Memorandum from Kossway Automatics (DGB
185)
I am the Managing Director of the above company,
with 30 years experience in the supply of gaming and amusement
machines. I have a high degree of self interest in the continuity
of machine availability to the gambling public but may I bring
to your attention what I consider to be four very important points
in connection with the above.
FOBMs (Fixed Odds Betting Machines)
Clearly these types of machine have been enormously
successful, witness the enhanced profits of the large betting
chains, ie Ladbrokes, William Hill, etc as a direct result of
the FOBM extra revenue. They have also been described as "the
crack cocaine of gambling"'. To allow them to migrate into
high street adult gaming centres (I understand currently under
consideration) would, in my view, be social irresponsibility.
They are very highly addictive and will proliferate problem gambling
and a surge of applications in retail areas for, gaming centres,
to the detriment of our industry and the vulnerable players. I
strongly urge that they are restricted to licensed betting shops,
as now.
Deregulation for casinos
Providing that deregulation is staged, with
a sensible amount of permits being granted over, say, a three-year
period, ie 30 to 50 per annum, this would nearly double the amount
of casinos we have at present and should accommodate the requirements
of the casino industry and offer the additional choice to the
gambling public. Unrestricted deregulation will damage, in some
cases terminally so, hundreds if not thousands, of public houses
and bona fide members social clubs across the UK, as well as give
this country the aesthetics of a Nevada-style territory. (May
I respectfully refer you to the Economic and Social Impact Study
of the proposed gambling bill from the Henley Centre, published
in February 2004).
Amusement Machine Licence Duty
Currently there is a levy payable to Customs
and Excise (AMLD) in respect of gambling machines sited. This
levy ranges from £695 per annum for a gambling machine placed
in a public house (currently £25 maximum jackpot, Category
C machine) to £1,860 per annum for a high rate jackpot machine
(ie currently £250 maximum jackpot, Category E machine) placed
in a proprietary or members social club. A recent consultation
document intimated that the government may seek to scrap existing
rates of AMLD and replace instead with a gross profits tax (GPT)
on the gaming machine income that will replace both VAT and AMLD.
Our trade association is against the proposal
of GPT and wishes to keep AMLD but I believe they are being influenced
by the larger retailers who see a GPT proposal as costing them
more money. (Several of our trade association members supply the
large retailers?!) I favour the government proposal of a gross
profits tax as I believe it is both fair and progressive, ie the
more you earn the more you pay. I calculate that GPT would create
an additional £150m per annum uplift to the Treasury if it
was pitched at, say, 25% of gaming machine income. (I have studied
machine weekly averages to support this and should be pleased
to give you my own findings if required.) This would also assist
in supporting the survival of a raft of marginally trading public
houses and bona fide members social clubs, both types of establishment,
I believe, are worthy of some support. Highly profitable machine
locations would, of course, pay more, but that's tough. If you
are making plenty of money, you can afford to pay more.
How on earth can it be fair for a large managed
city centre pub with, say, three gaming machines averaging £1,000
per week, to pay the same licence fee as a struggling rural pub
or social club earning possibly only £100 per week or less
out of their machine.
| Typical managed house gaming machine gross take per week
| £300.00 |
| Current VAT payable | £44.68
|
| AMLD per week (at £695 per annum) |
£13.37 |
| Total duty per week therefore | £58.05
|
| GPT at 25% of gross income as suggested |
£75.00 |
| Uplift to Treasury or 29% increase. | £16.95 a week
|
The low earning gaming machines in marginally trading public
houses and some members social clubs will get relief, which is
fair, but this will be substantially outweighed by the increase
in revenue from more profitable locations, ie managed houses,
busy clubs, casinos, etc etc.
Members' Social Clubs
These are non-profit making, charity supporting, locations
which, in most cases, act as centres for the communities they
serve and should receive, in my view, the fullest support from
the government to continue to be able to trade. They are quite
simply a place for the average man in the street and his family
and friends to meet, relax, and enjoy themselves, and are mainly
frequented by those who cannot afford managed house pub high street
prices and certainly not regular attendance in casinos. However
thousands of these bona fide members clubs depend on their machine
income for their survival and should be able to compete on an
even playing field with licensed bookmakers shops, which many
social clubs directly compete with, by virtue of the geographical
proximity of both locations. The current proposal for bookmakers
shops, which seems likely to be carried through, is for a maximum
jackpot of £500 and a maximum stake of £1 per play.
This jackpot and stake should also apply to members social clubs
who have to compete for the reasons I have already stated. This
is only fair. I hope and trust that this uplift will be applied
in the new gambling bill in respect of bona fide members
social clubs. For the avoidance of doubt, I refer to British Legions,
CIU Working Mens Clubs, political clubs Lib/Lab/Con, and sports
and social clubs.
All of the above proposals that I have set out, if adopted,
would be sensible for our industry and its growth, good for the
Treasury, and socially responsible in accommodating the requirements
of the gambling public and the best possible protection for the
vulnerable or potential problem gambler.
I stress that I am trying to exercise impartiality as my
own business supplies social clubs, public house groups, casinos,
and bookmakers, and I supply FOBMs, but I strive to see a well
balanced gambling industry with a minimum of negative effects
to all parties.
I should be grateful of your views and acknowledgement to
ensure safe receipt.
March 2004
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