Memorandum from Leisure Link Group (DGB
14)
1. EXECUTIVE
SUMMARY
This paper has been prepared for submission
to the Joint Committee on the Draft Gambling Bill in order to
aid the group in its examination of the Bill.
We are encouraged by the Government's publicly-stated
commitment to reform the law as it stands and believe that such
reforms will make investment in the UK market highly desirable.
We support the Government's wider objectives in reforming the
law and believe the reforms will bring much needed transparency
to the system.
1.1 Leisure Link
Leisure Link is one of the UK's most successful
and dynamic companies operating in the leisure sector. Leisure
Link's business base and corporate profile gives it access across
the whole of the UK gambling sector. Its business partnerships
cover the whole spectrum of gambling, including pub and bar operators,
amusement arcade owners, licensed betting shop operators, and
bingo and casino operators. It understands the impact of reform
better than most other players within the highly fragmented gambling
industry.
1.2 Main Concerns:
General
Leisure Link holds the opinion that the Bill
is too proscriptive in a number of areas. The Government's original
intention was to create a piece of enabling legislation. However,
this has been negated by specific restrictions on machines in
particular (see below). The new gambling market needs to be encouraged
to evolve in a way which brings maximum economic benefits, matched
by social protection. The regulation route would achieve this
with a greater degree of flexibility than through specific legal
restriction.
Pubs
The Government has not published, so far, those
parts of the Bill relating to gambling in alcohol-licensed premises.
This is a major shortcoming and handicaps our response on key
sections of the Bill. However, albeit in the absence of specific
proposals from the Government in this area, Leisure Link would
make the following observations:
— 11,000 pubs currently have more than
two machines. Therefore, the currently proposed entitlement of
two machines is much too low.
— There is still no clarity on Grandfather
Rights over machines in pubs. This problem needs to be addressed
rapidly.
— The basis on which application for
additional machine permits can be made must be clarified.
— Greater clarity is required to avoid
potential conflict over automatic entitlements, codes of practice
and local authority license conditions (which, we understand,
are in the process of being drawn up as part of the 2003 Licensing
Act requirements).
Between ten and twenty five per cent of pub
profits are generated by machines. Pub operators are rightly concerned
as to Government intentions in relation to machines in Pubs, which
have been an integral part of the entertainment proposition for
over 40 years. The constant references to the Australian market
are both unhelpful and inaccurate and do not reflect reality.
AWP's, a low stake low prize product, are used predominantly for
entertainment and cannot be viewed in the same way as unlimited
stake and prize machines.
It has been estimated that loss of machine incomes
could result in the closure of c forty per cent of British pubs,
largely in community based outlets.
Fixed Odds Betting Terminals
The proposals relating to Fixed Odds Betting
Terminals positions them as an alternative to category B gaming
machines in the overall mix of four gaming machines allowed in
betting offices only. In the light of the recently announced code
of practice agreed between the Gaming Board and ABB, it would
be helpful to clarify the status and siting options for these
machines in the Bill. Leisure Link believe that these should be
a separate category.
Planning and Local Licensing Issues
We accept the need for local authorities to
have a role in authorising the development of gambling opportunities
in their areas, and remain convinced that local authorities should
not have the scope of powers to enable them to block all proposals
in the area. Furthermore, we believe that early guidance is essential
as to how local authorities should employ the power that they
are given, together with an indication of the sanctions that will
apply should such guidance be ignored
The industry will be investing considerable
sums in leisure regeneration projects. Therefore, it will want
to be assured that a proper balance is struck between the considerable
economic and social benefits which will accrue to specific localities;
and local consultation exercises which may give rise to opposition
to these projects. It is important that developers are provided
with clear and early guidelines on the way in which local opinion
will be sought and measured for both the planning and local licence
applications.
Machine-Table Ratios
We strongly recommend that limits on the number
of gaming machines should not be enshrined in the Act as a number.
We think it would be far more appropriate for the Secretary of
State to have discretionary powers over the specific limits. The
Government should recognise that it is a function of a successful
casino that it has significant numbers of casino slot machines.
International experience shows that casino slot machines are the
preferred option for the majority of customers. Therefore, a Government-imposed
regulation determining an unreasonably low number of machines
compared to tables is both illogical and will prove to be uneconomic
to many operators, including some larger groups.
Linked Machines
We take issue with the Government's justification
for banning machines linked across different casinos (Wide Area
Progressives). There are no studies available which demonstrate
any association between these facilities and problem gambling.
Restrictions on WAPs will undermine the economic viability of
many smaller casinos, especially in a more competitive environment.
It is our contention that it would be more appropriate to incorporate
any restrictions on WAPs within the regulations and not in the
form of primary legislation.
2. BACKGROUND
Leisure Link Group comprises four key
business divisions:
— Leisure Link Solutions is
the UK's largest machine operating business, managing over 90,000
"pay to play" machines across some 27,000 leisure retail
venues and employing around 2,200 people.
— The company provides machines and
corollary support services across every part of the UK leisure
sector. Its customer base includes the biggest and smallest businesses
involved in leisure retailing:
Pubs, clubs and bars with clients including
Mitchells & Butlers, Scottish & Newcastle, Enterprise
Inns and J.D. Wetherspoon; regional groups such as Fullers, Young's,
Charles Wells and S A Brain; as well as over 2,500 sole traders
and smaller multiples.
Bingo, casino and licensed betting offices
with customers such as Coral, William Hill, Ladbrokes, Gala, Stanley
Leisure; and a number of smaller chains such as Corbetts and Jennings.
The company also manages machine arcades
in holiday parks for customers such as Bourne Leisure, motorway
service groups including Welcome Break and a number of Universities.
— Maygay Machines is a manufacturer
of AWP, Club, Jackpot and Bingo as well as SWP machines. In addition,
it manufactures under license PGA Golf Tour and Casino machines.
The business sells machines predominantly in UK but does export
c eight per cent of its output.
— Maygay manufactures c 20,000 machines
annually and employs c 200 people.
— VIP Gaming Solutions is a
recently formed new division of Leisure Link. It has been established
to offer distribution services to the Casino market place in UK
and overseas. It was established in May 2003 and currently employs
nine people.
— Inspired Broadcast Networks leads
the market in networked terminals in public venues. The business:
manages the Itbox, a multimedia entertainment
and gaming terminal currently being deployed by Leisure Link.
To date, there are over 5,000 Itbox networked terminals in the
market;
offers wireless broadband in public venues through
its wifi business, The Cloud; and
offers game syndication and mobile marketing
services.
Leisure Link has an established track-record
in technological innovation which has made it a world leader in
the growing market for "pay to use" products in public
space. New developments include wireless networking applications
for machines which create management and supervision efficiencies,
as well as facilitating external monitoring via remote data capture.
Leisure Link's business base and corporate profile
gives it access across the whole of the UK gambling sector. It
understands the impact of reform better than most other players
within the highly fragmented gambling industry, and will be able
to gauge the impact of specific proposals on different sectors
of the industry.
3. GAMBLING LAW
REFORM
Leisure Link believes there is an urgent and
pressing need for reform of the UK's outdated gambling laws and
is encouraged by the Government's publicly-stated commitment to
reform the law as it stands. The leisure sector is one of the
fastest growing parts of the economy, contributing jobs, tax revenues
and sustainable investment. Yet growth in the leisure gambling
segment is lagging behind, in spite of enormous pent-up consumer
demand. Legislative reform, accompanied by robust social and educational
policies aimed at consumers within a deregulated environment,
will enable gambling to join the mainstream of leisure activities
and make a proper economic contribution to society.
In terms of timetabling proposed reforms, given
the high expectations which have been raised by the Government
within the gaming industry, as well as the pressing need to update
the law in response to rapid technological advances, Leisure Link
hopes the Government will be able to press forward as quickly
as possible with primary legislation. The currently outdated nature
of existing legislation fulfils none of the Government's own criteria
of fairness in gambling, social protection or encouraging commercial
development of the industry.
Companies like Leisure Link may benefit from
reform through additional sales and increased revenues. However,
uniquely for a UK leisure business, it should also be able to
facilitate the Government's wider and concomitant social and tax
reform objectives through the application of new technologies
in areas such as machine monitoring and networking.
4. THE DRAFT
GAMBLING BILL
Leisure Link broadly welcomes the proposed changes
outlined in the draft Gambling Bill. This paper comments on the
clauses where we believe further clarification or consideration
is needed.
We would encourage the Government to publish
the remaining clauses of the Bill as quickly as possible. Manufacturers
and suppliers of machines, as well as site owners, will be affected
by issues such as advertising, gambling in pubs and clubs and
transitional provisions. The current lack of published information
on how the Government proposes to tackle these areas in legislative
terms means that Leisure Link's response to those parts of the
Bill which have been published is, to a certain extent, incomplete
and subject to caveat.
5. DETAILED COMMENTS
Part 2—The Gambling Commission
16—Codes of Practice—We believe
it is important for there to be proper consultation with representative
groups before the Commission issues a code of practice. As with
other sectors of the industry, the gaming machines sector is working
towards developing our own code of practice. We would hope that
sufficient time is given to allow industry to engage with issues
before a code is imposed from above.
20—Consultation with National Lottery
Commission—We would like further clarification as to the
weighting that the opinions of the National Lottery Commission
will receive. In the case that a direct conflict of opinion arises
between the National Lottery Commission and the Gambling Commission,
we would like clarification as to whose views would take priority.
Part 5—Operating Licences
55—Application—We believe the term
"person" in subsection 1 should be extended to include
"an organisation".
56—Consideration of application: General
principles—(c) We do not believe it is necessary or desirable
that the suitability of gaming machines be considered as a factor
in considering an application. Regulations governing the design
and manufacture of machines will be set out elsewhere in the legislation
and manufacturers and operators will adhere to these.
60—General conditions imposed by Commission—We
would welcome further clarification as to the nature of the conditions
that may be attached. We believe that more detail is required
for us to pass judgement on this section.
61—General Conditions: procedure—(1)
We would like further clarification on what grounds the Commission
would consider amending or revoking a condition. (2) We are concerned
that the terms of consultation are not sufficiently far-reaching,
and would welcome measures to increase the scope of the consultation.
62—Individual condition imposed by Commission—We
would welcome further clarification as to the nature of the conditions
that may be attached to the licence, and on what grounds this
may be done.
63—Condition imposed by Secretary of State—We
would welcome further clarification as to the nature of the conditions
that may be attached to the licence, and on what grounds this
may be done.
64—Scope of powers to attach conditions—We
would welcome further clarification as to the nature of the conditions
that may be attached to the licence, and on what grounds this
may be done.
68—Equipment—We would welcome further
clarification as to the grounds on which conditions may be made.
In addition we believe that the definition of "equipment"
should be made clearer.
79—Change of circumstances—We would
welcome further clarification as to what will be considered as
a relevant "changes of circumstance".
87—Initial Duration—We would welcome
further clarification and detail regarding the initial duration
of operating licences.
90—Forfeiture—We would welcome a
definition of what is to be considered a "relevant offence"
in this context.
92—Review—We believe that the provisions
made in 2cii are too strong, and that more justification is needed
for a review.
94—Revocation—(1) We believe that
the phrase "the Commission thinks that" should be changed
to "the Commission has evidence that". (3) We believe
this section should be changed so that the fee is disapplied if
the holder of the licence can show that failure to pay was due
to administrative error.
95—Financial Penalty—(1) We believe
that the phrase "the Commission thinks that" should
be changed to "the Commission has evidence that". (3)
We believe that two years is too long a time period. There is
no reason why it should take such a length of time between the
Commission becoming aware of a breach and their taking action.
96—Levy—(5c) We believe that this
clause is too vague. We also believe that a further clause should
be added covering transitional arrangements between the Gambling
Industry Charitable Trust and the Gambling Commission
Part 6—Personal Licences
102—Exemption for small-scale operators—We
would like further clarification as to why conditions cannot be
attached to the licence of a small scale operator, particularly
if the Government is concerned about the proliferation of smaller
casinos.
103—Application—We would like further
clarification of this section. Sections 1, 2 and 3 imply that
an applicant must have an employer in order to attain a personal
licence, which contradicts section 4.
107—Production of licence—(1) We
believe that the wide variation between the requirements contained
in a, b and c will cause huge confusion.
110—Disqualification—We would like
further clarification on what grounds a court can order the forfeiture
of an individual's personal licence.
Part 7—Operating and Personal Licences:
Appeals
114—The Gambling Appeal Tribunal—We
believe clarification is required as to whether the onus of evidence
in appeal cases is on the licensee or the Gambling Appeal Tribunal.
120—Rules—We would like clarification
on what grounds the Secretary of State will have the right to
intervene.
Part 8—Premises Licences
124—Three-year licensing policy—(3c)
We would like clarification as to how much weight interested parties
will have. We strongly believe that due regard must be given to
weighting interests. (4) We believe further clarification is necessary
as to what regulations may be made.
128—Responsible authorities—(1i)
We would like further information regarding who could be included
as a result of this clause and for what reasons.
129—Interested party—(a) We would
like clarification as to how it will be determined that a person
lives "sufficiently close" and on what grounds they
will be considered to be "affected by the authorised activities".
(b) We would like further clarification on how it will be determined
that someone's business interests are affected.
140—Gaming machines—We strongly
believe that limits on the number of gaming machines should not
be enshrined in the Act as a number. We think it would be far
better for the Secretary of State to have discretionary powers
over the limits.
153—Initial duration—We would like
further clarification regarding the length of the period between
the Secretary of State issuing a prescription and the licence
expiring.
155—Revocation for failure to pay fee—(2)
We believe this section should be changed so that the fee is disapplied
if the holder of the licence can show that failure to pay was
due to administrative error.
156—Lapse—(1a) We do not believe
that a premises licence should automatically lapse if the licensee
dies. Instead, the possibility should be allowed for the licence
to be transferred to a named successor.
159—Application for review—(3)—We
would like further clarification as to the length of the notice
period.
Part 9—Temporary Use of Premises
We are unconvinced of the need for temporary
licences. We are concerned the measures contained in this section
could encourage the proliferation of gambling through the emergence
of "mobile casinos". If these measures are included
in the Bill, further clauses are necessary to specify the actions
that can be undertaken by a person who possesses a temporary licence.
At present, the existence of such a licence would seem to legitimise
all forms of gambling and impose no restrictions.
Part 10—Gaming Machines
192—Gaming machine—(2d) We remain
slightly unclear over what is meant by this clause.
193—Gaming machines: Categories A to D—(2)—We
would be interested to know when these regulations will be available.
197—Use of machine—We believe further
clarification is required regarding the extent to which the Secretary
of State will make regulations and the likely nature of these
regulations.
198—Supply, etc—We would welcome
further details about the likely nature of the regulations.
201—Linked machines—We believe it
would be more appropriate to incorporate any restrictions on WAPs
within the regulations and not in the form of primary legislation.
We are not convinced that the prohibition on linked machines is
necessary or desirable as there is no evidence proving that linked
machines encourage proliferation and problem gambling. In the
future non-linked casino jackpot machines will offer players significant
prizes so, by restricting Wide Area Progressives, the Government
would not be restricting customer access to additionally large
prize payouts. Furthermore, WAP table games are already legal
within the UK, some with considerable jackpot prizes. We do not
see how the Government can draw distinction between machines and
table games in this regard.
Schedule 6—Category D Gaming Machine Permits
Making of an application (3a)—We would
like further clarification of this point as it Is unclear why
a permit cannot be applied for if an alcohol licence has effect
in respect of the premises.
Regulatory Impact Assessment—Regulatory
Costs
The Regulatory Impact Assessment shows considerable
growth in regulatory costs as a result of the proposals in the
draft Bill. Accepting that the new Gambling Commission, with a
broader remit, is likely to attract additional cost; we would
welcome more detail on the Local Authority cost estimate, which
is a considerable increment on the existing cost base.
We also believe that the provision of early
detail on the likely licence/permit and taxation costs is essential
to understand the impact on relevant industry sectors, particularly
in the light of the recent review of Amusement Machine Licence
Duty.
December 2003
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