Further memorandum from London Clubs International
(DGB 159)
Now that the Committee has almost concluded
its hearings and we have had some time to digest the various submissions,
LCI plc asks that the Committee consider our brief concluding
submission on just four issues.
THE ORIGINAL
INTENT
Our first point is that the original and primary
purpose of this Bill was—as a response to the Budd Review
and the proposals in A Safe Bet—to modernise Britain's existing
gaming industry. The regulator, the Gaming Board for Great Britain,
and every existing operator has said clearly and unambiguously
that the current law is anachronistic and increasingly—in
the face of technological developments including the Internet
and electronic forms of gaming—simply unworkable. It would
be nothing short of a tragedy for the existing industry if this
bill were to be derailed by confused policy objectives.
We strongly urge that, whatever new objectives
may have emerged either during the Bill's preparation or through
the scrutiny process, the modernisation of the existing industry
should remain the primary objective and be assured progress.
FAIR COMPETITION
AND GAMBLING
AS AN
ENGINE OF
REGENERATION
We hope that the Committee recognises that the
climate of honesty and compliance that has provided the confidence
for deregulation has been generated solely and at cost
by the existing industry. It would therefore, in our view, be
grossly unfair—and, consequently, strongly resisted—if
proposed legislation disproportionately favoured international
companies promising regeneration. Had the domestic industry not
been so tightly constrained and heavily taxed over the last 30
years it would no doubt have evolved, gained financial strength
more comparable to its international competitors and, perhaps,
would also have been delivering regenerative benefits domestically
for many years.
If investors are prepared to put capital at
risk in areas requiring genuine economic revival on a scale
unachievable by domestic operators then it is right and proper
that the government avail itself of that opportunity on behalf
of poorer communities. That said, we remain very concerned that
"regeneration" might become a flag of convenience under
whose protection huge developments are planned in prime locations.
For example, as London operators, we do not see much of London
or the prosperous South East as "in need of regeneration".
We are concerned about the emerging proposition that, "exclusion
zones" and other forms of protection from normal market forces
are crucial in an equation which promises "regenerative benefit".
We are confident that the Committee will recognise the distinction
between altruism and protectionism and hopes that its recommendations
reflect the concerns of the UK constituency of operators and shareholders.
The idea that the "stunted infant" that is the UK gaming
industry should be further disadvantaged by de facto preferential
treatment for foreign operators just adds insult to injury and
would demand enquiry by the competition authorities.
Fundamentally, we agree with the Department
of Culture Media and Sport and the Minister, who have said that
regeneration is a "planning issue" and is not for the
Gambling Bill. We believe that, if a fourth category of casino
(Destination or Resort) is thought desirable, the definition and
gaming advantages could be set out quite simply in the Gambling
Bill. Defining a fourth category would also help Local Authorities
understand the distinction between the Large and the, currently
loosely defined, "very largest casinos" and to help
them properly judge their obligations in relation to the Regional
Spatial Plan. As a principle, conditions for approval should be
left to Local Planning Authorities acting within the pre-defined
Spatial Plan. We do not believe it is for the Gambling Bill to
be used to promulgate planning issues.
Where a project offers genuine and significant
regenerative benefits in an area where the RDA has identified
need, we see an argument for offering some advantage. But that
advantage should not be delivered solely through the Gambling
Act. It may be that encouragement can be given in other ways,
for example by reduced Business Rate. That said, we see sense
and balance in offering some gaming advantage by only allowing
unlimited slot machines to destination/resort casinos approved
by Local Authorities in accordance with RDA approved Regional
Spatial Plans.
THE SLOTS
RATIOS
We see and understand the argument that seeks
to avoid the so called "cliff edge phenomenon" between
Small and Large casinos, ie where a very small existing casino
has, at best, only modest increase in machines and at worst a
reduction (assuming that certain variations of automatic roulette
are re-defined as slot machines) and a Large 41 table casino in
an urban environment has thousands of slot machines. We believe
the ratio of three machines per table to be unrealistic in
these limited circumstances and urge the Committee recommend
that the Department reassess this issue, but on balance we would
be content with a ratio for Small casinos (5CR) of between three
and five machines per table.
We believe that unlimited slot machines for
all Large casinos is unnecessary and could lead to the kind of
"slots hall" that are inconsistent with the policy objectives
of the legislation and undesirable in UK gaming market. We also
believe that beyond 40 tables the continued linkage of slot numbers
to tables is likely to lead to artificiality in staff numbers
and unused facilities.
Our view is that a simple ceiling of somewhere
between say 500 and 750 machines should be placed on Large casinos.
Such a ceiling would leave significant headroom for clear market
segmentation between Large and Destination/Resort casinos with
all the additional facilities such premises should offer. This
kind of profile for a UK casino would do no more than bring it
into line with most of its European counterparts and would help
to rebalance the UK industry.
Amongst some commentators a discussion has been
emerging about a single fixed ratio applicable to all casinos,
regardless of size, and including the new Small and Large casinos.
We are strongly against this mechanism and understand why the
Department has not promulgated it. There is no doubt that there
is a degree of artificiality about the ratio mechanism as currently
proposed, but it is just workable up to the 40 table limit. Beyond
that, the demand for and cost of an additional table and staff,
weighed against the incremental benefit of three additional slots,
is very doubtful. Any examination of casinos around the world
will fail to reveal a mix of gaming facilities based on such a
formula.
In our view, such a formula, ie 3 to 1 for all
except Destination casinos, would quickly and effectively kill
the existing UK industry, whilst at the same time it would provide
the most enormous competitive advantage to foreign operators developing
Destination casinos. A few vast slots palaces along with corner
shop betting offices with gaming machines would soon dominate
the gaming landscape: the absolute antitheses of what Budd and
Safe Bet anticipated.
In Summary we favour:
Four Kinds of Casino
— Grandfathered Casinos: no comment.
— Small Casinos: five thousand square
feet of table gaming area. Slots in accordance with the SCR of
between three and five. (The minimum size of these premises
is likely to be around 25 thousand sq ft.)
— Large Casinos: ten thousand square
feet of gaming space, a minimum of 40 tables and a maximum of
say 500-750 slot machines without any ratio. (The minimum
size of these premises is likely to be around 40-50 thousand
sq ft.)
— Destination/Resort casinos: premises
of such overall size and amenity that the impact of their development
on key factors like housing, education, transport and economic
development of an area is such that a LA needs to ensure compatibility
with the RSP and which include at least ten thousand square feet
of gaming space, a minimum of 41 tables:unlimited slot machines
without any ratio.
Given that Budd suggested a minimum gaming area
of just 2,000 sq ft and the cost of developing both the new Small
and Large casinos, there is, with this formula, absolute protection
from the proliferation of the so called "corner-shop casinos".
THE SOCIAL
IMPACT OF
GAMBLING
We have been concerned at some of the comments
the Committee has received in relation to the social impact of
gambling. We feel that "the problem" remains ill-defined,
quantified by anecdote and laid disproportionately at the door
of the casino industry. It was the casino industry that established
Gaincare. It was the casino industry that developed the Code of
Conduct on Responsible Gaming and it is the casino industry that
still leads the way on social impact issues. We believe this legislation
offers a real opportunity to bring gambling and any associated
problems there may be, visibly into the public arena. In so doing,
the opportunity to hide problems, either corporately or personally
will be greatly reduced and there will be opportunity to make
proper assessments of the true social and economic impact of gambling.
Finally, as responsible operators we do not
wish to undermine our commercial success or opportunity by damaging
or being perceived to damage our customer base by promulgating
policies that encourage problem gambling. It follows that we applaud
and totally support the gambling industry's charitable trust and
the introduction of real independence in the process of determining
the scale of the problem, the availability of solutions and the
amount the industry should fairly contribute. We believe this
to be the right way forward and are confident that the industry
will meet its obligations without the Secretary of State ever
needing to revert to a statutory levy.
We look forward to the Committee's report.
February 2004
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