Draft Gaming Machine (Miscellaneous Amendments and Revocation) Regulations 2018

Mims Davies Excerpts

Monday 17th December 2018 General Committees

[The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Mims Davies)]

I beg to move,

That the Committee has considered the draft Gaming Machine (Miscellaneous Amendments and Revocation) Regulations 2018.

It is a pleasure to serve under your chairship, Ms Ryan. The regulations were laid before the House on 15 November, and I am very pleased to have the opportunity to debate them. The Gambling Act 2005 established a new system for the regulation of gambling in Great Britain. Section 235(1) defines a gaming machine as

“a machine which is designed or adapted for use by individuals to gamble (whether or not it can also be used for other purposes).”

The Categories of Gaming Machine Regulations 2007 define four categories of gaming machines, known as categories A, B, C and D. For the purposes of the 2005 Act, category B machines are divided into sub-categories.

Following consultation and the consideration of all relevant evidence, the Government announced in May our decision to reduce the maximum stake on sub-category B2 gaming machines, informally known as fixed odds betting terminals, to £2. The decision was met with enthusiasm from many quarters. Local authorities, charities, faith groups, interest groups and academics all submitted opinions in favour of a £2 limit. Parliament—including many hon. Members present today—was no exception in expressing its emphatic support for the Government’s intentions.

I want to add my personal thanks to the all-party parliamentary group on fixed odds betting terminals, led by the hon. Member for Swansea East (Carolyn Harris), and to my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) and the hon. Member for Inverclyde (Ronnie Cowan), for their consistent support on this policy. I worked closely on it with the previous Minister, my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch). I thank her for all her work, and I am delighted to be in a position to bring forward this progressive legalisation.

These regulations give effect to the May decision by amending the Categories of Gaming Machine Regulations 2007 to reduce the maximum stake permitted for B2 gaming machines from £100 to £2 from 1 April 2019. They also make consequential changes to other secondary legislation. They amend the Gaming Machine (Circumstances of Use) Regulations 2007 and revoke the Gaming Machine (Circumstances of Use) (Amendment) Regulations 2015 to remove requirements that no longer apply as a result of the stake reduction. The latter regulations imposed a new requirement that players who wanted to access stakes in excess of £50 on sub-category B2 gaming machines had to load cash via staff interaction or use counter-based play. The amended and revoked provisions relate to gaming machines in which it was possible to stake more than £50. They are no longer relevant to sub-category B2 gaming machines.

Millions of people enjoy gambling responsibly, and the Government are committed to supporting a healthy industry. We do not want to stop people having fun, but we need to find the right balance between freedoms and protections. We are taking decisive action to ensure we have a responsible industry that continues to contribute to economic growth, while ensuring that the most vulnerable in our society are protected from gambling-related harms. The Secretary of State and I, and the industry, want to identify behaviour that could put people at risk of harm, and we want to be able to intervene early. Socially responsibly business is the only kind of business that we want to see in this sector.

Under the Gambling Act 2005, B2 gaming machines have a maximum stake of £100, which is by far the highest for any gaming machine in Great Britain. The maximum prize that can be won as a result of a single use is £500. The next highest limit on the high street is for B3 machines, where the maximum stake is £2 and the maximum prize is £500. Almost 14% of players of B2 machines are problem gamblers, which is currently the highest rate in terms of gambling activity in England. In addition, the highest proportion of those who contact GamCare, the main treatment provider, identified the machines in betting shops as their main form of gambling. Gaming machines in betting shops also account for one of the highest proportions of people in treatment for gambling addiction.

In October 2017, the Government published the consultation on proposals for changes to gaming machines and social responsibility measures, which invited views on proposals to reduce the maximum stake for B2 machines. The consultation received more than 7,000 responses and closed in January. The Government published their response on 17 May. After giving due consideration to all the information and evidence received, the Government decided that it would be appropriate to reduce the maximum stake for B2 gaming machines to £2. We concluded that the volume of high-level session losses was the best proxy for harm, and the evidence was that the harm from B2 gaming machines would be significantly reduced with a reduced maximum stake of £2. That was supported by the Gambling Commission’s advice that action on B2s should involve a stake limit between £2 and £30 if it is to have a significant effect on the potential for players to lose large amounts of money in a short space of time, with any further decrease a matter of judgment for the Government.

In comparison with other gaming machines on the high street, B2 machines are an outlier because of the speed with which it is possible to lose large amounts of money. B2s generate a greater proportion and volume of large-scale losses—for example, losses of more than £500 in a session—and the losses are larger and the sessions are longer for those who bet at the maximum stake of £100 than for those who play at a lower level.

Even cutting the maximum stake to £10 would have left problem gamblers and those who are most vulnerable exposed to losses that could cause them and their families significant harm. In particular, the Government noted that more than 170,000 sessions on B2 roulette ended with losses between £1,000 and £5,000. Such sessions persist at average stakes of between £5 and £10. By contrast, none involved average stakes of £2 or below. In addition, the Government considered that the reduction to £2 was more likely to target the greatest proportion of problem gamblers and therefore protect the most vulnerable players.

In coming to our conclusions, the Government considered the impact on those who live in more deprived areas and on their communities. Some of the most vulnerable to harm are likely to be people who can, sadly, least afford to lose large sums of money. Having considered those and other factors, the Government concluded that we would reduce the maximum B2 stake to £2.

The regulations amend the definition of a sub-category B2 gaming machine in the gaming machine regulations, so as to reduce the maximum stake permitted in respect of such a machine from £100 to £2. In consequence of that amendment, these regulations also amend the definition of a sub-category B3 gaming machine, so that B2 and B3 gaming machines can continue to be distinguished from one another by reference to the different places in which B2 and B3 machines are allowed to be made available. This approach draws on the power in section 236(4)(e) of the 2005 Act to permit the categorisation of gaming machines by reference to the premises in which they are used. Regulation 6 of the gaming machine regulations provides that sub-category B3 gaming machines may be available for use in casinos, betting premises, bingo premises and adult gaming centres, while sub-category B2 gaming machines may be available for use only in casinos and betting premises.

Having conducted a process of engagement with the industry, the Government announced in November that we would implement the stake reduction on 1 April 2019 —a date that is specified in the draft regulations and that the Government consider allows the industry sufficient time to make relevant changes. The industry has known about the Government’s intention to reduce stakes to £2 since May this year. The date announced last month provides further clarity to allow it to continue preparations.

We have said all along that protecting vulnerable consumers is our primary concern. As a responsible Government, it is also right that we take into account the needs of those employed in the gambling industry and that we provide time for an orderly transition. The date on which the draft regulations will come into force generated much opinion and debate, and it was right that those with strong views and evidence on the issue, including many Members, had the opportunity to share them. Most importantly, this significant change will help to stop extreme losses by those who can least afford them and to protect the most vulnerable in our society. Members will know that the Government’s draft Finance Bill was also amended so that the increase in remote gaming duty, paid by online operators, comes into effect in April 2019, at the same time as the reduction in stakes, in order to cover the negative impact on the public finances and to protect vital public services.

My appointment follows an extremely progressive year of policy developments. The intention of the Government’s wide-ranging gambling review is to continue to strike the right balance between socially responsible growth and protecting the vulnerable, including our children, from gambling-related harm. Let me be clear: the review and the legislation do not mark the end of Government action. We recognise that harm is not about only one product. We will act where there is evidence of harm, and we will always keep issues under review, as is our responsibility. We must ensure that people can have an open conversation about what responsible gambling looks like, in order to identify harmful behaviours both online and offline. Millions of people rightly enjoy gambling responsibly, and the Government are committed to supporting an industry that generates employment and investment.

However, while the Government want to see a healthy gambling industry, we also need to see one that is socially responsible and protects the most vulnerable in our communities. The industry is rightly coming to the table, which the Secretary of State and I strongly welcome. We will also continue to work with colleagues from other Departments, such as the Department for Education, to ensure that we co-ordinate our approach to young people, and the Department of Health and Social Care, to improve links between gambling treatment and other services. I am proud that the Government are taking forward this decisive measure. I commend the draft regulations to the Committee.

--- Later in debate ---

[Mims Davies]

I thank hon. Members for their contributions in this very important debate and for their support. The debate on B2 machines has brought much consensus about the harm that they can do to individuals and communities. As we heard from the hon. Member for St Helens North, that may obscure the fact that many millions of people in this country enjoy gambling safely and responsibly.

Allow me to turn to some of comments; I am aware there is much consensus in the room but I am happy to respond to questions. I want to make absolutely clear to the hon. Gentleman that we as a Government are not anti-gambling. We want horse-racing to prosper. I have been due to meet the all-party parliamentary racing and bloodstock industries group and I hope that meeting comes soon. It is right that we should be socially responsible and act when there is evidence of harm. I understand the concerns about the racing industry. If it becomes apparent in the gambling review that stake limits cause significant market changes, we committed to consider bringing forward the timing of the review of any levy arrangements. We can continue to converse about that.

Hon. Members asked why the Government reduced the £30 limit to £2. As I said in my opening remarks, the Gambling Commission advised that stake limits should be reduced to between £2 and £30, with a further decrease being a matter for the Government. Having considered all the evidence, the Government concluded that £2 was the most likely figure at which the greatest percentage of problem gamblers—the most vulnerable— would be most protected. If the figure remained higher— £5 or £10—the high session losses would continue. We will continue to monitor the impact of that on horse-racing.

On the comments about the Association of British Bookmakers, it shared estimates with us, which we looked at closely, but there is considerable uncertainty about the figures. Some operators have told us that they will not make many redundancies off the back of this move. They have had between nine and 12 months to prepare. I hope that allays the concerns that we are not looking at the industry as a whole.

I thank the hon. Member for Tooting for her kind remarks; she said that this is a meaningful gambling reform. I have met the charities Gambling with Lives and GambleAware in the last month. I note her concerns about the compulsory levy, the issue of radio, and credit card spending. I held a tech and gambling roundtable with the Digital Minister, with all industry experts, including banks, to ensure that as we act to make this a responsible industry, we listen to all the experts. I am very keen to keep that conversation going. The hon. Lady rightly asked why this took so long; the Government are committed to evidence-based decisions. They will continue to make appropriate reviews of all evidence before making decisions. There is a lot in this space and it is right that we consider all the evidence.

On credit cards, the Gambling Commission is looking at many issues outlined in the gambling review. That includes affordability checks, age verification and perhaps the use of debit cards. That was also raised in the tech roundtable and we are looking at it all. We need to have an open conversation about what responsible gambling looks like, in order to identify harm. In this role, I recognise that there is not a clear definition between what is responsible, enjoyable and fun and what is a problem. All that needs to be looked at.

The hon. Lady raised loot boxes. We are aware of concerns that they could encourage gambling-like behaviour. We will continue to look very closely at any evidence. We are committed—I am committed—to ensuring that children’s vulnerability and inexperience are not exploited by aggressive commercial practices. I welcome the fact that the gambling industry is looking at labelling for games and will look at warning opportunities for in-app purchases. The Gambling Commission is looking at reviewing how we can continue to strengthen that age verification and address the deposit issues, and I have made some suggestions. I have been working with the Secretary of State and there will be further announcements.

I welcome the kind remarks from the hon. Member for Glasgow East about my predecessor, and note his comments and concerns about scratchcards. As we look at the fourth licence for the national lottery, which will commence next year, we should look at the issue of sales in deprived areas and also look at the issue of 16 and 17-year-olds. We have seen no evidence on that question, but decisions will be made next year on the start of the fourth licence. While the distribution is done by arm’s length distributors, I have already raised the question with Camelot and distributors, and I am confident that the Government are rightly looking at that particular area.

My hon. Friend the Member for South West Bedfordshire mentioned the lives lost to gambling addiction—a great shame and a terrible tragedy. Last week I met the charity Gambling with Lives and I look forward to continuing to work closely with it on that important issue. I have spoken to the charity about how we can talk about responsible gambling and ensure that we speak to our youngsters about what they may come into contact with. I am also delighted that there is a Minister for Suicide Prevention in the Department of Health and Social Care and I am committed to working with her. I believe that, alongside her Department and the Department for Education, we can all do better in pursuing a socially responsible industry, one that thrives but also works with Government, so that we act when we need to protect.

As I said earlier, the publication of the gambling review did not mark the end of Government action. We will always act where there is evidence of harm and we will keep issues under review. We have a strong industry regulator with a core responsibility to license and regulate gambling, to keep it fair, safe and free from crime. We will also work with colleagues from other Departments to improve the links between gambling treatment and other services. If I were not here today taking this legislation through, I would have been with the Gambling Commission in Birmingham.

We must achieve the right balance. We must be able to work with operators to make early interventions before harm occurs. I want to see rapid and continued progress in that area. We can use tech for good. Achieving the balance between industry growth and socially responsible business must be a joint effort, with central Government, regulators, local councillors, gambling companies, campaign groups, charities and finally individuals all playing their part.

As we have discussed, the B2 gaming machines are an outlier in the world of high street gambling because of the speed with which so much money can be lost. There has been extensive support in the responses to the Government’s consultation for a significant reduction in the B2 stakes; many hon. Members rightly came in to support the Government’s decision in May, and I am delighted with the support we have had today. By reducing the B2 stakes to £2 we can help to reduce gambling-related harm and prevent extreme losses by those who can least afford it. This is an important change and we have a chance to make a real difference in the lives of our vulnerable people and constituents. I commend these regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Gaming Machine (Miscellaneous Amendments and Revocation) Regulations 2018.