Euromat Meeting 7 th May 2004 Report from the United Kingdom

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1 Euromat Meeting 7 th May 2004 Report from the United Kingdom The Draft Gambling Bill The proposed Bill has the potential to bring about the greatest change and impact on the UK gambling industry since the 1960 s. De-regulation would allow casino controls to be relaxed with the removal of the 24 hour rule, the introduction of unlimited stakes and prize machines, and the start of a new breed of resort casino s offering Las Vegas type venues. Remote gaming would also be licensed in the UK which paves the way to a new type of gaming environment. For the last 3 months, the proposed Bill has been through a rigorous scrutiny process by selected members from the House of Lords and the House of Commons. Each sector of the gambling industry has been interviewed and questioned, and many opted to produce bespoke research to substantiate their claims. BACTA commissioned The Henley Centre to look at the social & economic impact of the Bill and predicted the following results; There will be significant winners and losers across the key gambling sectors Casinos and remote (internet, digital TV and mobile phones) gambling will grow The nation will gamble an extra 1billion per year due to the Bill by 2010 There will be no significant employment gains Cannibalisation will occur through the unrestricted opening of new casinos and that a third of Family Entertainment Centres and Adult Gaming Centres may close. Government will gain an extra 400 million in tax annually by 2010 The number of problem gamblers will grow from 400,000 to over 700,000 by 2010 BACTA publicly announced its claims that Government must take into account the full social and economic impact of deregulation, and examine both the positive and negative implications. We proposed that there should be a phased introduction of a limited number of new style casinos, restricted to those areas where regeneration is needed, and where social and economic benefits seem likely. Currently the Bill benefits two new market sectors (Las Vegas style casinos and new media) but hugely disadvantages much of the existing traditional UK market.

2 The Scrutiny Committee published their recommendations on the 7 th April and it has been clear that our concerns regarding the proposed Bill have been taken into consideration, such as limiting the introduction of new casinos, and where they are located. Our main disappointment is that the Committee has recommended that Fixed Odds Betting Machines shall remain exclusively in betting offices and casinos, and so BACTA will be campaigning for a level playing field for FEC s, AGC s and bingo halls. The next stage is for Government to address the issues raised by the Scrutiny Committee and make relevant and fitting amendments to the draft Bill, this will be within 2 months. The hope is that the Bill will be announced in November with the new session in Parliament, with potential implementation in Regulatory Reform Order A new law was passed in December last year to offer players increased freedom of choice and improve current facilities. Players can now use notes and smartcards (not credit cards) and re-play winnings off the meter. The full Regulatory Reform Order applies to higher payout jackpot machines in casinos, bingo halls and members clubs, whilst the 25 (all cash) machines found in pubs, adult gaming centres and betting offices will just be allowed the use of notes (the additional facilities will be made available as part of the new Bill). All machines will still have the capability to use coins. This has been a long sought change from both the industry and consumers to improve the current facilities available on gaming machines. From January 2004 machines carrying the additional facilities are being manufactured. Fixed Odds Betting Machines Prior to the introduction of FOBM s, bookmakers were allowed two AWP machines, but now bookmakers have been allowed a maximum of four machines (either AWP or FOBM) machines on their premises. Unsurprisingly most are opting to have four FOBM s where possible. The maximum stake for this type of machine is between

3 and the maximum prize is 500. The speed of play is still an issue and there is concern that there will be a rise in problem gamblers from this type of machine. With these high level stakes and prizes, FOBM s have had a direct impact on traditional arcades, pubs and clubs and bingo halls, and will continue to do so. BACTA are therefore keen to allow consumers to have the choice to play these machines in all adult environments (ie; not just betting offices and casinos) and promote a level playing field where possible to protect traditional businesses. There has also been a major dispute between bookmakers and the government about the legality of FOBM s, which has recently brought about the introduction of a voluntary code of practice. AMLD (Amusement Machine License Duty) Customs & Excise are currently reviewing how they collect duty from the coin-op industry, which is part of their industry wide investigation into taxation, both in terms of the amount collected and the method used. The betting industry and bingo have now both changed to a GPT and C&E would like the machine industry to follow. The issue is that the current system is unnecessarily restrictive and inflexible where the demand for machines on a particular site varies upwards or downwards. If an additional machine is needed, an additional license is required which may take several days to receive which results in lost revenue for all concerned. If the customer wishes to reduce the number of machines, the whole licence needs to be surrendered and a new licence applied for. BACTA has acknowledged the shortcomings of the existing system, but resists the change to jump to a GPT system. Instead, the proposal is to switch to a system of self licensing for all major operators of gaming machines. This would mean that the calculation of duty could be made on a daily basis according to fluctuating demand, but paid monthly. Under this proposal, the self licensing system would entirely replace the present system of special licenses, and would apply to all premises where relevant qualifying machines are offered to the public for use.

4 BACTA have thoroughly investigated the impact of a GPT on the industry, and have identified that there could be significant losers if a GPT were introduced as the average gross profits per machine can vary enormously depending on location and business sector. This fact has been communicated to Customs and they are considering the implications. They have also acknowledged that a self-licensing system is workable form a control point of view and that it would lead to significant administration savings for Customs. We are currently awaiting a response. Any major change to industry taxation would take at least 12 months to introduce and will be subject to the implications of the new Bill. WEEE Directive The WEEE and ROHS Directives came into force on 13 February 2003, which has now become law within the EU. The WEEE directive encourages and sets criteria for the collection, treatment, recycling and recovery of waste electrical and electronic equipment. Gaming machines are currently included, although the Directive was targeting traditional electronic goods. The ROHS Directive facilitates the dismantling and recycling of waste electrical and electronic equipment by restricting the use of hazardous substances used in their manufacture. Both changes will come into effect in Manufacturers and retailers within the EU will be affected and must pay their share of treatment and recycling costs. BACTA believes that the Directive will potentially place an unfair and costly strain on the industry while discouraging the current greening practices developed by the industry. BACTA is lobbying hard to have gaming machines exempted. Triennial Review 2004 The UK leisure and gaming market continues to experience massive changes, both in respect of the competitive marketplace and consumer expectation. The reality is that the customer can now play high stake and prize games on the Internet and digital television. They can play any of the plethora of National Lottery games and scratch cards for large cash prizes, can enter an adult only shop on the high street (called an LBO), and play FOBM s with high stake, high prize terminals. However, the Stakes and Prizes of games available next door in an adult only gaming centre or a pub are

5 currently very restricted. The result is that the gaming and amusement machines market is struggling in the face of the new competition and rising costs The GBGB and Government review stakes and prizes for gaming machines every 3 years, and this year is a Triennial year. On April 1 st, BACTA submitted a proposal to reflect the changing marketplace and increase the current machine stakes and prize levels. For example, All Cash Machines Today = Proposal = Maximum 30p stake, 25 prize Maximum 1 stake, 50 prize The proposal aims to increase levels above inflation to meet the needs of consumers and create a slow down of migration towards FOBM s. The issue of problem gambling should not feature a significant factor as GamCare have shown that stake is less influential than rapidity of play, plus 1 is still a relatively low stake within the increasingly competitive environment. If the submission to the Gaming Board is successful then the changes will be in circulation from October 2004.

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