UK Casino Industry

Wednesday 7th July 2021 Westminster Hall

16:04

[David Mundell (in the Chair)]

I remind hon. Members that there have been some changes to normal practice in order to support the new hybrid arrangements. Members attending physically should clean their spaces before they use them and as they leave the room. I also remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall.

[Scott Benton (Blackpool South) (Con)]

I beg to move,

That this House has considered the UK casino industry.

It is a pleasure to serve under your chairmanship, Mr Mundell. Before I begin, I refer the House to my declaration in the Register of Members’ Financial Interests.

People’s perceptions of casinos often fall into two categories, either James Bond at the Monte Carlo Casino or problem gamblers chasing their next win. For 99% of people, however, that is simply not the reality. Casino goers are just ordinary people enjoying time out with family and friends. They have budgeted an acceptable cost for an evening’s entertainment, which is no different from purchasing an admission ticket to the theatre or attending the football on a Saturday afternoon.

Casinos bring many benefits to local communities. In Great Britain, 13,000 people are directly employed in casinos, with thousands more additional jobs generated in their supply chains. More than half of those working in the gambling industry are under the age of 35, a far higher proportion than in the wider economy, demonstrating the importance of the industry in providing entry-level jobs for young people looking for experience in the workplace.

Hundreds of people in Blackpool are directly employed in the three casinos across the town, as croupiers, waiters, security and chefs. Casinos offer long-term, year-round employment in my constituency, in what is otherwise a tourism-focused and therefore seasonal local economy.

Casinos also make a substantial contribution to the Treasury. In the financial year 2019-20, 128 casinos were operating in this country, paying a total of £213 million in gaming duty. Their contribution to the national economy and the job opportunities created in many towns, therefore, must be taken into account in the upcoming review of the Gambling Act 2005. The review has to be established on the evidence, not on preconceived ideas and ideology.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman may give me the answer that I wish to hear, and I hope that the Minister will endorse it when he responds. I have a real problem with some people in my constituency who are worried about gambling addiction. Will the hon. Gentleman confirm that for casinos overall—I know we do not have them in Northern Ireland—there will be protection for those with a gambling addiction? If they enter a casino, will that protection be in place, with the help they need to prevent them spending the money they should not be spending? I am very concerned about people with gambling addictions and need that reassurance.

[Scott Benton]

The hon. Gentleman makes a valid contribution. I am sure that many people across the country share such concerns. I have visited a number of casinos, including the ones in my constituency, and I can honestly say that the safe gambling practices they have in place are second to none. I am sure that the Minister will address that point further in his remarks.

The gambling review needs to allow for the casino sector to implement much-needed modernisation and allow the industry to provide the services and experiences that its customers desire. Thankfully, I know that the Government’s objective is to ensure that the legislation is fit for the modern day, while of course committing to player protection and safer gambling measures, to which the hon. Member for Strangford (Jim Shannon) just alluded.

Legislation for casinos should have been updated in the 2005 Act. That in effect introduced an experiment for the sector: it legalised two new types of casinos, eight large and eight small, in predetermined areas. However, the truth is that that experiment has stalled. Fewer than half the 16 permitted casinos are now open but, crucially, an evaluation of the changes introduced by the 2005 Act has not occurred, meaning that there has been no consideration whatever of how the vast majority of other casinos, still governed by the 1968 legislation, would be modernised. Now is the time to do exactly that.

The outdated rules are exemplified by the number of gaming machines allowed in casinos. The 2005 Act allowed a maximum of 80 gaming machines on the premises of the small licence category casinos and 150 for the large licence category casinos, but the rest are limited to just 20 machines, regardless of their size. Most casinos across the world have thousands of machines. Let us take, for example, Belgium and Denmark, which have up to 140 times as many gaming machines per customer compared with casinos in Great Britain.

[Mr Laurence Robertson (Tewkesbury) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. Does my hon. Friend agree that if restrictions are too stringent, there is a great danger that people will play on the black market? PricewaterhouseCoopers, in a recent report, estimated that the value of people’s gambling on the black market had increased from £1.4 billion in 2018 to £2.8 billion just two years later. Is that not a worrying trend that we need to be careful of?

[Scott Benton]

My hon. Friend makes a very valid point. Of course, many people will be concerned about some of the Gambling Commission’s proposals on affordability and the extent to which they could drive people into the arms of black-market operators. I know that that will be tied up in the gambling review, and the Minister will potentially address those points—if not today, then as the review continues on its way to the autumn.

[John Spellar (Warley) (Lab)]

I thank the hon. Gentleman for drawing attention to regional casinos, but does he, like me, find strange the Government’s lack of desire to improve and upgrade the legislation? It is especially stranger given that casinos are part of the tourist attraction offer not only domestically, but internationally, particularly in London, with high-value visitors, and that that is an enormous contributor to national revenue through gambling tax—let alone some of the changes that are taking place, such as the disappearance of cheques. Is there not an urgent need to recognise this industry’s importance for the Treasury, but also for the wider ecosystem that makes Britain a desirable destination?

[Scott Benton]

Absolutely. I thank the right hon. Gentleman for his valid points. I hope that, as part of the review that is ongoing, those points can be addressed. Over the last 14 years or so, it would have been hoped that the experiment that I just alluded to from the 2005 Act would have allowed ordinary casinos to be updated, in terms of their practices and regulation. Disappointingly, that has not happened, but the review offers a golden opportunity to now do exactly that.

I was talking about the number of machines operated in some ordinary casinos. The Hippodrome in Leicester Square is restricted to just 20 machines. That in effect means that during busy periods there can be up to 75 customers in the building for every one gaming machine, which is incredibly perverse. Of course, there is little, if any, evidence to link problem gambling to the number of slot machines available. Gamblers can only play on one machine at a time. And there have not been any such issues from the casinos licensed under the 2005 Act that have substantially more machines. Instead, the lack of available machines means that potential customers face long delays to play and, when they finally are able to play, they feel uncomfortable, knowing that others are waiting to do so as well. In fact, it stops people leaving their machines, through fear of losing their spot—counter-intuitive to safer gambling practice.

Introducing a machine-to-table ratio would relate the number of machines to the size of the casino. That would ensure a suitable number of machines for the size of premises and stop ridiculous scenarios such as that at the Hippodrome. Rank Group, which operates 52 casinos, has suggested starting with a five-to-one ratio to cater for customer demand. The size of a casino, and therefore the number of machines, would be for local authorities to decide during planning applications, which would enable them to ensure a suitable local offering.

Existing laws also limit the choice for customers using gaming machines by restricting electronic versions of casino games to those based on physical events. In effect, that restricts casinos to offering only electronic roulette, as games such as blackjack are much more difficult to offer electronically with the necessary physical event. That makes little sense as there is no identifiable reason that a customer is safer or receives any additional protections from a random physical event rather than a random number generated game. [Interruption.]

[David Mundell (in the Chair)]

Order. I do not intend to suspend the sitting for the Division in the House because both you, Mr Benton, and the Minister have proxy votes. Let us continue.

[Scott Benton]

Thank you, Mr Mundell. Legislation fit for the modern-day customer would also enable casinos to offer a wider range of casino games via electronic terminals. That would allow gamblers to play at much lower stakes than on live tables.

A second inconsistency between the 2005 Act and the 1968 Act relates to the ability to offer sports betting. The new legislation allows for sports betting at the casino, yet the historical legislation does not. There is a relatively small number of casinos in the UK compared with the thousands of licensed betting offices. Therefore, any change to legislation to allow sports betting in casinos would have little effect on the betting offices sector. Casinos would not become the favoured place for sports betting, yet they would be able to offer a complementary service to the casino floor. It is archaic and puzzling that casinos cannot offer sports betting when casino customers can simply pick up their phone, open an app and make a sports bet online. There have been no reported issues from casinos that can offer that facility. Yet again, internationally that means we are lagging behind, because that is normally a standard offering in a casino.

It is not just placing bets that people increasingly do electronically. Society is rapidly moving away from using physical cash in all transactions, with electronic payments estimated to be used in up to 80% of transactions in the retail industry. Yet the majority of payments in casinos remain cash-based. No doubt accelerated by the pandemic, in many situations across the UK it is impossible to pay for goods or services with cash. As such, it is scarcely believable that restrictions would bind an industry to cash payments only.

Casinos need to be able to offer a cashless option to keep up with changing customer expectations. The controls on cashless opportunities in casinos are detrimental to business and restrict customer choice. There would be no additional risks to customers, as operators would continue to ensure that safeguards were in place to prevent people from spending beyond their means. That could be similar to the measures casino operators have in place elsewhere.

Other credit issues relate to high-end casinos in Mayfair, which bring in incredibly wealthy individuals from around the globe. Those casinos can accept cheques from players to facilitate the transfer of funds from abroad. However, the future of cheques is constantly in doubt, and some countries have already stopped their use in favour of electronic payments. Without the ability somehow to accept payments from those individuals, casinos would close overnight. Jobs and the significant contributions to the Treasury in gaming duty would be lost, along with the indirect investment and spending brought by those gamblers when they visit the UK. Electronic payments and permitting those casinos to give credit for gambling to high net worth individuals, with robust anti-money laundering controls in place, would make it possible to continue offering that service.

No part of the betting and gaming industry has been as severely affected by the pandemic as land-based casinos. These are small asks that would future-proof the sector while safely increasing what it could offer to consumers. Refusing to bring legislation into the 21st century, and ignoring the demand for gambling by over-regulating the industry, will only see casinos left behind, unable to compete and match the modern-day expectations of customers, which in turn will lead to a decline in jobs and tax revenue, and the sector’s contribution to economic growth. I hope the Minister will address those issues in the review, and I look forward to his response to those points.

The 2005 Act allows for one regional casino, or super-casino as it is sometimes known. A regional casino is defined as having a minimum total customer area of 5,000 square metres, and will be permitted to have up to 1,250 gaming machines. Paul Ward, a hotel operator in my constituency, has experience of working in a large casino abroad, and he has said:

“A super-casino isn’t just about gambling. I worked in a casino in Perth, Western Australia for a while. The employment opportunities were incredible… it created jobs for 1,500 people. The tourism it generated on top was amazing.”

The Government of the time agreed with that assessment and expected that a regional casino would be a major development, offering clear potential for regeneration and bringing in major investment and providing accommodation, as well as conference facilities, restaurants, bars, areas for live entertainment, leisure attractions and, of course, a premium gambling experience.

The primary criteria laid down by the Secretary of State at the time were to ensure that any chosen location would satisfy the need for the best possible social impact, and focus on areas needing regeneration. In a 2019 study comparing 32,000 neighbourhood areas across England, the Ministry of Housing, Communities and Local Government looked at income, employment, education, health and a few other factors. All the neighbourhoods were then ranked against each other. The sad result of the study was that eight of the top 10 most deprived neighbourhoods in England are based in Blackpool—a shocking statistic that clearly underlines the desperate need for substantial regeneration in my constituency.

There is widespread support across town for a regional casino. Ian White, a director of the approved hoteliers’ group, StayBlackpool, has said:

“A super-casino, bringing in dynamic investment would stimulate and support a truly year-round economy that the resort needs.”

Following the introduction of the 2005 Act, local authorities could bid for small, large or regional casino licences. Blackpool, of course, was a clear frontrunner to be awarded the regional casino. However, somewhat surprisingly, the panel recommended that it should be awarded to Manchester. Partly owing to that, a statutory instrument that was required to approve its location was defeated in the House of Lords in 2007. The issue has since been swept under the carpet, ignored and never returned to.

The Select Committee on Culture, Media and Sport looked at casinos in its 2012 report on the Gambling Act, as I am sure the Minister recalls. On regional casinos, the report said that there was

“a general reluctance to discuss the development of regional casinos”.

Perhaps now, 14 years later, the time has come to re-examine the issue. Allow me to share the words of Amanda Thompson OBE, owner and managing director of the Pleasure Beach:

“The creation of a super-casino in Blackpool would herald a new powerful tourism brand for the resort and create a new holiday experience that would be a catalyst for inward investment, supporting growth, development and prosperity across all sectors.”

Although there is clearly no silver bullet to change Blackpool’s fortunes, a super-casino would create many jobs in the town, from contractors working on the site initially to staff at the premises once completed. There would also be a significant boost for local companies that could offer goods and services to the casino, its staff and its customers.

Will the Minister commit himself to reviewing the case for a regional casino during the gambling review and assess the significant positive economic impact that a regional casino could make to a town such as Blackpool, which would be the obvious location to host such a casino?

16:24

[The Minister for Media and Data (Mr John Whittingdale)]

It is a pleasure to serve under your chairmanship, Mr Mundell.

I congratulate my hon. Friend the Member for Blackpool South (Scott Benton) on, and thank him for, giving us the opportunity to debate these issues. I also thank the right hon. Member for Warley (John Spellar), the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Tewkesbury (Mr Robertson) for their contributions.

Casinos come in all shapes and sizes. As my hon. Friend the Member for Blackpool South said, I have been involved in the issue as Opposition spokesman during the passage of the 2005 Act and as Chair of the Select Committee on Culture, Media and Sport for 10 years. As a result, I have visited quite a number of casinos, ranging from the Venetian in Macau, which I believe is the biggest in the world, and the Crown in Melbourne all the way down to the Genting in Westcliff, in Southend-on-Sea, and Aspers in Stratford, which is one of the few operating under one of the new licences.

My hon. Friend is absolutely right to stress that, obviously, casinos are centres for gambling, but that they offer much more. Last week, I was at the Hippodrome in Leicester Square, where I was able to observe not only the gambling, but the excellent restaurant in that place. It is possible to enjoy hospitality there right through the night, unlike many other places in London. Although I did not attend, there is also regular entertainment by, I believe, Magic Mike.

My hon. Friend is right that casinos provide a significant tourist attraction, as well as a major economic contribution. They were, obviously, badly hit during the lockdown, in particular because, even when we were able to relax the measures, there was still a 10 o’clock curfew, and of course a lot of casinos do their business after 10 pm. It was with great relief, I know, that the casino industry was able to reopen on 17 May without a curfew in place. Casinos are still impacted by some restrictions. That affects the income of the local area, especially as casinos provide employment for a large number of people. My hon. Friend is right to remind us that the Chancellor also benefits considerably from the income from gambling duties.

The hon. Member for Strangford referred to the risk of problem gambling, which is at the top of our minds throughout. The gambling review that is taking place will address whether additional measures are needed to offer greater protection to those who may be susceptible to problem gambling. However, there has always been a pyramid of risk in the different places where one can gamble. Casinos have been seen to offer a safer environment than almost any other form of gambling. I have certainly observed that to be so, given the scrutiny of people who are gambling to ensure that they show no sign of having problems, as well as that regular intervention and the self-exclusion schemes. For that reason, it was felt right to allow more casinos to open.

My hon. Friend the Member for Blackpool South talked about the 2005 Act, and he is absolutely right that consideration in Committee was a tortuous process. We ended up with the creation of just eight small licences and eight large licences for new casinos. In actual fact, not all those licences have been taken up, or at least they have not been utilised. The majority of casinos still operate under the licensing arrangements of the original 1968 Act.

My hon. Friend made an excellent case that that has thrown up some bizarre anomalies, in particular the number of machines allowed under the licences pertaining to the new small and large casinos compared with those operating under the 1968 Act. As he said, a large casino under a new licence may have up to 150 machines, but, whatever the size, a casino is limited to 20 under the old Act. The House of Lords Gambling Industry Committee drew attention to that and said it needed to be addressed. That is certainly a matter that we are considering as part of the gambling review.

My hon. Friend flagged up one or two other anomalies, such as the fact that sports betting is allowed under the new licences but not under the old, despite the fact that someone who goes to a casino that operates under one of the 1968 Act licences can bet on sports—they just do it on their mobile phone, rather than through the casino itself. There are anomalies that are difficult to provide justification for and that we have said we will look at. There is also the development of technology. Furthermore, my hon. Friend flagged the fact that the requirement to have cash is becoming harder to fulfil as more and more people do not actually use cash any longer, which we need to take account of.

My hon. Friend rightly identified, and the right hon. Member for Warley alluded to, a very small but significant group of people whom I believe are known in the slang as whales, which means those people who tour casinos around the world and are quite capable of losing £1 million in an evening—the high rollers. This is an intensely competitive area, with maybe half a dozen or 10 venues in different countries around the world competing for their custom. The fact that we still require cheques when, as my hon. Friend said, they are becoming outmoded and more countries are not even using them is also something that we need to look at and on which the industry has made a case. The gambling review is considering all those issues.

[John Spellar]

Can the Minister convey a greater sense of urgency? We are competing in a very competitive world—not only in this industry, but across a spectrum. Do we not need more urgency to improve and continue Britain’s attractiveness?

[Mr Whittingdale]

I understand the right hon. Gentleman’s wish for these matters to be addressed as soon as possible, but that is likely to require legislation, possibly primary legislation, which will need to be considered against all the other demands on Parliament. However, we are hopeful that we will be able at least to come forward with the conclusions of the review in the autumn. I would like to be able to say a little more ahead of that time, although I absolutely take his point that these matters need to be addressed soon.

Finally, I will touch on the case made for Blackpool by my hon. Friend the Member for Blackpool South. I was Opposition spokesman on these issues in 2005, and originally, we were going to say we should not have any super-casinos or regional casinos because of the risk that they might lead to a significant increase in problem gambling. We changed our mind and supported the Government in making available one licence. Everybody in the House of Commons believed that that one licence, if awarded, should go to Blackpool, and we were all somewhat mystified when the panel advised that it should go to Manchester.

That is history, but it is why a regional casino has not yet been built. We would need to consider whether there was support for one—my hon. Friend quoted a number of people from his constituency—but obviously that is a decision for the local authority as well. We would also need to establish whether an operator was prepared to make that investment. If those two things were the case, I would certainly be willing to talk to my hon. Friend and others from his constituency about that possibility. As he knows, the legislation is still on the statute book and could therefore be utilised if those two things were proven.

I am most grateful to you, Mr Mundell, and to my hon. Friend. I assure hon. Members that these matters are under very active consideration as part of the gambling review.

Question put and agreed to.

00:04

Sitting suspended.