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18 September 2012

Fear of “super casinos“ must not prevent us reforming gambling laws

The UK's outdated gambling legislation still needs updating.

By Christopher Snowdon

Sir Alan Budd, the distinguished economist who was commissioned by the government to review gambling legislation a decade ago, has described the Blair government’s capitulation to anti-gambling campaigners in the run-up to the 2005 election as “quite shocking”. Budd has rarely commented on casino regulation in the years since he wrote a detailed report for the Department for Culture, Media and Sport in 2002. That publication — known as the Budd Report — recommended that local councils be given the power to decide what gambling activities, if any, would be permitted in their area. The Labour government initially endorsed his recommendations but a subsequent press campaign against so-called “super casinos” led to the Gambling Bill being watered down and the boldest attempts at liberalisation were abandoned.

At a meeting at the Institute of Economic Affairs held to launch the IEA’s review of the 2005 Gambling Act (Seven Years Later: Casinos in the Aftermath of the 2005 Gambling Act), Budd explained that his proposals had not been designed to help the gambling industry, nor to raise extra money for the treasury. The interest of consumers always came first, he said, and their interests were “best left to the market”, albeit within the constraints of what local authorities and the Gambling Commission would countenance.

Reflecting on the government’s panicky response to the Daily Mail’s “Kill the Casino Bill” campaign of 2004-05, Budd accused ministers of “dashing around like frightened rabbits in response to a press campaign”. The government’s climb-down left casinos working in a regulatory environment that was created in the 1960s. The Budd Report set no limit on the number of casino licences that could be issued and would have allowed “resort casinos” of the kind seen abroad which incorporate restaurants, hotels and live music venues. The government later set a limit on such “super casinos” of eight, which was then reduced to one and then, under Gordon Brown, to zero.

Ultimately, casinos and their customers bore the brunt of a government’s pre-election jitters, but whilst the super casino became the symbol of attempted liberalisation, it was always peripheral to the main task of updating the archaic 1968 Gaming Act. In its haste to appease its critics, the government discarded necessary reforms which would have attracted little attention had they not been part of a broader package of deregulation. The casino industry had waited forty years for the gambling laws to be updated, but it never sought the free-for-all that was implied by “unlimited” development.

Sixteen smaller casino licences were created by the legislation but only one has yet been built. Arbitrary planning restrictions, high taxes and regulatory anomalies make it unlikely that more than a handful of new casinos will be built in the years ahead. In total, more than a quarter of the UK’s 202 casino licences are lying dormant. Some towns and cities have more licences than they need while others have none at all. There are, for example, more than twenty casinos in the couple of square miles around Westminster and Chelsea, but go south of the river and you will not find another one until you get to Brighton. The IEA recommends allowing unused licences to be transferred to councils who wish to make use of them. Budd described the think tank’s proposals as “sensible”.

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Christopher Snowdon is an IEA Research fellow and author of “Seven Years Later: Casinos in the Aftermath of the 2005 Gambling Act”