]

410. The Committee heard evidence stressing the importance of Regional Economic Strategies in ensuring that the economic impacts of major developments are taken into account. The Government's proposals do not make specific reference to Regional Economic Strategies. Nick Gerrard of the North-west Development Agency believed this to be a mistake. "The fact that there is no reference to the only existing statutory document which identifies the tourism and economic development priorities for the region is a weakness and does need to be specifically included".[609]

411. DCMS and ODPM are as yet unclear on where the line will be drawn between designating a casino as large or resort. This will determine whether planning for the casino takes place at the local or regional level. Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM told the Committee:

"The issue we are still in discussion with at DCMS is what the dividing line should be. Clearly, you can imagine that big-scale resorts which are going to have a massive impact need to fall into the category of those that should be dealt with at the regional level, and should be considered as part of the regional spatial strategies and so on. However, equally, the very small-scale ones […] should simply be dealt with by the local planning authorities as part of their normal processes. Where I think we have not made the decision yet is exactly where you draw the line between those two".[610]

412. The Committee has grave concerns that the lack of clarity in this area, particularly the failure of DCMS and ODPM to have decided where to draw the line between large and resort casinos, could have serious consequences. Regeneration cannot be achieved until the process for achieving planning gains and regenerative benefits has been resolved. This has become a matter of some urgency as casino licences are being granted without relevant planning gains having been negotiated. This issue is discussed in more detail below.

413. Resort casinos have the potential to have a significant impact on the economies of the regions in which they are located. The Committee recommends that plans for resort casino developments are considered in line with Regional Economic Strategies and the regional planning process to ensure that the economic impacts of any such developments are properly considered. This will encourage the benefits ensuing from such a development to be maximised.

414. Given the potential for regeneration from resort casinos we believe that planning for such developments should be the responsibility of Regional Planning Bodies. As recommended in paragraph 385, we reiterate our view that all resort casinos should provide regenerative benefits. They should be required to do so by Regional Planning Bodies. We so recommend.

Planning and licensing

Planning Use Class

415. Under the proposals in the draft Bill, prospective operators of premises, such as casinos, which require a premises licence will need to obtain a licence before using the premises for that purpose: "The licensing requirements are additional to, and not in place of, the normal planning process".[611] An operator will not need to obtain planning permission if they intend to use the premises for a business that is in the same planning Use Class as the existing premises.[612]

416. Within the planning system, buildings and areas of land are categorised according to their use. Casinos currently fall within the D2 Use Class: Assembly and Leisure.[613] Under the Use Classes Order, where a building or land is used for a purpose within a specified class, its use for any other purpose in the same class does not require planning permission. This means that premises that share the D2 Use Class with casinos, for example, bingo halls, could convert their premises into a casino without the need for further planning permission or consultation with their local authority, as long as this did not involve making alterations to the premises.[614] The Local Government Association has expressed concern about this:

"Should casinos remain in the same Use Class as community uses such as cinemas and sports facilities some member authorities have expressed concern that operators will target such premises which could be changed to a more profitable gambling use without the need for planning permission".[615]

417. However, Clause 125(1) provides that subject to Clause 143(4) in respect of casinos, a premises licence can only authorise the premises to be used for one category of gambling activity. Therefore, a licence permitting premises to be used for the provision of betting could not also be used to enable those premises to be used for bingo and vice versa. Furthermore, Clause 125(2) provides that only one premises licence can be held for a single set of premises. This would mean that bingo clubs would not be able to convert to casinos without applying to the local authority to ask for a new casino premises licence. The extent to which this would enable local authorities to prevent a bingo club converting to a casino will depend on the discretion that local authorities can lawfully exercise under Clause 127. This is a particular example of the general point concerning a local authority's discretion to refuse a premises licence that we discussed in paragraphs 186-189. The Committee is concerned at the potential for proliferation of small casinos developing through conversions of this sort, over which a local authority may have inadequate control. This general issue must be addressed in the guidance given to local authorities by the Gambling Commission.

Change of Use Class

418. If a change of Use Class is intended, or if the building requires significant alterations, planning permission would have to be sought in the normal way.[616] This would lead to interaction between the planning and licensing system. The draft Bill:

"seeks to cater […] for the needs of prospective operators who have secured planning approval for building work but do not want to incur the risk of undertaking it without a reasonable measure of assurance that an application for a premises licence will be successful. Clauses 166 and 167 accordingly provide for a local authority to issue a provisional statement that has the effect of restricting its ability subsequently to refuse a licence application or grant a licence on different conditions".[617]

A separate planning use class for casinos

419. The Committee received evidence suggesting that it would be appropriate for casinos to be categorised as sui generis and afforded a separate use class. Mr Haslam of Blackpool Council told the Committee, "large establishments are able to slide out of one entertainment use into casino use. I think the casino use has to be sui generis.[618] Mr Anthony Jennens was in favour of having a separate planning use class, "In the first instance any variance in ownership or substantial change in the operation of the premises would require a new consent, in the second, casino operators would be afforded more latitude".[619] This view was not shared by representatives from the Local Government Association, "why create another class? What is so special about casinos that they should have a particular class?".[620] Having a separate use class for casinos would prevent other businesses from being able to turn their premises into casinos without having to obtain planning permission.

Casino applications prior to Royal Assent

420. The Committee has heard evidence suggesting that there should be no granting of applications for casinos that were made after the Government published its position paper on casinos on 7 August 2003. Mr Haslam, of Blackpool Borough Council, told the Committee, "there is a need […] to ensure that new licences for casinos emerging from the new legislation should be associated with planning applications considered and granted after that legislation is enacted".[621]

421. Licences granted since August 7 2003 could give casinos grandfather rights without ensuring that where appropriate, they have been considered in line with regional and local plans. This could mean that the opportunity for Regional Planning Bodies and local authorities to achieve planning gains is lost. There have been numerous press reports of casino developments that are already underway, highlighting the risk of losing planning gains.

Grandfather rights

422. Under the proposals in the draft Bill, it is not clear whether all existing casinos will receive grandfather rights or whether this will be limited to those below 5,000 sq ft that were operating before the Government produced its position paper on casino sizes on the 7 August 2003.[622] The Gaming Board believe "there is a need for clarity about the grandfather rights of casinos falling below the new minimum area of 5,000 sq ft".[623] The Committee has received evidence from Sun International suggesting that grandfather rights should be limited to those casinos that were operating before the 7 August.[624]

423. The aim of grandfather rights is to protect the position of casinos with a table gaming area of less than 5,000 sq ft that would otherwise not be able to continue to operate under the new regime. In its 7 August Position Paper, the Government notes that "there are a number of casinos with gaming areas of less than 5,000 sq ft already in use. We are clear that these will continue to operate as small casinos under the licensing framework which we envisage".[625] Due to the lack of clarity surrounding the issue, it now appears that grandfather rights could be used by operators to establish large or resort casinos without having to involve local authorities or Regional Planning Bodies, something that would be necessary once the Bill is passed. Mr Anthony Jennens, a planning consultant, told the Committee, "If I were a casino operator and I were now to purchase the David Lloyd tennis clubs throughout the land of which there are 28, I could turn all of those immediately into casinos and put in 40 tables, and whatever the statutory amount is now for machines, wait and get grandfathered in and have 28 very large casinos around the country".[626]

424. The Committee is concerned that the lack of clarity over grandfather rights could lead to the undesirable proliferation of casinos and to the loss of planning gains and regeneration benefits in some areas. Planning permission and casino licences granted prior to the Bill achieving Royal Assent could invalidate much of the Government's policy in this area. It could also result in there being considerable inconsistency in the interpretation of grandfather rights in different areas.

425. Casino licences can currently be granted for premises in permitted areas only. There have been numerous press reports of proposals for large scale casino developments in a number of cities including London, Glasgow, Newcastle, Manchester and Liverpool.[627] Such developments are likely to fall into the Committee's recommended large or resort categories of casino, with the ensuing benefits of Category A gaming machine entitlements. Because planning permission and a casino licence would have been granted before the Bill gained Royal Assent, it will be very difficult for the situation to be reversed. Under the proposals in the draft Bill, planning permission previously granted will not be able to be reversed and the local authority will be required to grant a premises licence. While the Gambling Commission is not required to grant an operating licence, there would have to be a justification for not doing so. If the casino continues to operate then local authorities and regional planning bodies will not be able to negotiate planning gains or regeneration benefits from a development that already exists. This is a considerable cause for concern as while the situation could only arise in existing permitted areas, this means that large areas of the country could miss out altogether on the positive benefits that can arise from such developments. Mr Haslam of Blackpool Borough Council told the Committee, "permissions granted now by sleight of hand in the hope that licence will come automatically could also puncture a sensible regional strategy".[628]

426. This is unfortunately another area where government policy has failed to take account of developments in the industry. The lack of clarity on grandfather rights could lead to a series of missed opportunities for certain areas and risks an inconsistent approach being taken across the country. The Committee considers this to be most regrettable.

Planning at the local level

427. While resort casino developments will be for consideration by Regional Planning Bodies, large and small developments will be the preserve of the local planning process. "Proposals for casino developments which are not of regional significance should preferably be bought forward through local development plans in order to capture the benefits for the local evening economy by locating them in locations, such as town centres, consistent with government planning policy on the location of development".[629] Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM told the Committee "the very small-scale ones […] should be dealt with by the local planning authorities as part of their normal processes".[630]

428. While local authorities will no longer be able to refuse planning permission for casinos using the demand test, there is concern that planning permission may be refused on grounds of 'need'. Anthony Jennens, a planning consultant, told the Committee "one stated aim of the Gambling Bill is the removal of the unstimulated demand test, yet the Planning System can reimpose it by means of the requirement to demonstrate 'need'".[631] This will be an area in which the Gambling Commission guidance to local authorities will be very important. We deal with the demand test in the Chapter on licensing (paragraphs 186 to 189).

Interaction between planning bodies

429. As it is currently outlined, the planning process for resort casinos will involve a range of stakeholders, including Regional Planning Bodies, Regional Development Agencies and local authorities.[632] Operators of Adult Gaming Centres noted that "the roles and responsibilities of local authorities/Regional Development agencies need to be clarified to ensure fairness and consistency of approach".[633]

430. The Government "expects Regional Planning Bodies to set out, where they deem it appropriate, planning policies for leisure developments of regional significance, including the largest casinos […] Local planning authorities will need to develop policies and identify sites for such developments in their local plans which are consistent with regional policies".[634]

431. The interaction between the Gambling Commission, Regional Planning Bodies, Regional Development Agencies and local authorities will be vital to the success of the Government's proposals. The Local Government Association expressed concern about how interaction might be achieved in practice, "although it is unclear whether regional planning bodies would be given direct powers over councils, the proposals might set up a worrying framework that could see input from councils and local residents vetoed at regional level".[635]

Miscellaneous Issues

Linking Machines

432. The Gambling Review Report contained no restrictions on linking machines (also known as wide area progressives) between casinos.[636] The 7th August Position Paper outlined a change to Budd's approach stating that

"casinos, while free to install gaming machines with no fixed prize limits, are not able to link them to machines on other premises to create progressive jackpots. Such linking would undercut effective controls over the availability of machines which evidence from overseas suggests importantly influence the incidence of problem gambling".[637]

433. Accordingly Clause 203(1) generally prohibits the linking of machines. This general prohibition on linked machines is, however, subject to the exception in Clause 203(2) that machines may be linked within a single casino. The Committee received mixed views on this subject. Those in favour of the proposals include Kerzner who concur that "linking gaming machines between premises would lead to further proliferation in the number of small casinos".[638] Those against, including Rank and Gala which argued that the Government's rejection of proposals to allow gaming machines to be linked across a number of premises would be detrimental to their ability to compete with larger casinos:

"We believe that the proposal is illogical because we can see no difference in practice between the linking of, say, 500 machines in one casino and the linking of 500 machines located in a number of different casinos […]. We consider that the proposal is unfair because it further disadvantages operators of existing small casinos. If they cannot link machines in different casinos they will not be able to match the prizes offered by larger new casinos and will therefore be unable to compete […]. The inability to link machines would only exacerbate the two-tier nature of the Government's proposals".[639]

This view is shared by the British Casino Association, which argued that the restriction on linking machines between casinos "would be a serious anti-competitive restriction particularly for existing casinos, which would only be able to link a small number of machines, whilst a new competitor which opens a casino in the same catchment area could link 1000+ machines, thereby offering more attractive prizes".[640] Leisure Link endorse this view, arguing that restrictions on limiting machines "will undermine the economic viability of many smaller casinos".[641]

434. The evidence that linking machines can lead to problem gambling was disputed by the Casino Machines Manufacturers' Group. In oral evidence to the Committee, Mr Wimsett said "we, through our best endeavours […] have failed to find any such material".[642] However, Professor Griffiths told the Committee of the importance of the size of the jackpot, "the jackpot prize for instance is most important in why people first start to play an activity".[643] Leisure Link,[644] the Casino Machine Manufacturers' Group[645] and the Barcrest Group[646] have all suggested that a delegated power should be included in the Bill to enable the linking of machines.

435. Most existing casinos are small. If, as is likely, grandfather rights permit such casinos to install their entitlement under the Bill of new Category A machines immediately after Royal Assent, linking of machines would enable small local casinos the opportunity of offering very high jackpots in a number of locations where until now there has been only a limited gaming machine availability, if any.

436. On balance, we agree with the general prohibition on the linking of gaming machines situated in different casino premises, contained in Clause 203 of the draft Bill. We consider the prohibition to be necessary at this stage to prevent the proliferation of high-value gaming machines which, as discussed elsewhere, we consider to pose a considerable threat to the prevalence of problem gambling. However, we recommend that Clause 203 should be amended to give the Secretary of State the power to remove this prohibition at a future date, subject to the affirmative procedure. The Committee recommends that the Gambling Commission and Ministers monitor the extent to which the ability to link machines within premises results in a proliferation of high value jackpot offers and what effect, if any, this has on competition between small and large casinos.

Available for use

437. The Government's proposals provide for a link between the number of gaming tables and the number of gaming machines. In order to avoid casinos increasing the number of gaming tables they have, to increase their entitlement to gaming machines, gaming tables must be 'available for use'. Disappointingly DCMS have yet to have come to an agreement with the industry about what 'available for use' means. The Committee received evidence from the Casino Operators Association that "the definition in our opinion should be a table which has a live operative".[647] The British Casino Association concurred with this view.[648]

438. There is a risk that casino operators will increase the number of tables that they have, in order to increase their machine entitlements by having 'dummy tables'. Stanley Leisure have suggested that the Gambling Commission should be responsible for checking that gaming tables are actually in use, "we strongly recommend that there is an Audit by the Gaming Commission on 'Table utilisation' measurements to ensure that the 40 Gaming Tables are substantiated by 'customer demand' and not simply 'made available' in large Casinos".[649]

439. Given the importance of the issue DCMS need to agree a definition of "available for use" as soon as possible. The Committee encourages the Gambling Commission to monitor the availability of gaming tables and the levels of consumer demand. If tables are not being used on a regular basis then the corresponding number of gaming machines should be removed from play. We so recommend.

Membership of casinos

440. The draft Bill removes the requirement for casinos to operate as private members' clubs and abolishes the 24 hour rule, which creates a statutory interval between membership and play. This means that casinos will be able to attract spontaneous, walk-in customers. However, under the EU Directive on Money Laundering, casinos will still have to positively identify customers who participate in gaming activities, in order to satisfy 'know your customer' regulations. As it would be very difficult for a casino to differentiate between customers who gamble, and customers who do not, they will effectively have to identify anyone who enters the gaming floor.

441. The Committee has received evidence in favour of maintaining some record of membership. Stanley Leisure "would like to retain a membership position even though people can come in off the street. By continuing to have a membership form to be completed, it does give us control over the people who may come into the casino".[650] The Evangelical Alliance is in favour of maintaining the 24 hour rule for playing in casinos, to "avoid the dangers of people walking off the street to gamble in highly vulnerable states".[651]

Employment in casinos

442. The Committee heard evidence from the Transport and General Workers Union about the risks involved in working in a casino. "It is […] our contention that jobs in the casino industry are often very low paid with poor conditions. The casino business is mainly night work which according to recent research is a severe danger to an employee's health".[652]

Smoking in casinos

443. The Committee has received evidence suggesting that the ability of customers to smoke in casinos should be restricted. One basis for this argument is that smoking in casinos is harmful to casino employees. The Transport and General Workers Union have told us that:

"To go back to passive smoking, very often in a casino there is poor ventilation and poor air-conditioning and the legal protection from health and safety is just not there, so there is a big problem for casino workers".[653]

444. It further noted that: "there are particular problems in casinos in that mainly a lot of gamblers do smoke, but the Code of Practice, as far as we are concerned, gives us no protection whatsoever and we just suffer in silence."[654] We are concerned by the evidence we have received regarding the detrimental impact of passive smoking on casino employees.

445. In addition, banning smoking in the gaming areas of casinos has been proposed as a means of addressing problem gambling. For example, we have received evidence from the Blackpool Coalition Against Gambling Expansion that the Bill should:

"Allow local authorities to introduce smoking bans in the slot machine areas if Public Protection Committee Councillors vote to do so. Evidence from Australia indicates smoking breaks get people away from the slots, enough to significantly halt the addictive hold they have on some people".[655]

During our visit to Australia, we learnt that smoking bans in casinos had been introduced in the State of Victoria in September 2002. Mike Hill, of Community Action on the Pokies Problem, has been reported as saying that, while the intention was not to reduce the time problem gamblers spend at machines, "it has been by far the most effective thing the Government has done to address the high levels of addiction."[656] In addition to the arguments regarding the health of casino workers, TGWU has also commented that "More important to this legislation, it would make the majority of customers break from play. There are no figures on the prevalence of gamblers that smoke, but in casinos the percentage is high."[657]

446. We believe that non-smoking policies in the gaming areas of casinos would be an effective means of helping to protect casino employees from the dangers of tobacco smoke. We accordingly recommend that the Gambling Commission should incorporate provision for a non-smoking policy in either licence conditions or the codes of practice to be issued under Clause 16 of the draft Bill.

Alcohol in casinos

447. While Budd was generally "anxious that gambling and alcohol should not mix more than they do already",[658] it considered restrictions preventing alcohol being taken onto the gaming floor of casinos to be artificial, noting that alcohol was already available a few feet away from the gaming floor.[659] Budd therefore recommended that "the current restrictions on alcohol on the gaming floor should be lifted."[660] The Government has accepted this, [661] and the current law has already been amended accordingly. [662]

448. We have, however, received a number of criticisms of this policy. For example, the Evangelical Alliance has commented that it "firmly opposes the proposed relaxation of alcohol rules and urges the complete ban on the sale of alcohol in gaming establishments";[663] and Stanley Leisure have stated that "the permission of people to drink alcohol at tables and at machines is wrong and we would like the Scrutiny Committee to change the recommendation as this in itself can cause problem gambling".[664] The Transport and General Workers Union explained that:

"It is accepted that alcohol may be obtained at a bar, which is situated nearby, but because the punter has to physically leave the gaming tables in order to drink, this acts as a disincentive to excessive alcohol intake and may create a break in play."[665]

449. Dr Moran has told us of the risks of mixing alcohol and gambling:

"It has also been found that normal, social levels of drinking alcohol alter self-control over decision-making. This results in regular gamblers finding it more difficult to decide at what point to stop, when losing."[666] [and] "Alcohol impairs judgment. It clearly increases impulsivity. Therefore, the association between gambling and alcohol is, I think, a very hazardous one."[667]

Inter Lotto has countered this evidence, stating that "The link between drinking and gambling is anecdotal, as little relevant research has been undertaken, but in its 1996 Report 'Casinos and Bingo Clubs', the Home Office states 'We are not aware of any evidence to suggest that this (alcohol) is a factor in excessive gambling or other problems.'"[668]

450. A number of commentators have suggested that further research should be conducted into the link between alcohol and problem gambling. Quaker Action on Alcohol and Drugs has recommended that "the effects of alcohol consumption on gambling be a priority area for research by the Gambling Trust [and] that evidence will result in government willingness to use "the flexibility available in the legislation" to review and amend these provisions if necessary."[669] The Drug and Alcohol Foundation has urged "why not use the change in gambling regulations as the opportunity to research the link between gambling and alcohol usage?"[670]

451. We agree with the decision to remove restrictions on alcohol on the gaming floor of casinos. However, in view of the fact that serious concerns have been expressed as to the relationship between gambling and alcohol the Committee considers it is an aspect that needs to be monitored by the Commission and included in its third year report.


501   Gambling and the Public Interest, Professor Peter Collins (London, 2003). Back

502   DCMS, Draft Gambling Bill: Policy document, Cm. 6014 - IV, November 2003, para 4.6 Back

503   DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 24.37 Back

504   DCMS, Draft Gambling Bill: Policy document, Cm. 6014 - IV, November 2003, para 2.7 Back

505   Q 66 Back

506   Q 1111 [Mr Haslam] Back

507   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

508   The Committee assumes that the function of Clause 10(5)(c) is to enable the Secretary of State to make special provisions for the grandfathering of existing casinos which are below the minimum size for a small casino. Back

509   Q 87 [Lord McIntosh]  Back

510   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

511   Ev 164. See also London Clubs International, Ev 627 and Kerzner International, Ev 161, section 3 Back

512   Q 1110 [Nick Gerrard] Back

513   Q 1111 [Nick Gerrard] Back

514   Ev 598, para 6.3 Back

515   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

516   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

517   Ev 693, para 3 Back

518   Ev 594 Back

519   Ev 707 Back

520   DCMS, Draft Gambling Bill: Regulatory Impact Assessment, Cm. 6014 - III, November 2003, para 4.38 Back

521   Ev 599 Back

522   Ev 638 Back

523   Ev 595 Back

524   Q 436 [Lady Cobham]  Back

525   Ev 139, para 2.3 Back

526   Ev 181 Back

527   Q 989 Back

528   Q 436 [Lady Cobham]  Back

529   Ev 181 Back

530   Ev 185 Back

531   Ev 161 Back

532   Ev 598 Back

533   Ev 386 Back

534   Ev 349 Back

535   Ev 719 Back

536   DCMS, Draft Gambling Bill: Policy document, Cm. 6014 - IV, November 2003, para 4.13 Back

537   DCMS, Gambling Review Body Report, Cm. 5206, July 2001, recommendation 57 Back

538   Ev 691. The same point was made by the Casino Machine Manufacturers Association (Ev 349). Back

539   Ev 161 Back

540   Q 446 Chairman: Is it your view that, if the ratio were more generous than 3:1 and it was the eight Budd originally recommended, that some of these casino developments would not be Quite so big?

Mr Ramm: Yes, very much so. Back

541   Ev 22, para 8 Back

542   Ev 598, para 6.2 Back

543   Ev 161 Back

544   Ev 596 Back

545   Ev 166, para 2.2 Back

546   Ev 161, para 4 Back

547   Gala response to 7th August Position Paper.  Back

548   Ev 594 Back

549   Ev 598, para 3.1 Back

550   Ev 181 Back

551   Ev 161 Back

552   Q 1783 Back

553   Ev 139, para 2.3 and Ev 181 Back

554   Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004 Back

555   Ev 594 Back

556   Qq 262-65 Back

557   Ev 350 Back

558   Ev 355, para 1.4. See also the memorandum by the British Greyhound Racing Board, Ev 386 Back

559   Q 303 [Ms Chambers]  Back

560   Ev 139, para 2.3, Ev 158, para 3 Back

561   Ev 409 Back

562   Q 412 [Mr Love]  Back

563   Ev 161 Back

564   Ev 701, para 3.3.2 Back

565   Ev 645, para 4 Back

566   Ev 185 Back

567   DCMS, Gambling Review Body Report, Cm. 5206, July 2001, recommendation 57 Back

568   Q 353 [Professor Vaughan Williams] Back

569   Q 1783 Back

570   Ev 185. International comparisons of machine entitlements were provided by Accor casinos (Ev 711) and the American Gaming Association (Ev 714). Back

571   DCMS, Draft Gambling Bill: Policy document, Cm. 6014 - IV, November 2003, para 5.16 Back

572   Ev 566 Back

573   Ev 641, para 3.2 Back

574   Q 65 [Lord McIntosh]  Back

575   Q 349 [Brigid Simmonds]  Back

576   Ev 169, para 2.4 Back

577   Ev 169, para 2.1 Back

578   Q 346 [Mr Kelly]  Back

579   Ev 491, paragraph 9 Back

580   BACTA, Ev 295, para 2.2b) Back

581   Park Baptist Church, Ev 591, para 6.1 Back

582   Ev 685 Back

583   Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004, page 158 Back

584   DCMS, Draft Gambling Bill: Policy document, Cm. 6014 - IV, November 2003, para 5.17 Back

585   Q 1802 [Yvette Cooper MP]  Back

586   Ev 671 Back

587   Ev 671 Back

588   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

589   Ev 687 Back

590   Q 499 [Mr Byrne] Back

591   Economic and Social Impact Study of the Proposed Gambling Bill, para 2.4 Back

592   Q 1798 [Yvette Cooper MP] Back

593   A Winning Hand - The Modernisation of UK Gambling - Ernst & Young, commissioned by Business in Sport and Leisure Back

594   Q 423 Back

595   Q 431 [Mr Love] Back

596   Q 1786 [Yvette Cooper MP] Back

597   Ev 164 Back

598   Ev 419 Back

599   Q 431 [Mr Love] Back

600   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

601   Ev 701 Back

602   Q 1783 [Yvette Cooper MP] Back

603   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing, para 4 Back

604   Q 1110 [Mr Reg Haslam]  Back

605   Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004 Back

606   Ev 418 Back

607   Ev 405 Back

608   Q 344 [Mr John Kelly]  Back

609   Q 1110 [Nick Gerrard] Back

610   Q 1783 [Yvette Cooper] Back

611   DCMS, Ev 1, para 2 Back

612   DCMS, Ev 1, para 2 Back

613   www.odpm.gov.uk Back

614   DCMS, Ev 1 Back

615   Ev 405 Back

616   Ev 1, para 3 Back

617   Ev 1, para 4. See also paras 190 to 191 on Provisional Statements. Back

618   Q 1111 Back

619   Ev 418. See also memorandum from Councillor Audrey Lewis, Westminster Council, Ev 708. Back

620   Q 1104 [Cllr Brown]  Back

621   Q 1111 [Mr Reg Haslam] Back

622   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

623   Ev 22, para 8 Back

624   Ev 169, para 5.2 Back

625   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

626   Q 1111 [Mr Anthony Jennens]  Back

627   See for example, 'Casino plan to raise stakes in soccer rivalry' Evening Chronicle (Newcastle) March 19 2004 and 'Council happy to bet on blue-chip plan for Ibrox casino and resort' The Herald (Glasgow) March 25 2004 Back

628   Q 1111[Mr Haslam]  Back

629   Ev 571, para 5 Back

630   Q 1783 [Yvette Cooper MP]  Back

631   Ev 418 Back

632   See diagram in earlier section. Back

633   Ev 350, para 22 Back

634   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

635   Ev 389 Back

636   DCMS, Gambling Review Body Report, Cm. 5206, July 2001 Back

637   Future Set Out For UK Casinos - Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing Back

638   Kerzner, Ev 161, para 5 Back

639   Rank, Ev 594 Back

640   Ev 158, para 2.1 Back

641   Ev 691 Back

642   Q 906 [Mr Wimsett] Back

643   Q 246 [Professor Griffiths] Back

644   Leisure Link, Ev 600, para 5 and Ev 691, para 2. Back

645   CMMG, Ev 323 para 6.7. Back

646   Barcrest Group, Ev 641, para 3.2.1. Back

647   Q 448 [Mr Love]  Back

648   Q 448 [Lady Cobham]  Back

649   Ev 549. See also MGM Mirage, Ev 166, para 2.4.3 Back

650   Ev 679 Back

651   Ev 72, para 10 Back

652   Ev 491, para 9 Back

653   Q 1466 [Mr Bunn] Back

654   Q 1467 Back

655   Ev 21, para 12 Back

656   Reported in The Age, 29 February 2004. Back

657   TGWU, Ev 491, para 10. Back

658   DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 24.19 Back

659   DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 24.18 Back

660   DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 24.19 Back

661   DCMS, A safe bet for success - modernising Britain's gambling laws, Cm. 5397, March 2002, para 4,24 Back

662   DCMS, Draft Gambling Bill: Regulatory Impact Assessment, Cm. 6014 - III, November 2003, para 4.5 Back

663   Evangelical Alliance, Ev 72 Back

664   Stanley Leisure, Ev 679, para 5 Back

665   TGWU, Ev 491, para 17 Back

666   Dr Moran, Ev 64, para 3.3 Back

667   Q 256 [Dr Moran] Back

668   Inter Lotto, Ev 666, para 8 Back

669   QAAD, Ev 30, para 4.3 Back

670   Drug and Alcohol Foundation, Ev 664, para 5.4 Back


 
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Prepared 7 April 2004