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Lord Mancroft: My Lords, as one of those who pressed the Government to commission a review of the gambling industry as far back as 1997, it would be churlish of me not to welcome the Bill—and I do.

I was, too, largely supportive of the general thrust of Sir Alan Budd's report—although I did not agree with every detail. I did not totally agree with the Government's response in A Safe Bet for Success, although it, too, contained some proposals that were pretty bizarre. I was, however, largely supportive.

I was happy to join the scrutiny committee because I was keen to ensure that the area of gambling in which I have an interest and have been involved with for 10 years—society lotteries—was not forgotten. Amidst the furore about casinos, betting exchanges, fixed-odds betting terminals and all the other headline-grabbing parts of the Bill, I was very concerned that the smaller part of the gambling industry—society lotteries—should not be forgotten.

The scrutiny committee was a fascinating experience. I hope that the House has noted that its members—from both Houses and of all parties and no party—agreed on virtually all of the key issues. I am delighted that the Government accepted most of our recommendations. It is interesting to notice that they have got into trouble—over casino numbers and machines, for example—in the areas where they ignored us.

Although there are not any votes in gambling—this remains an issue that does not divide the political parties—it is important. The UK gambling industry is significant; it is large; it is an important part of a growing leisure industry in Britain; and it provides jobs. But it is true to say, as the Minister said, that the laws governing it are now old-fashioned, in part because of the advent of so many technologies. When the Government want to modernise something, one should always look at it with great suspicion. But, in this case, modernisation is called for.
 
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It is also true to say that the existing Gaming Board does not have the resources or the powers to operate in a way that a modern regulator should operate. That is not meant as a criticism. In fact, I should like to take this opportunity to pay tribute to the work of the Gaming Board, the chairman, Peter Dean, the retiring secretary, Tom Kavanaugh, and their teams, who have done a first-class job with great care and courtesy in their regulation of the industry. Nevertheless, we need the new commission.

I commend, too, the Government for their decision to regularise and regulate the new remote gaming industry—those which operate by Internet, mobile telephony and interactive television. Without the Bill, the remote gaming sector will continue to operate a free-for-all, which is not a good idea.

However, your Lordships will want to look at that part of the Bill closely. The balance between what is in the Bill and what can be addressed in codes of practice is not absolutely correct. I am not convinced that it is perfect. We will want to look at that carefully in Committee.

I start to part company with the Government in their handling of the casino question and in the detail of some of their proposals. I should make it clear that I have absolutely no interest in casinos. I do not gamble or visit them, except when, as during the past year, very kind operators invite me for dinner, which is very nice. I do not go to casinos because I do not find them entertaining.

I listened very carefully to what the noble Lord, Lord McNally, said about Blackpool. I wish Blackpool well. I listened carefully, too, to what my noble friend Lord Jopling said about St Anne's. I reflect that, apart from Blackpool, Manchester just down the road wants its own casino. I wonder how well they will go together. I remember that the great American, Mark Twain, once said that he would like to die in Manchester because the transition between Manchester and death would be so small as to be hardly noticeable. But I am not sure that that is very fair.

I recognise that casinos are an extremely important part of the British gambling industry. No one has said yet that in the UK we have an extremely efficient, demonstrably honest and well regulated casino industry, which conducts itself with commendable responsibility. Budd recognised that the restrictions surrounding casinos are largely based on 1950s morality and are inappropriate for the 21st century. It is difficult to disagree with that. I thought that the Government agreed with it: the scrutiny committee certainly did. It appeared that the Government recognised that, bar a few details—some of which are important and some less so. I believe that the industry was content with what the Government proposed, subject to the recommendations of the scrutiny committee.

But on 16 December that apparently changed. The Government's new proposals from that date—cobbled together, I may say, under fire—have resulted in the
 
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complete alienation of the industry. Frankly, that is a pity. To try to modernise an industry that has turned against you is silly, a pity and highly unnecessary.

I welcome, as I hope that any noble Lord would, any foreign investor who wants to bring business and create jobs in the United Kingdom. I do not think that the UK casino industry fears competition from the United States or anywhere else, provided that it is fair competition.

By the Government's current handling of the Bill, they have disadvantaged the existing industry. Any new casino, regardless of whether it is owned by an American, a South African or an existing UK company, will have a significant advantage over an existing casino and, if opened within its catchment area, will inevitably offer more attractive products.

The Minister said that he does not agree with that, but he is wrong. I do not know which of us is right, but there is little chance that this House will be able to make the progress that it needs to make if this Bill is to reach the statute book before the general election unless the Government are prepared to look at the UK casino industry's concerns rather more favourably than they have up to now.

We cannot all agree on every detail in a complex Bill like this, but it needs to achieve a greater degree of consensus if I am to give it my wholehearted support. I shall be looking for early signs of that consensus during the Bill's passage.

I hope that your Lordships will have seen the report of the All-Party Group on Betting and Gambling, to which the Minister made reference. The group was very ably chaired by the noble Lord, Lord Faulkner of Worcester. I am delighted to hear that the Government will be taking its recommendations into account, some of which are already catered for in the Bill and others I hope we will see coming forward.

I should like to focus the remainder of my remarks on my main concern; namely, society lotteries. The company of which I am founder, chairman and a shareholder is a certificated external lottery manager. We have managed daily lotteries, weekly lotteries, instant lotteries and frequent-draw lotteries for 30 charities over 10 years in Britain. We have raised more than £10 million for different charities. I think that we are now the largest and most experienced society lottery manager in Britain—our two largest competitors having given up the struggle and having packed up. But there are a plethora of charities and sporting clubs for which lotteries are a vital source of income.

The Government have repeatedly stated that they recognise the role of society lotteries. But after so many committees, reports and extensive consultations in the past few years, it remains a source of frustration to us that the key issues identified by Budd are the same key issues that are still outstanding today. Perhaps your Lordships will allow me to flag them up quickly, before we look at them in greater detail in Committee.

Our main concern is that the Government have still not fully dealt with the issue of prize competitions. It is a difficult issue, of course. For those of your Lordships
 
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who are unfamiliar with prize competitions, they can be legitimate and reasonable. They are skill-based competitions with a variety of prizes. But all too often the skill test is not a great test. I wonder how many of your Lordships could answer the question: where is the Tower of London? It does not take a lot of skill to answer that one.

In effect, a great number of them are pseudo lotteries. Whereas society lotteries are registered and are highly regulated, prize competitions are unregistered, unlicensed, unregulated and free to do much as they like. I accept that it is difficult to find the right wording to define them separately, but both the Lotteries Council and the Gaming Board are of the view that as the Bill stands it is still open to abuse. In Committee, we shall have to look at ways of tightening that up.

Your Lordships may consider this a side issue, but perhaps I may put it into context. The regulated society lottery industry in Britain turns over about £126 million every year. The casino industry, about which we have just been talking, turns over about £4 billion. But the prize competition industry, which the Government are content to leave wholly unregulated, is estimated to be worth about £5 billion a year. I am not sure that £5 billion a year is a side show, particularly when children and other vulnerable groups that the Government profess to be so concerned about are encouraged to buy entries without controls. That is why we will have to come back and look at it.

The Budd report and the scrutiny committee recommended the abolition of stakes and prize limits for society lotteries. The Government have removed the limit on stakes, which is the easy bit, but have maintained arbitrary limits on prizes and pool sizes. There is also an annual limit on the number of tickets each charity can sell. I have asked every Minister and official that I have come across in the past 10 years why such a limit exists. I have yet to receive an answer, whether silly or sensible. I have received no answer at all. I shall ask again in Committee.

The Government believe that an increase in prizes will undermine the National Lottery. I accept that the Government have a reasonable and legitimate desire to protect the National Lottery, but it needs to be reasonable, which I do not think that it is at the moment. We would like to come back to that in Committee.

As an alternative, we can look at the business of triennial reviews. The Minister in another place thinks that they work. But in my view, in order for a triennial review to take place, it needs to happen every three years: in our part of the industry, we have had two since 1994. That does not sound like triennial. The solution is to put that in the Bill. If the Government do not like it, let us go the Budd and scrutiny committee route and abolish them. We need to look at that, too, in Committee.

The Government propose to allow societies to sell tickets by machines. This is a modernisation Bill, and that is a sensible thing to do. However, in seeking to differentiate a lottery terminal from a gaming
 
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machine, the Bill, at clause 229(2)(d), insists that the draw is not "determined by the machine". That is right, as lotteries require a pool of players. The clause also says that the machine cannot display the result. The object of this last point is to prevent instant lotteries being played like a gaming machine—not that that has ever happened anywhere in the world.

However, there is a drawback. I do not know of any game in the world, played either for pleasure or for money, in which the player cannot determine the result. Why would I play? Can you imagine a machine where, having played and won, I cannot collect my prize; where the operator does not know if I have even won a prize, and cannot even tell how many tickets I have sold? I did a bit of research for my own entertainment, and there are somewhere between 500,000 and 750,000 lottery terminals in the world. Every single one of them displays the result. We need to congratulate our good old British Civil Service for the remarkable feat of finding a potential problem that has so far not occurred anywhere in the world. We might want to look at that at Committee.

There is a wider concern that the language of the Lotteries and Amusements Act 1976 is a bit archaic, and needs to be brought up to date. That is why the Government removed the phrase "ticket or chance", as the Minister mentioned, to try and allow for ticketless lotteries, which is clearly sensible in the 21st century. The Minister believes he has resolved that problem, but I am not certain he has. That too is an issue we can come back to in Committee.

Finally, Clause 258 gives the Secretary of State a reserve power for either himself or the commission to restrict the frequency of lottery draws. There is a case for allowing the commission—or, at a stretch, the Secretary of State—a reserve power, in case for some reason a lottery, or any product, becomes unacceptable or undesirable. This, however, is not that power. In a letter to the chairman of the Lotteries Council in December, the Minister appeared to confirm that the order-making power would be used immediately to restrict lotteries to once every hour.

I do not propose to rehearse the arguments today, particularly as I see the numbers on the clock. Suffice it to say that these lotteries are completely harmless, and the Government know it. I know it, because mine is the only company in Britain that has ever run such lotteries. We are quite experienced in them now. We have run 150,000 of them since 1997 through 2,000 outlets, and sold 10 million tickets. Do your Lordships not think, if the potential problem feared by the Government were going to appear, that it would have done so by now? We might want to consider that in Committee as well.

Of course, I should be delighted, as always, to sit down with the Minister to find a way of meeting the Government's concerns. I do not think that would be difficult, and it would avoid needlessly destroying an important source of charitable fundraising.

We are all aware of the Government's three main priorities, but it is worth pointing out that that is where we are today under the present legislation: protecting
 
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children and the vulnerable, keeping gambling crime-free, and ensuring that it is conducted in a fair and open way. The object of the Bill is to modernise that regulatory system without jeopardising those goals. In the process, the Government need to explain why some areas of the industry should be relaxed while others should be further restricted.

The modernisation part of the Bill requires a framework piece of legislation that gives the commission the power to regulate flexibly as circumstances and technology change over time. If there is too much on the face of the Bill, the legislation will be out of date before it hits the statute book. If there is too little, neither the Commission nor the industry will know where Parliament stands. I am not sure the balance is quite right yet, or if the Government have been able to resist the temptation to over-regulate. It will be your Lordships' task to find that balance.

I will be unhappy unless I see the UK casino industry demonstrably treated fairly. I would hope, too, that I have said enough to convince the House that we need to see some changes in the regulation of lotteries. These are changes not of principle but of practice, and without them the Bill remains unacceptable. The Bill's fate lies in the Government's hands. Regardless of any statements put out by the Department for Culture, Media and Sport, if the Bill falls, it will be because the Government have mishandled it. It is that simple, and the whole world knows it. Fortunately, the Secretary of State has an extremely able and experienced deputy in the shape of the noble Lord, Lord McIntosh, who, if allowed to by his Secretary of State, can get the Bill through.

I wish the Bill well, but it will require a great deal of give-and-take on all sides of the House if we are to get it on the statute book before the general election.

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