House of Commons Culture, Media and Sport Committee The Gambling Act 2005: A bet worth taking? First Report of Session 2012–13 Volume I Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/cmscom Ordered by the House of Commons to be printed 12 July 2012 HC 421 (Incorporating HC 1554-i to vii of Session 2010-12) Published on 24 July 2012 by authority of the House of Commons London: The Stationery Office Limited £30.50 The Culture, Media and Sport Committee The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Culture, Media and Sport and its associated public bodies. Current membership Mr John Whittingdale MP (Conservative, Maldon) (Chair) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Louise Mensch MP (Conservative, Corby) Steve Rotheram MP (Labour, Liverpool, Walton) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South) Mr Tom Watson MP (Labour, West Bromwich East) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/parliament.uk/cmscom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some of the written evidence are available in a printed volume. Additional written evidence is published on the internet only. Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Sarah Heath (Second Clerk), Victoria Butt (Senior Committee Assistant), Keely Bishop/Alison Pratt (Committee Assistants) and Jessica Bridges-Palmer (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected] The Gambling Act 2005: A bet worth taking? 1 Contents Report Page 1 Introduction and context 3 The situation prior to the 2005 Act 3 Criticisms of the 2005 Act 5 Our inquiry 6 The conduct of the inquiry 7 2 The three objectives of gambling regulation 8 Gambling and crime 8 A fair and open industry 8 Problem Gambling 9 Defining problem gambling 9 Extent of problem gambling 10 Under-age gambling 13 Preventing problem gambling 14 Gaming machines 15 Stakes and prizes 24 Tackling problem gambling 25 Self-exclusion 26 Research, education and treatment 27 The tripartite structure for raising and distributing the levy 28 Distribution of funds 30 3 The industry, tax and regulation 32 Factors external to the Act 32 Tax policy 32 Bingo tax 33 Casino tax 34 Online gambling 35 Regulation and the impact of the Act 38 Triennial reviews 38 Online gambling 39 4 Casinos 48 New Large and Small Casinos 48 1968 Act Casinos 51 Regional Casinos 52 A future for Regional Casinos? 54 5 The Gambling Commission 56 Cost and value 57 Regulatory activities of the Commission 58 Licensing fees 60 Champion or regulator? 62 Relationships and communication 63 2 The Gambling Act 2005: A bet worth taking? The future: Merging Commissions and the move to Birmingham 65 The Health Lottery 67 Society Lotteries 68 Conclusions and recommendations 70 Annex 1: Information gathered in Australia and Macao 81 Annex 2: Methodology of the British Gambling Prevalence Surveys 84 Annex 3: Full Tilt 86 Formal Minutes 88 Witnesses 89 List of printed written evidence 90 List of additional written evidence 91 The Gambling Act 2005: A bet worth taking? 3 1 Introduction and context 1. The Gambling Act 2005 (‘the 2005 Act’), which came fully into force on 1 September 2007, was broadly designed not only to consolidate existing gambling legislation but also to update the regulatory structure for online gambling, casinos and what were known as Fixed Odds Betting Terminals (FOBTs), on which roulette and other casino games can be played in betting shops. The Act also created a new unified industry regulator, the Gambling Commission. 2. As had been the case for such legislation since gambling was first regulated in the UK, the 2005 Act was based on three key principles, which are set out in section 1 of the Act: • Gambling should not be a source of crime or disorder, associated with crime or disorder or be used to support crime; • Gambling should be conducted in a fair and open way; • Children and other vulnerable people should be protected from being harmed or exploited by gambling. The situation prior to the 2005 Act 3. Gambling has been a part of British culture for many hundreds of years. However, there has been considerable disagreement between those who believe gambling to be a fundamentally immoral and damaging activity—which should be severely restricted if not banned—and those who argue that individuals should be free to gamble with only those minimal restrictions needed to prevent crime and protect the vulnerable. Prior to 1960, governments’ attitudes to gambling were for the most part prohibitionist. In 1960, the Betting and Gaming Act liberalised gambling law, allowing those who wished to gamble to do so. The 1960 Act legalised betting shops and, despite its original intention to permit private gaming, it inadvertently led to an explosion of commercial gaming which could take place in locations such as restaurants, bingo halls and members’ clubs. Illegal gaming also took place in private residences: by 1968 there were at least 1,200 ostensibly private venues offering casino games. It was only under the 1968 Act that gambling was restricted to licensed premises. Largely due to the deficiencies of the 1960 Act (and the subsequent 1963 Betting, Gaming and Lotteries Act), commercial gambling quickly became a source of significant organised criminal activity. However, the Gaming Act 1968 largely succeeded in its aim of removing criminality from the gambling industry. This Act established the Gaming Board for Great Britain, which regulated the industry until it was replaced by the Gambling Commission under the 2005 Act. 4. Since the 1960s, the UK gambling industry has undergone significant change. This has been due partly to developing social attitudes and partly to technological innovations. Groups which previously took a prohibitionist stance now argue for what they see as appropriate regulation and consumer protection measures to combat problem gambling.1 On the other side of the debate, the industry accepts in principle that problem gambling is 1 Ev 210 4 The Gambling Act 2005: A bet worth taking? a serious issue for some people.2 Successive reviews, including the Royal Commissions on Gambling (1932-33, 1949-51 and 1978) and the Gambling Review Report of 2001, all clearly state that it is the role of Government to treat the gambling industry in the same way as any other legitimate leisure industry whilst putting in place measures to prevent criminality and excess. Government policy has been to recognise the legitimacy of the gambling industry and to allow the consumer increasing freedoms whilst maintaining consumer protection largely through regulation.3 The restrictions imposed on various types of gambling have been calibrated to reflect their perceived potential harms, in particular the possibility of encouraging problem gambling, the large earning potential, opportunity to launder criminal proceeds and therefore attractiveness to organised crime. The text box below summarises the approach taken. ‘Hard’ and ‘soft’ gambling Gambling is often broken down into “hard” and “soft” types. The level of stakes, prizes and the speed of play are the main factors deciding the hardness of gambling types. A fundamental aspect of protecting children and other vulnerable people from gambling- related harm is restricting access to gambling and, in particular, to harder forms of gambling. Venues like casinos and, to a lesser extent, betting shops are at the ‘hard’ end of gambling, while bingo and family amusement arcades are ‘softer’. 5. Gambling is now widely accepted in the UK as a legitimate entertainment activity. While we recognise the need to be aware of the harm caused by problem gambling, it seems to us that the rather reluctantly permissive tone of gambling legislation over the last 50 years is now an anomaly. Our general approach in this report has therefore been to support liberalisation of rules and delegation of decisions to those most knowledgeable about their likely impacts, local authorities, while keeping national controls to the minimum commensurate with protection of the vulnerable, in particular children. 6. One of the catalysts for the 2005 Act was the National Lottery Act 1993, which established the National Lottery and modernised and relaxed the regulation under which lotteries operate. Subsequent demands for a “level playing field” from the rest of the gambling industry led to piecemeal deregulation and the realisation that the existing laws were out of date and unable to deal with new technology. Because of these concerns, a Gambling Review Board chaired by Sir Alan Budd was set up and published its Gambling Review Report in 2001. Shortly afterwards the Government issued a consultation and policy document, A Safe Bet for Success—Modernising Britain’s Gambling Laws.4 The 2005 Act arose from these.