Joint Committee on the Draft Gambling Bill Written Evidence


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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