UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 139 vi

HOUSE OF LORDS

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

JOINT COMMITTEE ON THE DRAFT GAMBLING BILL

 

 

Bingo

 

 

Thursday 15 January 2004

SIR PETER FRY, MR PAUL TALBOYS, MR ALAN NICHOLS, MR KEVIN SMYTH,

MR NORMAN PRITCHARD-WOOLLETT and MR GRAHAM CATT

Evidence heard in Public Questions 539 - 609

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Joint Committee on the Draft Gambling Bill

on Thursday 15 January 2004

Members present:

Mr John Greenway, in the Chair

Brooke of Sutton Mandeville, L Donoughue of Ashton, L. Falkland, V. Faulkner of Worcester, L. Golding, B.

Janet Anderson Jeff Ennis Dr John Pugh Mr Anthony D Wright

________________

Memoranda submitted by The Bingo Association and CORCA

Examination of Witnesses

Witnesses: Sir Peter Fry, Chairman, The Bingo Association, Mr Paul Talboys, Chief Executive, Mr Alan Nichols, Honorary Treasurer; Mr Kevin Smyth, Secretary, Committee of Registered Clubs Associations, Mr Norman Pritchard-Woollett, Consultant, and Mr Graham Catt, Department for Culture, Media and Sport, examined.

Q539 Chairman: Good afternoon. May I welcome our witnesses? Having spent quite some time this morning talking about casinos, this afternoon we move to bingo. It gives me very great pleasure to welcome a former colleague, Sir Peter Fry, chairman of the Bingo Association, which represents the interests of 104 operators who between them have 538 clubs. Paul Talboys is the chief executive and Alan Nichols is the honorary treasurer, whom we also met in Blackpool. Then we have Kevin Smyth, secretary of the Committee of Registered Clubs Associations, CORCA. May we refer to you as CORCA?

Mr Smyth: Yes, certainly.

Q540 Chairman: CORCA is the country's leading forum for non-profit making private members' clubs. Norman Pritchard-Woollett I have not had the pleasure of meeting before. He is a consultant in this field. Gentlemen, you are all welcome. Can I also note that Graham Catt from the Bill team is present at the meeting should we require him to clarify some points. A transcript of the meeting will be produced and placed on the internet within about a week. In the event of a division in either House, the Committee will suspend for ten minutes and the public gallery will have to be cleared. A full declaration of interests was made at the beginning of our first meeting and information for the public with a note of those interests is available. Sir Peter, you will know from your many years in this place how important it is that witnesses and Members of the Committee speak up. You are not all obliged to answer every question. We will direct some questions to specific witnesses and please only speak if you have something to add to what another member of the panel has said in their answer. Can I begin by asking a couple of general questions which apply to all of you? First of all, do you think that in the draft Bill the government has the balance right between relaxing the regulation of gambling and preventing the potentially negative consequences of increased gambling activity?

Sir Peter Fry: Thank you for calling us. I can assure you I have never been accused of speaking too quietly in public. The brief answer in one word would be no. I would like to elucidate a little. The reason we say no comes from the fact that the main benefit of this proposed legislation undoubtedly will go to casinos, particularly very large casinos. That does seem to be attracting the interests of operators from other parts of the world, particularly the United States, some of which seem to expect a minimum of something like 1,000 linked slot machines in their premises. Therefore, I do not think the government has fully recognised the machines sector and the part it plays in major gambling centres, such as Las Vegas, where little ladies sit in front of machines almost 24 hours a day. Nor does it seem to understand that even when one tries to restrict the smaller gambling outlets, say, on the high street, in the way that the Victorian Government has in Australia, that does not necessarily improve matters. The main casino in Melbourne when I was there to see something else rather than gambling a couple of months ago had had a 50 per cent increase in its custom since some restrictions were put upon the use of pokeys in the city. I think those factors are not recognised. The government also seems to believe that casinos will be for destination gamblers and that will avoid problem gambling. The example I have just given gives the other side of that. The government stressed greatly that this regulation was doing away with regulation but it would be a moderate move forward. It would be controlled. We would argue that the effect of the Bill as it stands now will be that there will be a sudden, very large change once it comes into law in its present terms. It will not be a gradual process. It will be a very swift process. That leads me to the last point. If this is excessive and beyond what the public and the government want, there seems to be very little evidence that there is anything in the Bill to be able to retrieve the matter. Finally, the only mechanism to help problem players seems to be to expect the rest of the industry to pay for it, regardless or whether or not in that particular sector of the industry there are many problem gamblers. I would quote the football pools, for example, which Lord Faulkner is well familiar with. All in all, we do not oppose the idea that there should be legislation. We believe it has gone too far, too fast and a much slower, balanced approach would be better for our industry and, we think, for the public at large.

Q541 Chairman: Do either of the witnesses from CORCA or Mr Pritchard-Woollett want to add anything?

Mr Smyth: I would also like to thank you for inviting us. I would agree with Sir Peter's first one word answer. Do we think the government has the balance right? Our answer is no as well, for different reasons. We have no real, direct experience of casinos or indeed other commercial gambling industries, although obviously we have contacts with them as trade organisations. We have no objection in principle to the government deregulating but we think they have deregulated at one end of the scale and not at the other. They have certainly deregulated the casinos, but that is the harder end of the gaming spectrum. It seems as if the government's regulations have introduced constraints on our sector which is at the very other end of the spectrum. Clubs have not had any regulations imposed on them for many years and we do not think that has ever caused any problems. As far as we are concerned, you probably do need some balanced relaxations but we cannot see that the relaxations have come our way. We feel there is great prospect of tighter control within clubs and there is no evidence that our private clubs of all sorts have any track record of problem gaming or any other problems involved. We think the way in which the government have deregulated is at one end of the scale but not at the other.

Mr Pritchard-Woollett: I think it is true that clubs do not seek any particular measure of deregulation. They are fairly content with the options available to them at the moment under the 1968 Act. Apart from maybe tidying up some loose ends, clubs would be quite happy to carry on with what they are doing now, without any further regulatory constraint.

Q542 Chairman: In your answer, Sir Peter, you did make some differentiation between hard gambling and soft gambling. How important is it to make such a differentiation in the regulatory framework?

Sir Peter Fry: I will not say it is amusing but it is ironic that the government is no longer recognising or does not seem to be recognising this distinction in its approach to the Bill. Yet, it is still actively dividing it by creating casinos as the most highly regulated part of the gaming sector and not allowing other parts of the gaming sector to get much improvement or advancement. Where we think that hard and soft gambling are important relates to the very nature of bingo. Bingo is a very mutual game. The prize is generated by a large pool of players. Everybody has an equal chance of winning. Casino games and betting are completely different. Players are staking against the house. The odds are predetermined. Perhaps most important of all - and I have read some of the evidence that has been given to you with the concerns about addiction gamblers - is that you cannot chase your losses playing bingo. You go in and buy your six books. You cannot suddenly rush out and buy another four or five for the next game. That is very important. I would very strongly argue on behalf of my Association that some kind of distinction should still exist between hard and soft gambling because some people who have only been subjected to soft gambling are suddenly translated into a hard gambling environment and could easily be led astray, particularly if they have been in a bingo environment where they think, "That is as much as I can spend." Where they go to play a machine or even a game of roulette, they are suddenly going to find they can chase their losses. Therefore, we would argue very strongly that there has been value in the 1968 Act distinction which by and large has worked very well. It is true that some people say that the distinction has been blurred but I do not think we would say that the distinction has been blurred enough to entirely do away with the distinction between hard and soft gambling.

Q543 Lord Faulkner of Worcester: Would you say that all machines are in the hard gambling category?

Sir Peter Fry: I would not, entirely. You could argue that the amusement machines with very low stakes and very low prizes lead youngsters into being addicted but by and large those cheaper machines are not hard gambling. They are more for amusement. Any ideas of unlimited stake machines and even a jackpot machine with a hard prize is a harder form of gambling. The higher you go up - in other words, if you go from a limited prize to an unlimited prize - if you go from a place like a bingo club where there are only four jackpot machines to a casino where there are 1,000 linked machines, which will happen, it is undoubtedly true that the scale of hard gambling increases in that respect.

Q544 Lord Faulkner of Worcester: You refer to the environment of gambling. Do you feel that if you have a mixture of machines, some of which are restricted to adults, over 18s, and some category D machines which are available to children, the mixture of them in the same premises produces a hard gambling environment?

Sir Peter Fry: No. We do not allow anybody under 18 to play any machines. You are talking about generally. This is a question whether families can go into an amusement arcade. It is a difficult one to decide and I personally would not like to be categorical about this. Obviously, there is a risk in playing any machine, but one has to evaluate what effect that risk is likely to have. The more machines there are, the bigger the prizes, the odds are that it would tend to be more addictive. I do not think there is any doubt about that.

Q545 Chairman: Cannot a player chase his losses on any kind of machine?

Sir Peter Fry: You can keep putting your 50ps in or whatever. Only 30 per cent maximum of bingo players ever play a machine. 70 per cent of our customers do not play a machine even inside a bingo hall. In addition, unlike 24 hour casinos which will come about, we are limited with hours and we are not open all day. Secondly, most of the time that we are open is subject to main stage bingo. Therefore, the opportunities for really hard gambling are limited. I am not saying that nobody ever goes in and spends too much money on a machine at a bingo club, but compared with other sectors of the gambling industry ours is not the one you should be worrying about.

Q546 Chairman: Does Mr Smyth have a view about machines?

Mr Smyth: Yes. It is very similar to what Sir Peter says. I certainly take his point about bingo and the fact that you cannot chase your losses. I would also agree that, although our research is done completely differently because we are different organisations, it is a fairly small proportion of bingo players who play the machines in our type of club. We are in favour of separation but we feel that 1968 Act has for the last 30 years reflected a distinction between hard and soft. The words I have are exactly the words Sir Peter used: the new Bill may well blur that distinction. As far as we are concerned, there are different types of gaming. Skill and low stake machines are obviously different to other hard gaming machines. We would argue that club machines can be distinguished from other jackpot machines in that they offer lower maximum stake money and lower maximum prizes. In most CORCA clubs, the maximum jackpot is £100. It could be higher in law but it is normally £100-£150 at the most.

Q547 Lord Walpole: On the question of licence fees, the secretary to the Gaming Board said it would be helpful for the Bill to permit differential fees according to the size of the operation. Would you welcome that? Do you have any thoughts where the lines might be drawn?

Mr Talboys: Yes, I think broadly the Association would welcome that. We are making the core assumption that the £7 million transitional costs would be similar to the licensing bill and funded by central government, but in principle this is a step in the right direction, particularly so for the smaller clubs.

Sir Peter Fry: We do think it is important that, rather than take floor area as a basis, most bingo clubs have quite a lot of floor area but it is not necessarily all full of customers. We think that a much better way would be on the admissions. It would be a fairer form of charging. We categorise clubs in our Association in groups according to their admissions.

Q548 Chairman: That could provide a structure for licence fees for your sector?

Sir Peter Fry: Yes.

Q549 Lord Walpole: Does CORCA have any views?

Mr Smyth: Yes. We think it is quite reasonable to have a different scale of fees but again, looking at it from our personal viewpoint, we believe that as we are at the lower end we should be subject to a considerably lower fee than for a larger, commercial organisation.

Q550 Lord Walpole: On the future of bingo, given the proposals in the draft Bill, do you expect bingo to continue to operate as a stand alone activity?

Sir Peter Fry: Yes, but all the odds are that it would be on a much smaller scale than it is now. We think that the legislation will considerably alter the industry. There are something like 130 or 140 bingo clubs that might convert to casinos. That of course would not be stand alone bingo. We are very concerned that the opportunities that are available for stand alone bingo could be affected. A considerable proportion of our customers would not necessarily want to go into a casino, but the odds are that enough of them would to seriously undermine the financial stability of an existing bingo club. We are concerned, not just for our own members, but because we do appreciate that there is a considerable amount of social advantage to people going into a stand alone bingo club. Any reduction in those would be not just damaging to the people who own them but damaging often to the social cohesion of an area. Two-thirds of our customers are women. They can go to a bingo club. It is comfortable; it is warm; they see their friends and it is comparatively cheap. I do worry that the reduction in the number of stand alone bingo clubs could have an adverse public effect.

Q551 Chairman: That is an interesting answer. You and I know from previous discussions that there are some tensions but on Tuesday John Kelly from Gala, on behalf of the Cross-Industry Group, suggested that bingo was an enormously robust business and he was not personally expecting that there was going to be any significant impact on bingo from casino developments.

Sir Peter Fry: John Kelly is a good friend of mine. He is the largest bingo operator. He is also a large casino operator. One's attitude on this depends upon whether you want to get more casinos or more bingo halls. We would have to disagree on this. The Cross-Industry Group, despite its name, is not exactly across the whole industry. Large sections of the gambling industry do not ascribe to the idea that it has put forward. We do not deny that a casino will keep on a bingo section. We are concerned as to whether the bingo will be quite the same as it is now. Let us be quite realistic. If you are a large scale, American casino operator, what you want is people through the door. You are not worried too much about how you get people through the door; you want them to come and play your hundreds or thousands of machines. We fear that bingo might well be a kind of lost leader. Secondly, we would expect that the kind of bingo being played would change. If you are a casino operator, you do not want people to come in, sit down and spend all night playing bingo. You only have to go into any major casino in America. If you want to go to any other part of the casino, you have to walk past where the machines are. That is a deliberate, commercial ploy and I do not blame them. We think there would be shortened games of bingo, perhaps on some kind of machine. We do not think that what the average person imagines when they see bingo in the traditional bingo hall would necessarily be the kind of bingo played in the future.

Q552 Lord Faulkner of Worcester: Some of the questioning we went into earlier in the week was about displacement, not so much the fact that similar products are being offered in new outlets, but that the expansion of the overall gambling industry was going to lead to people transferring from one section to another. Is part of your fear for the future of bingo that that will happen and people who are presently spending money on bingo will necessarily be attracted by the opportunity of spending in a casino? I would be interested to know if you have any calculation of what that displacement effect would be. Bearing in mind that you are at the soft end of the gambling market, Sir Peter, what sort of impact did the introduction of the national lottery have on bingo in the years following its introduction?

Sir Peter Fry: The lottery itself did have an effect upon the industry. Much more dangerous was the scratch card introduction, funnily enough.

Mr Nichols: When the scratch cards were introduced, we had a big drop in spend per head because people were buying scratch cards. The lottery at that particular time was only played once a week. The scratch cards were available throughout the day, every day, 365 days a year. That had a big effect on our spends in the bingo industry.

Sir Peter Fry: The figures that we have are that we lost about 10 to 15 per cent after scratch cards. The first question relates to how many people might change. That is an interesting one but we have not seen the change yet so we do not know what is going to happen. We do know that a fairly large number of our customers on first questioning would not want to go anywhere else. That rather begs the question that if those who do go elsewhere undermine the existence of the club they go to they can have the choice of either not going to a bingo club at all or going to a casino where some kind of gaming takes place. It is this reason that led us, when we submitted figures to the Customs and Excise over the gross profits tax, to believe that something like 80-odd clubs would close as a result of this legislation.

Q553 Lord Faulkner of Worcester: Is part of your difficulty the fact that the clientele of bingo tend to be rather older than the population that would be naturally attracted to casinos? Whilst the present customers you have say they do not intend to switch, you will have difficulty attracting new ones?

Sir Peter Fry: The profile of the customers has been altering. It has become younger and perhaps a little further up the A, B, C, D and E scale. There is no doubt that it is the newer, younger people who like to have a new thrill and try something different. They have gone to a bingo club because they think it is a good night out, whereas 20 years ago they would not have gone anywhere near a bingo club. Therefore, we fear that that section could be attracted away and therefore obviously my members are concerned.

Q554 Viscount Falkland: It is clear from the little I know about bingo - and it has now been made much clearer by Sir Peter's remarks - that it is a relatively benign activity in terms of total gambling activity. In fact, one would hardly call it gambling at all because of the chasing losses aspect, as you so rightly explained to us. Now that there is a likelihood that bingo in its present shape, with its elderly, somewhat predominantly female participation, will come into a closer relationship with harder forms of gambling, whether it be machines or any other form, is there in the potential for bingo for those who are of an entrepreneurial set of mind something that could transform it from a relatively benign activity into an activity which was much more exciting to gamblers? In other words, is there a possibility that some bright operator may take bingo as a form of minor speculation, if you will, and transform that into a more interesting game which comes into main line gambling?

Sir Peter Fry: I would not want you to think that bingo is considered boring. We did a survey of public opinion on what excited people most. Funnily enough, waiting for your last number to come up in a bingo club was supposed to be more exciting than sex to the individual. We are restricted as to what we can do. We are still going to be pretty heavily regulated. Clearly, anything approaching a casino game is not allowed. We are restricted on the number of machines. We are constantly trying to find new ideas. We are going to have a big draw, are we not, later in the year? The industry is trying to keep abreast but, because of the straitjacket that we are in and the fact that we cannot suddenly go along and say we want extra machines, if we did want them, or we want an extra kind of game, we are going to have to wait until the Gambling Commission is in place and then we are going to have to ask. Because of that, we have to make the best of what we have. By and large, I think the industry has done very well and it has a lot of satisfied customers. No, it is not possible for somebody to jazz it up tomorrow night because of the restrictions that we have.

Q555 Viscount Falkland: Obviously it is certainly more exciting than sex if you are waiting for a number which yields you a sum in excess of £100,000, for example, rather than the modest prizes which are on offer now. I was wondering whether there was that possibility that bingo could be transformed by successive younger generations who wanted to juice it up, as it were, which put it into a different category.

Mr Nichols: I would like to go back to the statement from Mr Kelly who said it would be a robust business in future. It may be for Mr Kelly's business. They are a very big company. They will switch some of their clubs from bingo clubs to casinos, playing bingo, which will reduce one of our big tools, which is the national game. By switching those into casinos, they will disappear from the national game, which will reduce our biggest game prize money considerably, which will then mean the independent, little clubs which I am speaking on behalf of will find it very difficult to compete.

Q556 Chairman: Why will they abandon the national game just because the bingo takes place within a casino?

Mr Talboys: The reality is that bingo in whatever form it takes place in casinos is going to be a different structure than takes place in a bingo club. It will be a very much shorter period of time in a casino, probably 15 minutes, and it will not fit the timing of the national game, which is once a night at a fixed point.

Q557 Mr Wright: How many bingo clubs have you in the country in excess of 5,000 square feet and how many would you expect of those clubs to apply for a casino operating licence?

Sir Peter Fry: Most of them are above 5,000 square feet. There are an awful lot above 25,000 square feet. That 5,000 square feet figure, unless I am wrong, related to the playing area for casino tables. Therefore, if one was going to have bingo plus the tables plus the machines, you probably could manage in a 25,000 square foot club. Many of my independent members, even if they had clubs that were big enough, do not want to change. They want to keep things as they are, but competition being such as it is many of them may be forced to do it and therefore accelerate the process that I have been talking about. I refer back to the study we did for Customs and Excise. We calculated that after the legislation is in something over 130 will convert. What my colleague has been trying to say is that the kind of bingo that could be played may be rather different to the bingo you play now.

Q558 Mr Wright: The bingo players I know look at it as a social avenue rather than a gambling avenue. How do you think the proposals in the draft Bill are going to affect that social aspect?

Sir Peter Fry: Successive governments and many Members of Parliament have come to appreciate that bingo is soft gambling and it does play a part in the fabric of life in many localities. What we are worried about is that if bingo continues in a different form, in a different context, such as a casino, there is the possibility - in fact, the certainty - that it will alter in nature. That in turn will alter the social aspect. At the moment, a lady goes into a bingo hall. She sits down and talks to her friends and they are very fussy about their position. We had a case in Wales where one lady sat in the wrong seat and somebody came and punched her. That was her seat and she had sat there for the last 20 years. There is this social aspect to it. The attachment is the social aspect. If, instead of sitting down and playing main stage bingo, it is all chopped up, you immediately start to alter the way people behave within that club. You are breaking up relationships and the habit. Because the British in many respects are conservative, those who are going to bingo clubs would rather leave it pretty well as it is. They might want bigger prizes, but we believe that because of the very fact that the smaller clubs are in danger, the removal of a smaller club from, say, a small town outside a larger town where there is a new, massive casino would have an effect.

Q559 Mr Wright: Surely that smaller club would not entertain going in for a casino licence? They would still keep their clientele. I would consider that bingo clientele are different to those who go into a casino.

Sir Peter Fry: That is right. Although the majority of our customers would prefer to play, you have to have enough customers to run your business. There are not many businesses in the country that would lose, say, 30 per cent of their customers and not have severe financial problems. This is what we are trying to drive at. We are not against casinos being deregulated. This particular aspect can lead to this social problem, if you like, because of the effect it is going to have on the viability of the local club to which people go.

Mr Talboys: The very essence of those clubs is the sociability. The purpose of the session, as far as the customers are concerned, is usually to go and meet somebody, have a good night and go home at a reasonable time. Because bingo is entirely composed of the prize money effectively, the game is totally dependent on the customers in the club, unlike any other form of gaming, which will pay out the same no matter if there is one customer or 50. Taking 30 per cent of those clubs' business away reduces the attractiveness of the product instantly by 30 per cent and in effect could make it completely unattractive, because there is a value for money judgment that takes place on every visit.

Q560 Mr Wright: With my limited knowledge of bingo, the attraction would be the regional and national games. It would not be the ten pounds a line or a full house. As I understand it, the regional and national games would still continue and be an attraction to those bingo players. Those family members that I know would not go to a casino.

Mr Talboys: I accept what you are saying. We believe that to be true and it is an integral part of the balance of the evening. Further, we believe that because of the introduction of bingo in casinos there will be a drift from normal bingo into the casino bingo and we do not believe they will be playing the national game or any other such big games operated on behalf of the industry. Because of that and the fact that they will not participate in that game, again the national game will be reduced by that 30 per cent that Pile itself lost. Thus those prizes will diminish.

Sir Peter Fry: The national game only plays part of the evening. Most of the evening will be club and house games and there the number of people in will predicate the prize that is available. If you reduce the number of people in, the other prizes, the house prizes, will go down.

Q561 Mr Wright: Without the national or regional game with the £100,000 or £75,000 prize, some of your players would probably drop off. Perhaps they would go three or four nights a week and instead they might go twice a week. I would consider that that national game would be the attraction and keep the people there.

Sir Peter Fry: One of the reasons people go to a bingo club is purely social. Another is the chance of winning some money. If every so often there is going to be a game with a big prize, yes, I would expect perhaps more people to go that night, in the same way as when I buy a lottery ticket it is when there has been a rollover and I hope that I will get a bigger prize. I think that will always be so. I honestly do not think that we would be able to keep the same level of national game; nor do I think that the link prize could be as great if we are going to lose the number of clubs that I have just mentioned. If all those clubs that are bingo at the moment go to a different kind of bingo in a casino, that would severely affect the money available for prizes in the rest of the sector and therefore that is a disincentive.

Q562 Jeff Ennis: In terms of the social aspects of playing bingo, I am thinking particularly of some of the more elderly clientele, possibly who live by themselves. Is there indeed a therapeutic value to playing bingo for some individuals?

Sir Peter Fry: That is undoubtedly true. For some people, it is the only place they go to apart perhaps from the supermarket. That is their main activity. This is why in certain parts of the country, where perhaps the only bingo club might be forced to close, it presents a problem. What can you do with an 80 year old lady who is nervous about going out and wants to be sure of the environment where she is going and where she is going to be welcome? You cannot really take her down to the local nightclub. Well, you might, but that would not be normal. The point you are making is absolutely right. There would be a considerable loss. I think most of our members make every effort to help people get to clubs who do not have their own transport.

Mr Talboys: That would be particularly the case in the afternoons when 80 to 90 per cent are over 60.

Chairman: An elderly lady at the Buckingham Club in Bradford when I went there a few weeks ago told me that she went there almost every night for her dinner, because it was cheaper than shopping in the supermarket.

Dr Pugh: The beer is cheaper too!

Q563 Chairman: Mr Smyth, do you want to say anything about the social aspect of bingo in clubs?

Mr Smyth: I believe it is fairly therapeutic for a lot of elderly people in non-profit making clubs. I would also emphasise that there are very few members of social clubs who would go to a casino. It is a different type of clientele.

Q564 Dr Pugh: You seem to be saying that you could be hit by something like a 30 per cent reduction and if various outlets are cut by that sort of factor there comes a time when people consider closing down. If that is correct and you are correct in thinking that many of these old ladies are not going to hop into a taxi and go off to a casino but will simply not turn up at all, is that not going to throw some doubt on the figures we have that show that the deregulation of the gambling industry is going to create an increased yield, because these are presumably people who will not continue to gamble? They will not be customers of anybody.

Sir Peter Fry: That question relates to the Pile Report, amongst others. We are not satisfied with how robust that is but it talks about a 30 per cent reduction in the bingo market. That is substantial. It is also saying that the amount of money that linked slot machines in massive casinos will bring will lead to an increase in the gambling yield and presumably also to the Treasury. We are not talking about the gambling industry as purely a separate unit. When you talk about the worth of the industry to the country, it will depend upon which bits are doing very well and which are not. We can understand how these figures are put forward, but we are rather concerned that one of the other things that appeared in the Pile Report was the large amount of money that was presumed to come from other kinds of expenditure. In other words, more of people's leisure pound, they are arguing, will go into a casino, particularly a big casino, but nonetheless, despite that, they think there will be at least a 30 per cent substitution.

Q565 Dr Pugh: It is not obvious what some of your customers would do, is it? They might not spend the money at all. There is also, I guess, the factor that some of the people who are customers now may look at buying more lottery tickets or scratch cards.

Sir Peter Fry: If you buy a scratch card, you have a ten second thrill to see if you have won a prize. I do not think if a bingo hall closed people would rush out and buy a scratch card.

Mr Talboys: We have some rather elderly research which did ask customers in a number of towns what they would do if their local bingo club closed. It endorses exactly what you have just surmised in that a large chunk of those players would simply not play at all and not play anywhere else. Some would attempt to do so but quite a number would not.

Q566 Dr Pugh: When you get a 30 per cent reduction, that is more or less the break even point for many institutions and you could then have a domino effect with a much more substantial reduction kicking in.

Sir Peter Fry: Yes.

Q567 Dr Pugh: In many small-ish towns, you often get a bingo club and not too far away a casino and it has been like that for quite some time. If the casino gets bigger, presumably it will pull in more people but not necessarily from the bingo club. Do you not think that situation could prevail?

Sir Peter Fry: It would if the casino did not play bingo. Your case is really the case that we are putting forward. We believe that the present situation is probably the right balance. What we are arguing is that if you suddenly open up a casino in a town you immediately put the bingo club under threat.

Q568 Dr Pugh: You seem to be suggesting that the motivation of casinos offering bingo is not because they necessarily wish to take over your business; they wish to divert people through bingo into more profitable enterprises for themselves.

Sir Peter Fry: I could not blame them. The whole point about running a business is to attract customers and make a profit. There is nothing illegal in that. For example, if you are a casino operator and not too far away there is another casino owned by MGM, who say, "Tonight we will be giving a week's free holiday in Las Vegas", if you are a medium sized British casino operator you could not do that very often, but if you are MGM you could probably do it every night of the week. We are in favour of and understand competition but I suspect the danger is we would get lost leading.

Q569 Janet Anderson: You have said that a lot of people would like to leave the bingo industry as it is and there is still a market for a number of stand alone operations and you have mentioned the lost leader. Will this Bill give you any particular opportunities to develop the bingo industry in a particular way, to expand the kind of products that you offer? Where do you see the bingo industry after this legislation, say, in three or five years' time?

Sir Peter Fry: We have had some improvements. We believe that all the improvements we have had up to now and even some of the improvements in the Bill are not going to alter the main case that we put to you. It is simple. You suffer a reduction in admissions; you cannot keep up high prizes. One follows from the other. You can for a short term. You can put money in for a certain week but in any business there is a point at which you cannot pour money in if you do not have the customers. Because we are an industry where we have been restricted, there are some changes and I will specify them. It has been suggested that we will be able to have what is known as retention of stake. That briefly means that instead of the whole of the prize stake being returned to the customer, which it is at the moment under law, there will be the ability to retain a small part of that stake, which I understand will be subject to direction from the Secretary of State, which will enable a small rollover. We come back to the number of admissions argument. Even with that, it is dependent on how many people come and buy tickets, so a 30 per cent reduction in our admissions frankly dwarfs the improvements that we have in the Bill.

Q570 Janet Anderson: Because it will mean a 30 per cent reduction in prizes, so it will be less attractive?

Sir Peter Fry: It is even worse than that, because it is the actual removal of the clubs. We do not know where that will end. We have done these forecasts but we still do not know the overall taxation structure in which we are going to operate. If you are running a bingo club and you do not get what you hope for on GPT; you are still paying VAT; we are still the most highly taxed sector and then we read in the papers that the American casinos do not want a rate of tax over 20 per cent. We are paying a lot more than that. All of these factors have to come into play. Until we know the taxation structure, I cannot tell you how many bingo clubs are going to stop.

Q571 Janet Anderson: You cannot really answer the question until you get more detail?

Sir Peter Fry: That is right.

Q572 Chairman: What impact has the GPT and the VAT retention on participation fees had on the profitability of clubs and on visits to bingo clubs?

Sir Peter Fry: It would be wrong to say that we were not grateful for the help we got from the changes in the last budget. On the other hand, it was not in our view enough. We did not expect VAT to remain as it had been taken away from the pools and bookmakers. They pay a GPT without any VAT. We did not feel too happy about that. Funnily enough, the effect of it now is something we did not quite anticipate. Some of our operators are having to put up their participation fee in order to pay the GPT. The minute you put up your participation fee, you put up your VAT tax, so the advantage of the GPT in replacing bingo duty has been partly compensated for by the increase in VAT.

Q573 Chairman: On numbers of people coming, has it had any impact?

Sir Peter Fry: The industry has had for years gradually slowing admissions. It is difficult to say whether the drop in admissions is just that fewer people are coming or whether people are coming on fewer occasions. All admissions will tell you is how many there have been in a week or a year. I think probably it is a bit of both. There is greater competition for leisure pounds today. At the same time, because prices have gone up, there are people who decide they will not go three times a week.

Q574 Lord Faulkner of Worcester: Is there any possibility of being able to play bingo interactively on my television set at home?

Sir Peter Fry: You could play bingo this afternoon, my Lord, and you would take a long time to discover that it came from Philadelphia. We naturally welcome therefore the plans the government have in relation to the internet because there is no doubt you can do almost anything if you do not worry about whether you are going to get your money back.

Q575 Chairman: On the issue of impact, you will be relieved to know that Mr Kelly on behalf of the Cross-Industry Group told us that the Pile Report was not a forecast; it was a mathematical, economic impact document and it was simply a general estimate. Maybe it will not be 30 per cent after all.

Sir Peter Fry: I would point out that it is not just the Pile Report. The Ernst and Young report and the KPMG reports both indicated considerable contraction of the bingo industry.

Q576 Lord Faulkner of Worcester: I do not particularly want to play bingo in Philadelphia but I might be interested in playing your national game. Would you be offering that on the internet?

Mr Talboys: We cannot at the moment. I suspect at the moment we would not want to in that playing bingo alone by a terminal at home or anywhere else is a solitary, non-social experience; whereas the current game is pretty social, pretty exciting and fairly dynamic. I suspect that, on the other side of a new Act, we like any other industry, once we are presented with the finality of it, would look at all sorts of options. I am sure, if there is a way of doing that that adds benefit to what we currently do, then yes.

Q577 Baroness Golding: What are your views on the proposed system of operating premises and personal licences, and especially on the need for an additional bingo licence?

Mr Nichols: From a personal licence point of view, we agree wholeheartedly with the personal licence and the operating licence. On the premises licence, we are a bit upset with removing it from the local magistrates to the local authority, mainly because with magistrates there was no political influence. We think there is a political influence with local authorities. Also, the appeal procedure is going to be to the local magistrates. Bearing in mind that magistrates, when the new Act comes, are going to be out of touch with gaming, and the appeal is going to go to the magistrates' court, it is only going to a judicial review afterwards. If it went to the crown court, it would be before a judge who was a lawyer, familiar with the law. We feel that the route to the magistrates' court for appeals is not the right one.

Q578 Chairman: You want the crown court?

Mr Nichols: Yes.

Q579 Chairman: How many appeals do you think there are likely to be over licence refusals?

Mr Nichols: I can only draw on my experience of the present regime in the past when it was quite common to go to crown court for an appeal for a bingo licence.

Sir Peter Fry: We are also concerned with licensing in relation to exactly what the guidelines to local authorities are going to be. I think it is true now that we at least will be consulted on that by the new Commission, but it is also clear that the local authorities have the power to impose a whole range of conditions on a licence. If a local authority does not really want you, it can probably get round the obvious by putting in some kind of conditions. Then you have to go through the whole process of appealing against it. What we are worried about is that it does not seem to be firm yet, the relationship between the Gaming Commission and the local authority. Our members want to know where they stand. They may not like what the particular law is but they do not want an area where it could be vague, where there could be an overlapping of jurisdiction. What we are asking for here is certainty.

Q580 Baroness Golding: Guidelines?

Sir Peter Fry: Yes, strong guidelines. As I understand it, the guidelines do not need to be followed by local authorities at the moment, as the legislation is framed.

Q581 Chairman: That is correct. What is your view about that? By implication, do you think they should be?

Sir Peter Fry: Having been on a local authority as well as in this place, my personal feeling is that there is a danger that the Commission might find itself with some local authorities a minority who are not keeping to the guidelines, maybe for very good reasons. I do not think you can expect people to run businesses in any industry where they do not really know what the guidelines are. If you are going to a new town, you do not really want to discover that you might have conditions that you do not have in the town you are in already, because that is going to affect your business judgment.

Q582 Lord Brooke of Sutton Mandeville: I apologise for asking Sir Peter a question born of ignorance. You said a moment ago that the local authority would be allowed to set all sorts of conditions, but on the analogy of a Licensing Bill the opportunity of establishing conditions has effectively been swept away. I am talking about liquor licences. Not merely that, but all the agreements which have been reached between licensees and subsequently applicants and the magistrates have been swept away as well, the ones which were set up as a result of the licence application. Is what you are saying a statement of legal fact or is it your expectation?

Sir Peter Fry: We have taken the legal advice of Susannah Fitzgerald and she confirms that it is vague. It is not decisive enough and what we are saying is we want it to be absolutely clear. What is obvious is that conditions can be applied in various aspects of the whole process of licensing and planning permission. At the Liaison Committee on the Bill, of which I happen to be a member, this issue was raised and the example of the kind of condition that could be put on was, "We will limit the bingo club to 500 places."

Q583 Chairman: Does Mr Catt want to clarify this for us?

Mr Catt: It is true that the draft Bill does say that the magistrates should have regard to the codes of practice.

Q584 Chairman: His point is that the local authority can apply conditions which will vary from one place to another. Is that correct?

Mr Catt: Yes.

Q585 Viscount Falkland: You say in your written submission that clubs operate benign social and recreational gambling and yet your members will be allowed category B machines, Mr Smyth. As all other venues that have these machines will be required to operate under a strict regulatory regime, is there any reason why clubs should be exempt from the kind of powers which the Commission will have for routine inspection?

Mr Smyth: We believe that over the years self-regulation has worked perfectly well. We also believe that there is no history of any problem gaming in clubs because machines are not operated for commercial gain. The money that is made from the machines is put back in terms of the club for the benefit of the members as a whole. CORCA clubs are run on the mutuality principle. It is just an aspect of the club; it is not the aspect of the club. There are many other features of a club: sports activities and so on, raising funds for pensioners and charities and all sorts of things. We believe that there has not been a problem so why now introduce something additional? It is just not required.

Q586 Viscount Falkland: In addition to that, as all other machines and bingo operators will be required to apply a formal code of social responsibility, do you expect the licence of your members to include such a condition? What kind of code do you think would be appropriate for your members?

Mr Smyth: We are certainly prepared to consider any form of code of practice. We do not think there has ever been any difficulty so we cannot quite see why there is a need to bring in any extra legislation, but if there are any other proposals we will give them due consideration. We certainly have not come up with any ideas of our own at present.

Q587 Viscount Falkland: How do you interpret the term "social responsibility" in this regard?

Mr Smyth: As far as clubs go, they do have a social responsibility because the clubs are run by the members. If someone is doing something that is either incorrect or possibly leading them on to problem gaming, the Committee usually has a responsibility. Clubs are very often a mixture of families and people care for each other. They know each other and consequently we know that over the years they have traditionally stopped any problems in the club before they have ever started.

Q588 Viscount Falkland: You are really saying that yours is a particular case and you already institute, through the club membership, a kind of control. In future, any relationship with an inspector coming in from the Gambling Commission would be more of a personal nature. He or she would know the way your clubs operated and the inspection would be a relatively informal exercise.

Mr Smyth: I would certainly hope so because I think most inspectors know about the fairly informal way that clubs are run, but they do have this self-regulation and disciplinary code which, if necessary, can come into play. Our type of social clubs are much more community clubs. They are individual members who are there because they want to go for a chat and a drink. The playing of bingo or machines is limited to a relatively small number of people and it has been proven over many years that we have not required any inspection.

Mr Pritchard-Woollett: If the Gambling Commission or other authorities were interested and were pressing for a code of practice in clubs which might lighten the official touch that might be applied to inspections, I am sure CORCA would be glad to enter into negotiations on that.

Q589 Chairman: You mentioned that some of the clubs are family clubs, Mr Smyth. How many of the clubs in your membership allow children on the premises? What arrangements do they make to avoid children coming into contact with these category B machines?

Mr Smyth: Almost every club I know of - and that encompasses Conservative, Labour and Liberal clubs, British Legion clubs, working men's clubs - invariably has specific regulations above the machine and it is known to all the members that children do not play the machines. Technically at the moment, they could do so legally but they do not because the clubs have already taken that self-regulation to say that children cannot play. Under 18s just do not play on machines. They are always within sight of committee officials or the steward of the club, so if a child ever did attempt to they would be quickly warned off and the parents told accordingly.

Q590 Jeff Ennis: Before I ask my question I ought to declare my interest as a member of working men's clubs and miners' welfare clubs in my own constituency as well as a public institute union. Under the proposals in the draft Bill, your members, Mr Smyth, will have to apply for the additional bingo operating licence if in any period of seven days their stake or prizes have totalled £1,000 or more. Is the £1,000 limit pitched right or do we need to look at changing it?

Mr Smyth: I believe it is pitched too low. We have looked at our figures and there are probably about 20 per cent of clubs that do play for more than £1,000 a week. £1,000 a week is a very small sum when, if they are playing five times a week, you are talking about £200 a day. The present law is a bit more generous because it has no specific financial limits. We believe a more realistic figure would be a minimum of £2,000. I would remind you that clubs are run by volunteers. They are individuals who perhaps are employees themselves during the day. They suddenly become employers and they now have a raft of legislation. This would be yet another one which we think would be unnecessary.

Mr Pritchard-Woollett: One of my concerns is that, in the policy document issued with the Draft Gambling Bill, we have not seen the club clauses yet and it certainly indicates that the government's intention is that, if a club has to take out an additional bingo operating licence, its officers will have to take out personal licences. I think that is a burden we would oppose to the letter. Its officers hold elected office. There is probably a steady turnover of personnel and it seems to me that could develop into a paper chase and the compliance aspects could be absolutely horrendous to contemplate, especially as we represent 5,000 clubs. There are probably 20,000-odd clubs of one sort of another up and down the country, so when one thinks of the compliance implications of operating a £1,000 limit with personal licensing, it beggars belief.

Q591 Mr Wright: Would it be true to say that if the £1,000 limit came in the majority of those clubs would cease playing bingo rather than go to the expense of licensing?

Mr Smyth: Obviously it would depend on the cost of the licence, but certainly a good number would reduce if not cease playing altogether and that could have implications for the clubs' very survival.

Q592 Chairman: Do the Bingo Association and your members have a view on registered clubs playing bingo and whether or not they should be licensed, because your members are not.

Sir Peter Fry: Yes, we do think they should be licensed. We have no objections to smaller prizes at bingo played in any kind of club, but I get complaints from people in the north east particularly and other parts of the country, where they say, "I am trying to run a business and down the road the working men's club is offering a prize five times the size of mine." Obviously we have members who are concerned. What we are mainly worried about is that, whatever the limit is, it must be enforced. Up until now, if the law had been broken, you could not get any action because the only people allowed to act were the policy and they could not care less. They are too busy with other things. I am sure that, knowing the club movement as I do, they want to be seen to be absolutely within the law and behaving properly. Therefore, the whole question comes in of how to fix the level if you are going to have investigation and if you are going to have to keep books, for example, which could be a problem for some of the smaller clubs. As an organisation, we do feel very strongly about this but we do think there should be a level at which you apply a bingo licence and it should be enforced.

Q593 Mr Wright: You think £1,000 is okay?

Sir Peter Fry: On the basis that when you put any submission in you always put in a different figure, knowing you could get one worse, we originally put it in at £500, but I think we have accepted it would be at least £1,000. We have no desire to undermine or do undue damage to the club movement at all.

Q594 Jeff Ennis: You would accept the £2,000?

Sir Peter Fry: I would have to ask my members.

Q595 Chairman: Is there a possibility that £2,000 would be acceptable if there was proper enforcement?

Sir Peter Fry: I am in the odd position that I am chairman of an association in which I do not have a vote, a bit like Mr Speaker, so therefore I would have to go back to my executive, which is meeting next week, and I promise I will take it up and write to you.

Chairman: There is plenty of time for you to do that and write to me.

Q596 Jeff Ennis: Is there a danger that clubs in the UK will increasingly become like clubs in Australia, especially New South Wales, where the dominant activity is some form of gambling whose profits only benefit the members and managers of the club?

Mr Smyth: I think I can say categorically no to that. The maximum number of machines that are allowed at the moment is three. Our statistics show that on average they have 1.6 machines, so they do not take up their maximum limit now. Yes, clubs in Australia are a different kettle of fish, I believe they were founded by former clubmen from this country who went across, although whether they were of the convict mentality or otherwise I am not too certain. Now clubs in Australia have huge walls full of machines, so I am told. I have not been there to see them but I have seen some photographs. No, our clubs are not gaming clubs like that. As I said, the average is 1.6 and when they have an opportunity to average three they do not do so and I cannot see that they will do so in the future.

Chairman: Thank you very much. Can we move on to contributions to the Gambling Industry Charitable Trust.

Q597 Lord Faulkner of Worcester: In your initial answer to the Chairman and in your written submission I detected a certain amount of grievance on the part of the Bingo Association at contributing to GICT.

Sir Peter Fry: No.

Q598 Lord Faulkner of Worcester: No?

Sir Peter Fry: I am one of the original trustees of the trust and my members contributed £200,000 to it last year. We even brought in a rule that the amount of money to be paid was compulsory on our members. We have enforced it and six of our members are no longer our members. I think we are the only trade association that has taken that line. Where I do think we have reservations, to go back to this issue of hard and soft gaming, is if one believes in the principle that the polluter pays, is it right for a working man's club, for a bingo hall, to pay the same as a casino with 1,000 slot machines? I think it is a very difficult point. I know the problem in applying a rule but I think one of the difficulties in getting some people to contribute to the trust has been just this point: "Why should I pay, I am not much of a polluter?"

Q599 Lord Faulkner of Worcester: There are three possibilities which might come up with an answer to this. One possibility presumably is just to have a straightforward levy based on the turnover of the business, that is one way of doing it. The second could be for the Gambling Commission to determine the level of hardness of the gambling operation and put gradations on the levels of contribution on those which are the hardest, ie those who pollute most will pay most and those who pollute least will pay least, which clearly will be in the interests of bingo I can readily see. The third point presumably is that if it were a compulsory levy which was imposed by statute then you would not have difficulty with payers and non-payers.

Sir Peter Fry: No. If it was done purely on turnover you would have the same kinds of problems we have got now in talking about machine taxation. We find that the actual weight of the taxation varies from club to club, from business to business. I would suggest if you did it purely on turnover the same would apply there. In relation to the second proposal, yes, we would. I do not underestimate the difficulties of that, it is going to be very difficult, but it would appear to be equitable. If the trust is going to develop to raise more and more money and without a compulsory levy then we have got to make it appear to be more equitable. There are people we could bring in on a different basis than the one we have today who at the moment just are not putting any money in at all. What is happening in many areas - I do not know whether you are familiar with this, my Lords - is in some of the trade associations only the big companies are paying, a lot of bookmakers are not paying anything. It is good that the large companies are doing that, but we are lucky we have got nearly everybody paying. My members have a gripe in that respect and we are delighted you asked us the question about the way in which the amount should be decided.

Q600 Lord Faulkner of Worcester: Do you think the trust should be entirely independent of the gambling industry?

Sir Peter Fry: I was an industry trustee and for nearly 18 months I have been pushing for an independent chairman, not that I had anything against the existing chairman, I just thought it was unfortunate that the impression was given that the industry controlled it and, therefore, there would not be enough money available.

Q601 Lord Walpole: Do you think the name of the trust is unfortunate as well?

Sir Peter Fry: Yes. In fact, there was a meeting last week at which it was decided that we will consider a different name. The second point is that we also agreed that we would have a majority of non-industry trustees. At the moment the trust is in the process of looking for more people, so there will never be a majority of industry representatives. Having said that, one of the interesting things is that on many issues the independent trustees are a lot tougher than the industry trustees on the way the money is allocated. I do believe that the trust is unbiased. The only interest that the industry have got is to have some idea of where their money is going if they are providing the money and I do not think that is totally unreasonable. We are setting up a sub-committee, as it were, of the independents to allocate the money, the resources that we have, and all the rest of the trustees will have to do is to oversee it and be satisfied that it is reasonable. We are already a long way down that road. If suddenly somebody said all of the industry trustees were wiped out and you still did not have any compulsory levy, I would not like to say how that would affect the amount of money coming in.

Q602 Lord Faulkner of Worcester: I do not think that is being proposed. Could I ask Mr Nichols whether it is the intention of your clubs which offer gambling products to be contributors to the trust?

Mr Nichols: Yes, we do.

Sir Peter Fry: They have to be otherwise he would not be here.

Mr Nichols: I would have been thrown out.

Q603 Lord Faulkner of Worcester: Do you feel in a similar way about the trust as Sir Peter does?

Mr Nichols: Absolutely, yes.

Q604 Chairman: Do CORCA have a view on this as well?

Mr Smyth: Certainly we have no problems with the principle of it but, like Sir Peter said, it must be equitable. It could not be on our clubs' turnover because gaming is a relatively small part of our clubs' turnover, so there would have to be some other method devised. In principle we have no problem even though, as I said before, we do not believe there are problem gamblers within our clubs anyway.

Lord Faulkner of Worcester: I apologise, I should have directed the question to Mr Nichols.

Q605 Chairman: Yes, Mr Nichols?

Mr Nichols: Could I just add - this is my view - that the Lottery should be made to contribute to the trust.

Chairman: We are very grateful for that observation.

Q606 Lord Faulkner of Worcester: The Minister thought so too.

Mr Nichols: Also, as the Government is bringing forward this Bill to create these problem gamblers, the Government should contribute as well.

Q607 Chairman: We hear what you say. On the former I think the ground may be more fertile than on the latter point that you made. If I remember correctly, the industry originally appointed the independent trustees. I am sure that is correct, is it not?

Sir Peter Fry: The trustees who were the industry trustees appointed the independents. One member is Mr Kavanagh of the Gaming Board, who I do not think you could describe as biased in any particular way.

Q608 Chairman: No.

Sir Peter Fry: Another is Joe Wolfe, who was on the Budd Committee, and the other is Professor Guy who is a leading academic.

Q609 Chairman: Sir David Durie, the new independent chairman, is coming to the Committee to give evidence on 3 February. In fact, it is a session that we postponed by about three to four weeks and in a way I am glad that we did because we are getting everybody's point of view on GICT before he comes. Before I close this session, is there anything else any of you want to say to the Committee on any aspect of the Bill?

Sir Peter Fry: The only thing we would say is that we do realise the many pressures there are on this Bill from various Government departments for different reasons. We would not want to be seen as trying to stop anybody else having a legitimate business or any area being regenerated or anything like that but we are concerned about some of our members and we genuinely think that there are dangers to the public in the proposals and we would like this Committee to address them.

Chairman: Sir Peter, you have made that very clear. Can I thank you, Mr Talboys, Mr Nichols, Mr Smith and Mr Pritchard-Woollett for coming this afternoon and answering all of our questions. Thank you very much.