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Regulatory Reform (Gaming Machines) Order 2003

8.20 p.m.

Lord McIntosh of Haringey rose to move, That the draft regulatory reform order laid before the House on 17th September be approved [25th Report from the Regulatory Reform Committee].

The noble Lord said: My Lords, this order is made under the Regulatory Reform Act 2001. It extends the payment methods which can be used in gaming machines. Currently, the machines covered by the order can use coins only. The order amends Part III of the Gaming Act 1968, which sets out the law on gaming machines. It applies to England, Wales and Scotland.

The order affects two types of gaming machine. First, there are jackpot machines, which are found in licensed casinos, bingo clubs and registered clubs. They have a legal maximum stake of 50 pence and maximum prizes of £250 to £2,000. Secondly, there are all-cash "amusement with prizes" machines, which are found in pubs and other alcohol licensed premises, betting shops, bingo clubs and adult-only parts of arcades. They have maximum stakes and prizes of 30 pence and £25. Both types of machine can be used by adults only. The order does not affect the third type of gaming machine—the so-called "coin or token amusement with prizes"—which are the only ones that can be used by children.

The all-cash "amusement with prizes" machines will be able to take and pay out in banknotes. Jackpot machines will be able to take and pay out using banknotes and smartcards. The order abolishes a requirement that the two types of machine must be able to take payment for a single play. The order allows jackpot machines, but not "amusement with prizes" machines, to let players keep any winnings in the machine to play again, if they want to.

The smartcards that the order will allow work in the same way as phone cards. Players buy them from the casino, bingo or club operator and use them to play machines. If they win, the money they have won is

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credited to the card. They can then cash in their card to collect their winnings. The order does not allow the use of bank debit cards or credit cards.

The order is backed by detailed guidance drawn up by the Gaming Board for Great Britain and the gaming machines industry. The order and the guidance contain important safeguards. The Delegated Powers and Regulatory Reform Committee of the House has considered the order in great detail, as has the Regulatory Reform Committee in another place. Changes were recommended and have been made, and both committees now recommend that the order is suitable to be made.

As will be known, the Government are proceeding with a gambling Bill, which will allow the use of smartcards and banknotes in all gaming machines not playable by children.

The independent review of gambling controls chaired by Sir Alan Budd concluded in its report, published in July 2001, that the Government should proceed with the proposals for the use of banknotes and smartcards in gaming machines in advance of any gambling Bill. We believe that it is right to make the changes in the order in advance of the Bill. Apart from anything else, it will save the gaming machines industry around £2 million a year. There has been extensive public scrutiny of the proposals.

I can confirm to the House that I am satisfied that the terms of the order are fully compatible with the European Convention on Human Rights. I commend the order to the House.

Moved, That the draft regulatory reform order laid before the House on 17th September be approved [25th Report from the Regulatory Reform Committee].—(Lord McIntosh of Haringey.)

Baroness Buscombe: My Lords, I am grateful to the Minister for the comprehensive explanation of the objectives behind this order. As the Minister explained, the order amends the provisions in Part III of the Gaming Act 1968 and will revise and extend the methods of payment in gaming machines. The order relates to two types of machine: jackpot machines and higher value "amusement with prizes" machines. Section 31 of the Gaming Act imposes restrictions on the methods of payment and forms by which prizes can be delivered. The purpose of the order is to remove these burdens and allow payment in a form that constitutes money or money's worth. Both types of machine will continue to be able to operate using coins, in addition to the new payment methods. However, important distinctions, such as location and stake applicable to each type of machine, remain.

On the l3th March, a draft order was laid before Parliament for scrutiny in accordance with the Regulatory Reform Act 2001. In addition, the guidelines that accompany the order detail the operation of gaming machines that take banknotes and smartcards and have been agreed by the industry's trade association, BACTA.

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We on these Benches welcome the changes proposed by both the House of Commons Regulatory Reform Committee and the House of Lords Select Committee on Delegated Powers and Regulatory Reform. The House of Lords Select Committee expressed concern about the two-pound cut-off and recommended that that cut-off should be included on the face of the order rather than the guidelines. We support that position. The guidelines do not have statutory force and may be amended without parliamentary consultation. Placing this requirement on the face of the order will guarantee the necessary protection afforded to the player by the two-pound cut-off. We therefore welcome the Government's decision to adopt this proposal and amend the order in accordance with that recommendation.

The House of Commons Regulatory Reform Committee concluded that the draft order should be amended so that it stipulated that higher value AWP machines may accept only coins and banknotes as payment for play. In addition, the committee made recommendations about the Gaming Board/BACTA guidelines. The Government have subsequently amended the order in accordance with those recommendations. We agree with the committee's conclusion on that point.

In essence, we support the adoption of the Budd report recommendation to modernise machine payment methods without the need for primary legislation. While the concerns relating to use of credit cards in gaming machines are justified, no such concern arises with relation to the use of smartcards or banknotes. We welcome the Government's move to address industry concerns and amend their policy in accordance with these recommendations.

Viscount Falkland: My Lords, we are grateful to the Minister for explaining so clearly what is contained in the draft instrument. I shall not even attempt to rehearse the details of what is contained in the order as it has been done so well already by the Minister and the noble Baroness.

We are dealing here with a balance which has been struck by the Government—who I know I have been pressed for some time by the industry to introduce changes of this type—between the industry's requirements in the light of advancing technology and the appropriate implementation of that technology and the public interest. There are many public interest elements in gambling, which nowadays often includes machines. Some £39.1 billion annually is gambled in the United Kingdom and the figure is increasing. One expects that the number of machines will increase in ratio to that total figure and perhaps to a greater extent. They are enormously popular and the industry is very sophisticated.

The principle in the public interest, of course, is to ensure that those who use these machines do not get themselves into a mindset whereby they have a certain amount of money and continue playing until that sum

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is gone without allowing themselves a chance to contemplate the various stages at which they play. Quite sensibly, the order deals with that. Under this new measure, which allows staking methods other than coins, there has to be a stage at which people can consider their actions by means of the credit available and the money they have for playing on that particular occasion. It is a delicate and complicated matter.

I declare an interest as a member of the Select Committee which is looking at the gambling legislation that the Government are putting before us. I think that it is a pity in a way that the proposed gambling commission has not been created ahead of the committee and the introduction of the main body of the gambling Bill. I think that a proper regulatory body such as the Government envisage would be very useful in considering at least the public interest involved in these matters.

Problem gambling is undoubtedly increasing. I have to be fair and say that the Budd report underestimated the amount of problem gambling in this country, although not purposely. The matter will be looked at thoroughly. I am quite sure that the Government have the best interests of the public in mind. I am optimistic that the results will be good and that we will be an example to the world when the Bill has gone through Parliament. This is an interim tranche, as it were, with some of the implications of the issues that we have to address. By and large, however, it is a sensible measure.

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Baroness and to the noble Viscount for their welcome for the order. I do not think that they asked any questions to which I need respond.

On Question, Motion agreed to.

Lord Evans of Temple Guiting: My Lords, I beg to move that the House do adjourn during pleasure, resuming at two minutes past nine.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.31 to 9.2 p.m.]

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