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Lord Phillips of Sudbury: My Lords, I am afraid that the noble Lord, Lord Wade of Chorlton, is not able to speak and I therefore rise to say my piece. We are confronted here with another giant highly technical Bill comprising 225 pages. It constitutes a licence for us lawyers; we at least will do well out of it. I sincerely hope that by the time this Bill reaches the statute book one will be able to say that of the public as well.
 
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I realise that this is an extremely difficult area of human activity to deal with and police. I also accept that there are libertarian issues which are not easy; there is no point in pretending that they are. It is certainly not part of my case to be a killjoy, let alone a puritan. I believe that the current state of gambling, given a number of improvements suggested in the Bill, is in many ways acceptable. At least we have a clean industry—I am talking particularly of the casino end of it—and we have an uncorrupt industry. It is partly because I think that those two priceless attributes are at risk from some parts of this Bill that I shall make the following remarks.

I agree largely with the summary of the view of the Casino Operators' Association of the UK. As has been mentioned, there are 131 casinos. Some 115 of those are owned by four public limited companies, which leaves 16 smaller, mainly privately and family-owned casinos, and the Casino Operators' Association represents a majority of them. The Casino Operators' Association states:

A number of noble Lords—the noble Lord, Lord Mancroft, for one—made that last point strongly.

I should like, if I may, to spend a minute or two discussing the context of this Bill. I suppose that before doing that I should express my history within gambling as one of the founder members of the National Lottery Charities Board—one who, like my noble friend Lord McNally, has an occasional and happy flutter, and, indeed, one who in his early days in the legal profession was required by his principal to spend months of his life deep in the heart of the gaming industry, but I shall say no more of that now.

We are dealing with a context of a country currently spending over £8.5 billion a year on gambling—one of the highest per capita expenditures in the world. We have a huge and growing problem of personal debt in this country—again one of the highest in the world. Statistics from the National Association of Citizens Advice Bureaux, which deals with the problems of more than 8 million citizens a year, show that the highest category of problem is that of personal debt.

I do not wish to repeat the figures given by the noble Lord, Lord Jopling, beyond saying that the work of Professor Mark Griffiths at Nottingham University, which is devoted exclusively to gambling, flies directly in the face of the comments just made by the noble Lord, Lord Lipsey. The professor's statistics, which pointed to there being around 300,000 problem gamblers, were not disputed by the noble Baroness, Lady Golding, or the noble Lord, Lord Steinberg. The gist of their remarks was that that was not too high a figure in relation to the size of the industry and the size of the population.
 
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The point is that if you hugely increase gambling, as the Bill certainly will, and hugely intensify gambling, as the Bill certainly will, it is common sense that the problem figures will rise in step. The evidence given to the Joint Scrutiny Committee was clear. For example, the Royal College of Psychiatrists said:

Perhaps I may also quote from an eloquent letter that I received from a psychiatrist, Dr Nicholas Land. He stated that,

which will be scrapped under the Bill. He continued:

There is a disproportionate concentration of poor people among those problem gamblers, and they are three-and-a-half times more likely than the well off to have gambling problems. I am referring to statistics from the British Gambling Prevalence Survey of 2000. Those statistics were given to the Joint Scrutiny Committee. The same relationship can be found in research in the United States.

I turn to the demand from the public for the huge extension in gambling proposed by the Bill. What do we find? Nothing. No evidence whatever. My noble friend Lord Roberts of Llandudno performed his own local survey and the results of that would be borne out anywhere in the country. There is no demand or cry for an increase in gambling, let alone on this scale, except from the big end of the industry itself.

The 1968 Act requirement for those seeking licences to demonstrate need is to be scrapped. Why? Surely that is the most profoundly commonsense and useful provision that the 1968 Act had. Yet it will be swept from the board. What is the reality? This will be a charter for hugely increased gambling in all its dimensions—outlets, machines, stakes, prizes, advertising and freebies. That is what this Bill is about. On the evidence that I have seen—and I have no axe to grind—there will certainly be an equal and opposite increase in problems connected with gambling.

I suggest that we proceed extremely gingerly with the Bill. The recent Licensing Bill went through this House with much debate and contention. Various protestations were repeatedly made by the Government about how it would do this and not do that. Now, a year or so down the road, there has been an immense public outcry. That could easily be the consequence of this Bill.

Knowingly and intentionally to encourage a massive increase in and intensification of gambling, when the problems created by it, whether of debt or
 
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addiction, will increase, as both common sense and research indicate, is an extraordinary step for a legislative House to take. I believe that the more strongly due to the disproportionate damage that it does to the less well-off.

Lastly, I refer to some statistics on prize machines, because the evidence suggests that they are particularly dangerous to the poor and psychologically vulnerable. Under the present law, prize machines can have a maximum stake of only 50 pence; the maximum prize is £2,000; the maximum number of machines in any casino is 10. Under the new law, the maximum stake is unlimited; the maximum prize is unlimited; the maximum number of machines per casino is 1,250. So, one new regional casino can have in it nearly as many prize machines as the whole of the casino industry can currently operate.

We would be fooling ourselves if we believed that the Bill will not create enormous social problems. It is not open to us properly to allow the Bill through in its present form, permitting these super-casinos. Finally, the Bill's third objective states that it is for,

The Bill not only does not do that, it actually adds to the harm and exploitation that gambling can cause. I am sorry to be so negative about certain aspects of the Bill, but we ignore these realities at our peril.

Lord St John of Bletso: My Lords, I welcome the Bill, both in its objective of modernising the UK gambling laws and its attempt to do so while addressing many of the concerns of problem gambling. I appreciate the concerns that the noble Lord, Lord Phillips, outlined. I have for the past five years been involved in a web hosting company, with many of our customers being online gaming companies.

There is a widespread misconception that the Bill will open the floodgate to remote gaming. On the contrary, it is a means to regulate and provide protections for something that already exists. Without the Bill, UK citizens are exposed to unregulated and possibly disreputable offshore companies that may be unscrupulous in their business dealings. The Bill will make the operators subject to probity tests and the gaming software and equipment subject to fairness testing. That will certainly build in protections to deal with problem gambling.

There is much detail omitted from the Bill which is left to subsequent regulation to be developed by the Gambling Commission. However, one of my concerns about the equipment for online casinos is that the current proposals require remote gaming operators to be either "all in" or "all out" of the United Kingdom. That will effectively require companies primarily based in the UK with some offshore activities such as call centres to move them onshore. Conversely, it will require primarily offshore companies to obtain licences where they only have limited UK connections and equipment or use UK services such as banks here.
 
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That may result in some companies moving entirely offshore with the ensuing job losses and loss of Treasury revenue.

That "all in" or "all out" test will create the exact opposite effect of the intent of the legislation, which is to provide a compelling proposition for remote gambling companies to remain in or move to the UK. A better approach is for the Gambling Board to have a worldwide right to audit the equipment and operations of its licensees.

Moving from remote gaming to land-based casinos, I am particularly in favour of the Government's proposal for regional casinos, where the gaming space comprises only 10 per cent of the overall facility, with the remainder made up of hotels, restaurants, cinemas, sporting and conference facilities. I certainly support the cause of the noble Lord, Lord McNally, for Blackpool.

As someone who does not gamble, I have often visited Sun City in South Africa for its leisure and conference facilities. It has excellent family facilities. I do not agree with the negativity of the noble Lord, Lord Jopling, about foreign operators investing in regional casinos in the UK. With each regional casino projected to cost about £250 million, they will inevitably deliver significant regeneration, planning and tourism benefits.

It is estimated that if each of the eight regional casinos are successfully developed, they will not only represent an investment of more than £2 billion over the next three years; they could create more than 50,000 direct and indirect construction and operational jobs.

However, I have reservations about the proposal of some commentators to retain compulsory membership of casinos, particularly the regional casinos. Research on the viability of regional casinos around the world shows that a regional casino must attract between 5,000 and 6,000 people a day in order to succeed. The model is premised on public access.

The argument by those in favour of compulsory membership that such membership will prevent money laundering is disingenuous. All casinos have to comply with applicable European Union money-laundering directives, which do not require membership. Moreover, the industry code of conduct deals with problem gamblers. Any further decrease in the number of regional casinos would further destroy the competitive balance between the different types of casinos, thus further diminishing the delivery of regenerative benefits to the UK.

However, I certainly agree with my noble friend Lord Walpole that eight regional casinos is sufficient for the time being. That would obviously have a detrimental knock-on effect on inward investment.

It has been argued that regional casinos could be detrimental to the National Lottery. I defer to the expertise of the noble Lord, Lord Mancroft, with his operational knowledge of society lotteries, but I understand that the evidence in the United States suggests that lotteries have not gone into long-term decline when other forms of gambling were introduced.
 
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If any pattern can be determined, it might be that as gaming expands, lottery revenues experience a temporary decline for up to a year, with normal growth resuming thereafter. There is also considerable evidence to support the fact that national and state lotteries in jurisdictions without other forms of gaming often decline for other reasons such as poor product appeal.

I shall leave my views on category A and category B machines to the latter stages of discussion of the Bill.

I commend the excellent report by the Joint Committee on the draft Gambling Bill. With the general election likely in May, we have a tight schedule to complete and improve the Bill. After all the expensive preparatory work, it certainly deserves a smooth passage and I commend it to your Lordships' House.

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