Rank’s Ian Burke writes for Telegraph

10/01/2012

In an article for the Telegraph newspaper this week, Ian Burke, Chairman and Chief Executive of Rank Group calls on the Government to promote land-based gaming.

“In a report published before Christmas, the European Parliament ruled that online and land-based sectors of the same industries (in this case, the betting and gaming industry) are indeed in direct competition to one another and that legislation that favoured one over the other amounted to state aid.

The report could have gone further and pointed out that a tax system (such as we have in the UK) that favours online casinos, bingo clubs and bookies (low levels of employment and regulatory oversight) to the detriment of their land-based equivalents (high levels of employment, highly regulated) was not just unfair, and potentially illegal, but just plain misguided. Alas, Brussels requires that member states govern fairly and in accordance with European law; it does not require them to govern well.

This point has been made repeatedly over recent months to the Parliamentary Select Committee for Culture, Media and Sport, which has been convened to understand what has been the effect of gambling legislation in this country and why it has failed to deliver the economic benefits ministers had anticipated.

At a time when it is needed most, Britain’s land-based gaming entertainment industry has the potential to boost employment and thereby contribute to the growth of the economy. However, it can only do this if the Government brings to an end the subsidies provided to online gaming and harmonises the taxation of all regulated forms of gambling under one simple and fair regime.

The Gambling Act was designed to create in Britain a modern gaming industry capable of making a positive contribution to the development of the leisure economy, adaptable to changing technologies and responsible to the welfare of customers. The intention was to benefit society by offering greater freedoms and more effective controls; to benefit business by rescinding anachronistic and redundant commercial restrictions; and to benefit the economy by promoting greater investment and job creation.

The Act did sweep away a number of antiquated restrictions and allowed the industry to become more commercial. It also enshrined in law the principles by which we all strive to operate – free of crime, protective of our customers and at all times fair.

Yet, despite this, the licensed gaming industry in Britain today is still characterised by policies of taxation and regulation that appear designed to undermine rather than support the aims of the Act.

This is why the Select Committee inquiry is so important. It has handed Government and operators a second chance to mould the industry into something that is more responsible to society, provides greater benefit to the economy and is better able to compete in the global market.

Perhaps Government’s biggest opportunity is to reform a system of policies that at present appears to run counter to the aims of the Act by discriminating against those sectors that provide the highest levels of customer protection and overall economic benefit.

The Rank Group’s casinos and bingo clubs provide a range of customer protections, from controlled entry mechanisms and proof-of-age checks to systematic problem gambling training for all customer-facing employees. In 2009, Britain’s casinos and bingo clubs accounted for just 0.09pc of all reported incidences of under-age gambling. Yet these two sectors are the highest taxed in the UK gaming industry. By comparison, most of Rank’s online gaming competitors, who also target UK consumers but have no establishment in this country, pay no UK tax on their online gaming income. The small minority of UK established online companies that offer bingo and casino games enjoy the advantages of a benign system of regulation and lower rates of taxation. There are similar inconsistencies from a regulatory perspective. At present, Britain’s licensed casinos account for just 1pc of the near 250,000 gaming machines in Britain today, despite being widely acknowledged as providing the safest environments for machine gaming to take place.

These are not simply the views of a self-interested businessman but are shared by senior ministers and our regulatory commissioners. In 2007, the present Secretary of State for Culture, Media and Sport, Jeremy Hunt, wrote that Britain’s casinos “are one of the easiest places to prevent problem gambling”. Meanwhile, in its 2009 report into machine gaming, the Gambling Commission stated that bingo clubs and casinos were “seen to facilitate social gambling” (as distinct from solitary gambling) and were therefore less likely to foster problem gambling than other venues.

I wrote to HM Treasury in January 2010 to recommend the harmonisation of gaming taxation in Great Britain, even though this would mean that the Rank’s online business would be subject to higher taxation. Since then, the Government has signalled its intention to regulate and tax all online gambling in Britain.

These are sensible steps, but if they are undertaken in isolation, without consideration for the broader industry, then the Government will have failed in its duty to provide protection for its citizens and to promote economic growth.

As it looks ahead to a challenging year for the economy in 2012, the Government has an opportunity to get things right. It has an industry that (unlike many others) is willing to invest and to create skilled jobs; and it has the counsel of John Whittingdale’s Select Committee and the European Commission to turn to for guidance. I hope that this time Government ministers choose what is right over what is politically expedient.”

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