Good day. I am delighted to join you today for a wide-ranging discussion on the future of the arcade and entertainment industry.
I want to start by telling you something that I'm sure you already know: the economic benefits of the arcade and entertainment sector are enormous. The sector produces a collective economic turnover of ยฃ1.6bn and supports thousands of jobs across the UK.
From the galleries that underpin our high streets and coastal towns to the unique site operators and manufacturers, they all play an important role in supporting jobs and helping our local economies thrive.
Our white paper, which we published earlier this year, recognized the importance of the sector. He outlined our continued commitment to supporting you after a challenging few years following COVID-19 and rising energy prices. We hope that the measures we are taking will allow the sector to continue operating sustainably now and in the years to come.
I recognize the business challenges you face and believe the modernization measures we are taking will help support that move toward a better future.
Many of you here today will be interested in understanding the progress we have made on the physical gambling proposals set out in that white paper.
Last month we closed the government's consultation on land-based gambling, which included our proposals for the reform of the 80/20 rule, the introduction of direct cashless payments at gaming machines and our commitment to introduce an age limit for cash withdrawal. D-Style Slot Machines โ Something I know Bacta members already adhere to.
The consultation sought views on a range of policy proposals, which were designed to support the gaming and entertainment sector. I would like to personally thank everyone who has responded. The evidence you provided is essential to ensuring that government policy is evidence-based and takes into account the real-world impact these policies will have on the daily operations of your businesses.
I would also like to thank Bacta for their continued commitment throughout the consultation process. By bringing together a wide range of voices and representing its members so effectively, Bacta is able to provide us with valuable information. This gives us confidence that we are listening to the opinions of the sector as a whole.
In terms of the proposals themselves, I appreciate that many of you are eager to understand what will happen next. I fear they will have to wait a little longer for the government's response to confirm the political direction we have chosen.
However, I would like to reiterate that the intention behind all of our proposals is to ensure that the industry can operate sustainably now and in the future, while ensuring that adequate safeguards are in place to protect the minority of customers who suffer harm related to the game. .
I would like to especially thank the Gambling Commission and local licensing authorities for their work in creating a regulatory environment that minimizes the risk of gambling-related harm, making Britain one of the world leaders in regarding standards.
I understand Andrew Rhodes will be speaking to you later today and I'm sure he'll be grilled a bit, as I'm sure I will be.
I know that reform of the 80/20 rule is of great interest to many of you here today.
Our white paper and consultation recognized that the 80/20 ratio of low and medium stakes gaming machines is no longer fit for purpose.
We fully recognize that you believe that this current ratio does not allow you to meet customer demand, and that this has led to the maintenance of a large number of machines, which are underutilized but consume a lot of energy. This situation is undesirable for both companies and consumers.
Therefore, we proposed to modernize this ratio to better reflect customer demand. But we have a responsibility to ensure that customers are presented with a genuine offer of lower stakes gaming opportunities to maintain a safe gaming environment.
To help inform decision-making around business flexibility and a genuinely balanced product offering, we have sought additional evidence. This includes consulting and requesting industry data on the use and functionality of different categories of machines. My department and I are extremely grateful to Bacta and other trade bodies for their willingness to share such evidence. The data we have received will help ensure our policies remain evidence-based and we will consider this alongside the consultation responses to reach a balanced and measured solution.
I appreciate the concerns that John has raised regarding Option 2 and the strong opinions that have been expressed on this proposal. That is why, in part, for this policy to be a success, it has been essential to gather a broader range of evidence through a rigorous consultation process. That's why we also consulted on completely eliminating the 80/20 rule. This process will give us confidence that our policy changes will deliver on the white paper priorities of modernizing the sector, whilst maintaining appropriate safeguards against harm to gambling.
I'm sure many of you will be pleased to see that the government has committed to allowing cashless payments to be made on gaming machines.
Payment methods have changed substantially in recent years, and many customers on the high street no longer carry cash like they used to. Having visited the Novomatic and Merkur arcades in Hammersmith, I appreciate that there are ways for customers to use their card through check-in and check-out machines.
However, the current ban on using debit cards directly at machines is out of step with how people expect to be able to pay for things. The ability to use debit cards on gaming machines is a necessary modernization to ensure the industry can keep up with changing consumer preferences.
As you can see, such a significant transition will not be achieved overnight. There will be technical challenges that manufacturers and operators will need to overcome together.
However, we will establish a framework of minimum standards that must be met if a machine accepts direct cashless payments. Central to this framework is the need to ensure that strong protections are in place for players to protect them from the harms of gaming.
The evidence provided through the consultations has been extremely useful in shaping our thinking on this and we will set out more detail in the government's response to the consultation.
The last measure I would like to mention is our commitment to introduce an age limit on Category D cash-out slot machines. This measure is essential to ensure that children and young people are not exposed to the risks associated with underage gambling.
As members of Bacta, I would like to thank all of you for leading the way on this issue. The voluntary ban undertaken by Bacta members of minors under 18 years of age in 2021 was an important step forward.
We are now legislating on this to ensure that all venues, including those outside of Bacta's membership, meet these standards.
I am aware that some of you have expressed concerns about any potential requirement that these machines be moved to an age-restricted area. I would like to assure you that we have not made any proposals in this regard. We recognize the value of keeping these machines on the floors of Family Entertainment Centers for adult use while your children enjoy the penny sales and other amusements these locations have to offer.
I am sure many of you are interested in greater clarity on the measures and an understanding of the timelines for their implementation. My officials are currently analyzing the responses submitted through consultation. We intend to publish the government's response in early 2024, which will outline our precise policy direction on all of these issues.
All of the measures outlined above will require secondary legislation, and we intend to take the necessary steps to implement these measures by summer 2024. As with all secondary legislation, these timetables will depend on parliamentary time.
In addition to the land consultation, we also recently launched a statutory tax consultation, the third consultation we committed to in the White Paper.
The introduction of the statutory tax is an important counterpart to the wider set of regulatory protections that we and the Gambling Commission are putting in place. While we would all agree that we want to prevent harm before it happens, it is also crucial that the public has access to the right help when they need it, and that regulation is based on timely, quality research.
I want to see greater, independent and sustainable funding directed to where it is needed most. This will ensure that people across our country can make informed decisions about their gambling and know who to turn to for help if they need it. We have proposed a 0.1% levy rate to be paid by physical gambling halls, which is lower than the rate proposed for online gambling operators, betting shops and casinos. We believe this is a proportionate approach and should not place an undue burden on the sector.
As for manufacturers, single facility operators and distributors, I understand your concern about the proposed 0.4% levy rate. The legislation is clear that the tax must be paid by all those who have a license. However, we want the structure to be clear, fair and proportionate. We are interested in hearing from the industry and will take into consideration all evidence we receive when making a final decision.
That consultation closes on 14 December and, if you haven't already, I encourage you all to submit a response.
Thank you once again for inviting me to speak today and I hope the rest of today's discussions are productive. I hope that in my time as Minister I have shown that my door is open and will remain open as we continue to implement what I hope are the right policies for a sustainable future.
I will now be joined by Sarah Fox, Deputy Director of Gaming and Lotteries at DCMS. We will be happy to answer any questions you may have about the gaming review and the measures the government is taking to support the sector.
