The Culture Media and Sport report into Gambling: Explained
This week the Culture Media and Sport Committee released its report into the 2005 Gambling Act. It provides a series of proposals for improving industry legislation, and was created as a result of consultation from various interested parties.
Obviously, these are purely recommendations and will not necessarily ever become law, but they provide an interesting insight into the way our industry is perceived and it will undoubtedly inform future legislation.
The link to the full report will be provided at the end and I recommend reading some of the evidence that was provided by BACTA, the Nobles Group Solicitor Elizabeth Speed and Praesepe.
Given the huge amount of information contained within the report, I have analysed those issues of most relevance to the arcade and retail sectors and will list the points alphabetically.
Adult Gaming Centres
The Committee felt that Adult Gaming Centres should have the same number of B2 machines as LBOs.
Nick Harding, Chairman of Praesepe commented, “Obviously this is excellent news that will ( assuming it is implemented) go a long way to levelling the playing field. We will be discussing these recommendations with the Gambling Commission as soon as we can.”
The report stated, “In the case of Adult Gaming Centres we believe that they provide a controlled adult environment and have robust access controls, as demonstrated by their low failure rate in the Gambling Commission’s test-purchasing scheme. We therefore recommend that Adult Gaming Centres are permitted B2 machines on the same basis as betting shops.”
In the evidence section of the report Chloe Smith MP is asked “Why do amusement arcades seem to be of the opinion that this Government have it in for them in the proposed tax changes?”
She responds, This Government do not have it in for amusement arcades, absolutely not. We are …in the process of reforming what used to be AMLD, which will, plus the VAT, become machine games duty as of 1 February 2013. The Government recently published our consultation response, of which I am sure you will be well aware, and there are a number of measures in there that we are trying to take in order to assist businesses in seaside towns such as Torbay and others, but it must be said that our aim is to put the tax revenues from machines on a sustainable footing.”
Mr Adrian Sanders (Lib Dem, Torbay) from the Committee then said, “There is always a great fear that when any Government say “revenue-neutral”, they are looking at it as a whole. What is actually happening here is that there is a speciﬁc sector of the entire industry that tends to be in seaside resorts where the revenues will go up if they are able to stay in business. It is possible it might be revenue neutral because they go out of business and revenues go down. That is the fear—that some of them will cut back on the amount of business they do, or indeed could well look at going out of business altogether. It is a very serious issue in the seaside resorts, as Mr Penrose should know.”
Miss Smith responded, “I do recognise that. As I say, I have engaged particularly with the representative bodies for many of those resorts, and my predecessor did plenty more as well. One example that I hope would be helpful to such resorts would be the treatment of category D machines under the design of the future tax, which would beneﬁt from a lower rate. We have said there would be a two-rate structure. Obviously, I cannot tell you what that rate would be in this session.
“We have speciﬁcally put category D machines within that, which coincides at present with those that have stakes of up to 10p and prizes of up to £8. Beneﬁting from that lower rate is a way we have endeavoured to make clear to seaside resorts and others who may, as you say, fear this change, that we are aware of the need for treatment at that end of the scale.”
The commission concluded: “We are not convinced by arguments from the Treasury that measures to allow the offsetting of Gross Profits Tax against VAT on capital investment for gambling machines cannot currently be implemented. The Treasury should carry out further work in this area and identify a means by which such offsetting could be achieved. We also recommend that the Treasury make judicious use of industry analysis of the likely impacts of its proposed taxation measures. As it is in the public interest to maximise the tax take from the gambling industry, the Treasury should set tax at a level which allows investment in the industry and does not stifle growth.
We recommend that the Treasury also take into account the likely impact on investment by the gambling industry in future tax-rate calculations. We recommend that any changes to machine gaming duty should be revenue neutral as the Economic Secretary to the Treasury assured us that they would be. If the rate of machine gaming duty raises more than a revenue neutral figure, the Chancellor should reduce the new rate to ensure that revenue neutrality is achieved.”
John Whittingdale MP, Chair of the Committee, said there needed to be a sea-change in attitude over gambling,
“The ‘reluctantly permissive’ tone of gambling legislation over the last 50 years now looks outdated. It is also inadequate to cope with the realities of the global market in online gambling, and even seems ill-equipped to cope with the realities on our high streets. Our general approach in this report has therefore been to support liberalisation of rules and delegation of decisions to those closest to the communities that will be affected.”
The Committee proposed that Local Authorities should have the power to allow betting shops to have more than the current maximum of four B2 machines per shop if they believe it will help to deal with the issue of clustering.
The Committee advised that the Gambling Commission should introduce a new licence fee structure which reduces the current anomaly where small, independent bookmakers pay much higher fees per shop than large chains. “Small independent operators should certainly be paying less than they are now, and the Commission should also be looking to charge all operators less than they currently are,” says the report.
The Committee says that casinos should be permitted to operate up to twenty B2-type gaming machines. It also felt that limiting the number of B2 machines in betting shops has encouraged them to cluster in some high streets in order to satisfy customer demand.
The Gambling Commission came under a lot of fire in the report and the Committee says the Commission has not gone far enough, in particular, in its efforts to reduce its operating costs. Greater transparency over Commission spending was also suggested; “The Gambling Commission should provide the gambling industry with a clear and easily accessible summary of where the fees it charges are spent as a part of its Annual Report. This would improve the relationship between the Commission and the industry, as well as highlighting areas where value for money is not currently being achieved. This requirement should also help to reduce well intentioned mission creep by the Commission into areas such as sports integrity, which is—and should continue to be—the responsibility of the sports’ governing bodies,” said the report.
Industry trade associations did not mince their words.
The Bingo Association said, “the Commission is less effective than the Gaming Board, yet costs more, representing poor value for money”.
BACTA described the Commission as “gold-plated” and not “fit for purpose”.
BALPPA did not agree with the Commission’s justification for its staff levels—that its role is significantly increased from that of the Gaming Board for Great Britain. Instead, it held that its workload had “only risen marginally with extra involvement in the Arcade sector”.
The report stated that evidence from the amusement and arcade sectors, in particular, suggested that the Gambling Commission has not been able to develop strong relationships and lines of communication with some smaller operators.
Section 16 and 21
“The British Amusement Catering Trade Association (BACTA) told us that the removal of the section 16 and 21 machines from arcades had resulted in more than 200 amusement arcade closures in the previous 18 months, a fall in the number of amusement machines being manufactured from 55,000 to approximately 10,000 per annum, and hundreds of jobs being lost,” said the report.
“Leslie MacLeod-Miller of BACTA told us that “arcade revenues are down somewhere between 20% and 30%”.8 This view was supported by high street gambling company, Praesepe plc, and the British Association of Leisure Parks, Piers and Attractions (BALPPA),” it continued.
Kevin Allcock from Mecca Bingo told the Commission that his company probably lost about £0.5 million of income “overnight” as a result of this change
The report stated, “We welcome the reinstatement of the Triennial Review system for gambling machine stakes and prizes. These reviews should be designed to maintain the value in real terms of stakes and prizes, as is the case with other industries where prices are controlled by the Government, rather than as a means of increasing industry profitability. A Triennial Review system has the potential to lead to significant calls from all sectors of the industry that they should have their machine allowances and/orstakes and prizes increased on a regular basis. It is important therefore that these reviews are carried out on the basis of evidence, are as open and depoliticised as possible. “
To see the report in full click here http://www.publications.parliament.uk/pa/cm201213/cmselect/cmcumeds/421/421.pdf
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