Gauselmann Group – Written evidence (GAM0096)


The Gauselmann Group is pleased to respond to the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry’s Call for Evidence.

By way of background, the Gauselmann Group is an internationally active family-owned gaming company, committed to providing leisure-time entertainment and gaming fun with small stakes and prizes. Alongside the development, production and sales of amusement and gaming machines and money management systems, the group operates the well-known arcade chain MERKUR Cashino. The Gauselmann Group is also active in many other business segments, such as sports betting, and casinos.

The group trades in over 40 countries across the world, and in the UK operates subsidiaries, comprising Blueprint Gaming, Regal Gaming and Leisure, Betcom, as well as Praesepe.

As a manufacturer of amusement and gaming machines and an exemplary operator of gaming venues, we are committed to ensuring that our consumers are protected from gambling harm. This is prioritised within all the gaming formats we offer.

We understand the importance of a diverse and comprehensive prevention information policy, which allows both those affected, their family members, employees and in particular the public, to openly and freely engage on the topic of gambling related harm. We provide continuous awareness training to enable our staff to detect and deal safely with signs of problem gambling and to offer assistance where it is needed.

We welcome the formation of this Committee and its Call for Evidence.


The Gambling Act 2005

1. Are the three primary aims of the Gambling Act 2005 (to prevent gambling from being a source of crime or disorder, to ensure that gambling is conducted in a fair and open way, and to protect children and other vulnerable persons from being harmed or exploited by gambling) being upheld?

We are of the view that the three primary aims of the Gambling Act 2005 are broadly being upheld. That said in recent years there have been developments within the gambling industry that have fallen outside of the regulatory structure put in place by the 1968 Gambling Act which formed the structure and basis for the 2005 Act, and these developments failed to meet the primary aims of the Act.

The proliferation and the high maximum stake of £100 on Fixed Odds Betting Terminals (FOBTs) took place outside of this regulatory structure, allowing very hard gambling in easily accessible locations with very low supervision levels. This led to increased incidents of money laundering in bookmakers as activity is largely unsupervised and it is therefore relatively easy for fraudsters to 'clean' their money. A Freedom of Information request to the Gambling Commission in 2015 revealed that the machines were responsible for a 20 per cent rise in crime at betting shops as addicted gamblers often turn violent. In addition, research by GambleAware, showed that around 80% of FOBT gamblers exhibited problem gambling behaviour at stakes in excess of £13 a spin.

We welcomed the Government’s decision to reduce the maximum stake on these machines from £100 to £2, from 1 April 2019, bringing them in line with other products available on the high street and striking the correct balance between regulation and player enjoyment.

Going forward, it is important to ensure that the basis of this regulatory pyramid is preserved and upheld, with gambling activity taking place within this structure. A further aspect of this question would be to ask, to what extent various stakeholders in the gambling sector are upholding these licensing objectives and to distinguish specifically between Gambling operators and the Gambling Commission. Whilst the answer to the question above refers to issues relating to the upholding of the licensing objectives by the industry, the Gambling Act 2005 places a number of specific statutory duties upon the Gambling Commission. The Gambling Commission is responsible for pursuit of the Licensing Objectives including protection of the vulnerable. As the Gambling Commission has primary statutory duty to advise the Secretary of State regarding Gambling Related Harm, its inability to clearly describe how existing products should be viewed and the way in which those products might be developed, responding for example to consumer choice without causing potential harm to the vulnerable seems to be a fundamental failure. It should also be noted that the Gambling Commission’s duty is specifically defined as one of protection, i.e. anticipating harm and acting before the harm occurs, rather than acting after harm has been experienced. While the Gambling Commission is to be applauded for its recent activities in investigating failures by the remote sector, it must be noted that those failures have occurred on the regulators watch and every player who has not been protected from Gambling Related Harm, must be properly viewed as an instance where the regulators duty to protect has been a demonstration of the regulators inability to carry out its statutory function which clearly must be reviewed.


2. What changes, if any, are required to bring the Act up to date with new technology and the latest knowledge about how gambling harm is distributed?

Over the past decade, there has been an exponential growth in technology across all sectors including the gambling sector. This has given rise to online and mobile gambling. Recent figures published by the Gambling Commission shows that the remote sector is financially the largest sector in the UK gambling industry. The legislation is therefore becoming less reflective of our society. Our legislation is often deemed to be ‘analogue legislation’ for a digital age.

By comparison, in 2012 the Australian Government conducted a review of its 2001 Interactive Gambling Act and found that the Act was outdated and therefore both ineffectual and potentially harmful to Australian players. As a result in 2016 the Interactive Gambling Amendment Bill was passed, to better reflect the growth in technology within the sector.

Since the Gambling Act 2005 came into effect, there are now more diverse gambling products and experiences on offer than ever before, these include live sports betting, in-play gaming and more recently mobile gaming. These are relatively new products that differ from traditional gambling and there are understandably concerns raised about player safety and protection, particularly on the vulnerable. Current government policy is not encouraging or allowing the ‘plan-ahead’ venues to develop healthily but is instead encouraging impulsive and ‘convenience’ gambling such as online, where far less player protections exist.

3. Is gambling well regulated, including the licensing regime for both on- and off-shore operations? How successfully do the Gambling Commission, local authorities and others enforce licensing conditions including age verification? What might be learned from comparisons with other regulators and jurisdictions?

Generally, the UK gambling industry is well regulated and the Gambling Commission is often looked to for best practice by other regulatory bodies in other countries.

Nonetheless, there are key areas within the UK gambling industry that the Gambling Commission could take a much stronger position to encourage a more responsible and fair industry.

For example, there are well established safeguards and controls in the non-remote sector that the Commission have put in place to protect the vulnerable from harm, such as stake and prize limits and software homologation for land-based B1, B2 and B3 games. These measures however have not been put in place for the remote sector which meant that online and mobile operators can develop games without controls that would help to protect the vulnerable and ensure that those games are fair and safe.

We would encourage the regulator to review all aspects of the online sector to ensure that there is adequate protection available to customers regardless of the environment in which they are playing and a more consistent approach to gambling regulation. This lack of control in the online sector leaves open to question whether the online industry satisfies two of the main tenets of the Gambling Act ‘to keep gambling fair and protect the vulnerable’.

4. Should gambling operators have a legal duty of care to their customers?

Operators should have a duty of care to their customers, but this should not be a legal duty.  It would be near impossible to determine the extent of that duty of care and extent of any responsibility and thereafter liability. We submit however that The Act already places a statutory duty on the Gambling Commission, under S22 of The Act:

(a) to pursue, and wherever appropriate to have regard to, the licensing objectives, and

(b) to permit gambling, in so far as the Commission thinks it reasonably consistent with pursuit of the licensing objectives.

It must therefore be reasonably foreseeable that if the Gambling Commission fails to pursue and have regard to the Licensing Objectives because it fails to identify potential harms and take action to prevent those harms by effectively regulating to protect the vulnerable, and the vulnerable are thereby harmed, there is arguably already a direct causal nexus between the harm caused and the failure of the Gambling Commission to act. We therefore strongly submit that while it might be arguable that an operator should have a duty of care to the customer, the duty of care which was intended by Parliament and by The Act is that of the Gambling Commission.

It is the Gambling Commission who is responsible for licensing of operators and requires detailed policies and procedures to be in place before such licence is granted. It is the Gambling Commission who is responsible for satisfying itself that the way in which operators carry out their duties is compliant with The Act. It is the Gambling Commission which is responsible for setting out Licence Conditions and Codes of Practice which determine the detail of an operator’s activities. It is also the Gambling Commission who is responsible for monitoring and reviewing as appropriate the activities of the Industry and charge substantial licence fees for doing so. Against such a background, it must be right that the Gambling Commission is held to account as having a legal duty, to customers, the industry and Parliament to ensure that the vulnerable are protected.

Social and economic impact

5. What are the social and economic costs of gambling? These might include costs associated with poor health and hospital inpatient services; welfare and employment costs; the cost of benefit claims; lost tax receipts; housing costs through statutory homelessness applications; and criminal justice costs.

Currently there is no clear framework to accurately measure and assess the social and economic cost of gambling.

6. What are the social and economic benefits of gambling? How can they be measured and assessed?

Traditional and social gambling is capable of delivering significant benefits to society and the UK economy. A 2019 Industry statistics published by the Gambling Commission, showed that the Industry has a total turnover of £14.5bn. The sector employs over 100,000 people directly and thousands more indirectly through its various supply chains.

An estimated 9 million people gamble in the UK, and for most it is a social, leisure and entertaining activity. Land-based venues, particularly Adult gaming centres and Bingo clubs offer relatively benign gambling in a safe and highly regulated environment where the stakes and prizes are comparatively low, as befits the High street location. Destination gambling venues contribute to social cohesion and are an integral part of the local community and often serve as community hubs for customers.

It is therefore important that the Government implements policies that are appropriate for the sector and address particular areas of concern without stifling the growth of the industry which is an integral part of the wider UK entertainment industry.


7. Is the money raised by the levy adequate to meet the current needs for research, education and treatment? How effective is the voluntary levy? Would a mandatory levy or other alternative arrangement be more productive and effective? How should income raised by a levy be spent, and how should the outcome be monitored? What might be learned from international comparisons?

Knowledge about the numbers affected by gambling-related harm, the types of harm that individuals experience, and how such numbers change over time, is hampered by the absence of a recent British Gambling Prevalence Survey (the last survey was conducted in 2010) and questions about gambling participation and behaviour not regularly being included in the Health Survey for England (questions were last asked in 2012, 2015 and 2016). Whilst the Gambling Commission collects and publishes statistics about gambling participation and problem gambling, we lack longitudinal data about gambling-related harm in respect of the trajectory of individuals’ gambling participation and behaviour over time, and individuals’ help-seeking behaviours (aside from data collected by GamCare). It is therefore difficult to assess if the money being raised is adequate to meet needs for RET. This is particularly relevant in the wake of the reduction of stakes on B2 Gaming machines which were widely considered to cause at least 50% of problems relating to gambling addiction. A new base line needs to be established for Problem Gambling in the UK and this can only be achieved through a new Prevalence Study linked to a Longitudinal study.

The current voluntary levy appears to only be partially working with some operators only paying a partial or minimal contribution. We would support the introduction of a mandatory levy if was a ‘smart levy’ which reflects the relative contribution to gambling related harm associated with different products.  It is unreasonable for non-contentious and relatively harmless forms of gambling such as the public health lottery or providers of seaside amusements (such as penny falls machines and teddy bear cranes) or Bingo clubs to pay a levy at the same rate as say on-line casinos or sports betting sites where there is no limit on stakes and prizes.

A smart levy could be calculated if a gambling prevalence survey was reconstituted. This could assess how many ‘problem’ or vulnerable gamblers mode of gambling is with a particular sector.

Consideration should be given to giving oversight of additional levy payments to a new, third party, organisation which is linked to the skills and expertise of the public health sector and ideally the NHS.



8. How might we improve the quality and timeliness of research in the UK? What changes, if any, should be made to the current arrangements for funding, commissioning and evaluating research in the UK? What might be learned from international comparisons?

Given the fundamental change in the gambling landscape in the UK due to the significant reduction in the maximum stake on B2 gaming machines, it would be useful for a new wide-ranging research on the industry to be conducted to get a better understanding of the impact of the reduced stake and also to identify the keys areas of concern.

We would also like to see an increase in the number of academics involved in gambling research. In the UK currently there is a small group of researchers who are responsible for a large part of the research carried out.  There have also been concerns raised on the lack of transparency around funding and the extent of the industry’s influence on research. We would welcome a more transparent and open system through the introduction of a professional code of conduct. This code of conduct would mean that where relationships exist between researchers and operators, it would be publicly declared and embedded within formal academic structures.

9. If, as the Responsible Gambling Strategy Board (RGSB) has  suggested, there is limited evidence on which to base sound decisions about gambling by children and young people, what steps should be taken to rectify this situation?

The Gambling Commission has reported that 45,000 children aged between 11 and 15 self-report as being ‘problem gamblers’. It is important to highlight that a significant number these children are more than likely involved in ‘gaming’ rather than gambling and the issue is that they are spending money on random loot boxes and so called ‘skin upgrades’ in video games etc. It is therefore essential that the industry is not castigated with headline grabbing statistics without the regulator conceding that some of this is not commercial gambling. There is also a view that much of this ‘gambling’ relates to games played in playgrounds which should if necessary be controlled by teaching staff. We also note that whilst moves have been made to remove gambling companies sponsorship logos from sports shirts sold for children there remain a number of high profile home video games where these logos still appear on players sports shirts within the actual game play.

We would suggest that further research is carried out into areas of interest where there is limited evidence and/or research gaps have been identified. As above, the Gambling Prevalence Survey should be reconstituted.



11. Are the services available for the treatment and support of people at risk of being harmed by gambling sufficient and effective? How might they be improved? What steps might be taken to improve the uptake of treatment, particularly among groups who are most likely to experience harm from gambling and least likely to seek help?

Notable experts in treatment services such as Dr Henrietta Bowden-Jones have highlighted the need for further funding of these services and also to raise awareness of the availability of these services amongst problem gamblers. We would support these calls.

12. What steps should be taken better to understand any link between suicide and gambling?

We would encourage further research into this area.


13. The RGSB has said that by not taking action to limit the exposure of young people to gambling advertising “we are in danger of inadvertently conducting an uncontrolled social experiment on today’s youth, the outcome of which is uncertain but could be significant.” Do you agree? How should we make decisions about the regulation of gambling advertising? What might be learned from international comparisons?

There is wide-spread concern about the impact of gambling advertising and marketing on children, young people and vulnerable people, particularly during live sporting events.

To address this, we believe that there should be, stronger self-exclusion safeguards that restricts targeted gambling advertising online. We would also like to see the 9pm watershed extended to cover all forms of gambling and limited thereafter. Whilst this may help reduce the volume of advertising to which all generations are exposed, it should not be assumed that this will be sufficient to protect children from exposure to gambling advertising as young people currently consume media online – internet and social media. Therefore we would like to see a mechanism created that allows individuals to block gambling advertisements online.

In addition, marketers for large companies, particularly those employed by a third party are often paid on results which can drive aggressive advertising. An awareness of the rules and regulations relating to advertising should be mandatory for third parties and personal management licenses are required for Executives and we would suggest that Marketing Executives should be required to hold PMLs.

Gambling and sport

14. Gambling is becoming an integral part of a growing number of sports, with increasingly close relationships between operators and sports clubs, leagues and broadcasters. What are the risks attached to this?

Please see our response above

Gambling by young people and children

15. How are new forms of technology, including social media, affecting children’s experiences of gambling? How are these experiences affecting gambling behaviour now, and how might they affect behaviour in the future?

Again, please see our response above. As social media is a relatively new phenomenon, we believe that there should be tighter regulations particularly around gambling advertisement online. Furthermore, concerns have been raised about the availability of ‘social gaming’ apps on social media platforms which mimic real-life gambling, and are aimed at children with no age verification or checks offered. We would be interested in seeing extensive research, perhaps a Longitudinal study carried out looking at the effect of social media and other forms of technology, in encouraging gambling behaviour among young people.


16. The legal availability of certain forms of commercial gambling to under-18s in Great Britain is unusual by international standards and has been described as an ‘historical accident’. Should young people between 16 and 18 be able to purchase National Lottery products, including draw-based games, scratch cards and online instant wins?

We believe that the current age limit on lottery and scratchcards age limit should be raised to 18, in line with all other forms of gambling.

Whilst the weekly lottery is relatively low risk, consumers can play high speed scratchcards, on and offline, at up to £10 a go, aged just 16. They can also play these games using a Smart Phone with no structured supervision.   The maximum rewards could be up to £1million, in contrast to Pubs/AGCs where Cat C/B3 machines have a maximum prize of £100/£500. Furthermore, the current scratch cards and online games (at up to £10 a game) are not dissimilar to casino games.

Although this part of the sector is working to distance its products from gambling, it is important to recognise that the National Lottery website is in many ways now indistinguishable from many other online gambling websites.

For example, on the homepage, there are links to Gamestore instant win games such as the £4 million jackpot or the £20 million Cash Spectacular, which anyone 16 or older can play – the only safeguard is a limit that is initially set to “75 Instant Win Games you can play or try in any 24 hour period, and a £350 weekly limit on how much money you can add to your account”.

Safer gambling should be promoted in line with the rules for the rest of the gambling industry.

17. Should children be allowed to play Category D games machines (which include fruit machines, pushers and cranes)?

Currently, there is no minimum age for players of category D machines and it is indeed legal for under-16s to play on these machines. That said, due to the emerging concerns raised specifically around reel-based Category D machines, BACTA the trade association for the amusement machine industry which includes seaside arcades where these machines are found, has recently put in place a new condition that will require its members to prevent anyone under the age of 16 playing on a cash payout fruit-machine unless accompanied by an adult.  We believe that ‘Pusher’ machines and Teddy Bear cranes should now be classified separately to cash payout fruit machines.

We would like to see further research carried out exploring the effects of these machines on children and young people.


18. The restrictions on society lotteries were relaxed by the Gambling Act 2005, and there is concern that some of them are effectively being taken over by larger commercial lotteries. Is this concern well founded? If so, what should be done?

No comment.

19. Should changes be made to the statutory regime governing the National Lottery, to bring it into line with the regime governing operators of other lotteries?

No comment.


8 October 2019