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Essential Guide to ... Category C Sector Overview


CONSULTATION


Commission proposals seek to increase


PUB CLIMATE Cautious optimism for UK pubs sector


attractiveness of Cat C genre


A new series of proposed technical standards have been put forward in an effort to help bolster the Category C gaming sector. James Walker reports.


M


ay 3 marked the end of a 12-week con- sultation period relating to possible amendments to the machine standards


of Category C gaming machines. The Gambling Commission’s decision to put forward a series of proposals to the government follows an appeal by the industry to increase the attrac- tiveness of Category C machines. The Commission is currently awaiting a


response from the government and intends to issue a draft document listing the final pro- posed standards in June. It will be necessary to allow the European Commission the statutory 12 week period to comment on the proposals insofar as they constitute technical standards in relation to gaming machines. Subject to these requirements, it is anticipated any amendments to the standards would come into force in October 2011, at which time the Com- mission said it will also issue a formal response document.


The consultation was brought about follow- ing sustained reports that that the Category C gaming machines sector has been experienc- ing a decline in manufacture, whilst operators of Category C machines are also experiencing difficult trading conditions. In an effort to help realign the sector with other gaming categories, the Commission focused on three main areas and generated a series of proposals for each.


LIVE JACKPOTS: Alive jackpot is a prize which is displayed to the player and is incremented from game


to game. Once it has been won, the prize is re- seeded to a pre-determined value. The prize value is limited to the maximum permitted for the game category and cannot be linked to another machine. Existing Category C legisla- tion states that the live jackpot must be incre- mented in proportion to the money staked and by no more than the maximum stake in any single game. According to the Commis- sion, the industry has requested that this pro- vision be modified to enable machines to operate such a feature without the need to incorporate ticket out or other non-cash pay- ment methods. The current Circumstances of Use Regulations stipulate that the “winner must have an opportunity to collect the whole amount of the prize he has won”, whilst the standard only allows such a feature to be incre- mented at a standard rate each game, which is generally a value less than £1). Payment mech- anisms are often designed only to pay out £1 coins which means this feature is not easily compatible with Category C machines. As such, a proposal has been put forward to modify this section to allow the live jackpot to be incremented in values which can be paid by means of the Category C machine.


GAME LINKS: Game links are permitted on all categories


PROPOSED AMENDMENTS SPEED OF PLAY:


The Commission was asked to revisit the


speed of play restrictions as the industry is seeking to make Category C games more com- mercially viable when operating at lower stakes and to allow for greater flexibility in game design. One of the proposals is to allow the speed of play to be scaled according to stake so as to allow for feature rich games to be created, which on average take much longer to complete, whilst retaining commer- cial viability. If scaled in a linear fashion this would result in a 10p game being played at an average of 0.3 seconds at the current mini- mum average speed of play for a £1 stake.


Coinslot MAY 20 - MAY 26, 2011


of machine, and Category C games are per- mitted to carry over features or other elements from the current game to the next where a win has been awarded. Game links therefore allow Category C games to offer features such as repeat wins or the ability to hold over win- ning reel bands. The standards in all cases restrict game links so that they cannot be awarded on a better chance than even - often referred to as the ‘50/50 rule’. Manufacturers and operators have, however, argued that since no restrictions applied to legacy machines, new Category C equivalents cannot compete even where the prize levels offered are greater. In order to redress the balance between Category C and legacy machines, and to enhance the manufacturer’s ability to create more entertaining games, it is proposed to modify this section to allow for links to be given on a 100 per cent basis.


Category C gaming machine are inextricably linked to the UK pub sector. And despite the fact that pubs across the land continue to struggle amid tough trading conditions, many leading operators have been expressing a degree of cautious optimism for the future. James Walker reports.


Pubs across the UK have long been a


mainstay of local communities and a key focal point for all things coin-op - from pool and other table games to jukeboxes and, of course, Category C gaming machines. Many would argue that a trip to the local would not be complete without hearing the gentle whirr of an AWP as it flashes entic- ingly towards customers. However, over recent years it has been widely reported in both the national media and leisure publica- tions that the UK pub sector has been suf- fering at the hands of unfavourable legislation, the July 2007 smoking ban, ever- competitive supermarket alcohol prices and the more general economic downturn that is forcing consumers to stay at home. While there is no doubt that pub opera-


tors across the country will be forced to fight their corner for the coming months and years, recent data from the British Beer and Pub Association, along with trading updates from leading companies, suggest the worst is over, with many industry observers sensing that the sector has finally bottomed out. According to the BBPA, the UK’s leading organisation representing the brewing and pub sector, British pubs are now closing at an average rate of 25 per week, with around 1,300 venues calling last orders for the final time in 2010. At its peak more than 12 months ago, more than 40 pubs were clos- ing per week. Moreover, a separate study released by


the group in April suggests that the pro- tracted decline in beer sales in pubs across the UK began to ease in the first quarter of the year. Although the sales drop of 3.8 per cent acts as a clear indicator that the market remains fragile, this compares favourably to the 8.8 per cent drop in sales that was experienced in the same period in 2010 and matches the 3.8 per cent drop in alcohol sales in supermarkets and shops, making it the lowest first quarter decline since 2005.


While the impact of the huge 7.2 per cent tax rise in this year’s Budget has yet to sur- face in the BBPA’s statistics, the association said the good weather at Easter and the extended bank holiday season may help the second quarter figures, as people flocked to pubs to enjoy the Royal Wedding and the sunshine. “Taken together, the fall in sales, and the impact of the Budget shows sales in the sector are still fragile,” said BBPA chief executive Brigid Simmonds. “However, the


on-trade’s performance relative to the off trade has improved - and quarter two will be helped by the bank holiday bonanza and the good weather.” Leading pub groups have echoed these positive ripples in their most recent trading statements. Earlier this month JD Wether- spoon reported a 2.4 per cent increase in like-for-like sales for the 13 weeks to April 24 and expressed a degree of cautious opti- mism for the remainder of the year. “The company, in common with many businesses, continues to be faced with rising costs for a wide range of goods and services, combined with a reduction in dis- posable income for many of its customers,” the company said. “However, sales and cashflow continue to be resilient and the performance of our recently opened pubs remains encouraging, which should enable the company to produce a reasonable out- come in the current financial year.” Similar sentiments can be found within the balance sheets of Enterprise Inns, which overcame weather-related trading difficulties to report static sales and inform the City that it was “successfully facing up to challenges”. Punch Taverns, meanwhile, saw an 8.6 per cent rise in like-for-like sales for the second quarter of the year, while Mitchells & Butlers said total sales for the 17 weeks to January 22 were up 3.9 per cent. Ultimately, the UK pub sector - as with many out-of-home verticals - continues to suffer amid the downturn. However, the positive momentum reported by the coun- try’s leading traders acts as a clear indica- tion that there is light at the end of the tunnel. And this should ultimately filter through to the Cat C cashbox.


“Driven by our clear and consistent strat- egy of delivering excellent customer value, service and quality, trading at Greene King has been strong and as a result, we remain confident for the outcome for the year,” noted Greene King chief executive, Rooney Anand.


BRIGID SIMMONDS


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