Categories of Gaming Machine (Amendment) Regulations 2014

Lord Moynihan Excerpts

Tuesday 12th November 2013 Grand Committee

These are really important issues, and it feels that this review is a missed opportunity to get a grip on machines that are highly addictive and lead to an increase in crime and poverty. I do not feel that it is sufficient to sit back and wait for the industry to act, and I hope the Minister is able to persuade me this afternoon that the Government are on the case and prepared to change the rules, if not in these regulations, then before the next review.

[Lord Moynihan (Con)]

My Lords, I welcome this order and echo many of the concerns mentioned by the noble Baroness with regard to the social protections we need to have in place for young and vulnerable people. But this is a regulated sector in which job losses, business closures and competition with jurisdiction overseas are to be found on virtually every page of the Explanatory Memorandum. Two hundred and ninety arcades have closed since 2009-10, with 900 jobs lost. These arcades are part of the character of so many of our traditional seaside resorts, and we should do everything we can to keep them competitive.

My principal reason for intervening on this order is because of the importance of consultation with sports clubs, which are mentioned in this document. I hope that sports clubs have welcomed this order, and I will be interested to hear what the Minister has to say on that subject. Sports clubs’ major task is to retain members and increase participation. Substantial investment is needed in sports clubs so that they stay competitive and attractive, whether by floodlighting their premises, segregating their changing rooms or upgrading their facilities—three items on which the noble Baroness, Lady Billingham, has always been eloquent and occasionally vociferous. Today, I am sure she will agree with me that licensed gaming machines, properly controlled, are an important source of income for some of our sports clubs, and we need to provide interest in those machines and demand for them from the membership. For that reason, it is important for sports club to view this order, see the changes that are being made and, I hope, welcome them. As I understand it, sports club machines come in category B4, or possibly B3A—the Minister will correct me if I am wrong. The proposal is to increase the minimum stake from £1 to £2 for those machines, and potentially the prize money from £250 to a maximum £400, to make it more attractive to players and, in turn, to generate more income for the sports clubs.

The noble Baroness rightly mentioned, and I echo her comments, due social protections should be put in place, with proper regulation in the clubs and protection of young and vulnerable people. With that, it would be right to support the order and recognise that both sport and sports clubs will benefit, in a difficult economic environment. Ultimately, I hope that we will see the goals that many of us who will participate in the next debate, albeit briefly, will want to see on the record—namely, an increase in participation in sport in this country, which can best be delivered by the clubs, which are there in the interests of their membership.

[Lord Bates]

My Lords, I am grateful to noble Lords who have spoken, who have in many ways captured the extent of the debate—the economic problems being faced by many sports clubs and other commercial enterprises around the country and, at the same time, a natural and right concern, which the Government share, about protecting vulnerable adults from exploitation.

The noble Baroness, Lady Jones, asked a number of specific questions, and I want to give them an appropriate response as best as I am able. But to respond quickly to my noble friend Lord Moynihan, who talked about the importance of gaming machines as a revenue stream for sports clubs and other private members’ clubs, that is correct. In the category of machines that will be found there are the B4 machines to which he referred, as well as the B3A and C machines. The clubs observe the Gambling Commission’s guidance and codes of practice to ensure effective social responsibility arrangements are in place.

The noble Baroness asked about research into the effects of gambling. I reassure her that work is already under way to advance our understanding about gaming machines and their impact. The Responsible Gambling Strategy Board, an independent expert advisory body, is working to develop a strategy which will review the impact of regulatory change and any associated changes in gambling behaviour, while the Responsible Gambling Trust is carrying out research which aims to better understand how people behave when playing gaming machines and what will help people to play responsibly. Again, in the context of this, it is important to realise that one reason for the decline is the growth of online gambling, which has no regulation or supervision at all. So drawing people to enjoying this form of leisure in a reasonable way in regulated areas would seem to help towards that. The work being carried out will further our understanding of the social impact of regulatory change and allow for the wider cost-benefit analysis on the impact of these changes to which the noble Baroness refers.

The noble Baroness asked about the justification for intervention and said that there should be an onus on the industry to justify proposals for stake and prize increases. The Government agree with that approach and are satisfied that sufficient evidence has been put forward by the industry to justify the stake and prize limits that the regulation proposes.

On strengthening player protections, the Government have consulted extensively and invited representations about research as part of the review. I should say to my noble friend Lord Moynihan that there were many representations and responses to the consultation received from sports clubs to this, and they were broadly in favour of the measures being put forward for the reasons that he has outlined. The Government have received advice from the Gambling Commission and the Responsible Gambling Strategy Board, and there is scope to increase the stake and prize limits for some categories of gaming machine, provided that the industry makes progress in strengthening player protection. It has twin sides; as the industry gets better at providing protection, it may be possible to consider further changes to the limits. That is the right way in which to proceed.

The noble Baroness, Lady Jones, referred to the risks to children, particularly from the increases in stake and prize limits to penny falls and coin pushers. The Government share the view that a cautious approach should be taken to products accessible by children. It is for these reasons that the Government have rejected the proposals from the industry to increase the stake and prize limits for reel-based gaming machines accessible to children and all other category D machines, with the exception of coin pushers.

The noble Baroness also referred to fixed-odds betting terminals, the so-called category B2 gaming machines. As part of the review, the Government sought quantifiable evidence on the impact of a reduction in stake and prize limits for these machines. However, the evidence received was inconclusive and the Government have been advised by the Gambling Commission and the Responsible Gambling Strategy Board that a precautionary reduction in stake and prize limits is currently unsupported by the available evidence. Despite this, the Government remain concerned about these machines and their potential association with an elevated risk of gambling-related harm. The Government have therefore made it clear that they will consider the future of the B2 machine to be unresolved. As the noble Baroness noted, the Prime Minister confirmed the Government’s commitment to monitor these machines to ensure a fair and decent approach that prevents problem gambling, and that is exactly the course of action that the Government are taking here.

As to the £18,000 per hour loss rate sometimes cited for B2 machines, this is astronomically improbable, one might say. It is an extreme calculation. However, the Government have acknowledged that it is quite possible to lose or win several thousand pounds within an hour within a normal range of behaviour on a machine. It is for these reasons that the measures I have outlined are so important and why the Government consider the future of these machines to be unresolved.

On betting-shop clustering on high streets, to which the noble Baroness referred, the Department for Culture, Media and Sport is in regular discussion with DCLG Ministers about the issue. I can certainly reassure noble Lords that these discussions will continue and that evidence will be monitored.

The Government are satisfied that the measures that we are debating today will bring benefits to businesses and sports clubs through much needed revenue and will allow consumers to enjoy a broader range of products in a responsible way. On the basis that the industry has committed to enhance its social responsibility measures and that work is under way to allow for proper assessment of the impact of these regulations, I am confident that the risk to problem gamblers and vulnerable people is minimal.