Draft Gambling BillCommission. Two areas are excluded from its remit: spread betting and the...

HL Paper 63-I HC 139-I

House of Lords House of Commons

Joint Committee on the Draft Gambling Bill

Draft Gambling Bill

Session 2003–04

Volume I

HL Paper 63-I HC 139-I

Published on Wednesday 7 April 2004 by authority of the House of Lords and the House of Commons

London: The Stationery Office Limited £0.00

House of Lords House of Commons

Joint Committee on the Draft Gambling Bill

Draft Gambling Bill

Session 2003-04

Volume I

Report, together with formal minutes and annexes

Ordered by The House of Commons to be printed Thursday 25 March 2004 Ordered by The House of Lords to be printed Thursday 25 March 2004

4

The Joint Committee on the Draft Gambling Bill

The Joint Committee on the Draft Gambling Bill was appointed by the House of Commons and the House of Lords on 9 September 2003 “to consider and report on any clauses of the draft Gambling Bill presented to both Houses by a Minister of the Crown” and to report by 8 April 2004.

Membership

Mr John Greenway MP (Conservative, Ryedale) (Chairman) Janet Anderson (Labour, Rossendale & Darwen) Mr Tony Banks (Labour, West Ham) Jeff Ennis (Labour, Barnsley East & Mexborough) Mr Alan Meale (Labour, Mansfield) Mr Richard Page (Conservative, South West Hertfordshire) Dr John Pugh (Liberal Democrat, Southport) Mr Anthony D. Wright (Labour, Great Yarmouth) The Rt Hon Lord Brooke of Sutton Mandeville (Conservative) Lord Donoughue (Labour) Viscount Falkland (Liberal Democrat) Lord Faulkner of Worcester (Labour) Baroness Golding (Labour) Lord Mancroft (Conservative) Lord Wade of Chorlton (Conservative) Lord Walpole (Cross Bencher)

Powers

The Committee has the power to require the submission of written evidence and documents, to examine witnesses, to meet away from Westminster, to meet at any time (except when Parliament is prorogued or dissolved), to appoint specialist advisers, and to make Reports to the two Houses.

Publication

The Report and evidence of the Joint Committee are published by The Stationery Office by Order of the two Houses. All publications of the Joint Committee (including press notices) are on the Internet at www.parliament.uk/parliamentary_committees/jcdgb.cfm

Committee staff

The staff of the Joint Committee were drawn from both Houses and comprised Sarah Davies (Commons Clerk) Audrey Nelson (Lords Clerk until December 2003) Jake Vaughan (Lords Clerk from January 2004) Jago Russell (Legal Specialist) Abigail Plenty (Economic Specialist) Alison Mara (Committee Assistant) Francene Graham (Committee Assistant) Lisette Pelletier (Secretary) and George Fleck (Office Support Assistant)

Contacts

All correspondence should be addressed to the Clerks of the Joint Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 8388; the Joint Committee’s email address is [email protected]

1

Contents

Report Page

Summary 7

1 Introduction 9 The Committee’s inquiry 9 The publication of the draft Bill 11 The Committee’s approach to pre-legislative scrutiny 12 Key issues 14

2 The regulatory framework 15 Introduction 15 The objectives of the draft Bill 15 Detail to be issued by the Gambling Commission 16 Delegated powers 17 Regulation, taxation and planning: three legs of a stool? 19

3 The regulatory system 20 The Gambling Commission 20

Transition from the Gaming Board to the Gambling Commission 20 Day to day Gambling Commission resources 23 The powers of the Gambling Commission 24

The remit of the Gambling Commission 27 Should the Gambling Commission regulate spread betting? 27

4 The National Lottery 30 Regulation of the National Lottery 30 Proposed changes to the licensing process 30

The multi-licence approach 31 Should the Gambling Commission regulate the National Lottery? 33

5 Licensing 37 Introduction 37 Operating licences 37

Duration and renewal of operating licences 38 Licence conditions 39 Licence fees 40

Personal licences 41 Extent of personal licensing requirements 41 Small-scale operators 42

Sanctions 43 General 43 Unlimited fines 44

Appeals against the Gambling Commission’s decisions 44 Premises licences 45

2

Restricted discretion 47 Duration of premises licences 48 Resources 49 Relationship with planning 50

“Need” and cumulative impact 52 Provisional statements 53 Appeals 54

Transition 54

6 Social implications of the draft Bill 57 Problem gambling 57 Impact of the draft Bill 59

Prevalence study and other research 59 Potential impact of the draft Bill on problem gambling 60

Safeguards in the draft Bill 61 The industry-funded trust 63

Relationship with industry 64 Relationship with service providers 66 Level of funding 66 Contributions in proportion to risk 67 Method of funding 69 Government responsibility 70

The young 71 A uniform age limit of 18 71 Employment of young persons in gambling premises 73 Children and gaming machines 73

Ambient gambling 79 Destination gambling 79 Children 80

Problem gambling: additional recommendations 81 The National Lottery and spread betting 81 Advertising, inducements and credit 81 Casinos 82 Bingo 82 Gaming machines 82 Remote gambling 82

7 Advertising, Inducements and Credit 82 Advertising 82

Unlawful advertising 83 Other restrictions on advertising 84 Regulator 85

Inducements 88 Loyalty cards 89

Credit 90

8 Casinos 91 Unresolved issues 92

3

The Government’s proposals 93 Evidence received 955

Size categories 95 The cliff-edge 96 Alternative size formulas 96 The 3:1 ratio 97 Definition of ‘gaming machine’ 98 Three size categories 98

Small casinos 98 Large casinos 99 Resort casinos 102 Regeneration: general issues 103 Regional regeneration: Free market v. locational controls 106 Planning for resort casinos 108

Planning and licensing 110 Planning Use Class 110 Planning at the local level 113 Interaction between planning bodies 114

Miscellaneous Issues 114 Linking Machines 114 Available for use 116 Membership of casinos 117 Employment in casinos 117 Smoking in casinos 117 Alcohol in casinos 118

9 Bingo 120 Provisions in the draft Bill 120 Bingo in casinos 120

Soft v. hard gambling 121 The social aspect 121

Bingo in pubs and clubs 122

10 Gaming Machines 122 Categories of machines 123 Category A machines 123 Category D machines 124 Returns to customers 125 Machine numbers in licensed premises 125

Pubs and clubs 125 Tenpin bowling centres 126

Machine testing 127 Linking of machines 127 Fixed Odds Betting Terminals (FOBTs) 128

Categorisation 129 FOBTs and problem gambling 130

4

11 Betting and bookmakers 130 Betting Exchanges 132

The fiscal and regulatory regime 133 Non-recreational layers 139 Regulation 140 Sporting levy 140 Voiding of bets and cheating 141

12 Remote gambling 142 Regulation 143

Principles of regulation 145 Licensing requirements 146

Social responsibility 147 Safeguards 147 Controlling access 149

Other jurisdictions 150 Prohibited territories offence 151 Advertising by offshore operators 151

13 Lotteries (except the National Lottery) 152 Enforcement 153 Definition of “lottery” 154

Payment to Enter 154 Skills Test 157 Statutory definition of “lottery” and the National Lottery 160

Rapid-draw lotteries 160 Statutory limits 161 Customer Lotteries 163

14 Economic impact 163 Economic research 164 Economic regeneration 165 Displacement 165 Cannibalisation 166 Winners and losers 166 Overall net benefit 167 Taxation 167

Changes to the taxation regime 167 Inward investment 168

Conclusions and recommendations 170

Annex 1: Schedule of detailed comments on the draft Bill 192

Annex 2: Programme of visits undertaken by the Joint Committee on the draft Gambling Bill during the course of its enquiry 265

Annex 3: List of acronyms 268

5

Formal minutes 270

Witnesses 294

List of written evidence 297

7

Summary

This Report comments in detail on the draft Gambling Bill, the bulk of which was published in November 2003. It has been unanimously agreed. We make 139 recommendations suggesting modifications to either the clauses themselves, or the underlying policy, based on the evidence we received.

Although many of the changes we recommend are aimed at ensuring that the Government proceeds more cautiously than was recommended by the Budd review and as envisaged in the subsequent White Paper, A Safe Bet for Success, we think that the overall framework of the draft Bill is about right. In particular, we agree with the objectives of the Gambling Commission set out in Clause 1 of the draft Bill: preventing gambling being a source of crime and disorder, being associated with crime or being used to support crime, ensuring that gambling is conducted in a fair and open way, and protecting children and other vulnerable persons from being harmed or exploited by gambling. For these objectives fully to be realised the Government must ensure that access to high value gaming machines is more restricted than was first envisaged. Our other concerns relate to specific policy issues and the drafting of certain clauses.

Almost all the witnesses we heard from stressed the need for legislating quickly – including GamCare, the charity looking after people with gambling problems, and the Gaming Board, which currently regulates parts of the industry. We agree. This legislation is necessary and urgent. If the legislation were delayed we anticipate that there will be a sharp increase in gambling of doubtful legality. We see no reason why our comments could not be incorporated and the Bill introduced before the end of this session of Parliament, for carry over to the 2004-05 Session. This will ensure that the potential social and economic benefits of the provisions are not lost.

Some of the areas we were scrutinising have been subject to considerable media comment in recent times, in particular the use of betting exchanges. We commend the exchanges for their co-operation with us and the sporting regulators, their shrewd business model and the audit trail they can produce. But we do suggest that those who are effectively using the exchanges to lay bets professionally (i.e. above a certain frequency and value threshold) should be regulated in some way, though this should be neither onerous nor costly.

We also discuss in depth the Government’s proposals relating to casinos. In our opinion, key policy issues between the Department for Culture, Media and Sport and the Office of the Deputy Prime Minister relating to planning have not been addressed. These relate in particular to the policy which will apply to the siting of so-called ‘resort casinos’. An announcement will be made this summer, and we think that we should be reconstituted to examine it.

Throughout our inquiry we have been minded to examine the impact that the proposals in the draft Bill could have on so-called problem gambling. Almost all of the evidence we have received points to the fact that this legislation would increase the number of people in the United Kingdom with a gambling problem. However, it also takes steps to mitigate this. Operators will be required to take social responsibility seriously. Contributions to the Responsibility in Gambling Trust will be used to research contentious issues, and help those

8

who are in difficulties. We make several recommendations to reduce the potential impact of the draft Bill, in particular we suggest that no casino should be permitted unlimited numbers of gaming machines. We also comment on key areas in which more research is necessary, including the continued use of low-value gaming machines by children.

The draft Bill establishes a single regulator for the gambling sector: the Gambling Commission. Two areas are excluded from its remit: spread betting and the National Lottery. We believe that the principle of single regulation is the right one, and accordingly recommend that, over time, the current regulatory roles of the National Lottery Commission and the Financial Services Authority (as it relates to spread betting) should be reviewed.

The Gambling Commission will be formed from the existing Gaming Board, and will have considerable transitional responsibilities. We are critical that the Government did not introduce a paving bill to ensure that the Board had the constitutional authority to carry out these functions earlier; at the moment much of this work has to wait until after second reading of the Bill – another reason to introduce this Bill as soon as possible. The draft Bill gives the Gambling Commission strong powers of enforcement and sanctions. We agree that they are needed.

The Report covers a number of complex areas, and cannot be summarised in two pages – at over 600 paragraphs, it is one of the longest Committee Reports of recent times. A list of our conclusions and recommendations is included. In addition to the Report, we append a schedule listing all the drafting comments we received, and the Department’s response to them.

We are critical in the Report that we did not have the full text of the draft Bill before we reported, and that key policy documents had not been prepared, because a shadow Commission had not been formally established. But we do note that the Department for Culture, Media and Sport made its best efforts to supply us with as much information as it could, and we commend its commitment to making pre-legislative scrutiny work.

This Report does not mark the end of the debate; it represents another step in the process. While it is – in our opinion - the most comprehensive parliamentary inquiry into gambling in recent years, our timetable has been very tight, and many of the subjects we cover are worthy of even greater consideration. We hope, therefore, that our thoughts will contribute to a continuing dialogue between Government, Parliament and all interested parties about this complex subject.

9

1 Introduction

1. Reform of the United Kingdom’s gambling laws has been a long time in the planning. From the Rothschild Commission of 19781, through the Budd Report of 20012, and the Department for Culture, Media and Sport’s response A Safe Bet for Success3, the Government has sought to strike a balance between developing gambling as a legitimate leisure pursuit and mitigating its potential negative consequences. It recently summed up its belief in the following terms: “gambling should be seen as part of the mainstream leisure industry, offering fun and attractive products in a regulated environment.” 4

2. The motivation for a change in the law has come less from consumer demand than from developments in technology, and defects in the existing legislation.5 The existing law is inflexible and requires primary legislation for amendments necessary to respond to technological and market changes. For this reason, the House of Lords Delegated Powers and Regulatory Reform Committee recently described it as being “in a mess”, having been amended to the point of confusion.6 This is, therefore, a timely and important piece of legislation.

3. The Government announced in July 2003 that it planned to submit the draft Gambling Bill to pre-legislative scrutiny. Our Committee was duly established “to consider and report on any clauses of a draft Gambling Bill presented to both Houses by a Minister of the Crown.”7

The Committee’s inquiry

4. From the outset, we recognised that it was vital to ensure that all those with an interest in the draft Bill had an opportunity to contribute to the inquiry. Following open calls for written evidence, we received over 170 submissions, and held 17 oral evidence sessions. The range of witnesses at these sessions was drawn deliberately widely – from Christian groups, the widest possible range of industry associations and academics, to a trade union. There was also an international element to these proceedings, with witnesses from the United States of America and Australia, as well as the United Kingdom.

5. We are publishing in additional volumes of this Report the memoranda we received, and the transcripts of the oral evidence (which were produced by Gurney’s shorthand writers and the text corrected as appropriate by the witnesses). The full list of memoranda and witnesses appears on pages 294 to 302. Separate arrangements will be made by the

1 Rothschild Commission (Royal Commission on Gambling) Final Report, Cm. 7200, July 1978

2 Department for Culture, Media and Sport (DCMS), Gambling Review Body Report, Cm. 5206, July 2001, referred to in this Report as ‘the Gambling Review Body Report’ or ‘the Budd Report’.

3 Department for Culture, Media and Sport (DCMS), A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002

4 Department for Culture, Media and Sport (DCMS), Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para 2.10

5 Q 1672

6 House of Lords Delegated Powers and Regulatory Reform Committee, 24th report, HL Paper 81, Session 2000-01, reiterated in the Committee’s 19th report, Session 2002-03, HL Paper 103, para 9, on the Regulatory Reform (Gaming Machines) Order 2003.

7 Minute, House of Lords 2 July 2003, Votes and Proceedings, House of Commons, 10 July 2003.

10

Department for Culture, Media and Sport for the responses to its own consultation, which concluded in the final stages of our inquiry.

6. We took evidence from four Ministers - the Rt Hon the Lord McIntosh of Haringey, Parliamentary Under-Secretary, Department for Culture, Media and Sport, John Healey MP, Economic Secretary to the Treasury, Yvette Cooper MP, Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, and the Secretary of State for Culture, Media and Sport, the Rt Hon Tessa Jowell MP.

7. We are very grateful to all those who submitted oral or written evidence. We would also like to express our thanks to our four Specialist Advisers, Paul Bellringer OBE, former Chief Executive of GamCare, Professor Peter Collins, Professor of Public Policy Studies, University of Salford, Bill Galston OBE, former Chief Inspector of the Gaming Board, and Professor David Miers, Professor of Law and Head of Cardiff Law School, whose expertise and experience have been invaluable.

8. At an early stage of the inquiry, the Committee decided to take the opportunity to travel in the United Kingdom, to discuss the draft Bill’s potential impact with a wider range of potential interlocutors than would be possible in Westminster, and to learn more about the existing industry. We therefore visited Great Yarmouth on 1 December 2003 and Blackpool on 8 and 9 December 2003. The Committee also visited various sites in London - including the Grosvenor Victoria Casino, the offices of Betfair for a presentation by the Interactive Gaming, Gambling and Betting Association, the headquarters of GamCare to meet those affected by problem gambling, a licensed betting office and the National Lottery Commission. A list of these visits is produced as Annex 2 to this Report. We would like to thank all those who facilitated the visits and took the time to talk to us.

9. We also presented a case to the Leaders of both Houses of Parliament to amend our original orders of reference to permit overseas travel. Motions to this effect were subsequently agreed by both Houses in October 20038. Following this, the Committee agreed to bid for funds from the Liaison Committee in the Commons and the relevant authorities in the House of Lords, to conduct two overseas visits.

10. A delegation of two members went to Australia for a week in February to see at first hand the implications of gambling deregulation there. The proliferation of video gaming machines (‘pokies’) in certain states has been highly controversial, and the delegation was able to meet prominent figures from both sides of the argument. This was also an opportunity to discuss remote gambling issues, and the process for the licensing of casinos. The Committee also travelled to France for two days, to Enghien les Bains and Le Touquet, to discuss the links between casino development and regeneration in seaside and semi-urban settings. Further details of both of these visits are, again, annexed to this Report (Annex 2).

11. In late 2003 and early 2004, the Commons Culture, Media and Sport Select Committee conducted an inquiry into National Lottery reform, which had some relevance to our work.

8 Votes and Proceedings, House of Commons, 20th October 2003, Minute, House of Lords, 23rd October 2003.

11

That Committee’s Report was published as our own inquiry was drawing to a close. We have drawn on evidence submitted to the inquiry where appropriate.9

The publication of the draft Bill

12. For pre-legislative scrutiny of this type, we would have expected the full text of the draft Bill to be available either before, or shortly after, the Committee was established. However this was not the case, and DCMS’s piecemeal publication schedule has caused us some difficulty.

13. 50 clauses of the draft Bill were published shortly before we were established, in July 2003. These chiefly concerned the new licensing regime, and we were warned that they were subject to change. The introduction to that paper, signed by the Secretary of State, referred to the “whole Bill [being] presented for scrutiny in the autumn”. 10

14. Further clauses and schedules, making 242 clauses and 9 schedules in all, were published in November 2003.11 This has since risen to 268 clauses and 10 schedules following the publication of additional material in February 2004, on gambling in alcohol licensed-premises, gambling in members’ clubs, commercial clubs and miners’ welfare institutes, a new offence of cheating and the introduction of powers to void unfair bets. 12 Another three clauses, on chain-gift schemes, credit and inducements, and credit, were published on 12 March 2004.13

15. The delayed publication of the bulk of the draft Bill had a knock-on effect on the submission of written evidence both to ourselves and as part of the wider government consultation exercise. We are grateful to those who submitted written evidence to us for complying with a very tight timetable. The Government’s own consultation period ended on 28 February 2004, in the same week we finished taking oral evidence and started considering our Report. It has not, therefore, been possible to incorporate the bulk of the comments made to the Department in this Report.

16. At the time of agreement of this Report, clauses had not yet been issued on the licensing and regulation of the National Lottery; advertising of gambling; travelling showmen’s pleasure fairs; licensing of vessels and vehicles; the Commission’s powers to initiate prosecutions and share information through statutory ‘gateways’; transitional provisions; and provisions on the Scottish Executive’s powers in relation to the licensing of premises in Scotland, and for other arrangements in Scotland.

9 The Report was published on 25 March 2004 as the Fifth Report of the Commons Culture, Media and Sport

Committee, Session 2003-04, Reform of the National Lottery, HC 196-I.We have also noted, where appropriate, that Committee’s comments on the Government’s proposals as they stood in July 2002, Seventh Report, The Government’s proposals for gambling: nothing to lose? HC 827-I.

10 Department for Culture, Media and Sport (DCMS), Modernising Britain’s gambling laws, Draft Gambling Bill, Cm. 5878, July 2003. The Secretary of State’s introduction (page 4) stated “Inevitably, the draft clauses published today are not necessarily in the form they will take when the whole Bill is presented for scrutiny in the autumn.”

11 DCMS, Draft Gambling Bill, Cm. 6014 –I, November 2003.Readers should note that all Clause references in this Report relate to the February 2004 edition of the draft Bill.

12 Available at www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

13 Available at www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

12

17. We note that draft Bills are relatively low in the priority list for Parliamentary Counsel, the Government lawyers who are responsible for Bill drafting. We commend the Department’s efforts to keep us informed about the progress of publication, and its efforts to make policy information available in advance of the draft Bill clauses. However, our work has been hampered by the lack of key clauses until late in our lifetime, and there are some areas in which we have not been able to conduct any scrutiny whatsoever. Many of those who submitted written and oral evidence to us noted that this was unsatisfactory.14

18. Given the points made above, and the deadlines we were working under, we have not been able to examine the draft Bill in as much detail as we would have liked. In particular, we did not examine the Government’s proposals on chain-gift schemes, which were published on 12 March, too late for us to request specific submissions.

19. This situation was exacerbated by the extent to which the detail of the proposed regulatory regime is to be included in secondary legislation, Codes of Practice and licence conditions to be issued by the regulator, which we deal with later in this Report.

20. We recommend that, in future, the Government should ensure that the full text of draft Bills is available to pre-legislative scrutiny committees in good time before they are asked to report. We further recommend that the clauses of this draft Bill yet to be published are, at the very least, referred to an appropriate Select Committee for consideration, and that the proposals relating to other parts of the United Kingdom are considered either by the appropriate devolved parliamentary body or territorial affairs Committee in the House of Commons, depending on whether they cover devolved or reserved matters.

21. We believe that there are a number of key questions yet to be answered by the Government concerning the draft Bill. The most important of these, we would suggest, is the threshold at which casino developments are considered by Regional Planning Bodies and are obliged to contribute to regeneration. We gather that a decision on this matter is due to be made by the Department for Culture, Media and Sport (DCMS) and the Office of the Deputy Prime Minister (ODPM) before the summer of 2004.15 In this context there is a strong case for putting motions before both Houses to renominate this Committee in order for us to make a further Report on those matters. We urge the Government to consider tabling motions to reappoint this Committee so that we can finish the task we have started.

The Committee’s approach to pre-legislative scrutiny

22. Pre-legislative scrutiny committees, whether ad hoc or departmental select committees to which draft Bills have been referred, have adopted different approaches to the task. These have fallen in a continuum between considering the policy behind the proposed legislation and examining the actual wording of the draft clauses. We sought to adopt elements of best practice from a number of our predecessors.

14 For example Caesar’s Entertainment (formerly Park Place Entertainment) Ev 181, para 4, William Hill, Ev 648

15 Memorandum by Secretary of State for Culture, Media and Sport, Ev 566

13

23. The Financial Services and Markets draft Bill Joint Committee16 set itself a particular remit, and concentrated its inquiry on six specific issues. Like us, they asked a Bill team member to be present at every session, and put together panels of witnesses on particular issues who could respond to points not just from the Committee, but also from other witnesses. Unlike us, they had the benefit of a number of consultation documents issued by the Financial Services Authority (which had already been established) regarding the content of codes of practice and delegated legislation.

24. The Joint Committee on the Food Standards draft Bill17 decided that it would not debate or question the basic principles underlying the legislation but made the following comments about scope: “we were also clear that we did not wish to examine the draft Bill clause by clause [...] We saw our role as examining as much what was not in the proposals as what was in them[…].”18

25. The Joint Committee on the draft Communications Bill19 came to a similar conclusion, agreeing that its focus should mainly be on the proposed provisions of the draft Bill, “from their wording to their likely practical effect”.20

26. We chose to look both at the policy behind the draft Bill, particularly those aspects which appeared to be confused and contradictory, and the wording of the draft clauses. Our aims were, first to test the clarity of DCMS’s policy, second, to measure the draft Bill against it and, third, to assess the potential impact of the draft Bill in social and economic terms. Much of our questioning in evidence sessions concentrated on the broad themes of the draft Bill. However, we also recorded many of the specific comments we received on the clauses of the Bill in a table. This schedule was then put to the Department for its response to each comment raised.21

27. This Schedule of Detailed Comments on the draft Bill, including the Department’s responses, is published in this volume as Annex 1. We refer to the points made in it throughout this Report. This proved to be an extremely useful exercise, and we are very grateful to the DCMS for responding to this substantial document so quickly and in such detail.

28. Two other factors influenced our approach: we were told by Lord McIntosh, Parliamentary Under-Secretary, DCMS, that it would be “helpful” if we were to consider the potential contents of the various Codes of Practice mentioned in the draft Bill,22 and we were specifically asked to look at the policy relating to betting exchanges. 23

16 Report of the Joint Committee on the draft Financial Services and Markets Bill, HL 66, HC 465, June 1999.

17 Report of the Joint Committee on the draft Food Standards Bill, HC 276, March 1999.

18 Report of the Joint Committee on the draft Food Standards Bill, HC 276, March 1999.

19 Report of the Joint Committee on the draft Communications Bill, HL 169-I, HC 876-I, July 2002.

20 Report of the Joint Committee on the draft Communications Bill, HL 169-I, HC 876-I, July 2002, para 392.

21 A similar schedule appears in the Report of the Joint Committee on the draft Corruption Bill, Session 2002-03, HL 157, HC 705.

22 Q 27

23 Joint Press Release by the Minister for Sport and the Chairman of the British Horseracing Board, Ev 736

14

29. The Committee also sought to assess the effectiveness of the balance struck by the draft Bill in a number of areas - including the general issues and safeguards contained within it.24 We were particularly minded, throughout the inquiry, to examine the social implications of the draft Bill, and its potential impact on problem gambling.

Key issues

30. While we received a small number of submissions expressing strong concerns about deregulation in principle,25 most of the evidence we received accepted gambling as a legitimate leisure pursuit, but one which needs to be subject to control because of its potential negative consequences.

31. The Committee therefore identified the key issues relating to the draft Bill and through a press release invited written evidence on the following:

• the proposed functions, duties and powers of the Gambling Commission;

• transitional arrangements;

• licensing - the potential increase in the number of licensed individuals and the role of local authorities in premises licensing;

• implications of the increase in size, functions (for example: social responsibility, powers of entry to Members’ clubs) and cost of the Commission;

• whether the Commission should regulate the National Lottery and spread betting;

• the content of the various Codes of Practice referred to in the draft Bill and the associated consultation rights;

• future proofing – will the proposals in the draft Bill create a regulatory structure that is robust over time?

• protection of children and vulnerable persons;

• provisions of the draft Bill relating to social protection;

• Gambling Industry Charitable Trust (now the Responsibility in Gambling Trust) - its funding, role and independence; and the extent of existing research;

• the proposed sectoral framework for gambling regulation;

• casinos - the potential for US-style resort casinos, issues concerning their ability to regenerate rundown areas and their impact on other areas of the gambling industry;

24 The Secretary of State in oral evidence to us referred to “getting the balance right between protecting the

vulnerable and protecting the public interest and modernising what have become increasingly outdated laws” as the “Quintessential nature of this legislation.” (Q 1672).

25 From, for example, the Network of Buddhist Organisations, Ev 689, Mr John Wainwright, Ev 722, Rev. Derrick Hill, Ev 591, the Mothers Union, Ev 729 and R. J. Fear, Ev 670.

15

• betting exchanges - the ability to regulate them effectively and their impact on the rest of the betting industry, particularly bookmakers;

• remote gambling - the ability to regulate this effectively, given the increased accessibility of gambling on the internet and its impact on consumers;

• gaming machines and amusement with prizes (AWP) machines - the impact of the changes in regulation on businesses providing ambient gambling facilities, the potential exposure of children to gambling, the appropriate licensing regime, maximum stakes and prize values;

• bingo clubs – the possible impact of deregulation on existing clubs;

• tax implications – how the proposed deregulation will fit with the existing tax regime for different aspects of gambling;

• society lotteries and prize competitions; and

• the regulatory framework and its context.

2 The regulatory framework

Introduction

32. The draft Bill is, even in its incomplete state, a substantial piece of legislation - over 270 clauses and 10 schedules so far. But at the same time, DCMS has described it as putting in place “a regulatory framework”. 26 The reason for this description is that much of the detail of the new arrangements is not included on the face of the draft Bill. As Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told us, “What the Bill means is very often contained in Codes of Practice and guidance rather than in statute.”27

The objectives of the draft Bill

33. Clause 1 of the draft Bill sets out the three licensing objectives, which are described in the DCMS policy document as “central to the scheme of regulation:”28

• preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,

• ensuring that gambling is conducted in a fair and open way, and

• protecting children and other vulnerable persons from being harmed or exploited by gambling.

26 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para 2.13

27 Q 27


16

These are paraphrased on the DCMS website as: “gambling remains crime free, players know what to expect and are not exploited, and that there is protection for vulnerable persons.”29 These objectives would underlie the regulation of the industry by both the Gambling Commission and local authorities. For example, the Commission would have a duty, pursuant to Clause 14, to pursue and, wherever appropriate, have regard to the licensing objectives when exercising its functions under the Act.

34. We received a number of submissions suggesting additions, and amendments, to these objectives. These, and the response by DCMS, are included in the Schedule of Detailed Comments on the draft Bill (Annex 1). As a Committee, we are content that the objectives in Clause 1 of the draft Bill are balanced and appropriate, and recommend that they be included unamended in the final version of the Bill.

Detail to be issued by the Gambling Commission

35. The central plank of the legislation is the establishment of an overarching regulator for the gambling sector, the Gambling Commission. Much of the guidance provided to and by the Commission will be in the form of codes of practice, policy statements, and licence conditions which may be general or operator specific. These will include a statement of principles to be applied by the Commission under Clause 15 when exercising its regulatory functions30 and its explanation of how these will assist in the pursuit of the licensing objectives.31 The statement will also set out the factors considered in relation to operating licence applications32 and also the procedure for considering applications.33

36. Under Clause 16 the Commission may issue codes of practice about the manner in which facilities for gambling are provided. As discussed below, these will be a central aspect of the regulatory regime and will be linked to the licence conditions to be attached to operating licences under Clauses 62 to 65 of the draft Bill. The detail of the conditions will, in itself, be central to the future regulatory regime.

37. Clause 17 of the draft Bill requires the Commission to prepare guidance to local authorities, which they have a duty to take into account, on the manner in which they exercise their duties under the Act. 34

38. Drafts of all these key documents are to be prepared by the existing Gaming Board, subject to the restrictions on the work that can be done before the second reading of the Bill (see paragraphs 60 to 64) and work on them is due to start later this year.35 As discussed elsewhere in this Report, the Gaming Board will be able to build on existing material, and the DCMS’s policy document refers specifically to the fact that the existing

29 http://www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

30 Clause 15

31 Clause 16 (2)

32 Clause 58(3)

33 Clause 58(5)

34 Clause 17(2)

35 Q 123

17

codes of practice, which much of the industry has voluntarily adopted, will inform the preparation of the new codes to be issued under Clause 16.36

39. We were told by the Department that it did not feel able to prepare drafts of the codes because this should be the job of the Gambling Commission. Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS told us that “the difficulty is compounded by the fact that the Gambling Commission does not exist yet, it will be independent, it will be producing its own codes of practice and guidance, and therefore we cannot see them.”37

40. It is unfortunate that we were not able to see drafts of these key documents during our inquiry, and their absence has led to a considerable amount of uncertainty about the provisions in the draft Bill. Business in Sport and Leisure stated, for example, that it believed that “the codes of practice and guidance which will govern the industry and local authorities, must be published for consultation while the Scrutiny Committee is considering the draft Bill”.38 Dr Martin Rawlings, of the British Beer and Pub Association, stated “If I could quote the Minister formerly in charge of the Gaming Bill, he said ‘uncertainty is an expensive commodity for business’. We certainly would not disagree with that.”39 Susanna FitzGerald QC suggested that “a lot more of the nitty gritty of the law ought to be in legislation, whether primary or secondary, so that it is properly scrutinised by everybody and there is an [objective] standard.”40

41. It is worth noting here that the Joint Committee on the draft Financial Services and Markets Bill was able to consider the draft codes and guidance produced by the Financial Services Authority. We have not had that advantage, so we are not able to come to a definitive view on their content. In the light of these circumstances, in some parts of the Report we have perhaps been more prescriptive than would otherwise have been the case.

42. The fact that we have not been able to scrutinise in draft the various codes of practice and other guidance to be issued by the Gambling Commission, in particular under Clauses 15 to 17 of the draft Bill, is regrettable. We understand the reasons why they have not been produced, given the lack of a formally appointed shadow Commission, which we consider later in this Report. However, their absence hampered our consideration of the draft Bill.

43. However, we did have a chance to question the Gaming Board about its existing codes, and the content and consultation procedures relating to the new codes. Comments on this aspect of the Gambling Commission’s work are included elsewhere in this Report.

Delegated powers

44. The draft Bill would also grant substantial powers for the Secretary of State to make orders and regulations, including, in some cases, powers to amend the Bill itself. These are too numerous to list here. This, in addition to the detail to be provided by the Gambling


37 Q 26

38 Ev 95, para 4.2

39 Q 940

40 Q 1602

18

Commission, creates the degree of flexibility that DCMS has assessed to be necessary in order to make the draft Bill ‘future-proof’. We are grateful to DCMS for providing a delegated powers memorandum, which lists and explains these powers. We are also grateful to the House of Lords Delegated Powers and Regulatory Reform Committee, which has particular expertise in this area, for reviewing the delegated powers contained in the draft Bill. The Lords Committee’s comments are appended to this Report.41

45. The Delegated Powers and Regulatory Reform Committee noted a “number of delegated powers in the draft Bill”,42 drawing attention to the following points:

• the ability of the Secretary of State to amend Clause 142 (Gaming Machines) seems wider than is justified in the delegated powers memorandum;43

• some delegated powers which would appear to have a significant impact on the operation of the draft Bill only require the negative resolution procedure44 to be applied, in particular:

• the ability to make regulations classifying casinos as “large”, “small” or below the minimum size;45

• the ability to make regulations defining different categories of gaming machine;46

• regulations clarifying the scope of definitions contained in the draft Bill;47 and

• the use of Henry VIII powers in the draft Bill (i.e. those which would enable the Bill itself to be amended by secondary legislation) and inconsistency as to whether these should be subject to the negative or affirmative procedure.48

46. We agree with the Lords Delegated Powers and Regulatory Reform Committee’s comments about the delegated powers relating to certain key policy areas in the draft Bill, and recommend that the DCMS should accept the Lords Committee’s points.

47. It is clear that the Secretary of State would be granted significant delegated powers by the Bill. Parliament must retain control over key policy issues. We suggest that there should be a presumption that statutory instruments concerning key policy areas should be subject to affirmative, rather than negative, resolution procedure.

41 Ev 721.The delegated powers memorandum itself is available from the Department for Culture, Media and Sport,

and appears on its website (www.culture.gov.uk/gambling_and_racing/gambling_bill.htm).

42 Ev 721, para 3

43 Ev 721, para 4

44 Ie. a Statutory Instrument (SI) that becomes law on the date stated, but will be annulled if either House (only the Commons for financial SIs) passes a motion within a specified time (usually 40 days) calling for annulment. This contrasts to SIs subject to the affirmative procedure, which must be approved by both Houses (or the Commons alone for financial SIs) before they come into force, or come into effect immediately but require subsequent approval by both Houses to continue in force. The procedure to be applied to regulations and order made under the draft Bill is set out in Clause 263.

45 Clause 10(5)

46 Clause 195

47 Ev 721, para 5

48 Ev 721, para 6

19

48. The Lords Committee has only considered the delegated powers that are currently contained in the draft Bill. It does not consider areas in which further delegated powers might be desirable. We have received a number of comments suggesting that there are areas in which the draft Bill fails to achieve adequate flexibility because it contains detail in primary legislation which could be subject to change, meaning that secondary legislation might be more appropriate. Many of these comments have been set out in the Schedule of Detailed Comments on the draft Bill (Annex 1). Specific examples we have received include that:

a) under Clause 7, “spread betting” could only be included in the definition of “betting”, and thus be brought within the scope of the Bill, by amending the Act;

b) under Clause 79 (5)–(6) financial limits on lotteries should be amendable by secondary legislation, given that historically they have changed over time;

c) the number of gaming machines in specified premises should not be included on the face of the Bill under Clause 142 but in secondary legislation; and

d) the prohibition on the linking of machines in Clause 203 should be removable, without the need for primary legislation.

49. We welcome the acceptance by DCMS in the Schedule of Detailed Comments on the draft Bill (Annex 1), that there are areas in which the draft Bill should contain additional delegated powers.

Regulation, taxation and planning: three legs of a stool?

50. The draft Bill cannot be considered in a vacuum. Its impact is also dependent on wider government policies, which are the responsibility of departments other than Culture, Media and Sport. In particular, the approach to the provision of planning permission for new developments, particularly casinos, and the taxation regime that will apply to all forms of gambling, were referred to by Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, as two of the “three legs of the stool”, the third being the regulatory regime pursuant to the draft Bill itself.49

51. John Healey MP, Economic Secretary to the Treasury, demurred from the view that the link was so overt, but confirmed the importance of considering the issues as part of a whole: “I see it more as table and chairs, where the central and important policy area is deregulation; planning policy and tax policy may be very useful supplementary policy changes we can bring to bear, and certainly from the Treasury point of view we are drawing up the tax chair to this deregulation table.”50

52. The Committee therefore took an interest in planning and taxation policies, both of which are dealt with later in this Report.

49 Q 47

50 Q 376

20

53. In our discussions with Ministers on these issues, we detected some deficiencies in the co-ordination of the approach across Government. We deal with this in greater depth in the chapters on casinos and social responsibility.

3 The regulatory system

The Gambling Commission

54. Clause 12 and Schedule 2 of the draft Bill establish the new regulator for the gambling industry, the Gambling Commission. Clause 13 and Schedule 3 provide that the Commission will be formed from the Gaming Board, which currently regulates some sectors of the gambling industry, but will have considerably greater responsibilities and powers. The Commission will regulate some sectors of the industry that are currently outside of the remit of the Board and some that are not currently regulated at all. It will control the licensing and regulation of casinos, bingo, certain types of lotteries and also gambling that takes place via remote technology. It will also be responsible for regulating the sale, supply and maintenance of gaming machines and for licensing betting operators and pools promoters.

55. It is proposed that the Commission will be funded by licence fees and that, in exercising its functions, it will work and share information with law enforcement and other regulatory bodies such as HM Customs & Excise, the Financial Services Authority and the National Lottery Commission.51 In addition, important roles of the Commission will be to advise the Secretary of State on matters such as the incidence and effects of gambling,52 and to liaise with local authorities53 and the industry.54

56. We received a substantial amount of evidence on the scale of tasks that the Gambling Commission will face both in carrying out its day-to-day responsibilities and its workload during the transitional stages, which we explain in more detail below.

Transition from the Gaming Board to the Gambling Commission

57. Although the clauses of the draft Bill relating to transitional provisions have not yet been published, information about the timetable was included in the additional policy memoranda published in February.55 The first stage of transition will involve the formal establishment of the Gambling Commission. We deal with later stages of transition, in particular transition to the new licensing regime, in Chapter 5 of this Report.

58. It is clear that the creation of the Commission is going to involve a great deal of work, the successful and timely completion of which is essential to the smooth introduction of

51 Clause 20

52 Clause 18

53 Clause 17

54 See, for example, Clause 16

55 Supplementary policy memoranda, policy note 7, February 2004, http://www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

21

the new regime. Much of this will be done by the existing Gaming Board, and work is already underway to:

a) prepare successive codes of practice, which will eventually be subject to extensive consultation with a range of interested parties, as listed in Clause 16 of the draft Bill. Some of these codes will be based on existing codes, but will have to be subject to wider consultation and may have to be amended to reflect wider interests;56

b) prepare systems for the new licensing regime, which will involve issuing many new licenses, and associated guidance; and

c) develop relations with other bodies, for example the National Lottery Commission57 and local authorities.58

59. Clearly, this transitional work requires substantial resources and expertise, and the Gaming Board is doing a great deal to secure this. It has appointed a Transition Manager, Geraldine Meneaud-Lissenburg, who worked as Secretary to the Budd Review, and new Commissioners. 59 Work is underway to develop expertise on remote gambling,60 social issues, betting and illegal gambling. A consultancy study was undertaken on future staffing and resource requirements. Work is also underway on the various codes of practice. An initial grant of £500,000 was been made by the Department to fund these activities;61 £2.5 million has been made available by DCMS for the 2004-05 financial year.62

60. When we took evidence from the Gaming Board in December, the Chairman, Peter Dean, was relatively confident that the Gambling Commission, once up and running, would have the resources needed to carry on its work. However, he expressed serious concerns about the transitional stage: “I understand that there are question marks of a legal and constitutional nature as to what it is and is not possible to do in advance of Second Reading or the Act being passed into law. We are quite clear that work does need to be got on with in the interests of orderly transition and we are discussing that with the DCMS and I shall be surprised and disappointed if we cannot find a way through to enable us to get on with the work which needs to be done.” 63

61. He added later during the same session “From the point of view of the standing of the Board, once the four new members are in place from 1 January next year the way I see it is that the Board will function wearing two different hats. We will continue, obviously, discharging our statutory duties as the Gaming Board but we shall also operate as the prospective Commission. What I cannot tell you at this stage, and this really is in the hands of the DCMS, is to what extent we are able to get on with the work which needs to be done

56 Q 145

57 Clause 20

58 Clause 17

59 Q 124

60 As noted by the Secretary of State, Ev 566

61 Q 119

62 Q 1674

63 Q 122

22

in that latter capacity. We are talking to the DCMS about that and they know our views very well.” 64

62. The Government stated in its policy document that it “proposes in due course formally to designate the [Gaming] Board as the shadow Commission.”65 We were told by the Secretary of State that this will not happen until the second reading of the Gambling Bill. 66 Until then, DCMS maintains that there are constitutional, legal and accounting limitations on certain transitional expenditure. Following correspondence from the Gaming Board on this point, in which Peter Dean referred to the current situation as “highly frustrating and undesirable”67, we asked the Department for its position. The response was disappointing:68

“The Department has received the request from the Gaming Board for £2.5 million for financial year 2004/05 to fund additional work on transition. We are planning to make additional money available to the Board during financial year 04/05 to cover their work on transition to the Gambling Commission.

“The Department also acknowledges the issues raised by Peter Dean in paragraphs 8 and 9 of his letter. In practical terms alone, it would be ideal if the Board were able to spend money now on the full range of preparations necessary for the assumption of the new responsibilities it will carry as the Gambling Commission. Nonetheless, the Department accepts that the activities of the Board in this transitional period will continue to be constrained by government accounting rules that require Parliamentary consent before expenditure can be incurred on practical preparations for new services. The Department does hope, however, that following parliamentary consent it will be possible for the Board to make substantial progress during the 2004-05 financial year with the resources provided by the Department for this purpose. Government Accounting rules do also make provision for some preparatory expenditure following second reading of the relevant Bill.”

63. Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, Department for Culture, Media and Sport, reiterated the point during oral evidence 69 and the Secretary of State acknowledged that much more had been done in the case of the Office of Communications. 70

64. We are very disappointed that not enough has been done to ensure that the Gaming Board has the resources and authority to conduct its diverse and complex transitional responsibilities. We recommend that DCMS and HMT address this together as a matter of urgency. If necessary, a paving Bill should be presented to Parliament to establish the necessary authority for this expenditure. In the meantime, DCMS must do all it can to ensure that additional funding requested by the Gaming Board for 2004-05 is made available and can be used to full effect.

64 Q 124


66 Q 1673

67 Ev 43

68 Ev 736

69 Q 1674

70 Q 1676

23

Day to day Gambling Commission resources

65. We were told by witnesses from all sectors that it was essential to ensure that the regulator should be properly resourced. 71 Frank Fahrenkopf Junior of the American Gaming Association spoke powerfully about his experience in Nevada: “It is our experience that, in order to have any gaming that has any integrity, you must have strict rigorous regulation with law enforcement oversight […] you must make the commitment, whatever it costs, to make sure that there are properly trained regulators in place.” 72

66. The Regulatory Impact Assessment accompanying the draft Bill states that the annual running costs of the Gambling Commission, once established, will be between £9 million and £11 million.73 This was confirmed to us by Peter Dean, Chairman of the Gaming Board: “We have gone with our consultants into what is required to be done both in transition and in steady state thereafter with some care using the best estimates available to us about workload, both in relation to the existing industry as expanded and in relation to the wholly new areas such as remote gambling and betting. We are confident that the figure that you have quoted [£9 million to £11 million] should be adequate to do the regulatory job. The three-fold increase is actually quite substantial. One would expect an increase of that nature to be sufficient to cope with more than a proportionate increase in the size of the industry regulated.” 74

67. In a subsequent letter to us, Mr Dean confirmed that this was still the case, although the transitional period could last for longer than expected: “We had hoped that we might deal with the short-term bulge in applications by diverting resources from the monitoring function, but we now think that we will need some additional staff (over and above the 200) for perhaps the first year or so of the Commission’s life.”75

68. The Government intends that the Commission, once established, should recover its costs through the receipt of licence fees, an arrangement which the Gaming Board said it would favour.76 We comment further on this system in later chapters of this Report. We note at this point that it will be important for the Government to provide the necessary funding in the early stages when the Commission is not collecting the full amount of fees.

69. It is essential that the Gambling Commission has sufficient resources, once established, to carry out its diverse and substantial responsibilities. These include various new and complex areas, such as social responsibility and remote gambling. Once the issue of transitional funding has been resolved, we would expect DCMS and the Gaming Board to maintain an ongoing dialogue about whether the present figure of between £9 million and £11 million needs to be reviewed in the light of experience, and of the assumption of any new responsibilities that are suggested in this Report which the Government accepts. We note that a recent press report referred to a

71 For example, Business in Sport and Leisure – Ev 95, para 4.2: “it is of utmost importance that the Gambling

Commission is well resourced for its new responsibilities”.

72 Q 875

73 DCMS, Draft Gambling Bill: Regulatory Impact Assessment, Cm. 6014 – III, November 2003, para 1.49

74 Q 126

75 Ev 43, para 5

76 Q 128

24

significantly higher estimate, of £14 million.77 On the basis of the estimates we have seen, even the higher figure would be likely to be a small fraction of the additional revenues that will be generated both for the industry and the Government.

The powers of the Gambling Commission

70. Clause 1 of the draft Bill imposes a duty on the Gambling Commission to keep the British gambling industry crime-free. It is indeed crucial that the current reputation of the industry and its regulator, the Gaming Board, is maintained under the new arrangements. Concerns about a possible link between expansion and crime were expressed by a number of those who submitted evidence.78 We therefore welcome the fact that the Commission is given additional powers of inspection and sanctions under the draft Bill, which we set out in detail in this chapter.

71. The draft Bill places significant responsibility for regulation on the industry. To supplement this the draft Bill gives the Commission far greater powers in setting licence conditions,79 in investigating non-compliance and in sanctioning those that breach the terms of their licences. Ultimately, the Commission would be able to initiate proceedings through the Crown Prosecution Service directly, rather than relying on the police to do this.

Licensing

72. The Commission will be responsible for the grant or refusal of operating licences under Part 5 of the draft Bill. It will also be responsible for issuing personal licences under Part 6. In the context of its licensing role, it would have a number of substantial powers, including to amend conditions attached to licences and, ultimately, to revoke a licence. We deal with issues relating to the licensing process and the sanctions available to the Commission later in this Report (Chapter 5).

Inspection

73. Part 14 of the draft Bill provides for the appointment of gambling inspectors who may or may not be employees of the Commission.80 ‘Authorised persons’ are also identified primarily as local authority appointees, Fire, Health and Safety inspectors, Ships inspectors, Customs & Excise officers and others prescribed by the Secretary of State.81

74. The inspection rights granted to police and gambling inspectors are wide ranging. Clause 243 provides police and inspectors with a general right to enter any premises if there is suspicion of an offence being committed or about to be committed on the premises.

77 Observer, March 14 2004

78 For example the Evangelical Alliance, Ev 72, para 6; Q 1082 [Local Government Association]

79 Clauses 62 to 66

80 Clause 241

81 Clause 242

25

75. Clause 244 gives police, gambling inspectors and authorised persons a right of entry to premises on reasonable suspicion that facilities for gambling are being provided on the premises. Such entry must be in order: -

a) to discover whether facilities for gambling are being provided;

b) to determine whether an operating licence is held; and

c) to determine whether facilities are being provided in accordance with conditions of a licence.

76. Clause 254 provides police, inspectors and authorised persons entry rights by reasonable force in the exercise of their inspection rights. Clause 245 gives gambling inspectors and police the power to enter premises used by the holder of an operating licence. Authorised local authority officers have entry rights in respect of premises applying for or holding Category D permits82 whilst police and gambling inspectors have entry rights in respect of clubs.83 All have entry rights in respect of premises subject to premises licence applications.84 There are similar rights in respect of registered lottery premises and premises in respect of which a temporary use notice has been made.85

77. Clause 252 provides inspectors, police and authorised persons, when exercising powers under Part 14 of the draft Bill, to:

a) inspect the premises and any machine or other thing on them;

b) question any person on the premises;

c) require access to written or electronic records;

d) require copies of entries; and

e) remove or retain evidence if reasonable suspicion exists of an offence under the draft Bill or of a breach of a term or condition of a licence.

78. An offence is committed by any person who without reasonable excuse obstructs or fails to co-operate with those exercising their powers of inspection under Part 14 of the draft Bill.86

Investigation

79. The Gaming Board continues as it has done in the past to investigate rigorously applications for the various certificates it has statutory discretion to grant or refuse.87 Similarly, it has never hesitated to take action both through the licensing courts and through revocation procedures to act against licence holders or individuals believed to be

82 Clause 246

83 Clause 247

84 Clause 248

85 Clauses 249 and 250

86 Clause 255

87 Q 224 [Gaming Board]

26

acting improperly, and there are many examples of this. In doing so successfully, it has over many years gained a reputation worldwide for its expertise and commitment, albeit often under extreme resource pressure.88

80. This can only be achieved through thorough investigation of applicants and on-going supervision. In the past the Board has relied heavily on its relationship with the National Criminal Intelligence Service (NCIS), Her Majesty’s Customs & Excise (HMCE) and others, including overseas law enforcement agencies and regulators. This has been achieved in some instances through informal memoranda of understanding (e.g. NCIS), however, these informal arrangements have not been without difficulties. It is, therefore, a policy objective to provide for formal gateways to enable the Commission to obtain information in respect of its responsibilities for the application process, for monitoring licensees and for enforcement and prosecution matters.89 These provisions have not yet been published.

Enforcement

81. A significant policy objective of the draft Bill is to allow the Commission “to have full and effective powers to regulate licence holders, to investigate possible offences under the Bill and to initiate criminal proceedings” (including unlawful gambling).90 Currently the Gaming Board is able to initiate private prosecutions under the provisions of the Magistrates’ Courts Act 1981. However, this is a course that is rarely taken, the Board in the past having relied on police to initiate proceedings even in respect of gaming licensees. “Both [the Board and Police] […]acknowledged some difficulties in tackling illegal gambling due to a lack of police time and/or expertise to pursue gambling offences as rigorously as the Board would have wished.”91

82. It is therefore intended under the draft Bill that the Commission should have direct access to the Crown Prosecution Service, which can charge and/or continue prosecutions on the basis of investigations carried out by the Commission. Appropriate amendments to the Prosecution of Offences Act 1985 will be necessary to achieve this.92 These provisions have not yet been published.

Conclusions

83. The inspection powers and procedure clauses of the draft Bill are extensive, particularly in respect of police and gambling inspectors. They go much further than do those contained in Section 43 of the Gaming Act l968, and appear to meet a number of shortcomings in existing legislation. For example: currently the Board’s inspectors have no rights of entry or inspection in respect of authorised machine suppliers; warrants are

88 See, for example, Q 874 [BACTA]

89 Supplementary Policy Memorandum 4, February 2004, DCMS: www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

90 Supplementary Policy Memorandum 3 para 7, February 2004, DCMS: www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

91 Supplementary Policy Memorandum 3 para 2, February 2004, DCMS: www.culture.gov.uk/gambling_and_racing/gambling_bill.htm. See also Q 229

92 Supplementary Policy Memorandum 3 para 8, February 2004, DCMS: www.culture.gov.uk/gambling_and_racing/gambling_bill.htm

27

needed in respect of unlawful gaming, often leading to a failure to obtain necessary evidence. Entry to premises other than those licensed where records may be held is not permitted without a warrant; and there are no rights of entry into clubs registered under Part 2 or 3 of the Act, and records are only obtainable through the service of a notice. 93

84. Therefore Part 14 of the draft Bill appears to provide adequate powers for the Commission’s Inspectors, police and others to carry out their inspecting and supervision functions and importantly to investigate unlawful gaming. Likewise, the policy objective in respect of gateways should enhance the Commission’s ability to investigate applications fully and monitor the activities of licensees. Similarly, the intention that the Commission will be able to initiate proceedings directly through the Crown Prosecution Service must be seen as an essential tool in the objective of keeping gambling crime free.94 This will be particularly important in the context of the role that the Commission will have in relation to betting on a wide spectrum of sports events (see Chapter 11). We comment on the sanctions at the disposal of the Commission in the context of its licensing function in Chapter 5 of this Report.

85. Peter Dean, Chairman of the Gaming Board, summed up these powers as “sufficient to do the job”. 95 We agree. The sanctions given to the Gambling Commission in Clauses 95 to 97 of the draft Bill and the direct access to be given to the Crown Prosecution Service, represent a substantial increase in the regulator’s capacity to enforce compliance. We are satisfied that these additional enforcement powers are sufficient. We also consider the additional powers in Part 14 of the draft Bill, together with the establishment of formal gateways, to be adequate for the Commission to inspect gambling operators and premises. However, we emphasise that the Commission’s success can only be guaranteed if adequate resources are made available to it.

The remit of the Gambling Commission

86. Two major sectors of the gambling industry are not included in the remit of the Gambling Commission: the National Lottery and spread betting.96 We deal with the Government’s proposals for the National Lottery in the next chapter of this Report.

Should the Gambling Commission regulate spread betting?

87. Spread betting originated as an alternative way of speculating on financial instruments. While a significant amount of such betting continues to be financial, an increasing amount now relates to sporting events.

88. Spread betting has historically fallen within the remit of the Financial Services Authority (the FSA), and is governed under the Financial Services and Markets Act 2000.97

93 Qq 228-9

94 Q 229

95 Q 224

96 Other gambling activities outside the Commission’s remit will be certain lotteries and particular categories of gaming machine.

97 A summary of the current system has been provided by the FSA (Ev 680).

28

Although regulated by the FSA, spread betting firms have also opted to register as bookmakers.

89. The Budd review identified three options for the future regulation of spread betting:

a) transfer of responsibility to the Gambling Commission;

b) splitting the regulation of spread betting between the FSA and the Commission; and

c) leaving responsibility with the FSA.

90. It concluded as follows: “We recommend that spread betting continues to be regulated by the Financial Services Authority, at least until the Gambling Commission is well-established when the issue should be reviewed.”98

91. DCMS has followed the Budd recommendation. Clause 7(1), which defines “betting”, expressly excludes spread bets (defined in Clause 7(4)). Because spread bets are not “betting” for the purposes of the draft Bill, neither are they “gambling” as defined in Clause 2. Accordingly, they fall outside of the scope of the draft Bill and of the Gambling Commission’s remit.99

92. In oral evidence, Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told the Committee that “Spread betting is regulated by the Financial Services Authority. As far as we know it works. Our view is, if it ain’t broke, don’t fix it”.100 Sporting Index, one of the major spread betting companies, praised the way the FSA has regulated its business, and has described the FSA as having developed an extensive experience and understanding of spread betting.101

93. Sporting Index102 argued for the current regulatory system to be maintained, for the following reasons:

• it would take time for the Gambling Commission to develop an understanding of the industry and, in the meantime, consumer protection would be threatened;

• spread betting is different to the rest of the gambling industry because of the risk profile of its products;

• FSA regulation is more appropriate for spread betting which is a derivative product; and

• the FSA rules are more stringent than those the Gambling Commission would be likely to develop and, therefore, provide greater consumer protection.103

98 DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 27.8

99 There is one exception to this general position. The new statutory offence of cheating in Clause 30 also applies to cheating at spread betting. This is achieved by the statement in Clause 30(4) that “Section 7 shall have effect as if it did not exclude spread bets”.

100 Q 9

101 Sporting Index, Ev 621, para 4.1

102 A sports spread betting company

103 Sporting Index, Ev 621, para 5

29

94. The Gaming Board was originally happy with Budd’s conclusions regarding spread betting. However, it has subsequently submitted evidence referring to the “likely activity of spread betting companies in new casinos”104 and other gambling premises. It told us that “we would be uncomfortable about a position in which the Gambling Commission regulated every gambling activity within particular premises except for spread betting.” 105 The Gaming Board has suggested that financial spread bets should be regulated by the FSA and that the Commission should regulate all other spread bets.106 This option did not, however, find favour in the Budd review: “We think that this would be messy, and however closely the two bodies worked there would be inconsistencies between them.” 107

95. A number of organisations and individuals submitted evidence suggesting that regulation of spread betting should be transferred to the Gambling Commission, given the regulatory advantages of having one single regulator. These included the Royal College of Psychiatrists,108 the British Greyhound Racing Board,109 Barcrest,110 Gordon House,111 Professor Griffiths, Professor Orford and Dr Emanuel Moran.112

96. DCMS earlier stated that it will “keep the position [as regards the future regulation of spread betting] under review”113 and reiterated this position in the Schedule of Detailed Comments on the draft Bill (Annex 1), stating that the Bill will include a provision for switch-over to take place. Sporting Index has suggested that any re-evaluation of the regulation of spread betting should be deferred for five years to allow the Commission to “bed down before embarking on reviewing this extremely complex area”.114

97. The Committee believes that there is a strong case for a single regulator for the whole of the gambling industry, which we expand on in the next chapter of this Report. We note the arguments made by the Gaming Board and others as to why the Gambling Commission should assume responsibility for certain aspects of spread betting. However, given the potential difficulties of disentangling sporting spread betting from spread betting on other products, as noted by the Budd review, we recommend that this should be monitored and made subject to review after five years or so, rather than at the time of Royal Assent. We note that this flexibility could be achieved by including a power for the Secretary of State to include spread betting in the definition of “betting” in Clause 7 of the draft Bill. In the meantime, liaison between the Gambling Commission and the FSA in this area will be crucial.

104 Ev 22, para 18

105 Ev 22, para 20

106 Gaming Board, Ev 22, para 20 and Q 167 and Q 177


108 Ev 45, para 20

109 Ev 373, para 15

110 Ev 641, para 1.6

111 Ev 477, para 2

112 Q 266 and Q 267

113 Position Paper: Licensing of Betting Operators, DCMS, May 2003, para 24

114 Ev 621, para 5.6

30

4 The National Lottery

Regulation of the National Lottery

98. Under the proposals in the draft Bill the National Lottery will continue to be regulated by the National Lottery Commission (NLC). The NLC came into being on 1st April 1999 and is answerable to the Secretary of State for Culture, Media and Sport. Its statutory duties are set out in the National Lottery Acts 1993 and 1998. They are to:

• ensure that the Lottery is run and promoted with all due propriety;

• protect the interests of players; and subject to these;

• maximise the returns available for the good causes.115

Proposed changes to the licensing process

99. The Government has proposed considerable changes to the licensing of the National Lottery, including moving away from the requirement for a single major licence competition every seven years. This is designed to inject more competition into the process by allowing the National Lottery Commission to offer a range of licences to operate different parts of the National Lottery. There are currently two kinds of licence: a licence under Section 5 of the National Lottery Act 1993, which is granted to a company to run the National Lottery; and one or more licences under Section 6 of that Act, granted to companies to promote lotteries as part of the National Lottery.

100. Under the proposals there will no longer be a single Section 5 licence, nor any distinction between Section 5 and Section 6 licences. The Government believes the proposals will offer greater scope for new ideas and, by introducing licences of different duration, allow for increased opportunities to take advantage of technological change.116 It is felt that changes to the licensing approach are needed to attract more competition.

101. The last licence competition took place in 2000 and was not a great success. Only two bidders entered the competition, which was fraught with legal controversy. Ultimately, the licence was awarded to the existing Section 5 licensee, Camelot. Fears have been expressed that the existing licensee may have such an incumbent advantage that other firms are deterred from bidding.117 Those that have taken this view include the National Audit Office and the Public Accounts Committee of the House of Commons.118

115 National Lottery Commission Corporate Plan 2002-03 to 2004-05 National Lottery Commission. The importance of

the hierarchy was emphasised by Moira Black CBE, Chairman of the National Lottery Commission, when giving oral evidence (Q 1172).

116 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003.See also National Lottery Licensing and Deregulation Decision Document, July 2003, DCMS, TSO and supplementary policy note 8, February 2004, DCMS.

117 Q 1202 [National Lottery Commission]

118 Committee of Public Accounts, Sixty-fifth Report of the Session 2001-02, Awarding the New Licence to Run the National Lottery, HC 881.

31

The multi-licence approach

102. The multi-licence approach is set out in the policy document accompanying the draft Bill, a decision document and a supplementary policy note by the Department for Culture, Media and Sport.119 According to the Government, the approach would allow “the NLC […] to offer for competition a range of licences to operate different parts of the Lottery. There could be, for example, not only a competition to operate the main Lotto game but also separate licence competitions for scratch cards and internet-based products […]. We will also allow the various licences to be of different duration, to take account of technological change and the different periods required for companies to make a return on their investment”.120

103. The NLC is in favour of these changes: “We believe that the regulator should be able to decide when preparing for the next competition whether to offer one or more operating licences. It would take a strategic view on how the Lottery should develop, including the timing of major developments and the market position, before deciding on the shape and length of licences”.121

104. Serious doubts have, however, been expressed about whether the multi-licence approach is the best way of introducing competition. Michael Grade, Chairman of Camelot plc, told the Committee: “I think there are two tests that have to be applied to any proposals that affect the future of the National Lottery […] that conditions are conducive to a proper competition for the next licence […] and the second condition is that no undue risk is taken with the returns to good causes. We believe that the multi-operator approach which is being proposed and advocated by the National Lottery Commission fails both these tests quite spectacularly. To hear the Chairman of the National Lottery Commission say that the multi-licence approach is just a bit different […] really explains that they do not fully appreciate the impact of the multi-operator approach.”122

105. Simon Burridge, former Chief Executive of the People’s Lottery, an unsuccessful bidder for the Section 5 licence, expressed similar sentiments to the Commons Culture, Media and Sport Committee, stating that the Government “is going down a cul-de-sac trying to change the rules in the way it proposes. Faced between the choice of Camelot in perpetuity and the Government’s new proposals, with the greatest reluctance I think I would volunteer for Camelot in perpetuity as the lesser of two evils.” 123

106. Camelot expressed concern that the multi-licence approach could be detrimental to the National Lottery if rival operators are forced to compete with each other for sales: “Allowing a number of operators to run different parts of The National Lottery could result in lower net lottery sales revenue and higher costs, compared with those achieved by a single operator. This in turn would reduce the economic value of the Lottery, thereby reducing returns to Good Causes. By contrast, a single operator has both the incentive and

119 National Lottery Licensing and Deregulation Decision Document, July 2003, DCMS, TSO and supplementary policy

note 8, February 2004, DCMS.

120 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, Annex, page 58

121 Ev 424, para 25

122 Qq 1245-46 [Camelot plc]

123 Commons Culture, Media and Sport Committee, Fifth Report of Session 2003-04, Reform of the National Lottery, HC 196-II, Q 147.

32

the ability to develop the Lottery more efficiently than multiple operators”.124 Again, Simon Burridge made the same point: “It would provide more competition, but would it provide a greater return for good causes? I think the answer categorically is ‘No’.” 125

107. We received evidence on this issue from the National Lottery Commission, Camelot and others. We were sent copies of a report by Frontier Economics consultancy, commissioned by Camelot, and a response to that report by NERA, commissioned by the NLC. Given the time pressure we were working under, we could not examine these in detail, and note that the Commons Culture, Media and Sport Committee was in a position to scrutinise them in greater depth.

108. The proposed changes would significantly affect the role of the NLC, giving it a more pronounced proactive and strategic role in promoting the Lottery. Instead of having one large competition every seven years, the NLC would need to maintain a continuous review of the market. In oral evidence, Michael Grade said that the proposed changes would give the National Lottery Commission responsibilities that are not appropriate for a regulator. “A multi-operator approach would leave the NLC, the regulator, in commercial day-to-day operation of the National Lottery – a role for which they were not recruited, they were not intended, and for which clearly no regulator is really suited”.126 And, for a third time, Simon Burridge from the People’s Lottery concurred. 127

109. The Secretary of State in correspondence defended the proposals: “I do not believe that the proposals are flawed as they offer flexibility for the future […]. We do not accept that the new arrangements would lead to less money for good causes.”128

110. We questioned the NLC about this in the following terms:129

“Chairman: I have to ask you this. The last licence round was not a spectacular success from the Commission’s point of view, and that was just a straightforward two bids from two potential players for one licence. What you are saying is that you may well be granting several licences. How on earth is Parliament and the public to have any confidence in your ability to do that more complex licensing process when last time it was such a shambles? I am sorry to put it to you so bluntly, but there is a real issue of confidence in the ability of your Commission to do this task.

“Ms Black: The National Audit Office report clearly looked into this and concluded we had good reasons for the things that we had done. In terms of ability to run a competition which is more complex, we are not talking about lots of licences; two or three maybe.

“Chairman: Only to run one weekly draw. You do not intend to run more than one.

124 Ev 459 [Camelot plc supplementary memorandum]

125 Commons Culture, Media and Sport Committee, Fifth Report of Session 2003-04, Reform of the National Lottery, HC 196-II, Q 157

126 Q 1246 [Camelot plc]

127 Commons Culture, Media and Sport Committee, Fifth Report of Session 2003-04, Reform of the National Lottery, HC 196-II, Q 157

128 Ev 566

129 Qq 1203-5

33

“Ms Black: We currently expect – but clearly we have not consulted – one licence for the main jackpot draw, yes. We would not expect more than that, but that is obviously a part of the National Lottery. But the other bit of the legislation that we are anticipating is changes to the Commission itself, certainly in terms of size and having an appointed chairman rather than a selected chairman.

“Chairman: So it would be bigger.

“Ms Black: We have the potential to make it bigger, and also to have our chief executive and another executive on the Commission, which we think is also important.”

111. Given that the NLC’s annual budget of around £4 million130 is around the same as that of the Gaming Board,131 we are concerned about an increase of this nature in the context of the establishment of a single regulator for the rest of the gambling sector. We deal with this important issue in the next chapter of this Report.

112. We look forward to the Commons Culture, Media and Sport Committee’s Report on this issue, which is to be published as we conclude consideration of this Report.132 Having heard the arguments from various sources on the Government’s proposals, we are not convinced of their practicality, and believe that the DCMS should reconsider its future policy in this area.

Should the Gambling Commission regulate the National Lottery?

113. Bound up with the issue of multiple licensing is the question of how the National Lottery should be regulated. The Government believes that a separate regulator is necessary to protect the Lottery’s special status and ensure that the returns to good causes are maximised. The evidence received from the National Lottery Commission stated that a separate regulator is needed to avoid conflicts of interest, which could arise within a single regulator for the gambling industry because of the duty to maximise returns to good causes. The submission also noted that a single regulator for the Lottery has the benefit of maintaining “close links between the competition process and ongoing regulation” and the “ownership of lottery assets”.133

114. The Secretary of State for Culture, Media and Sport, giving evidence on this point, stated the Department’s position very clearly: “it is our view that there are benefits in plural regulation rather than having a single regulator.” 134 Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, added that “the principal reason why we did not have the National Lottery coming under the Gambling Commission was that the National Lottery Commission has an additional objective of maximising the return to good

130 Q 1228

131 Q 126

132 The Report was published on 25 March as the Fifth Report of the Commons Culture, Media and Sport Committee, Session 2003-04, Reform of the National Lottery, HC 196-I.

133 Ev 424, para 14

134 Q 1679

34

causes, whereas the Gambling Commission has the three objectives of excluding crime, [promoting] fairness, and protecting the vulnerable.” 135

115. The Committee heard evidence from a wide range of sources that the National Lottery should fall within the remit of the Gambling Commission, including the Casino Operators’ Association,136 Littlewoods Gaming Limited,137 the Royal College of Psychiatrists,138 Gala Group,139 Barcrest,140 Gordon House,141 Professor Griffiths, Professor Orford and Dr Emanuel Moran.142

116. A common argument for this is that the Gambling Commission should regulate the entire gambling industry to ensure a unified approach to regulation, and in particular social responsibility. The Royal College of Psychiatrists stated, for example that “it is […] vital that the Gambling Commission should regulate all types of gambling, including spread betting and the National Lottery”.143

117. We note also that the NLC faces its own internal conflict of interest through its responsibilities to protect players, whilst also maximising returns to good causes.

118. It was put to us that having separate regulators for the National Lottery and the rest of the gambling industry raises the potential for conflicts between the two. While the Gambling Commission and the National Lottery Commission would have separate responsibilities, there are areas where a decision made by one could impact on the responsibilities of the other and lead to territorial conflict. For example, Camelot currently operates online scratchcard games. If the Gambling Commission received an application from an operator to provide a similar service there could be a conflict if the National Lottery Commission felt that the National Lottery’s position should be protected. Leisure Link noted that, in such a case, it is not clear whose views would take priority.144

119. An answer by Mark Harris, Chief Executive of the National Lottery Commission, in response to a question on remote gambling products, demonstrated the potential complexity of the situation:145

“If the nature of the product was that it was an entirely lawful product, then I do not think there is any reason why the Gambling Commission should intervene. If it were a threat to the National Lottery and that threat were made out, and the Government decided to change policy on what the National Lottery could and could not do, that would be a matter for the Government, but I do not believe it would be a matter for the Gambling Commission. If however what was being offered was an illegal lottery,

135 Q 1680

136 Ev 140, para 11(a)(c)

137 Ev 655, para 3.2

138 Ev 45, para 20

139 Ev 598, para 3.1

140 Ev 641, para 1.3

141 Ev 477, para 2

142 Q 266 and Q 267

143 Ev 45, para 20

144 Ev 600, para 5

145 Q 1193

35

I think the Gambling Commission would have an interest, because it has the enforcement powers. If it were not, I do not believe that would be a matter for the Gambling Commission. Otherwise, it would be being drawn into the conflict of interest problem.”

120. Under Clause 20 of the draft Bill, the Gambling Commission would be required to consult the National Lottery Commission if it “becomes aware of a matter about which the National Lottery Commission is likely to have an opinion”. In its written evidence to the Committee, Camelot suggested that “the requirement [for the Gambling Commission] to consult with the National Lottery Commission ought to be mandatory and extensive […] [to avoid] inconsistency and omission”.146 The Government clarified in the Schedule of Detailed Comments on the draft Bill (Annex 1) that “in relation to matters arising under the Gambling Bill the Gambling Commission will make the ultimate decision”.

121. There is no easy solution to the issue of relative responsibilities. The Committee considered a number of different options, including transferring all the NLC’s responsibilities to the Gambling Commission, and some form of hybrid solution. There are advantages and disadvantages of each.

122. Creating a single regulator for the gambling industry could create internal conflicts for the regulator, which will always be cognisant of the National Lottery’s special status. The Gaming Board noted the conflict of interest that could arise by including the National Lottery within the Gambling Commission’s remit, “so long as the National Lottery has as one of its core objectives to increase the amount of money raised for good causes, that is something which would create a conflict of interest which the Gambling Commission could well do without”.147

123. On the other hand, this system would create economies of scale. Furthermore, the Gambling Commission could be better placed to protect the interests of the National Lottery if this were made one of its objectives, as it would have to consider the National Lottery when licensing other games. It would also ensure that a consistent approach is taken to social responsibility across the gambling sector, an area in which Camelot has been very active.148

124. One other option the Committee considered was a hybrid measure – to make the Gambling Commission responsible for player protection issues and ensuring the probity of the Lottery, while the National Lottery Commission would maintain its responsibility for maximising the returns to good causes and running the licence competitions. Separating the regulatory functions would allow each regulator to specialise in specific areas. Although specifically excluded in its remit from considering the National Lottery, the Budd Review nevertheless thought it significantly important to refer to the possibility of splitting “the regulatory role of the NLC […] from its sponsoring and commercial roles”.149

146 Ev 447, para 1.2

147 Q 166 [Mr Dean]

148 Q 1281

149 DCMS, Gambling Review Body Report, Cm. 5206, July 2001, paras 2.2 and 35.5

36

125. Separating the regulatory functions would, however, mean that licensees would be subject to the rules of two different regulators. Michael Grade of Camelot commented, “Anything that blurs the lines between competing regulators regulating one business could be a recipe for conflict”.150 The NLC made a similar point.151

126. The Committee is attracted to the idea of a single regulator, and takes the view that there would be distinct advantages for the National Lottery if it were to be included within the remit of the Gambling Commission rather than excluded from it as proposed in Clause 222 of the draft Bill. We are not convinced that the proposed structure will ensure consistency of approach across the gambling sector, particularly on key issues such as problem gambling and player protection.

127. We were also not convinced that the National Lottery Commission has fully thought through the implications for its work of a multi-licensing system and the relative roles of itself and the new Gambling Commission. For example, in this context, we were told by Moira Black, Chair of the NLC:152 “If I can just clarify what we think our proposals are, in a sense, we do not have them right now. We are still waiting to see what happens.”

128. Despite the apparent deficiencies of the National Lottery Commission, given the comments we have already made about the volume of the Gambling Commission’s transitional responsibilities, we do not think that it would be feasible to transfer the regulation of the National Lottery to the Gambling Commission before the next licence competition for the Lottery, in 2007.153

129. We accept that the National Lottery Commission will continue to regulate the National Lottery after the Gambling Commission comes into existence. As soon as possible after the next licensing round is complete, this arrangement should be monitored with reference to the possibility of placing the Lottery under the Gambling Commission, and to the outcome of the value for money study referred to below.

130. In the meantime, we believe that DCMS should do all it can to ensure that there are close links between the Gambling Commission and the National Lottery Commission, and that the Clause 1 objectives are reflected in the NLC’s work, particularly on problem gambling. For example, Michael Grade of Camelot suggested that one way of encouraging the two bodies [the National Lottery Commission and the Gambling Commission] to work together would be to have the “Chairman of the NLC sitting ex officio on the new [Gambling] Commission just to be present and to argue the case where there is conflict between [the …] Lottery and the other gaming products”.154 We so recommend.

150 Q 1276 [Michael Grade]

151 Q 1171

152 Q 1185

153 The National Lottery Commission estimated the timetable for the next licence to be as follows: “the regulator will need to start consultations several years before the expiry of the present Section 5 licence in January 2009. By way of illustration, the regulator might begin consultations in the second half of 2005 and publish a draft scheme early in 2006 for a competition the following year.” [Response by the NLC to the Review of Lottery Licensing and Regulation].

154 Q 1274 [Michael Grade]

37

131. In the light of the fact that there will be two regulatory structures, we recommend that there should be a detailed value for money study of the National Lottery Commission two years after the Bill receives Royal Assent.

5 Licensing

Introduction

132. The draft Bill proposes a three-tier licensing procedure for the majority of the gambling industry:155

a) licences will be required for bodies that provide facilities for gambling both on premises and remotely, as well as for the manufacture, sale and maintenance of certain gambling equipment (operating licences);156

b) licences will be required by individuals carrying on particular functions within the industry (personal licences);157 and

c) licences will also be required for premises on which commercial gambling takes place (premises licences).158

Operating and personal licences will be the responsibility of the Gambling Commission. Premises licences will be the responsibility of local authorities.

Operating licences

133. The granting of operating licences by the Commission would be regulated by Part 5 of the draft Bill. This sets out the classes of operating licences that may be issued; provides detail as to the duration of operating licences; and specifies conditions which may and may not be attached to operating licences. In addition, Part 5 outlines the factors the Commission should consider when determining a licence application and gives the Commission powers to renew, review or revoke licences. When considering an application for an operating licence, the Commission may have regard to the integrity and competence of the applicant and their financial or other circumstances, as well as to the licensing objectives.159

134. Operating licences will authorise the provision of specified types of gambling, based on the existing divisions in the gambling market. They may authorise the licensee to operate a casino; to provide facilities for bingo, betting and pool betting; to act as a betting intermediary; to make gaming machines available for use; to manufacture, supply, install, adapt, maintain or repair gaming machines; and to promote a lottery.160 For the first time,

155 As noted elsewhere in this Report, this does not, however, cover the National Lottery, spread betting, certain small

lotteries and low stake/low prize gaming machines.

156 Part 5 of the draft Bill




160 Clause 53(2)

38

the draft Bill would also enable businesses to obtain a licence to operate any of these classes of activity remotely (the remote gambling licence is discussed in Chapter 12 of this Report).161

135. We have received evidence on the proposed ability of the Secretary of State to add, remove or vary any of these classes of activity, a power which could fundamentally alter the structure of the UK gambling industry.162 We also received submissions on the provisions of the draft Bill that would permit operators to carry on more than one class of gambling activity. These focused primarily on the ability to permit bingo and betting in casinos and on the fact that a single operating licence would not be able to authorise a class of activity to be carried on remotely and non-remotely.163 These are discussed in the context of casinos and remote gambling later in this Report. Other detailed comments on Part 5 of the draft Bill are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1).

Duration and renewal of operating licences

136. While the Commission would generally be able to determine the duration of operating licences, it would not be able to issue a licence with a term of more than ten years.164 A number of gambling operators have expressed concerns about this.165 MGM Mirage, for example, stated:

“licences should not be subject to a particular duration. A fixed duration is wholly impractical, raises uncertainty for investment as well as accounting and staffing issues, and almost all other jurisdictions[…]provide for indefinite durations.”166

137. Casino operators told us that a ten year duration would not be sufficient to enable them to recoup the initial capital investment necessary for large casino developments and would also deter ongoing investment.167 The Bingo Association pointed out that the imposition of limited durations represents an unnecessary departure from the current law and will add “new and unnecessary administrative and cost burdens on operators”.168 The limited duration of operating licences is also inconsistent with the Government’s initial position that premises licences should have an indefinite duration (discussed below). Others have submitted evidence stating that the ability of the Commission to determine the duration of operating licences could “open the door to an ‘ad hoc’ approach to the question of licence term”.169

138. As discussed below, the Commission would be able to review and revoke operating licences and the draft Bill contains a requirement that operators pay an annual fee to the

161 Clause 55

162 Kerzner, Ev 161, para 10; British Amusement Catering Trades Association, Ev 295; MGM Mirage, Ev 166, para 6.1. See also memorandum from the Lords Delegated Powers and Regulatory Reform Committee annexed to this Report.

163 Clause 55

164 Clause 89(2)

165 Casino Machine Manufacturers’ Group, Ev 323, para 6.1; The Bingo Association, Ev 189, para 20; Kerzner International, Ev 161, para 9; Earl’s Court and Olympia Group, Ev 635, para 5 f)

166 MGM Mirage, Ev 635, para 9.2

167 Q 524 [Mr Prior of Kerzner International]

168 The Bingo Association, Ev 189, para 20

169 Casino Machine Manufacturers’ Group, Ev 323, para 6.2

39

Commission. The limited duration of operating licences is not therefore needed in order to enable the Commission to ensure either the continuing integrity of operators or the payment of licence fees.

139. We believe that limited duration operating licences, imposed by Clause 89(2) of the draft Bill, could deter investment in gambling developments in the UK and would unnecessarily add to the Commission’s and the industry’s regulatory burden. We therefore recommend that, in line with the default position for premises licences, operating licences should have an indefinite duration.

140. The draft Bill provides for the renewal of operating licences but requires applications for renewal to be made between one and three months before the end of an existing licence.170 We have heard a significant amount of evidence suggesting that, especially in the context of large operations, three months is not long enough.171 MGM Mirage suggested that a period of two years would be more appropriate.172 Business in Sport and Leisure (BISL) also argued that the timeframe for renewal is too restrictive and that the Commission should be able to consider late applications.173

141. If the Government is not minded to amend Clause 89(2) of the draft Bill to remove the limited duration of operating licences, we recommend that the time limit for renewal applications set out in Clause 93(3) should be more flexible, reflecting the type of operation to which the licence relates.

Licence conditions

142. In order to ensure that the regulatory regime is sufficiently flexible, the precise detail of operating licences is not provided on the face of the draft Bill. Instead, the Commission would be given the flexibility to attach conditions to classes of licence and to individual licences.174 The Secretary of State may also make regulations providing for specified conditions to be attached to operating licences falling within a specified class.175 Such conditions could impact on all aspects of a gambling business, from staffing to the way the gambling activity itself is conducted. The draft Bill does not contain general restrictions on the scope of conditions and the industry has sought clarification as to what they are likely to cover.176 It has told us that the current lack of detail has created a degree of uncertainty that could prohibit large-scale investment.177

143. The draft Bill does, however, list examples of the types of matter that conditions could regulate. 178 One such example is the number of premises on which licensed activities may be undertaken and the number of persons to whom gambling services can be provided. We

170 Clause 93(3)

171 MGM Mirage, Ev 166, para 9.3; and Earls Court and Olympia Group, Ev 635

172 Q 526

173 Business in Sport and Leisure, Ev 95, para 10.7.


175 Clause 63

176 Clause 66(1)

177 The Casino Machine Manufacturers Group, Ev 323, para 6.2. See also Leisure Link, Ev 600, para 5; MGM Mirage, Ev 166, para 7.1; and the British Amusement Catering Trades Association, Ev 295

178 See, for example Clauses 66(5) & (6), 67

40

received a wide range of comments on this and other examples. These are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1). The draft Bill also contains some detail as to conditions that can and cannot be attached to certain categories of operating licence.179 For example, a casino or bingo operating licence cannot require the casino or bingo to operate as a club.180 Such specific conditions are considered in this Report in the context of the industry sector on which they would impact.

144. Given the fundamental way in which conditions, attached to operating licences under Part 5 of the draft Bill, could impact on all aspects of an operator’s business, we recommend that guidance is issued, as soon as possible, as to the standard conditions that are likely to be applied to categories of licence.

Licence fees

145. The payment of application and annual fees by gambling operators will be the major source of the funding that the Gambling Commission will receive to carry out its licensing and regulatory functions. An application for an operating licence must be accompanied by a fee which will be prescribed in regulations made by the Secretary of State.181 Licensees will also be required to pay an annual fee, again prescribed in regulations.182

146. We received evidence from some sectors of the industry arguing that the additional costs of regulation should not be borne by sectors which will not benefit from the Bill.183 However, we agree with the Government’s view that the costs of regulation should be borne by those that are regulated, broadly in proportion to the amount of regulation that each operator requires. We recommend that this should be achieved in the regulations prescribing the fees payable under Clauses 57 and 80 of the draft Bill.

147. This basic position has been supported by much of the evidence we have received. The bingo industry has suggested that fees should be charged according to the size of the operation, in particular suggesting that this be limited to the number of admissions to the premises.184 The Committee of Registered Clubs Associations (CORCA) has suggested that its members should be subject to a substantially lower fee than larger, commercial organisations.185 The Casino Operators’ Association told us that “the size of the projected casino operation should have relevance to the size of the fee charged [and that] if it is a major company that requires a significant amount of investigation it is only proper that company should pay for that investigation.”186 The Gaming Board has indicated that this is the type of arrangement that it is seeking:

“We are looking in the new Bill for flexibility which will allow us to charge differential fees according to the size of the operation, so it may well be that

179 Clauses 70 to 77

180 Clauses 71 & 72

181 Clause 57(2)(g) and (5)

182 Clause 80

183 Q 663 [Mr Kelly] & Q 664 [Mr Clarke]

184 Q 547 [Sir Peter Fry]

185 Q 549 [Mr Smyth]

186 Q 489 [Mr Love]

41

particularly some smaller companies will benefit in that respect in the new legislation.”187

148. The agreement of an equitable fee structure will be a major and challenging task. We recommend that, as soon as possible and before the second reading of the Bill, the Government should publish drafts of the regulations to be made under Clauses 57(5) and 80(2) of the draft Bill, that will prescribe the fee levels. These should be subject to consultation with the industry and the Gaming Board.

Personal licences

149. The Gaming Board currently issues certificates of approval to individuals carrying out specified roles within gaming operations, such as croupiers in casinos. The personal licensing regime proposed in the draft Bill will build on this system but will not license specific roles. Instead, to enable the regulatory regime to be more flexible, personal licences will focus on the functions performed by individuals.188 These will fall into two broad categories, management and operational. A “management office” would include roles such as directors of a company, partners and compliance officers or managers.189 Operational functions will include positions giving the person the ability to influence the outcome of gambling; involving the receipt or payment of money; and the manufacture, supply and installation of gaming machines.190

150. Personal licensing requirements will be attached as conditions of operating licences. 191 The draft Bill would oblige the Gambling Commission to attach a condition requiring at least one person to hold a management office and a personal licence.192 It may also impose further personal licensing requirements with respect to other specified functions.193 In connection with the grant and renewal of personal licences, the Commission would be able to investigate applicants to ensure that they are suitable and competent to work in the industry, including by investigating detailed criminal records.194

Extent of personal licensing requirements

151. The proposed personal licensing regime has raised a number of concerns, particularly from the betting industry, whose key workers are not currently required to be licensed.195 In response, the Government issued a Position Paper: “Personal Licensing in the Betting Industry” in May 2003, explaining that it does not consider licensing at the “betting shop manager” level to be warranted. In particular, it noted that:

187 Q 142 [Tom Kavanagh]


189 Clause 67(5)

190 Clause 67(6)

191 Clause 67

192 Clause 67(1)

193 Clause 67(3) & (4)

194 See Part 6 of the draft Bill

195 Under the Betting, Gaming and Lotteries Act 1963, there are no exclusively personal licensing provisions, although Bookmaker’s permits can be issued to individuals which will be required to meet a number of key requirements.

42

“There is a real diversity in the size and type of betting operations and so there would be practical problems with the one size fits all approach”.196

In its November policy document, DCMS explained that the “Commission[…]will be able to come to a view about the level of personal licensing appropriate to the level of risk in each operation”.197

152. The Committee has heard evidence from various sectors of the industry regarding the additional burden that personal licensing could entail and the current uncertainty as to the level of personal licensing the Commission will require.198 The Association of British Bookmakers has, for example, commented that “[one] area in which cost could escalate unnecessarily is that of personal licensing” 199 and the British Amusement Catering Trades Association (BACTA) has explained:

“To date we do not know precisely the combination of licences that will be required in any given outlet (personal, operating, premises etc), but are deeply concerned that the potential requirement for excessive categories of personal licenses will be operationally invidious.”200

153. Furthermore, the Transport and General Workers’ Union commented that the new regime could lead to the development of agencies for casino workers which, it argued, could make the effective regulation of casinos more difficult. It suggested that “the licensing of gaming staff should remain operator-specific and so primarily their responsibility”.201

154. As with many other aspects of the draft Bill, a lack of available detail has restricted our ability to assess whether the personal licence regime will strike the right balance between regulating key staff and avoiding unnecessary regulatory burdens. Given the potential impact of this regime on the industry and employees, we recommend that draft guidance is produced as soon as possible, for consultation with the industry.

Small-scale operators

155. One means by which the draft Bill seeks to avoid a “one size fits all” approach to personal licensing is to exempt small-scale operators from personal licensing requirements.202 Unfortunately, the draft Bill does not contain a definition of “small-scale” which will instead be defined in regulations prescribed by the Secretary of State.203

156. We have received evidence explaining how critical this exemption could be to certain sectors of the industry and seeking clarity on the meaning of “small-scale operator”.204 The

196 “Position Paper: Personal Licensing in the Betting Industry”, DCMS, May 2003, para 13


198 See, for example: the Lotteries Council, Ev 547, para 4(d); British Amusement Catering Trades Association, Ev 295

199 The Association of British Bookmakers, Ev 206, para 5.4

200 British Amusement Catering Trades Association, Ev 342, para 9

201 Transport and General Workers’ Union, Ev 491, para 8

202 Clause 104

203 Clause 104(2)

204 British Amusement Catering Trades Association, Ev 295

43

Lotteries Council, for example, stated that “as there is no definition given of what a ‘small scale operator’ may be, the Council does not know how many of the non-commercial societies will be exempt”;205 and the British Amusement Catering Trades Association (BACTA) stated that “This is critical for BACTA members as it could fundamentally affect the operation of hundreds of businesses. We seek clarification without delay”.206

157. We recommend that draft regulations to be made under Clause 104(2) of the draft Bill, defining “small-scale operators”, be produced as soon as possible for consultation with the industry.

Sanctions

General

158. The draft Bill grants the Gambling Commission very wide powers to review a number of matters connected with the provision of facilities for gambling.207 Following a review the Commission will have significant powers to sanction licence holders. These include: (a) issuing formal warnings; (b) varying licence conditions; (c) imposing financial penalties; and (d) revoking licences.208 Much of the evidence we have received suggests that these wide ranging powers are thought to be appropriate and are welcomed.209 A number of detailed comments have, however, been received about the wording of these powers in the draft Bill and their potential impact on operators. These comments are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1).

159. The Centre for Gambling Research in Australia has, however, submitted evidence explaining that:

“In practice, however, stronger sanctions and penalties are rarely applied and financial penalties are not significant enough to adversely impact operator revenue[…] [and] without a well-resourced and alert inspectorate or monitoring system, in a multiple venue gambling environment it is difficult to know if operators and staff are complying with licence conditions”.210

160. The Gambling Commission’s proposed powers to sanction non-compliance with licence conditions under Clauses 95 to 97 of the draft Bill are irrelevant if the Commission is not given adequate resources to enable it to monitor compliance and to identify breaches. Accordingly, we recommend that adequate resources must be made available to it for this purpose.

205 The Lotteries Council, Ev 547, para9(b)


207 Clause 94

208 Clause 95

209 See, for example, Q 407 [Lady Cobham)]and Q 681 [Mr Foster]

210 Australian Centre for Gambling Research, Ev 694

44

Unlimited fines

161. One specific sanction on which we have received evidence is the proposed power for the Commission to impose unlimited fines on licence holders under Clause 97 of the draft Bill. This is comparable to the power given to the Financial Services Authority and would enable the Gambling Commission to fix fines at a level that reflects the commercial gain the operator has made from the breach of the licence. Despite this, Susanna FitzGerald QC has told us that it would be more appropriate to leave the imposition of fines to the Courts and that, if the Commission were to be given this power, the level of fines should be limited.211 The Lotteries Council has also noted that the Commission’s powers to impose financial penalties should not apply to non-commercial lotteries, as they would merely divert money from the good causes these lotteries support.212

162. Although we acknowledge the concerns about the ability of the Commission to impose unlimited fines under Clause 97 of the draft Bill, we recommend that this power should be retained and note that the FSA has been given a comparable power. Such a sanction would only be a concern to those who have breached their licences and, for some, would be a preferable alternative to the ultimate sanction of revoking a licence under Clause 96. Society lotteries and those who promote them should be required to abide by regulatory requirements and the ability to sanction non-compliance by imposing a fine, however sparingly applied, should be retained.

Appeals against the Gambling Commission’s decisions

163. The substantial powers of the Gambling Commission will be subject to review by a dedicated tribunal, the Gambling Appeals Tribunal (the Tribunal), to be established under Part 7 and Schedule 5 of the draft Bill. Appeals may be made to the Tribunal, on questions of both law and fact, against a wide range of determinations by the Commission, including those with respect to operating and personal licences.213 The Tribunal can affirm, quash and amend Commission decisions. Further rights of appeal to the High Court are to be available from the Tribunal on points of law only.214 While we have received some evidence suggesting that appeals from the Tribunal should be in respect of both law and facts,215 we agree with the Government’s assessment that the appeals provisions in Part 7 of the draft Bill, which already exceed those suggested by Budd,216 are adequate.

211 Q 1602 [Susanna FitzGerald QC]

212 The Lotteries Council, Ev 547, para 14

213 Clause 117

214 Clause 119


216 The Gambling Review Body recommended that the right of appeal be in respect of law only (DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 19.66). The Government modified this recommendation in favour of an appeal on both law and merits (DCMS, A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002, para 3.13).

45

Premises licences

164. The draft Bill also requires premises which are to be used for the provision of commercial gambling to be licensed. 217 Premises licences will be issued by local authorities and not the Gambling Commission.

165. At present, responsibility for the licensing of most gambling premises is shared between licensing justices and local authorities. In its consideration of the licensing of gambling premises, Budd referred to the Government’s Liquor Licensing White Paper, quoting that “local authorities plan town and city centres with an eye to the range of social and entertainment facilities available for residents and tourists, encouraging a social environment all can enjoy.”218 It considered “that the same arguments apply to gambling premises” and noted the importance of local residents helping to “shape the community in which they live”.219 Accordingly, Budd recommended that:

“the licensing of premises should remain a local decision, but that responsibility should transfer from magistrates to local authorities”.220

The Government has accepted this basic principle, commenting that:

“the Government wants local people to have a say in decisions that affect their lives. And licensing authorities should be accountable to the electorate for the decisions they take. Local authorities are also best placed to integrate policy on premises licensing with wider community strategies such as crime prevention and planning.”221

166. Budd received suggestions that “small-town” politics could adversely influence some decisions by local authorities.222 We have heard similar comments. The Casino Operators’ Association has told us that transferring this function to local authorities would amount to “the introduction of politics into an eminently fair and proven system; LJs have a reputation which some LAs cannot hope to match”.223 The Association of British Bookmakers has similarly commented:

“We are also less sanguine about the proposal to transfer responsibility for premises licensing from magistrates to local authorities. The present method has worked perfectly satisfactorily for years and we see the proposal as a move to a potentially more politically charged and controversial system.”224

167. In response to such arguments, Budd commented “we recognise that risk, but do not find it a substantial one”.225





221 DCMS, A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002, para 3.9


223 Casino Operators’ Association, Ev 140, para 12

224 Association of British Bookmakers, Ev 206, para 5.6. See also Cambos enterprise limited, Ev 629


46

168. We concur with Budd’s recommendation that ultimately premises licensing should be a matter for local authorities. We consider that the principle underlying such an approach has a number of advantages, including consistency with the regime under the Licensing Act 2003. However, local authorities must be fully prepared before assuming this additional responsibility, which could have significant resource implications (this is discussed further at paragraphs 180 to 182 below).

169. The Magistrates’ Association have also expressed concerns about the reforms proposed in the draft Bill. They have referred to the benefits of the current role of magistrates in gambling licensing decisions, explaining that “when dealing with contested applications for new betting shops, Betting and Gaming Magistrates will be fully aware of the character of the area, and the issues arising, from their other jurisdictions.”226 It also considers the proposals to give rise to concerns under the Human Rights Act 1998 on the basis that the Gambling Commission would be “both policy maker and decision taker”,227 commenting that the proposed Gambling Appeals Tribunal “would have neither the knowledge, experience nor the standing of the current Appeal Tribunal i.e. a Crown Court Judge, sitting with experienced Betting and Gaming Magistrates.”228 It has warned that the provisions of the draft Bill could lead to appeals being brought at the European Court of Human Rights in Strasbourg229 on the basis that they “centralise to a national incompatible initial tribunal, and a national incompatible appeal tribunal, a currently decentralized/local matter dealt with by experienced trained and fully compatible local tribunals, and a fully compatible local appeal tribunal”.230

170. While we understand the points that the Magistrates’ Association have sought to make, we consider that the proposals set out in the draft Bill would, in fact, limit the extent to which the Gambling Commission is both the policy maker and decision taker. The Gambling Commission would be required to operate within the legislative framework set out in the draft Bill.231 As noted above, it would also be required to issue a statement of the principles it will apply in exercising its functions under the Act, explaining how these would assist in its pursuit of the licensing objectives.232 Such measures would restrict the discretion of the Gambling Commission and would contribute to the transparency and consistency of its regulatory decisions. Furthermore, as discussed above, the decisions of the Gambling Commission, on matters of both law and fact, would be subject to appeal before the Gambling Appeals Tribunal, which would itself be subject to judicial review.233 As set out below, similar points have also been raised about the discretion which local authorities would be able to exercise in the context of their premises licensing decisions.

226 Magistrates’ Association, Ev 726, para 2





231 Clause 14

232 Clause 15

233 Clauses 116-122

47

Restricted discretion

171. DCMS has acknowledged that, during its consultation exercise, “significant misgivings were also expressed […] about what was perceived to be an overall level of local discretion that might lead to considerable inconsistency between local authorities dealing with similar licence applications”.234 Accordingly, the draft Bill proposes that the discretion of local authorities should be limited and that they should not, for example, be given the power recommended by Budd235 to institute a blanket ban on all, or particular types of, gambling premises within a specified area. It achieves this in a number of ways:

a) local authorities are required to aim to permit the use of premises for gambling, to the extent they think this would accord with, inter alia, the Commission’s guidance (see (b) below), the licensing objectives (discussed above) and their own licensing policy (see (c) below);236

b) the Gambling Commission is required to consult on and then issue guidance, regarding the manner in which local authorities are to exercise their functions and the principles they should apply when doing so (local authorities are required “to have regard to” this guidance under Clause 17(2));237 and

c) local authorities are required to consult on and then issue a three-year licensing policy, which will govern the exercise of their licensing function.238

172. Like DCMS, we have received much conflicting evidence on the degree of discretion that local authorities are proposed to be given under the draft Bill. On the one hand, local authorities have argued for fewer limits on their discretion; on the other, the industry has argued for greater prescription.

173. Industry representatives have, for example, commented that local authorities should not only be required to “have regard to” the Commission’s guidance, but that they should be required “to follow” that guidance.239 In oral evidence, the casino industry told us that, if the proposed degree of discretion is given to local authorities, this could create an inconsistency of approach across the country and uncertainty for businesses.240 They also commented that, as the Gambling Commission is required to consult local authorities before issuing the guidance,241 local authorities should be obliged to follow the guidance to which they have contributed.242 Susanna FitzGerald QC also recommended that guidance should be provided as to the grounds on which local authorities will be able to refuse applications and the conditions they may attach to premises licences.243



236 Clause 127

237 Clause 17

238 Clause 126

239 MGM Mirage, Ev 166, para 4.1. See also Casino Operators’ Association of the UK, Ev 140 (Annex), para 20; Cambos Enterprise, Ev 629

240 Q 533

241 Clause 17(4)(b)

242 Q 533

243 Q 1602

48

174. The Local Government Association has described the proposed restrictions on the discretion of councils as “a sting in the tail of the suggested measures”,244 and has told us that they see the draft Bill “as being over-prescriptive”, noting in particular that “the presumption in favour of granting an application rather limits the discretion of councils and does not really allow […] councils actually to look at the local conditions and circumstances.”245 It has suggested that councils should be able to impose an area wide ban on particular types of gambling premises,246 and to refuse applications on additional grounds, such as securing the social well being of the area.247

175. Balancing the industry’s need for certainty and consistency of approach with the requirement that local authorities are able to take account of local circumstances is one of the most challenging aspects of the draft Bill. Our ability to assess whether the proposed regime would achieve this balance has been restricted in part because we have not seen drafts of key information such as the guidance the Gambling Commission would issue to local authorities under Clause 17. We recommend that drafts of this guidance are issued as soon as possible for consultation.

176. The draft Bill would enable interested parties and responsible authorities to make representations about applications for premises licences and to seek a review of licences granted by local authorities.248 We have received a number of detailed comments about the scope of the “interested parties” and “responsible authorities” definitions in the draft Bill.249 Some have sought for the definitions to be restricted, arguing that the ability for such a wide range of persons to make representations would be prohibitively burdensome, slowing down the licensing process. They have also commented on the difficulties local authorities will face when balancing the conflicting interests of those who make representations.250 On the other hand, it has been argued that the list of those who should be consulted should be expanded to include the entire market catchment area and also schools, community groups and local ‘addictive support’ groups located within a generous radius.251 These comments are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1).

Duration of premises licences

177. Subject to a power for the Secretary of State to prescribe their duration,252 “premises licences will not be time limited”.253 Stakeholders have expressed concerns about the likely discrepancies between the duration of operating and premises licences (discussed above).254

244 Local Government Association, Ev 389

245 Q 1067 [Cllr Seymour]

246 Local Government Association, Ev 401, para 9.5


248 Clauses 134, 135 and 161

249 Clauses 130 and 131. See, for example, Mr John Wainright, Ev 722

250 Leisure Link, Ev 600, para 5; Casino Machine Manufacturers’ Group, Ev 323, para 5; and Park Place Entertainment, Ev 623, para 6.5

251 See, for example, The Evangelical Alliance, Ev 72, para 3 and the Methodist Church, Ev 77, para 7.3 and St Saviour’s Church, Guildford, Ev 631, para 5

252 Clause 155


254 Kerzner International, Ev 161, para 9

49

178. Despite the clear statement of policy, a number of submissions have requested greater clarity on the duration of premises licences.255 Some such concerns have related to the three-year policy statement that local authorities would be required to prepare:

“we believe that there is an ambiguity in the draft Bill between [Clause 126] and [Clause 155] which states that premises licences should be subject to a three-year duration in practice because it is unclear what [the position for] existing premises licences will be if a local authority’s policy changes after three years. We assume that that was not intended and are seeking clarity.”256

If each three-year licensing policy were to impact on existing premises licences, this would create unacceptable uncertainty and deter initial and ongoing investment in gambling premises.

179. We recommend that the draft Bill is amended to clarify that any change to a local authority’s three-year licensing policy to be issued under Clause 126 would not prejudice the status of existing premises licences. We also recommend that the duration of operating and premises licences in respect of the same activity should be consistent.

Resources

180. It is proposed that the licensing costs of local authorities will be borne by the industry through application and annual licence fees for premises licences.257 We have heard concerns from both the local authorities themselves and the industry about the resource implications of this proposed new function of local authorities. The Local Government Association has stated that it is “very concerned that the fee income will not provide sufficient funding to prepare for and implement the draft Bill without having to transfer funds from other services”,258 and have also told us that:

“Significant funding would be required for such upfront costs as training of members and officers, recruitment, computer software and hardware, office accommodation, producing policies, consultation and so on.”259

181. The industry has also commented that the Government needs to take “account of the very considerable training that local authority councillors and staff will require to properly equip them to deal with a realm of licensing in respect of which they will have had no previous experience”.260

182. The assumption of the proposed premises licensing function by local authorities will require a great deal of preparation with potentially significant resource implications. Accordingly, we support the recommendation of the Commons Culture,

255 Leisure Link, Ev 600, para 5; Casino Machine Manufacturers’ Group, Ev 323, para 6.5; and Park Place Entertainment,

Ev 623, para 6.5

256 Q 527 [Mr Nathan]

257 Clause 148 and DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para 3.73


259 Q 1086. See also Q 1087 and Q 1093. The LGA noted that the average cost of producing a licensing policy had varied from £11,834 to £65,050, depending on the type of authority (Ev 401).

260 Earls Court and Olympia Group, Ev 635, para 5(d)

50

Media and Sport Committee261 that local authority staff should be trained before the premises licensing function is transferred to them and that the Government should meet the cost of such training. It is also imperative that residual powers are in place to ensure that sufficient funding is available to meet the ongoing costs of local authorities if, for any reason, this is not adequately met by the licence fees payable by operators under Clause 148 of the draft Bill.

Relationship with planning

183. In addition to premises licences, some gambling premises may require planning permission (for example, where a new building is to be constructed or the use of an existing building is to change). We have heard a substantial amount of evidence about the potential interaction between planning permission and premises licensing. While much of this has focused on large casino developments, and is discussed below, some more general concerns have also been expressed.

184. In particular, we have heard concerns about the fact that, if an operator is required to obtain both a premises licence and planning permission, this would create a kind of double jeopardy for operators.262 This could enable interested parties to object to gambling developments on two occasions, and on the basis of both gambling law and general planning law. In addition, it creates the possibility of two sets of appeals – one against the granting of planning permission, and the other against the granting of a premises licence (appeals are discussed below). This has lead some commentators to suggest that the requirement for premises licences should be removed altogether.263 As illustrated in Figure 1 below (Interaction of Planning and Premises Licensing), the number of steps and bodies involved could also create confusion.

185. We recommend that DCMS and ODPM work together to clarify the interaction of planning permission and premises licensing for gambling premises. Although local people should retain adequate opportunities to have their concerns about proposed gambling developments heard, double jeopardy for the operator should be kept to a minimum.

261 Commons Culture, Media and Sport Committee, Seventh Report of Session 2001-02, The Government’s proposals for

gambling: nothing to lose? HC 827-I, paras 67 and 68

262 This was recognised by Lord McIntosh in oral evidence to the Committee, Q 10.

263 Q 1147 [Mr Jennens]

Reg

iona

l Pla

nnin

g B

ody

Loc

al A

utho

rity

(for

pla

nnin

gpe

rmis

sion

)

Pla

nnin

gap

peal

Loc

al A

utho

rity

(for

pro

visi

onal

stat

emen

t)

Loc

alA

utho

rity

(to

obta

inpr

emis

esli

cenc

e)

Gam

blin

g C

omm

issi

on

Com

plet

ew

orks

&ob

tain

ful

lli

cenc

e.

Cas

ino

open

s

Gui

danc

e on

larg

eca

sino

loca

tion

Yes

Per

mis

sion

gran

ted?

App

eal

succ

eeds

?

Pla

nnin

gpe

rmis

sion

need

ed?

Pre

mis

esbu

ilt?

Sta

tem

ent

issu

ed?

Lic

ence

Issu

ed ?

App

eal

succ

eeds

.

Pro

spec

tive

Cas

ino

Ope

rato

r

Mag

istr

ates

’C

ourt

app

eal

Gam

blin

gC

omm

issi

on(t

o ob

tain

oper

atin

gli

cenc

e)

Fin

dot

her

prem

ises

No

Yes

Yes

No

No

Yes

No

Yes

No

Yes

No

Yes

Gui

danc

e to

loca

l aut

hori

ties

on is

sues

rel

atin

g to

sui

tabi

lity

of p

rem

ises

for

gam

blin

g an

dpo

ssib

le li

cenc

e c

ondi

tion

s

Sim

ulta

neou

s

No

Figure 1 (Interaction of Planning and Premises Licensing) 51

52

“Need” and cumulative impact

186. One of the stated policy aims of the draft Bill is the removal of the current requirement that operators intending to establish new gambling facilities demonstrate existing consumer demand for them. While Clauses 73(4) and 74(3) of the draft Bill would prevent the Gambling Commission applying this test in the context of its licensing decisions, the industry has noted that the draft Bill does not prevent an equivalent test being applied by local authorities in the context of planning applications for gambling developments. Local authorities are able to refuse an application for planning permission where they consider that there is no need for the development, for example because other similar developments already satisfy local need. 264 Business in Sport and Leisure has told us that:

“Instead of demand we are going to have need and local authorities are going to argue a lot about where you are going to have these casinos on grounds of need”.265

187. The Methodist Church has, however, commented that local authorities should be able to turn down applications if there is already judged to be an excessive density of gambling opportunities within an area.266 The Local Government Association has also told us that it is important that local authorities are able to consider the cumulative impact of numerous gambling developments within an area. It has commented that local authorities should be able to consider whether a proposed development would actually add to the leisure facilities that are currently available or whether it would dilute them.267 We have also been told that:

“In small places, more than one adult gaming centre could have a very detrimental effect on the local community. It is therefore important that this cumulative impact idea comes in.”268

188. Similar issues regarding the saturation of on-licensed premises within an area were also raised in the House of Lords during Committee and Report stage of the Licensing Bill. In that context, concerns were expressed about the cumulative impact of numerous on-licensed premises and their customers when concentrated within a locality.269 The Government sought to address these concerns in the draft of the guidance to be issued by it to local authorities under what is now Section 182 of the Licensing Act 2003. This clarified that “need” is a matter for planning bodies but that “the cumulative impact of licensed premises on the promotion of the licensing objectives is a proper matter for a licensing committee.”270 In particular, the draft guidance explains that where saturation is reasonably

264 Mr Anthony Jennens, Ev 418: ‘One stated aim of the Gambling Bill is the removal of the unstimulated demand test,

yet the Planning System can reimpose it by means of the requirement to demonstrate "need"‘.

265 Q 363 [Brigid Simmonds]

266 The Methodist Church, Ev 77, para 7.4

267 Q 1078 [Cllr Grant]

268 Q 1079 [Cllr Seymour]

269 See, for example, HL Deb, 24 February 2003, col. 103

270 Draft Guidance issued under Section 177 of the Licensing Act 2003, and Guidance to Police Officers on the Operation of Closure Powers under Part 8 of the Act, issued by the Secretary of State for Culture Media and Sport, para 4.12. (www.culture.gov.uk/alcohol_and_entertainment/default.htm)

53

considered to be a concern “it may be necessary for the licensing authority to adopt a special policy of refusing new licences because the area is already saturated with licensed premises.”271 As the Local Government Association has commented:

“it is very important that through either the proposed planning or gambling regimes that the issue of saturation of alcohol, entertainment and similar premises can be taken into account when considering new gambling premises licences.”272

189. We recognise the industry’s concern that the ability of local authorities to reject planning applications on the basis of need threatens the policy aim of removing the “demand test”. However, we consider it appropriate that local authorities should retain the power to prevent the proliferation of gambling premises and, in particular, unlimited stake and prize gaming machines within their areas. We recommend that the model applied to address saturation of on-licensed premises, in the context of the Licensing Act 2003, should be adopted and that, where relevant, local authorities should be able to address proliferation in the three-year licensing policies they issue under Clause 126 of the draft Bill. We further recommend that the Gambling Commission’s guidance to local authorities under Clause 17 should regulate the means by which local authorities are able to address proliferation in order to ensure consistency and transparency of approach.

Provisional statements

190. We have also received evidence about the difficulties which may be involved in the building of new gambling premises and have been told that, unless operators are certain that they will obtain both planning permission and a premises licence, they will not invest in new developments.273 The draft Bill proposes to provide this certainty by enabling operators to apply for a provisional statement in respect of premises which are to be constructed, altered or acquired, including premises which they do not have a right to occupy.274 While the operator would still need to apply for a full licence once the premises are completed, where a provisional statement has been obtained, the local authority would only be entitled to take into account representations about this application under limited circumstances.275 Similar provisions are contained in Sections 29 to 32 of the Licensing Act 2003. We have received evidence suggesting that this would not provide adequate certainty, as it falls short of being an absolute promise that a premises licence will be obtained.276

191. We welcome the Government’s clarification, in the Schedule of Detailed Comments on the draft Bill (Annex 1), that operators may apply for a full premises

271 Draft Guidance issued under Section 177 of the Licensing Act 2003, and Guidance to Police Officers on the

Operation of Closure Powers under Part 8 of the Act, issued by the Secretary of State for Culture Media and Sport, para 4.15. (www.culture.gov.uk/alcohol_and_entertainment/default.htm)

272 Local Government Association, Ev 405

273 See, for example, Earls Court and Olympia Group, Ev 635, para 5(i)

274 Clause 168

275 Clause 169(2). These include that the representations address matters that could not have been addressed when the provisional statement was applied for and those which reflect a change of circumstances.

276 Earls Court and Olympia Group, Ev 635, para 5(i); Business in Sport and Leisure, Ev 95, para 10.8; and British Amusement Catering Trades Association, Ev 295

54

licence under Clause 132 at any time, provided that they have a right to occupy the premises to which the application relates. As in the Licensing Act 2003, where an applicant does not have the right to occupy the premises, they could obtain a provisional statement under Clauses 168 and 169 of the draft Bill. We consider that the combination of these provisions would provide adequate certainty for operators. However, we recommend that further consideration should be given to the “change in circumstances”, referred to in Clause 169(2)(b), that would justify a local authority having regard to representations made when a full premises licence is sought that were not made in the context of the provisional statement application.

Appeals

192. Appeals, on both law and facts, against premises licensing decisions will be to the Magistrates’ Court with a further appeal, on points of law only, to the High Court.277 We have received a number of detailed comments on these appeal rights as well as clarification as to the matters which may be raised at appeal (set out in the Schedule of Detailed Comments on the draft Bill (Annex 1)). Many of the comments have focused on the likely burden and number of such appeals. When asked about this, Kerzner told us that “it is going to lead to frivolous opposition on many occasions’;278 and the Bingo Association noted that, on the basis of its current experience, it is “quite common to go to Crown Court for an appeal for a bingo licence”.279 The Gambling Appeals Tribunal would be able to dismiss any such frivolous appeal.280

193. Evidence has also suggested that the risk of over-burdensome appeals is compounded by the additional ability for the public to seek judicial review of planning decisions. As noted above, this could be seen by those seeking to develop gambling premises as double jeopardy.

194. We agree that licensing decisions by local authorities must be subject to review by the courts, as is proposed in Clauses 170 to 173 of the draft Bill. However, we are concerned about the likely number of such appeals and the impact that this could have on both local authorities and operators. As discussed above, we recommend that the risk of double jeopardy with respect to appeals should be removed and that it should not be possible to use the same grounds of appeal against both the licensing and planning decisions of local authorities.

Transition

195. The proposed new regime for the licensing of commercial gambling in the UK represents a huge departure from the existing and varied licensing systems. The Gaming Board has described the immensity of the work it will have to do in order to facilitate the transition to the new regime.281 As discussed above, local authorities will face similar


278 Q 533 [Mr Prior]

279 Q 579

280 The Tribunal would have this right in the context of operating or personal licences. The Magistrates would have a similar right in the context of premises licences.

281 Qq 134 - 148

55

challenges.282 The industry has also expressed concerns about the way the transition from the existing to the new regime will be managed and the disruption that this could cause.283 The Casino Operators’ Association has particularly noted that “under no circumstances must the Commission be rushed into authority before it is ready to assume its powers. The build-up of the Shadow Commission must not be under-estimated in size or expertise required.”284

196. As noted above, the clauses relating to the transitional arrangements for licences are not contained in the draft Bill. However, in February, DCMS produced details of its proposals for transition.285 These include that the draft Bill will be implemented in three stages. In the first stage, neither the Gambling Commission nor local authorities would issue licences and would instead focus on preparing for the new regime. During the second stage, operators and prospective operators would be able to apply for licences and permits. It is only at the third and final stage that the new licences would be issued and that existing authorisations would expire. The proposals for the management of this third stage are as follows:

Operating Licences

197. Where the draft Bill requires an operating licence, existing operators would generally be required to obtain a new licence from the Gambling Commission in the same way as new entrants to the market. This is justified on the basis that:

“the Commission will need to be satisfied that all licensed operators will comply with all the conditions of those licences, including those in relation to the protection of children and the vulnerable, where some requirements will be new.”286

In the case of existing operators, DCMS has indicated that the Commission will take account of how well they have met their obligations under the current regime. This consideration will be of particular importance when grandfather rights are being asserted.287

Personal Licences

198. Existing certificates of approval, issued by the Gaming Board, will be deemed to be personal licences for a prescribed period (three years is currently proposed).288 In addition, employees of betting companies that have a bookmaker’s permit will not need to apply for personal licences during the prescribed period.


283 National Joint Pitch Council, Ev 211, para 5; The Lotteries Council, Ev 547, para 17; Leisure Link Group, Ev 600, para 4; Casino Machine Manufacturers’ Group, Ev 323, para 4.1; Park Place Entertainment, Ev 623, para 4; Earls Court and Olympia, Ev 635, para 5(d); Barcrest, Ev 641, para 1.1; British Amusement Catering Trades Association, Ev 295; BSkyB, Ev 257, para 6; British Beer and Pub Association, Ev 355, para 2.1; and British Horseracing Board, Ev 232, paras 9-11

284 Casino Operators’ Association, Ev 140, para 9

285 Draft Gambling Bill: Supplementary Policy Memoranda, February 2004, Policy Note 7

286 Draft Gambling Bill: Supplementary Policy Memoranda, February 2004, Policy Note 7, para 5


288 Draft Gambling Bill: Supplementary Policy Memoranda, February 2004, Policy Note 7 para 7

56

Premises Licences

199. As respects premises licences, it is proposed that local authorities will be required to grant applications to holders of:

• a betting office licence, a track betting licence, a racecourse approval, a gaming licence, a bingo licence or a machine premises permit;

• a casino operating licence, even if this is below the new minimum size for a small casino;

• clubs and miners’ welfare institutes that are already registered;

• family entertainment centres; and

• pubs and bars, which will be entitled to operate as many Category C or D gaming machines as they are authorised to operate at present.

200. We welcome the recent guidance on the proposed arrangements for the transition to the new licensing regime. However, we do not think that this staggered implementation should be used to justify delays in any preparations that the Gaming Board and local authorities could make before the Gambling Bill receives Royal Assent. In particular, as discussed in Chapter 12 of this Report, we recommend that remote gambling licences should be issued as soon as possible after the Bill is enacted.

201. The Local Government Association (the LGA) has commented on the immensity of the role local authorities will be required to assume under the Licensing Act 2003:

“The number of premises to be licensed under the 2003 Act by each LA is to increase up to ten times. In the period of transition between the current system and the new, which could be as short as nine months, every licensee will be required to apply to the LA for conversion and for any changes.”289

Similar concerns have also been raised in written evidence from Rileys Bar, Pool and Snooker.290

202. The LGA has also highlighted that restrictions on the size of Committees and Sub-Committees established under the Licensing Act 2003, would make this task greater, recommending that:

“The timetable for implementation of [the draft Gambling Bill] must not commence until the new alcohol and entertainment regime has settled down and allow reasonable time to prepare for the new gambling duties, such as development of and consultation on policy, training, staffing and so on.”291

203. We are particularly concerned about the challenges that local authorities would face in the assumption of their proposed licensing function. We recommend that the


290 Rileys, Ev 723


57

transitional arrangements should take account of the additional burdens recently placed on local authorities under the Licensing Act 2003. We further recommend that the Government should consult on and then publish a timetable for the transition to the premises licensing regime proposed in the draft Bill.

204. The new premises licensing regime should be introduced at the earliest opportunity. As we discuss in Chapter 8 of this Report, this is necessary to prevent authorisations for new casinos continuing to be granted without regard to either the licensing objectives set out in Clause 1 of the draft Bill or the possible objective of regeneration. If the full preparation of local authorities for this task would delay the introduction of this regime, we recommend that, as a transitional measure, the Government should consider enabling magistrates to grant premises licences under the Gambling Act, subject to Gambling Commission guidance.

6 Social implications of the draft Bill

Problem gambling

205. For the majority, gambling is a harmless leisure activity. For some, however, it has serious adverse effects, not only for the gambler but also for those around them. 292 This range of effects of gambling is illustrated in Figure 2 below (The Gambling Continuum),293 showing gambling as an enjoyable pastime at one end of the gambling continuum and pathological gambling at the other.

Figure 2: The gambling continuum

Chasing lossesGuiltArgumentsConcealment of gamblingSome depressionHigh expenditures

DepressionSerious suicide thoughtsDivorceDebt and povertyCrime

A minority A small group

Problem gamblers

EntertainmentHobbySocial activityPleasant surroundings

Most people

No problems(level 1)

Moderateproblems(level 2)

Severe problems(level 3)

Source: Productivity Commission 1999, Australia’s Gambling Industries, Report No 10, AusInfo, Canberra

206. The Budd Report cites a number of potential negative consequences of gambling, including: job loss, absenteeism, poor work/study performance, stress, depression and anxiety, suicide, poor health, financial hardship, debts, asset losses, exposure to loan sharks,

292 Gordon House, Ev 477: In its submission to the Committee, Gordon House has referred to the impact of problem

gambling on members of “problem gambling families”, para 4.

293 Productivity Commission 1999, Australia’s Gambling Industries, Report No 10, AusInfo, Canberra, Vol I, 6.20

58

bankruptcy, resorting to theft, imprisonment, neglect of family, impacts on others, relationship breakdown, domestic or other violence, burdens on charities and burdens on the public purse.294 We heard about some of these consequences during our visit to GamCare in January and many have also been highlighted in the written and oral evidence we have received.295

207. We have not sought to define problem gambling in medical terms. As the Centre for Gambling Research in Australia has commented:

“problem gambling is no longer viewed from a medicalised perspective as an individual ‘addiction’. Research has consistently found that problem gambling can affect any gambler; there are no apparent psychological or psychiatric predictors[…].”296

208. We consider gambling to be a problem when it begins to have serious adverse consequences for the gambler or for those around them. Such an “effects based” definition of problem gambling was used in both the 2000 Prevalence Study297 and the Budd Report:298

“gambling to a degree that compromises, disrupts or damages family, personal or recreational pursuits.”299

209. Budd explained that, with respect to problem gambling:

“we need to try to understand how possible changes will lead to future costs, and to try to identify and suggest strategies for mitigating present and future costs”.300

210. We have sought to do this in our scrutiny of the draft Bill and the accompanying policy statements, asking ourselves and our witnesses:

• how are the proposed changes likely to impact on problem gambling?

• how effective are the “strategies for mitigating present and future costs” likely to be?

• is there anything else the draft Bill needs to address?

• is there anything that the Government, the regulator or the industry need to do in order to balance any adverse impacts that the Bill could have on problem gambling?


295 See, for example: the Methodist Church, Ev 77: ‘Research shows that gambling damages the mental and physical health, employment, relationships, and family lives of those whose gambling gets out of control (and are customarily called ‘problem gamblers’) and it can leave them with massive debts’, para 3.1. See also Park Baptist Church, Ev 591.


297 Kerry Sproston, Bob Erens & Jim Orford, Gambling Behaviour in Britain: Results from the British Prevalence Survey, June 2000, para 5.1


299 This definition is frequently used in literature, including in NERA Economic Consultants, Gambling Liberalisation and Problem Gambling, November 2003, Executive Summary, p. 1. The Royal College of Psychiatrists, Ev 45: The Royal College of Psychiatrists has defined “pathological gambling” in a similar way: ‘There is a general consensus among psychiatrists that excessive gambling of all types leading to financial, social and psychological disorder should be referred to as pathological gambling, which has been precisely defined’.


59

211. Limiting the risk of increased problem gambling has informed many of our recommendations elsewhere in this Report, such as our proposals to limit the proliferation of casino slot machines. Such instances are highlighted at the end of this Chapter.

Impact of the draft Bill

Prevalence study and other research

212. The last large-scale study into the prevalence of problem gambling in the United Kingdom was conducted in the Autumn of 1999, under the auspices of GamCare and with support from gambling industry bodies.301 This suggested that, at that time in Britain, between 275,000 and 370,000 people aged 16 or over were problem gamblers. We received evidence recommending that a new study must be carried out into the prevalence of problem gambling before the Bill is enacted. The Methodist Church stated that “it is vital that a new baseline survey is commissioned by DCMS prior to de-regulation so that the impact of legislative change on problem gambling can be accurately judged”, 302 a view echoed by the Evangelical Alliance303 and Professors Orford and Griffiths.304

213. GamCare’s 2002 Report stated that it is “beginning to suspect that the prevalence of problem gambling may be rising[…][and that this] is a factor we should all keep very much in mind as new legislation is progressed”.305 A number of witnesses have, in particular, cited Fixed Odds Betting Terminals (FOBTs), spread betting and remote gambling as areas which seem to have had an impact on problem gambling levels since the last study:

“Statistical information collected and collated by us reveals: 1) A quantitative increase of 56.25% in applications made to us during October-December 2003 compared to October-December 2002. 2) Qualitative diversity in the range/type of gambling media identified by applicants as their primary gambling addiction. Most notable amongst which are currently spread betting, remote gambling, and Fixed Odds Betting Terminals”.306

214. Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, acknowledged that the last prevalence study could be out of date and that a revised study would be valuable.307 He explained that “The first step that we would do is conduct a simpler study of the prevalence of different forms of gambling closer to the date of implementation of the Act [to] establish whether [the last study] is out date and if it is […] we will have to consider whether to conduct a full Prevalence Study”.308 This was confirmed by the Secretary of State in evidence to us:

301 Kerry Sproston, Bob Erens & Jim Orford, Gambling Behaviour in Britain: Results from the British Prevalence Survey,

June 2000


303 The Evangelical Alliance, Ev 72, para 4

304 ‘I think a repeated Prevalence Study is important[…]’, Q 272

305 GamCare Care Services Report 2002, May 2003, p.3. See also the Drug and Alcohol Foundation, Ev 664, para 4.1.

306 Gordon House, Ev 477, para 2

307 Q 17 [Lord McIntosh]


60

“We certainly need to establish a baseline against which we can monitor any growth in problem gambling.”309

215. We recommend that, prior to the implementation of the Bill, the Government should commission and publish the results of a baseline prevalence study against which the impact of the Bill can be measured. We recommend that this should cover all existing forms of gambling including those which have become more widespread since 1999, namely spread betting, betting exchanges, remote gaming and FOBTs. We believe that such a comprehensive study is necessary in order to provide data on gambling that will be needed to inform future regulatory decisions.

Potential impact of the draft Bill on problem gambling

216. The Budd Report recognised that the weight of evidence suggested that its proposals would “lead to an increase in the prevalence of problem gambling”.310 The Government has also acknowledged this possibility, and the Regulatory Impact Assessment which accompanied the November draft of the draft Bill commented that “extending the choice and availability of gambling could lead to an increase in problem gambling.”311 Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, outlined this in oral evidence, stating:

“Basically we acknowledge there is a risk, that the greater availability of gambling, which will certainly be […] one of the effects of the Bill, involves a risk that the amount of gambling and therefore the amount of problem gambling will increase.”312

217. The Secretary of State, on the other hand, told us:

“I do not accept that the Bill will lead to an increase in problem gambling […] No secretary of state, no minister comes in front of a committee and says, “we are commending to you legislation that is going to increase a particular social problem”. If this legislation gave rise to an increase in problem gambling then it would have failed and it would be bad legislation and it would have defeated the intention and the purposes that we have.”313

218. The evidence we have received has not been conclusive as to whether the draft Bill will lead to an increase in the rate of problem gambling amongst those who gamble. Many commentators have, however, made the point that the draft Bill is likely to lead to an increase in the number of people who gamble and that, in absolute terms, this is likely to increase the number of problem gamblers:

“Basically, where you increase opportunity and access to gambling, not only do you increase the number of regular gamblers but you will also increase the number of problem gamblers. […]. Tessa Jowell was quoted as saying that a 50 per cent increase

309 Q 1693 [Rt Hon. Tessa Jowell MP]





61

in turnover of gambling would not lead to any increase in problem gambling whatsoever. I find the mathematics of that unbelievable.”314

The only evidence we have received to contradict this view has been submitted by Frank Fahrenkopf Jr. who has commented that a “significant body of research contradicts the common assumption that increased gambling opportunities lead to higher levels of pathological gambling.”315

219. While most of our witnesses have declined to comment on the scale of the likely increase,316 NERA Economic Consultants have reported that the draft Bill will result in up to one million problem gamblers in the UK, representing a three to four-fold increase from the current level.317 A recent Report from the Henley Centre, commissioned by BACTA, stated that “problem gambling will increase from the current 400,000 level to 703,000, i.e. 1.4% of the adult population by 2010 with the proposed Gambling Bill”.318 The Responsibility in Gambling Trust (the Trust) commented that “[the] Trustees recognise that there is a prospect that some of the Government’s proposals will lead to an increase in problem gambling [but that] there are conflicting views amongst some of them about the likely size of any increase”.319

220. We would expect the draft Bill to lead to an increase in the prevalence of problem gambling, even if only as a result of an increase in the numbers of those who gamble. We do, however, expect that a number of the recommendations in this Report would, if implemented, contribute to a reduction in the scale of any increase which might otherwise occur.

221. We recommend that the Government should fund prevalence studies at five-yearly intervals. These measures would enable the impact of the Bill to be accurately measured and also enable the Government and the Gambling Commission “to take the toughest possible action if there is any evidence that modernisation has given rise to an increase in problem gambling”.320 We further recommend that, in order to monitor the impact of change closely and adjust regulations according to the findings, the Gambling Commission should undertake appropriate studies and publish a report within three years of enactment of the Bill.

Safeguards in the draft Bill

222. The draft Bill recognises that gambling can be extremely damaging to some. The statutory recognition of this has been welcomed by many of our witnesses:

314 Q 249 [Professor Griffiths]

315 Ev 714, para 3.5

316 Q 249 [Professors Orford and Griffiths]

317 NERA Economic Consultants, Gambling Liberalisation and Problem Gambling, November 2003, Executive Summary, p.i

318 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004, para 2.7

319 The Responsibility in Gambling Trust, Ev 462, para 3.2

320 Q 1693 [Rt Hon. Tessa Jowell]. (Such studies will also help to inform the Commission more broadly on the policy issues that it will have to confront as it works out how to give proper effect to the licensing objectives.)

62

“By and large the draft Bill does an excellent job of requiring everyone to pay attention to the very important matter of social responsibility”.321

London Clubs International commented that they “believe this legislation offers a real opportunity to bring gambling and any associated problems there may be, visibly into the public arena.”322

223. The draft Bill begins by setting out the three licensing objectives that would underlie many of the functions of the Gambling Commission and local authorities in Clause 1. The third objective is: “protecting children and other vulnerable persons from being harmed or exploited by gambling”.323 Accordingly, “protecting the vulnerable” would be a statutory obligation of regulation. In addition, the draft Bill would require the Commission to advise the Government on the incidence and effects of gambling,324 and to enforce the sanctions contained in the draft Bill, many of which are designed to protect the young and vulnerable.

224. The draft Bill also empowers the Gambling Commission to issue codes of practice about the manner in which gambling services are provided. 325 These would become part of the conditions of operating licences. The requirement that gambling operators demonstrate compliance with a code of social responsibility would be one important means by which the Gambling Commission would be able to address the potential downsides of gambling.326 The Government has indicated that such codes might include: avoiding the encouragement of children to gamble; provisions for players to bar themselves from gambling; the display of clear information about the chances of winning and losing; and the provision of information to customers about problem gambling and advice about where to go for help.327 Given that the codes will be “a central feature of the new framework”,328 the Methodist Church has recommended that “a reference to social responsibility Codes should be included in the draft Bill itself.”329

225. The industry has been eager to see drafts of these codes of practice as soon as possible, but, as we have already discussed, they are not yet available. Despite this, the Government has recognised that many sectors of the industry have adopted their own voluntary codes of social responsibility and commented that “while the Commission will no doubt wish to look afresh at each issue, the work already done in a number of areas will inform its views.”330 BACTA has sought “confirmation that the recently updated Codes will form the basis of the proposed Statutory Codes for machines”.331 We understand that all such voluntary codes have been drawn up following consultation with GamCare.

321 Q 1378 [Mr Jennens]

322 London Clubs International, Ev 627

323 Clause 1(c)

324 Clause 18

325 Clause 16

326 See, for example, Mr Fahrenkopf Jnr, Ev 714, para 5



329 Methodist Church, Ev 77, para 3.3.2


331 British Amusement Catering Trades Association, Ev 295, para 2.10

63

226. We have received evidence highlighting the importance of the contents of the codes of practice and a number of suggestions have been made for matters they should include.332 Involvement of both the industry and those with expertise in problem gambling, when formulating the codes, has also been encouraged and the draft Bill contains detailed consultation provisions.333 Negotiation and development of codes of practice with each sector of the industry is likely to be a significant task for the new Commission, yet one which will be important in tackling problem gambling. When questioned on this, the Gaming Board told us that:

“There are a number of codes already in existence which the Board has been engaged in in one capacity or another. Some of them have been issued by the Board; some of them have been issued by the industry, and we have consulted on them. Therefore, the notion of codes is not one which is strange to the industry and quite a lot of the content of the new codes, so far as they affect the practicality of the work in the industry, will take advantage of the work that has already been done on the existing codes.”334

227. We welcome the provisions of the draft Bill, such as the licensing objectives in Clause 1, that address problem gambling and recommend that the Commission is given adequate resources and time to enable it to carry out its many important responsibilities in this area. We also recommend that the Commission should use the existing codes of practice voluntarily adopted by the industry as a starting point for those it is to issue under Clause 16 of the draft Bill and that it should start consultation on the new codes of social responsibility as soon as possible.

The industry-funded trust

228. In light of its acknowledgement that “the incidence of problem gambling increases with gambling opportunities”, Budd concluded that “the industry has a duty to finance measures to limit and treat problem gambling”.335 Accordingly, it recommended that “the industry should set up a voluntarily funded Gambling Trust”.336

229. The Trust (originally the Gambling Industry Charitable Trust, and renamed the Responsibility in Gambling Trust in February 2004) was established in January 2002 and in the financial year 2003/2004 raised £1.2 million in contributions from the industry. The Government, accepting that there is a lack of information on the causes and treatment of problem gambling, has welcomed the establishment of the Trust to commission research into these areas.337

230. We consider an effective, independent and adequately-funded Trust that provides support for treatment, education and research to be a crucial counterbalance to the

332 See, for example, Methodist Church, Ev 77, para 3.3. See also copies of existing codes by the Association of British

Bookmakers, Ev 222 and Accor casinos, Ev 671

333 Clause 16(5)

334 Q 145 (Peter Dean)



337 DCMS, A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002, paras 7.14 to 7.18

64

deregulatory aspects of the draft Bill. We greatly welcome the steps that have been taken to date to establish the Trust and consider that it might provide a valuable model for other jurisdictions.

231. The Trust has set as its mission statement:

“to make it less likely that people will become problem gamblers and more likely that those who do will seek and will be able to secure effective help.”338

Its strategy is to (a) support problem gamblers and their dependants; (b) educate vulnerable persons about the risks of gambling; (c) conduct research into the best ways of providing that support and education; and (d) fund and implement the strategy.

232. The Trust’s research panel has determined that its first priority should be to commission systematic reviews of existing international research which will enable it to identify those areas in which available research provides adequate answers and those in which more research is needed.339 We have received evidence suggesting a wide variety of areas into which the Trust should fund research, including: alcohol consumption and gambling;340 forms of gambling that are particularly dangerous;341 treatment trials;342 and non-problematic gambling behaviour.343 We have also heard about the need for the Trust “to spend money on creating public awareness of help services” that are currently available.344 As the Centre for Gambling Research in Australia has commented:

“responsible gambling strategies do not focus mainly on treatment programmes for individual gamblers; they extend to prevention, rehabilitation, community education and community engagement. In effect, problem gambling is seen as a complex public health issue requiring a multi-faceted approach which emphasises prevention.”345

233. The Committee recommends that, in the run up to enactment of the Gambling Bill, the Responsibility in Gambling Trust provides funding for the provision of treatment for problem gamblers and their families; education programmes to promote responsible gambling and highlight dangers of excessive gambling; public awareness campaigns to inform everyone as to the help available; and research into aspects of gambling and of problem gambling.

Relationship with industry

234. The Trust is industry-funded and, of its ten trustees, at present the Chairman and three others are independent, with the remaining six representing the industry.346 The need

338 http://www.gict.org.uk/about.asp

339 The Responsibility in Gambling Trust, Ev 462, para 6.6

340 Quaker Action on Alcohol and Drugs, Ev 30, para 4.3

341 Q 271 [Professor Orford]



344 GamCare, Ev 476, para 7


346 Q 1349

65

for the Trust to become more independent has been stressed by a number of commentators:

“the Trust must be, and must be seen to be, independent of the industry, or its role and its research will be discredited in the public eye”.347

235. We have been warned that “the research and funding programmes of industry-based or government-based trusts tend to favour projects that do not question/challenge gambling development and impacts (at best) or complement gambling activities (at worst).”348

236. The Trust has acknowledged that independence is important, and this is one of the reasons cited for its recent name change.349 Its Chairman told us that the Trust is in the process of looking for three further independent trustees, which would mean that a majority would be independent of the industry. It is particularly looking for people with experience of counselling, education, finance or law, other forms of addiction and treatment and problem gambling.350 We have also heard strong arguments for maintaining industry participation in the Trust:

“there are real benefits to the Trust in having people from the industry present, both in terms of […] a reality check on what the Trust is about but also in terms of assuring themselves that the Trust is spending their money wisely.”351

237. In particular, we have heard concerns about the risks associated in having a single body acting as the sole collector and allocator of funds for research into problem gambling, for raising awareness of problem gambling and also for treating problem gambling.

238. While industry representation is of clear benefit in the context of fundraising, it is important that sectional interests and bias do not impact on the way those resources are allocated.

239. We recommend that the Trust continue with its proposals to achieve a majority of independent Trustees. We further recommend that “industry trustees” should not be appointed to act as representatives of trade associations, but that they should be appointed and should act on the basis of their experience of problem gambling from an industry perspective. In particular, we recommend that the distribution of resources by the Trust should be assessed by the Gambling Commission and should be included in their three-yearly monitoring report to the Government (which we recommend in paragraph 221).352

347 Evangelical Alliance, Ev 72, para 2; and The Methodist Church, Ev 77, para 3.2


349 Q 1306, Sir David Durie commented, when asked about the change of name ‘someone strange to the industry might have thought that it was a Trust to help retired croupiers who had fallen on hard times’.

350 Q 1349

351 Q 1349. Mr. Tom Kelly also told the Committee ‘I think it is much easier for me to argue with my small numbers that they should contribute if they feel they are represented on the Trust. If independence became a huge issue, people like I may have to stand back, but I think it would impact on the voluntary contributions’ (Q 625).

352 This would provide an opportunity for the Government to review voluntary arrangements and decide whether it is necessary to impose a statutory levy.

66

Relationship with service providers

240. The fact that the industry has been encouraged to make contributions to the Trust has had a measurable and deleterious impact on the levels of funding that it had hitherto paid direct to service providers. As we were told by GamCare:

“direct contributions have, as of now, completely dried up because it seems to be government policy to make it almost obligatory to send funds direct to the Responsibility in Gambling Trust, as it now is. With Camelot, for example, who used to contribute £50,000 a year to us, now, as you have heard this morning, they are contributing direct to RIGT. Sky, who were contributing £45,000 a year to us, were under extreme pressure and they now send it direct to RIGT […]. It does concern us because there is no guarantee RIGT will give all this to us, and we are concerned for our own future.”353

In response to these comments, the Trust has told us that it “will continue to support GamCare and is about to start discussing grants for the period after June this year […] [and] come to an agreement with them which will enable GamCare, cost effectively, to continue to improve its services”.354 It has further commented that “The Trustees fully accept that when assessing future grants, they will need to take account of the funds that GamCare previously received from the above named companies [Sky, Camelot and Betfair], so that GamCare continues to be adequately funded.”355 Gordon House has identified two major concerns with the Trust’s funding strategy: (A) Trust led, not treatments needs driven, funding allocation; and (B) funding instability that impacts upon projections for future provision.356

241. We recommend that industry contributions made directly to service providers should also be taken into consideration as a demonstration of operators’ social responsibility.

Level of funding

242. Budd recommended that the industry should seek to raise a level of funding approaching £10 per problem gambler.357 As noted above, this initial target of £3 million has not yet been met. Quaker Action on Alcohol and Drugs argued that “it is already apparent that the funding of £3 million per annum for the Gambling Trust is unlikely to be adequate at approximately £10 per existing problem gambler”,358 adding: "We would like to see a figure more commensurate with the £44, £40, and £26 per problem gambler spent in New Zealand, Canada, and Australia respectively”.359 The figure of £10 is particularly questionable in light of the Trust’s aim to fund support for dependants of problem

353 Q 1401 [GamCare]

354 The Responsibility in Gambling Trust, Ev 475

355 The Responsibility in Gambling Trust, Ev 475

356 Gordon House, Ev 477, para 1a)




67

gamblers and the indication that the number of problem gamblers may have already risen since the last prevalence study.

243. We asked the Trust, GamCare and Gordon House whether a higher amount would be more appropriate. The Trust told us that “If we were, say, to get £10 million for the coming year we would not be able to spend it effectively.”360 GamCare and Gordon House, on the other hand, commented that they could happily spend £10 million and that such additional funding was needed to increase the availability of treatment services and to raise awareness of the services that already exist.361

244. In the context of our inquiries, we have also learnt a great deal about the value of the existing industry and the amount it is likely to grow as a result of the draft Bill. The Henley Study, sponsored by BACTA, has for example given the net spend on gambling in 2002 as £8.5 billion. On the basis of this figure, the current aim of £3 million represents only 0.035% of net spend, or 35 pence for every £1,000 of net spend. Given the industry’s value, it is clear that, whether the amount required is £3 million or £10 million, this would not represent an unreasonable burden on the industry.

245. We recommend that before the Bill receives Royal Assent, the Trust should commission an independent assessment as to the cost of: (i) providing the services required to run a nationwide education campaign; (ii) raising public awareness of the help that is already on offer; (iii) providing efficient counselling and other treatment, for both problem gamblers and their dependants; and (iv) determining and conducting the research needed to inform decision-making. We recommend that the industry should contribute the funds that are determined to be necessary to meet those costs and consider that, given the industry’s current value and likely growth as a result of the proposals in the draft Bill, this would not be an unreasonable burden.

Contributions in proportion to risk

246. The Secretary of State has called for “every sector and every company [to] join in the effort” to contribute funds to the Trust.362 Despite the call for all sectors to contribute, we have heard a variety of suggestions as to the most equitable means of determining how much each sector should pay. Sir Peter Fry (Chairman of the Bingo Association) commented “if one believes in the principle that the polluter pays, is it right for a working man’s club, for a bingo hall, to pay the same as a casino with 1,000 slot machines?”, explaining that “one of the difficulties in getting some people to contribute to the trust has been just this point: ‘Why should I pay, I am not much of a polluter?’”363

247. Some have commented that those sectors that will benefit from the draft Bill should contribute more.364 Others have told us that it is unfair for businesses offering “softer” gambling products to contribute to the Trust “to address problems caused by much harder

360 Q 1345

361 Q 1375

362 Speech given at the Business in Sport and Leisure Conference, London 19th November, 2003.

363 Q 598

364 Q 624 [Mr Tom Kelly]. See also British Amusement Catering Trades Association, Ev 295, para 2.11; and Adult Gaming Centres, Ev 350, para 20

68

gambling products.”365 The Pools Promoters’ Association has noted that it “is very keen to ensure that the sector’s contributions to the support of problem gambling are minimal, commensurate with that risk”.366 The Lotteries Council have also sought special treatment, commenting that they should not be required to make contributions as this would merely reduce the money they are able to give to good causes.367 We are also aware that some charities may be subject to legal restrictions preventing them from contributing to the Trust.

248. All of this illustrates that it would not be an easy task to agree an equitable mechanism for contributions. This seems to us to be a significant advantage of the current voluntary system over a statutory levy. The Casino Operators’ Association has suggested that “if the industry does not satisfactorily support the Trust and a levy is imposed, the levy should be based on turnover, the payment of which the Commission would be able to check”.368 Such an apparently simple approach would not address all of the concerns raised above. Similarly, we do not accept that it would be equitable to classify forms of gambling according to the relative risks they pose and to use this as a basis for differential contribution levels.369 We understand that the majority of problem gamblers gamble on more than one activity, ranging from “soft” to “hard” products (illustrated in Figure 3 below (Gambling Activities – First Time Callers)). Every gambling activity contributes to the potential for problem gambling. In principle, therefore, and subject to any legal restrictions preventing this, every commercial operator should contribute something to help address problem gambling.

FIGURE 3 - (Gambling Activities – First Time Callers) Lottery 0.7%

Private Games 0.7%Spread Betting 0.3%

Prize Draws 0.3%

Scratch Cards 0.7%Stock Market 1.0%

Events 2.6%Bingo 2.6%

Fruit Machines45.7%

Horses 34.9%

CasinoTable Games

7.6%

Dogs3.0%

Source: GamCare Care Services Report 2002

365 Bingo Association, Ev 189, para 6

366 Pools Promoters’ Association, Ev 539, para 4. See also Littlewoods Gaming, Ev 655, para 4.1

367 Lotteries Council, Ev 547, para 15

368 Casino Operators’ Association, Ev 140, para 11(b)

369 Q 1661

69

249. The contributions that the industry might be required to make in order to address problem gambling adequately, are likely to represent a tiny fraction of the industry’s profits. We, therefore, recommend that, as far as legally possible, all sectors of the industry should contribute to the Trust. We note that, by making such contributions voluntarily, businesses will not only illustrate that they are socially responsible but will also avoid the imposition of the statutory levy.

Method of funding

250. As noted above, contributions to the Trust are currently made on a voluntary basis. This has created a free-rider problem, with some operators not contributing and instead relying on the most socially responsible to foot the bill.370 It also leaves open the risk that insufficient voluntary contributions will be made. For this reason, the draft Bill contains the reserve power for the Secretary of State to make regulations requiring operating licence holders to pay an annual levy to the Commission.371

251. As noted above, the imposition of a statutory levy would, however, create significant technical difficulties. Furthermore, as Rachel Lampard of the Methodist Church told us:

“My view is that we ought to give the voluntary approach a chance. That is partly on the basis that it is always good if you can get people to buy into things as they are far more likely to care about the spirit of it”.372

252. We agree that there are significant benefits to maintaining a voluntary system of contributions and for avoiding the statutory levy. Nevertheless, it is vital that problem gambling is adequately addressed and that the industry acknowledges its financial responsibility in contributing to this. The Evangelical Alliance has suggested that “adequate contributions to the Trust, or another approved organisation supporting problem gamblers, should be taken as evidence towards compliance with the social responsibility conditions necessary for the grant of an operating licence”.373 Several witnesses have also suggested that financial contributions be considered as part of the tests applied by the Commission when determining whether to issue or renew an operating licence.374

253. We recommend that the ability to impose a statutory levy under Clause 98 of the draft Bill should be retained. We acknowledge Lord McIntosh’s comment that “I do not see how you can make contributions to a voluntary trust a condition of licensing”.375 However, we do not believe that this would prevent the Commission taking account of an operator’s financial contributions, whether to the Trust or direct to a service provider, when considering, under Clause 58 of the draft Bill, whether they are suitable to carry on a licensed activity. We consider that such an approach would encourage

370 The “free-rider problem” was, for example, raised by the Commons Culture, Media and Sport Committee, Seventh

Report of Session 2001-02, The Government’s proposals for gambling: nothing to lose? HC 827-I,paras 49 - 52. See also Casino Operators’ Association, Ev 140, para 11.b.

371 Clause 98

372 Q 299

373 Evangelical Alliance, Ev 72, para 2. See also Q 1602 [Susanna FitzGerald QC]

374 Quaker Action on Alcohol and Drugs, Ev 30, para 3.1; and Gamestec, Ev 652, para 4.3


70

operators to make voluntary contributions, but we would not expect non-payment to be a reason, in itself, for the Gambling Commission to refuse to issue or renew a licence.

Government responsibility

254. A number of commentators have expressed concerns that the existence of the Trust could cause public-funded bodies to take no responsibility for problem gambling.376 Budd recommended that increased funding be made available to the NHS for the treatment of problem gambling, and that problem gambling be recognised as a health problem by the Department of Health.377 The Culture, Media and Sport Committee also suggested that “the Government be prepared to invest in both the research and treatment of problem gambling, through the NHS nationwide, independent of the Industry Trust”.378 This has been echoed in much of the evidence we have received. For example, Professor Orford told us that:

“One of the things that has somewhat surprised me and disappointed me is the apparent lack of the Department of Health in all of these discussions […]. it is a public health issue and in my view the Department of Health ought to be a lot more involved than they are.”379

255. We understand that, while a small number of publicly-funded treatment schemes have been conducted, the NHS are very reluctant to address problem gambling. We also understand that this difficulty is exacerbated by the fact that the National Addiction Centre only recognises substance misuse as an addiction.380 In this context, we welcome the Secretary of State’s comments that the Department of Health:

“have made clear in the context of the development of the legislation the recognition that the National Health Service has a key role to play in the treatment of problem gambling. There is certainly a role for the Department of Health through the National Health Service but there is also, in terms of prevention, a role for the Department of Health’s developing public health strategy in this respect.”381

256. We also welcome the Minister of State for Health, Rosie Winterton MP’s written answer to a question in Parliament about the assessment the Government had made of the best method of meeting the health needs of problem gamblers:

“The national development group for specialised mental health services will review treatment for problem gambling to provide guidance that will help groups of

376 The Mayor of London, Ev 653, para 4.1


378 Commons Culture, Media and Sport Committee, Seventh Report of Session 2001-02, The Government’s proposals for gambling: nothing to lose? HC 827-I, para 57

379 Q 273. See also Quaker Action on Alcohol and Drugs, Ev 30, para 3.2

380 See also Drug and Alcohol Foundation memorandum, Ev 664, para 4.2

381 Q 1699 [Tessa Jowell]

71

primary care trusts to commission appropriate services and support the development of services in those areas where there are significant problems.” 382

257. The Trust should not absolve the Government of its responsibilities with respect to problem gambling. We recommend that the Government should accord greater priority and resources to problem gambling and that problem gambling should be recognised as a public health issue.

258. Earlier in this Chapter (paragraphs 221 and 239), we recommended that, three years after the Bill has received Royal Assent, the Commission should publish a report into the impact of the Gambling Act on problem gambling and the effectiveness of the distribution of resources by the Trust. We recommend that following this, the Secretary of State for Culture, Media and Sport should report to both Houses of Parliament on: (a) the success of the Trust in meeting its objectives and in particular the distribution of funds; (b) the steps the Gambling Commission has taken to address problem gambling; and (c) the work the Government, and particularly the Department of Health, have done to address problem gambling.

259. We also recommend in paragraph 221 that prevalence studies should be conducted at five yearly intervals. We recommend that, after the results of the first post-enactment prevalence study are available, the Secretary of State for Culture, Media and Sport should update both Houses of Parliament on the impact of the Gambling Act on problem gambling prevalence.

The young

260. The Government has stated that it is “unwavering in its belief that gambling is for adults only [and that] the minimum age to take part should generally be 18.”383 As noted above, protecting the young from being harmed or exploited by gambling is one of the licensing objectives set out in Clause 1 of the draft Bill. Accordingly, this would become a statutory obligation of the Gambling Commission and of local authorities. In addition, the draft Bill proposes a number of age-related offences, including offences of inviting under-18s either to gamble or to enter gambling premises; offences relating to the employment of under-18s to provide facilities for gambling; and offences for those aged between 16 and 18 of taking part in gambling.384 In addition to such statutory safeguards, the Commission will be able to attach conditions to operating licences, regulating the supervision of areas in which gambling takes place and codes of practice covering such matters as not encouraging children to gamble.385

A uniform age limit of 18

261. There are a number of exceptions to the general principle that the minimum age for gambling should be 18. The minimum age for buying and selling lottery tickets, including

382 Rosie Winterton MP, written response to Question by Sue Doughty MP, Hansard (8 Mar 2004, Col. 1330W)



385 DCMS, A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002, paras.7.6 to 7.13

72

the National Lottery, and for participation in pools competitions, is 16.386 Several submissions to the Committee have suggested that this should be raised to 18. The Evangelical Alliance commented that “the minimum age to play the Lottery should be increased to 18 to match the current age for adult gambling establishments”;387 Gala recommended that “the minimum age of play should be in line with all other forms of gaming at 18 years”,388 and Barcrest suggested that “social responsibility considerations must require that the age limit for participation in the National Lottery be raised to 18”.389 Others commented that an across-the-board imposition of a minimum age limit of 18 would emphasise that gambling is an adult activity and would avoid confusion as to the age limit that applies to a particular product.

262. On the other hand, the Pools Promoters’ Association commented that it is “pleasing to note that in retaining a minimum playing age of 16, the Government equates the risk to the vulnerable posed by the football pools as being no different to lotteries, be they society lotteries or the National Lottery itself.”390 The National Prevalence study, supported by GamCare’s statistics, also indicated that these activities are not significant factors in problem gambling. The Government has similarly used the argument that these forms of gambling are relatively low risk to justify the lower age limit and has commented that:

“To raise the minimum age to 18 would buy consistency at too high a price, paid amongst others by the many lotteries which involve young people and the shops in which they work part-time.”391

The serious consequences upon the businesses that sell these products have also been raised by both the Lotteries Council and Camelot.392

263. When we asked representatives of these industries whether consistency should be achieved by imposing a uniform minimum age of 18, the responses we were given indicated that this would not have a significant financial impact. Camelot commented: “It is a matter of record that on a couple of occasions we have said to the Department for Culture, Media and Sport that we in fact would not oppose a change to 18[…] the work we have done would indicate it would be a loss of about £20 million a year on scratch cards.”393 Although the Lotteries Council said that they would prefer the age limit to stay the same, they also confirmed that raising the age by two years would not have a major financial impact.394 The major consideration of the Lotteries Council was that “the worst outcome of all, from the point of view of society lotteries, would be that the National Lottery age stayed at 16 and ours went up to 18. That I do not think could conceivably be justified.”395


387 The Evangelical Alliance, Ev 72, para 10

388 Gala, Ev 598, para 3.1

389 Barcrest, Ev 641, para 1.3.1

390 Pools’ Promoters Association, Ev 539, para 3


392 Q 1656 and Q 1284

393 Q 1283

394 Q 1658

395 Q 1655

73

264. We recommend that the minimum age to buy and sell pools coupons and lottery tickets, including for the National Lottery, should remain at 16, as is currently proposed in Clauses 36(2) and 42 of the draft Bill, given the lack of evidence that this causes harm. We recommend that the Government commission further research to ascertain whether 16 and 17 year olds are harmed by this experience and that the age-limit should be re-assessed in the light of that research.

Employment of young persons in gambling premises

265. Clauses 41 to 45 of the draft Bill restrict the ability to employ children and young people in connection with gambling. We have received evidence on the potential implications of these clauses on certain sectors of the industry. Many of these comments are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1). In particular, the British Amusement Catering Trades Association (BACTA) has commented that the wording of Clause 44(1)(b) which prohibits the employment of children or young persons to perform a function “in connection with [a] gaming machine” is too wide. 396 MGM Mirage has also commented that “a young person[…]should be able to be employed in the non-gaming areas of a gaming complex (for example, as a junior waiter in a restaurant) as long as he does not enter the gaming floor and/or perform a gaming related function”.397 In response to this comment, the Government has indicated, in the Schedule of Detailed Comments on the draft Bill (Annex 1), that:

“there will be a difference in some cases between licensed casino premises and ancillary areas such as a hotel or restaurant forming part of the overall complex[…]the draft Bill does not prevent distinctions being drawn between such premises, and other areas which may be related to a casino, but which are not licensed as a casino.”398

266. We welcome the Government’s clarification that young persons will be able to be employed in areas of casino complexes in which gaming does not take place. We consider that Clauses 41 to 45 of the draft Bill should not prevent young persons being employed in gambling premises, provided that the employment does not relate to the gambling provided in those premises. As discussed above, we consider it to be appropriate that Clause 42 permits over-16s to be employed to sell lottery tickets and pools coupons.

Children and gaming machines

Family entertainment centres

267. We have heard evidence from a number of sources about the risks associated with gambling by under-18s. The majority of these comments have focused on the use of gaming machines by children, given that this is the only major form of commercial gambling in which those under the age of 16 are legally able to participate.399 GamCare’s

396 British Amusement Catering Trades Association, Ev 295. See also Leo Leisure, Ev 706

397 MGM Mirage, Ev 56, para 5.2

398 DCMS response to Clause 37 (Feb Draft) of the Schedule of Detailed Comments on the Draft Bill (Annex 1)

399 See, for example, memorandum from the Park Baptist Church, Ev 591

74

call statistics indicate that gaming machines are by far the most dominant form of gambling for under-18s (Figure 4 (Age Profiles – Under 18s)). The draft Bill proposes that certain low stake and low prize gaming machines (Category D Machines) should continue to be available for use by children.400

Figure 4 – (Age Profiles – Under 18s Gambling Activity)

0

20

40

60

80

100

120

FruitMachines

Horses

CasinoTable Games

Events(Sports etc)

Bingo

SpreadBetting

StockMarket

PrizeDraws

ScratchCards

PrivateGames

Lottery

Dogs

Source: GamCare Care Services Report 2002

268. Professor Orford commented:

“I believe [that the continued ability for children to play Category D machines] is one specific area of the proposals where the Government is in most danger of being seen to be inconsistent, and is putting young Britons at risk […]. Britain is alone in allowing children to play certain types of gaming machine and the Government’s Gambling Review Body expressed unease about it […]. The Government is therefore, in danger of acting irresponsibly by proposing that the anomaly of juvenile gaming machine playing be allowed to continue and thereby of failing to protect young people and their families.”401

269. The Royal College of Psychiatrists also commented that “in view of the nature of gambling, it is clearly not an activity that is suitable for children” and “It is […] a matter of great concern that gaming machines […] will continue to be available to children. There is no justification for this”.402 Several submissions have argued that machines paying out low value prizes are still enticing for children, given the relative value of the prize to their target

400 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para 6.24. See, for example, Clauses

34(2)(e) and 36(2)(e).

401 Professor Orford, Ev 47, paras 7, 9 and 14

402 Royal College of Psychiatrists, Ev 45, paras 10 and 22.

75

customer.403 The Royal College of Psychiatrists further commented that “it has been firmly established that all gaming machines, regardless of the size of stake or the amount of prize money, are unsuitable for children and young people”.404

270. When considering the question of machine gaming by children, Budd noted “a woeful absence of research”405 and recommended that:

“further research should be commissioned to examine the impact of machine gaming by children and […] the Government should formally review the position in five years time to determine whether any such gaming by under 18s should continue to be permitted.”406

271. This recommendation was repeated in 2002 by the House of Commons Culture, Media and Sport Committee (the CMS Committee).407 It is to be regretted that independent research into the impact of machine gaming by children has not been commissioned by the Government between the publication date of the Budd Report and now, nor indeed as a result of the CMS Committee recommendation.

272. When asked whether machine gaming by children should continue to be allowed, Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told the Committee that:

“those who want to abolish what has existed for many years would have to do a bit of research and show what harm they are doing before we will be convinced that we should cut out this business.”408

273. The evidence we have received has not been conclusive as to the extent to which Category D machines played by children are a direct cause of problem gambling. Much of it has focused on the relationship between starting to gamble at an early age and problem gambling later in life. For example:

“I know of at least four independent studies that have shown that the younger you start the more likely you are to have problems-even within the adolescent period.”409

and

“Analysis of our male client group during the period April 2002 to March 2003 revealed some 34.8% were primarily addicted to fruit machine gambling. This sub-group of our population were found […] more significantly to have begun gambling

403 See for example, Park Baptist Church, Ev 591, para 4.3 and Churches Together in Britain and Ireland, Ev 593

404 Royal College of Psychiatrists, Ev 66, paras 12&13 and Mothers’ Union, Ev 729



407 Commons Culture, Media and Sport Committee, Seventh Report of Session 2001-02, The Government’s proposals for gambling: nothing to lose? HC 827-I, paras 49 - 52. See also Addiction Recovery Foundation, Ev 630

408 Q 111

409 Q 246 [Professor Mark Griffiths]

76

at a much earlier age than those who engage in On and Off Course Betting and Casino gambling.”410

274. We understand that when low-value gaming machines are mentioned by problem gamblers calling GamCare it is usually in the context of these machines having been the initial introduction to gambling as a child and, most often, when visiting (or living) at the seaside. We do not consider this to be the same as asserting that there is a direct link between machine gaming by children and problem gambling.

275. During our visits to Great Yarmouth and Blackpool we saw at first hand the importance of family entertainment centres in the range of activities that British seaside resorts offer their visitors. We have also received evidence suggesting that “use of Category D machines by children not only allows the whole family to participate in harmless and enjoyable entertainment; it provides an opportunity to encourage responsible attitudes towards the use of machines”.411 Others have commented that the limits placed on the stake and payout of these machines is likely to ensure they remain as trivial entertainment.

276. We agree with the conclusions of Budd and the Commons Culture, Media and Sport Committee that there is an absence of sufficient evidence to show that the playing of Category D machines by under-18s causes problem gambling. We recommend that the Government commission research to ascertain whether there is any causal link between the playing of Category D machines by under-18s and problem gambling. The decision to permit the playing of Category D machines by under-18s should be reviewed in the light of that research. We do not, however, agree with their recommendations that a formal review should take place after a specific period of time. Such a measure would unfairly penalise the industry by creating unacceptable uncertainty and deterring investment.

277. The trade association, the British Amusement Catering Trades Association (BACTA), of which around 85% of family entertainment centres are members, has told us about the good practice its members have adopted through self-regulation. Through its codes of practice, supported by training initiatives and followed-up through its compliance officers, BACTA is taking positive steps to ensure its members bar children during school hours and that they exclude children from any ‘restricted’ areas in which higher-value gaming machines are sited. We also understand that some family entertainment centres operate a policy of requiring children under the age of 16, but not between the ages of 16 and 18, to be accompanied by an adult. If children are to continue to be permitted to play Category D gaming machines, we believe such measures, and in particular adequate supervision, to be vital.

278. Given the existing lack of clear evidence as to whether machine gaming by under-18s causes problem gambling, we recommend that children should continue to be permitted to play Category D machines in adequately supervised family entertainment centres as is currently envisaged in Clauses 36(2)(e) and 37(5) of the draft Bill. We also recommend that family entertainment centres should be subject to strict codes of social

410 Gordon House, Ev 477, para 3

411 British Association of Leisure Parks, Piers and Attractions (BALPPA), Ev 353

77

responsibility to be issued by the Commission under Clause 16, like those voluntarily adopted by BACTA members including, as discussed below, strict enforcement of segregated areas in which adult gaming machines are sited.

Adult gaming machines and segregation

279. The draft Bill prohibits the use of gaming machines, other than Category D gaming machines, by under-18s.412 Under-18s would, however, continue to be permitted to enter premises which are permitted to have adult gaming machines and to offer other forms of gambling:

a) children and young persons are, for example, permitted to enter family entertainment centres which the draft Bill would permit to have any number of Category C gaming machines;413

b) children are generally permitted to enter tracks which would be permitted to make four Category B and any number of Category C gaming machines available for use;414

c) children are entitled to enter clubs which would be permitted to have up to three gaming machines, of Category B, C or D as well as to offer other forms of gambling;415 and

d) subject to the provisions of the Licensing Act 2003, children would be entitled to enter premises licensed for the supply of alcohol which the draft Bill would permit to have a minimum of two Category C or D machines and to offer bingo.416 We understand that these provisions would apply equally to tenpin bowling centres.

280. The Government has made clear its policy that “[o]n any premises, no person under the age of 18 is to have any access to gaming machines in any category above Category D”.417 We have not received evidence that questions this basic position. The draft Bill seeks to achieve this in a number of ways, including by making it an offence:

a) to permit under-18s to gamble and for those between the ages of 16 and 18 to gamble – including on Category A, B or C gaming machines;418

b) to permit children to enter parts of family entertainment centres in which Category C machines are available for use;419 and

c) to permit children to enter areas of tracks where Category C machines are situated or, subject to some exceptions, where betting takes place.420

412 Clause 36

413 Clause 37(5) and Clause 142(2)(a)

414 Clause 142(8)

415 Clause 229(3)

416 Clause 239



419 Clause 37(5)

420 Clause 37(4) and Clause 146

78

281. In addition, the draft Bill provides that mandatory conditions of machine permits for clubs would include that no one under the age of 18 shall use a Category B or C gaming machine on the premises and that the holder will comply with any relevant provision of codes of practice about the location and operation of gaming machines.421 It also provides that premises licensed to sell alcohol must comply with any relevant provision of a code of practice about the location and operation of gaming machines.422

282. Whilst we have received some detailed comments on the way these provisions are drafted, set out in the Schedule of Detailed Comments on the draft Bill (Annex 1), our witnesses have not questioned the principle underlying them. Instead, they have focused on the practicality of ensuring compliance with these rules and, in particular, of supervising adult gaming machines to prevent underage play. When asked whether pubs would put adult gaming machines in a separate area, to which children would not have access, the British Beer and Pub Association (BBPA) commented:

“It is a question of management more than anything else. Our members argue that you manage a pub by walking about, you do not manage it by hiding away and you do not manage it by having green lines on the floors or barriers around machines or sticking them into a separate area, all of which I think are laughable ways of dealing with the problem, if there is a problem”423

283. The British Amusement Catering Trades Association (BACTA) have taken a very different approach. Their codes of practice relating to family orientated destinations, require that its members:

a) “[s]trictly enforce the exclusion of persons under the age of 18 years from entering ‘designated areas’ and undertake efficient and effective monitoring of all entrances to those ‘designated areas’ to ensure compliance”;424

b) “[d]isplay prominent notices to at least BACTA standard at all entrances to ‘designated areas’ stating that it is illegal for persons under the age of 18 years to enter the ‘designated area’”;425 and

c) “[d]efine and separate the ‘designated areas’ from other parts of the premises by the installation and maintenance of a permanent physical barrier designed and constructed for the purpose of preventing unauthorised access to within by persons under the age of 18 years.”426

When asked about the supervision of such designated areas in motorway service stations, BACTA told us: “Our code of practice says they should be monitored continuously. That means if it is monitored by a camera someone is going to be watching that camera all the time and taking action.”427

421 Clause 229(6) and Clause 231(4)

422 Clause 239(6)

423 Q 969 [Dr Rawlings]. See also Rileys, Ev 723

424 BACTA Codes of Practice, Appendix to Ev 295, para 3



427 Q 896 [Mr Batstone]

79

284. We agree with the Government’s position that under-18s should not be able to play Category A, B or C gaming machines and support the Clauses of the draft Bill designed to ensure this. We recommend that detailed codes of social responsibility relating to the enforcement of those rules should be issued by the Gambling Commission under Clause 16. Such codes should, however, take account of practicalities and of the effectiveness of measures in the context of different types of premises.

Ambient gambling

Destination gambling

285. Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, has explained to the Committee that:

“we have taken the view that in what I call destination gambling - in other words where you have to make a positive decision to go into a location where gambling takes place, rather than casual gambling which is thrust at you at the street corner - there is likely to be less increase in problem gambling than there is from casual gambling.”428

286. The Government’s distinction between destination and casual/ambient gambling is an important part of its strategy for restricting problem gambling levels. Dr Moran has supported the value of such a policy, commenting that “in view of the nature of gambling, when you participate in any type of activity it is vital that this should be a conscious decision”.429 This also enables those who have recognised that they have a gambling problem to avoid the temptation to gamble.

287. Nevertheless, the draft Bill does not propose to prohibit all forms of gambling in premises which are not dedicated to gambling. As noted above, the draft Bill will continue to permit Category D machines being sited in premises like cafes and fish and chip shops. Professor Orford said of this exception:

“The Government is talking about destination gambling but at the same time, I understand, is suggesting that there should continue to be the lower stake, lower prize machines in places like station buffets, motorway services, takeaways and so on. A station buffet is not a gambling destination […] If it is important to confine gambling to destinations, then I do not think we should also allow people to walk past machines in a station buffet. It is very confusing.”430

288. Other exceptions to this general rule include the proposal that premises licensed to sell alcohol will continue to be able to offer a range of gambling, including Category C and D gaming machines.431 The Association of Licensed Multiple Retailers (ALMR) has commented about the relationship between this and the policy of destination gambling:


429 Q 251 [Dr Moran]



80

“Whilst […] it is helpful to differentiate those premises whose primary purpose is gambling, we remain to be convinced that the concept of “ambient gambling” is appropriate or accurate to describe the playing of gaming machines in a pub context.”432

289. We recommend that, in general, gaming machines should not be permitted in premises where gambling is ancillary to the main services provided. We do not, however, consider that this should apply to pubs, clubs and tenpin bowling centres, on the basis that these premises are licensed and gambling has become an accepted and important part of the facilities they offer.

Children

290. Budd expressed specific concern about locating machines in places such as cafes and taxicab offices, noting that “The lack of supervision and ready accessibility of these machines is particularly worrying in relation to children.”433 The Gaming Board has also commented that:

“We are content that category D machines should be available in Family Entertainment Centres, but remain uncomfortable about children having casual access to gambling in other miscellaneous premises.”434

291. As noted above, BACTA members are subject to a voluntary code containing provisions dealing with supervision. Conversely, the weakness of the single site operation, where the machines are ancillary to the main business, is that there is likely to be less of an incentive to ensure safeguards are followed and no specific code of practice to guide them. These concerns have prompted local authorities to refuse to issue or renew permits in such non-gambling premises. The existing power of local authorities to do this is proposed to be retained in the draft Bill.435

292. In addition, the Gaming Board has commented on the regulatory difficulties posed by the siting of gaming machines in such premises:

“The Board also has regulatory concerns in that the number and variety of outlets make enforcement difficult. We know of instances where machines have been sited without the necessary permission and/or of the wrong type for such premises (e.g. Jackpot machines). The draft Bill, as does the present Act, allows local authorities to introduce a blanket ban in their areas. But where they do not, we believe proper monitoring and enforcement is unlikely. It remains our view that a complete ban would be more effective to prevent both illegal gaming and unsupervised gambling by children.”436

When asked about these concerns, the Secretary of State admitted that “[t]here are undoubtedly periodic problems with unlicensed machines and we are absolutely clear that

432 The Association of Licensed Multiple Retailers, Ev 613

433 DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 23. 9

434 Gaming Board, Ev 22, para 10

435 Schedule 6, para 7(2)(a)


81

it is the category D machines that are available […] If the category C machine were to be there, as people from time to time will say, they are there unlawfully”.437 She went on to explain that the Government “would look in that case to the local authority and the Gambling Commission to assist authorities in dealing with illegal machines.”438

293. BACTA have commented that single site operations should continue to be able to operate Category D gaming machines provided that such machines are only supplied by regulated licence holders, noting that “we believe the Government should continue to oppose changes requested simply on the basis of insufficient management resources.”439

294. We are concerned about the difficulties in ensuring that illegal machines are not sited in premises like cafes and taxicab offices and that children are adequately supervised when using machines in these premises. Accordingly, we recommend that the draft Bill should be amended to prohibit Category D gaming machines from such locations. We consider that this should be a blanket prohibition rather than a prohibition that local authorities are able but not required to impose, as is currently proposed in paragraph 7(2)(a) of Schedule 7 of the draft Bill. As discussed above, we do not, however, consider that this prohibition should extend to motorway service stations, pubs or bowling alleys, subject to compliance with strict codes of social responsibility and the provision of appropriate physical supervision.

Problem gambling: additional recommendations

295. It will be clear to those reading this Report that we have taken the issue of problem gambling very seriously. A desire to limit any increase in problem gambling has informed many of our recommendations. For ease of reference, we have indicated below those additional recommendations which we consider to be particularly pertinent to problem gambling:

The National Lottery and spread betting

• We have recommended that, in principle, a single regulator should be responsible for the whole of the gambling industry, to ensure that a consistent approach is taken to the key issue of problem gambling (paragraphs 97 and 126)

Advertising, inducements and credit

• We have made a number of recommendations in Chapter 7 of this Report (Advertising, Inducements and Credit). These relate to:

• controlling the access of under-18s to gambling advertisements (paragraph 305);

• the inclusion of information regarding sources of help for problem gamblers on advertisements and the adoption of codes of social responsibility (paragraph 312);



439 British Amusement Catering Trades Association, Ev 342, para 4

82

• the ability of the Commission to regulate inducements to gamble or to increase gambling activity (paragraph 322);

• the use of loyalty cards to obtain information on gambling behaviour (paragraph 326); and

• restrictions on the ability of operators to offer credit (paragraph 334).

Casinos

• We have recommended that, in general, premises should not be able to have unlimited numbers of Category A gaming machines, given the impact that the proliferation of such machines could have on the prevalence of problem gambling (paragraph 374).

• Our recommendation on the linking of machines between casinos (paragraph 436) is based on the concern that the increased availability of high-value gaming machines could increase problem gambling prevalence.

Bingo

• Our recommendations regarding the ability of casinos to offer bingo arise, in part, from concerns about the potential impact that this could have on problem gambling (paragraphs 458 and 459).

Gaming machines

• We have recommended that FOBTs are located only in casinos and licensed betting shops to avoid their proliferation and the associated risk of increased problem gambling (paragraph 491).

Remote gambling

• Our recommendations in this context have been informed by the desire to establish a well-regulated remote gambling industry. We consider that this would be of benefit to consumers (paragraph 559).

• We have recommended that social responsibility should be an important part of the regulatory regime for remote gambling operators (paragraph 577) and that operators must take steps to prevent children accessing their services (paragraph 579).

7 Advertising, Inducements and Credit

Advertising

296. Historically the ability to advertise gambling products has been restricted because of the underlying policy that demand for gambling should not be stimulated. In recent years the laws on advertising have been relaxed in a piecemeal way with the result that some

83

gambling advertisements, especially for “softer” products, are now permitted. The Government’s broad policy on advertising under the draft Bill is clear:

“to replace the piecemeal provisions[…]with new provisions which reflect the changed status of gambling as an acceptable leisure activity[…] the Government believes that legitimate gambling businesses should be allowed to advertise in the same way as other businesses”.440

297. It is undeniable that as a result of the draft Bill, gambling advertisements would become more visible and accessible than they are at present and, if successful, will stimulate consumer demand for gambling.

298. While we agree with this general policy, many of its details remain unclear. Some offences, relating to advertising and the protection of children, 441 are included in the draft Bill. However, we have still not seen drafts of other key provisions such as the offence of advertising unlawful gambling products.442 As discussed below, other key information, such as codes of practice, will be left to the Gambling Commission to determine. While the guidance the Government has produced has been helpful,443 the lack of specific detail has made it difficult for us and stakeholders to make a detailed assessment of the proposed future regime.

299. We recommend that further detail on the proposed regulation of gambling advertisements, including additional clauses of the draft Bill, should be published as soon as possible for consultation with stakeholders.

Unlawful advertising

300. Although the relevant draft Clauses have not yet been published, the Government proposes to include an offence of advertising illegal gambling. It notes that this could not apply to advertisements for gambling products from overseas, which would not be illegal within Great Britain.444 The Government has, however, explained that the ability to prevent advertisements originating within the European Economic Area, presumably where these relate to gambling products from the UK, may be restricted by European law.445 It has commented that Parliamentary Counsel will draft the relevant provisions of the Bill to permit derogation from such EU laws as appropriate.446

301. The Advertising Association has sought clarification on these provisions. In particular, it has commented that “reference is made in the EU Proposal for a Directive on Services (published in January 2004) to the fact that the [European] Commission is scheduled to bring forward proposals for additional harmonisation on gambling in 2005.”447 We recommend that the Clauses on the advertising of illegal gambling should

440 Draft Gambling Bill: Supplementary Policy Memoranda, DCMS, February 2004, Policy Note 6, para 6

441 See, for example, Clauses 36, 37, 46 and 47

442 Clause 30 of the draft Bill is left blank

443 Draft Gambling Bill, Supplementary Policy Memoranda, February 2004, Policy Note 6




447 Advertising Association, Submission to DCMS dated 12 March, 2004

84

be drafted so as to provide a flexible legislative framework that could take account of future European developments.

Other restrictions on advertising

302. The Government has accepted that some special considerations should apply to gambling advertisements: “the bar needs to be set higher still: gambling [advertisements] must be responsible”.448 We have heard a number of suggestions as to specific restrictions that should be applied. These have fallen into two main groups: first, the way in which advertisements are disseminated and to whom; and secondly, their content.

Restricted audience

303. One recommendation made by Budd was that advertisements should not be directed at children.449 This has been accepted by the Government and an offence of inviting children to gamble has been included in the draft Bill.450 The evidence we have heard suggests that this policy has wide-ranging support, although some have questioned its viability.

304. GamCare has commented that, despite the offence, young people will be subject to many more direct messages offering gambling products.451 Many in the industry have also recognised that “despite making best efforts to prevent minors from trying to access their sites […] many advertising media cannot distinguish between adults and minors”.452 Mr Brown of the Advertising Association has also told us that it is not possible to “cocoon children from commercial messages”,453 and has recommended that the prohibition should focus on advertisements that are intentionally directed at children or are careless as to their audience.454

305. We agree that gambling advertisements should not be directed at children and that operators should take care to identify and control their actual audience. However we recommend that Clause 36 of the draft Bill, and any guidance or codes made under Clause 16, should not penalise operators that have taken all reasonable steps to prevent children receiving gambling advertisements.

Content

306. We have heard varying views on the question of whether information should be included in gambling advertisements about the risks of problem gambling.455 In the context



450 Clause 36

451 GamCare, Ev 476, para 9

452 Interactive Gambling Gaming and Betting Association (iGGBA), Ev 255, para 14 and Sportingbet Ev 677, para 14.

453 Q 1578 [Mr Brown]

454 Advertising Association, Ev 501

455 The Government has explained that it will be possible, through codes of practice or secondary legislation, to require “mandatory wording (in the form, for example, of a warning about the risks of excessive gambling or information about the probability of winning or losing on the activity concerned)” (Supplementary Policy Memorandum, DCMS, February 2004, policy note 6, para 14).

85

of internet gambling, the Evangelical Alliance commented that health/wealth warnings should be considered, drawing comparisons with the warnings on tobacco products.456 Rachel Lampard of the Methodist Church, for example, suggested a simple statement like “stay in control of your gambling”.457 On the other hand, the Advertising Association has commented that the value of “health/wealth warnings” could be overestimated and that, in fact, they “are unlikely to be of much benefit”.458 The Advertising Standards Authority (the ASA) also informed us of research indicating that the public usually see warnings in advertisements as a way of protecting the advertiser. Mr Graham of the ASA commented that “one cannot assume that people will read those and think ‘Gosh, thank you so much, I had not thought of that’”.459

307. A number of witnesses have told us that it would, however, be useful if advertisements were to contain information about sources of help available for those who are concerned about their gambling. Peter Cox of GamCare told us that:

“if the industry starts to advertise in a major way, it would be helpful if our information is on their advertisements as well, as long as it does not become so small you need a pair of binoculars to read it.”460

308. As gambling does not cause problems for the majority of people who gamble we are not convinced that health warnings, like those used for tobacco products, would be appropriate. We also have doubts as to the effectiveness of some cautionary statements included in advertisements such as those for financial products. Nevertheless, we recommend that gambling advertisements should include information about sources of help for problem gamblers and that the future regulator should consult relevant stakeholders before agreeing any detailed rules on advertising content, for example those to be specified in codes to be issued under Clause 16 of the draft Bill.

Regulator

309. The regulation of the gambling advertisements that are currently permitted is undertaken by the Advertising Standards Authority (the ASA) and the Office of Communications (Ofcom). In the case of non-broadcast media, advertisements are self-regulated through codes drawn up by the Committee on Advertising Practice (the CAP Codes), a section of which deals specifically with betting and gaming. On the basis of the CAP Codes, the ASA currently receives, investigates and adjudicates complaints about gambling advertisements.461 Ofcom, which is responsible for the regulation of broadcast advertising, is currently considering contracting out this responsibility to the ASA under a co-regulatory mechanism.462

456 Evangelical Alliance, Ev 72, para 8

457 Q 301 [Rachel Lampard]

458 Advertising Association Ev 501

459 Q 1594 [Mr Graham]

460 Q 1450 [Mr Cox]

461 The current role of the Advertising Standards Authority is described by the Advertising Association at Ev 501 (especially Appendix 1) and Ev 521.


86

310. The Government does not propose to amend the current system for the regulation of broadcast advertising which it states “can effectively be regulated by Ofcom under the Communications Act 2003”. It does, however, state that “Ofcom would be expected to consult the Gambling Commission in preparing or amending its codes insofar as they relate to gambling”.463

311. However, in the case of non-broadcast advertising, DCMS has suggested a departure from the existing self-regulatory system. It proposes that the Commission will instead be given the power to set and enforce requirements as to the manner and content of advertising through operating licence conditions and codes of practice.464 The Government has also recognised that the Commission will not be able to control advertisements by those it does not regulate, such as family entertainment centres, advertising agencies and newspapers. The Secretary of State will be given the power to address this through secondary legislation.465

312. The Advertising Standards Authority (the ASA) and the Advertising Association have told us that the proposal to move responsibility for the regulation of non-broadcast gambling advertisements to the Commission is ill-conceived.466 The ASA have stressed the need to “avoid regulatory overlap, duplication of complaint handling mechanisms and double jeopardy in the future regulation of gambling advertising.”467 The main arguments they have used in support of retaining the existing system of self-regulation include that the Government’s proposals:

a) could create double jeopardy for the industry, which will be required to follow the Commission’s codes as well as the ASA’s more general rules, such as the requirement that advertisements are not misleading; 468

b) would cause confusion for consumers, who would not know whether to complain to the Commission or to the ASA about gambling advertisements;469

c) would waste the existing expertise of the ASA and the assumption of this role by the Gambling Commission would be “disproportionately expensive”;470 and

d) follow the model used by the Financial Services Authority with respect to the advertising of financial products, a model “that is criticised by consumers and advertisers alike as slow, burdensome and lacking in transparency and user-friendliness”.471

313. These comments have been supported by Sportingbet:

463 Draft Gambling Bill: Supplementary Policy Memorandum, DCMS, February 2004, Policy Note 6, para 15

464 See Draft Gambling Bill: Supplementary Policy Memorandum, DCMS, February 2004, Policy Note 6, para 12 and DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para 6.8

465 Draft Gambling Bill: Supplementary Policy Memorandum, DCMS, February 2004, Policy Note 6, paras 13 and 14.

466 Advertising Association, Ev 521 and Ev 501 and Advertising Standards Authority, Ev 505

467 Advertising Standards Authority, Ev 525

468 Advertising Association, Ev 521 and Ev 501 and Advertising Standards Authority, Ev 505

469 See, for example, Q 1536 [Mr Wisbey]

470 Q 1542 and Q 1543 [Mr Brown]


87

“We believe that this approach may cause confusion for the industry and customers and would deny both of the experience and expertise of the ASA and OFCOM. We believe a more appropriate role for the Gambling Commission would be as an expert adviser to the regulatory bodies.”472

314. The Government has argued that the Commission should develop its own codes, especially regarding technical matters in which “other regulators could not be expected to have an expertise”.473 The Advertising Association has questioned this, noting that as respects the example given by DCMS (statements in advertisements about relative odds), the “ASA already has experience and a proven track record of dealing with precisely such technical content”.474 It has told us that if there are areas in which expertise is needed, the ASA would, as Sportingbet suggested, be able to draw on outside help and could seek such assistance from the Commission itself.

315. We recommend that the draft Bill should not prejudice the continuation of the existing and seemingly effective self-regulatory model for gambling advertisements. This would have a number of benefits, including relieving the Gambling Commission of one of the many burdens that would be placed on it under the draft Bill. We do, however, recommend that the draft Bill should contain a reserve power that would enable the Commission to assume regulatory responsibility if it is determined that self-regulation is not a success in any particular area.

316. At present, the ASA’s regulation of non-broadcast gambling advertisements is underpinned by a power of referral to the Office of Fair Trading (the OFT). The ASA has recommended to us that a similar backstop model be adopted under the draft Bill as “[s]uch a model would retain last-resort sanctions […] for the Gambling Commission”.475 This could be achieved under the draft Bill in a number of ways. As the Government has acknowledged, it might “not be necessary for the Commission to impose licence conditions beyond one requiring operators to observe [codes developed by the existing regulators]”.476 If this approach were taken and the relevant CAP Codes were breached by an operator, the Commission would ultimately be able to revoke the operator’s licence:

“As the body responsible for issuing, amending and revoking licences, the Commission will be the ultimate legal backstop for dealing with those who breach the code(s) of practice’.477

317. We recommend that the Gambling Commission should be a backstop regulator for gambling advertisements. We consider that one simple way of helping to achieve this might be for compliance with advertising codes to be attached as a condition of operating licences pursuant to Clause 62 of the draft Bill.

472 Sportingbet, Ev 706, para 2.0. See also ITV, Ev 658





477 Sportingbet, Ev 706, para 2.0

88

318. The Government’s proposals for restricting advertisements from overseas operators are discussed in the context of remote gambling below.

Inducements

319. A number of gambling operators currently offer inducements to consumers in order to encourage them to use their services. Betting operators often offer free bets when customers open an account and, as we saw during our visit to Great Yarmouth, bingo halls offer more simple inducements like subsidised meals and free travel. We are also aware that a number of online gaming and betting operators offer free stakes or bets to encourage consumers to use their websites initially or to spend more than they would otherwise have spent. Other more sophisticated loyalty card systems are operated by casinos in the United States and Australia. These operate like supermarket loyalty cards, which award points for money spent and maintain information on the playing patterns of card holders.

320. We have heard some specific concerns about the possible impact of inducements on businesses in the locality of gambling premises. If large casino operators were, for example, able to provide free food and drink, we have been told that this could divert trade from nearby businesses which would be unable to compete with the inducements offered.478 Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, indicated to the Committee that free food and drink should continue to be allowed as it is currently permitted by the Gaming Board.479 The possibility of gambling operators being able to provide free alcohol has, in particular, been criticised by witnesses:

“I understand that in other countries free alcohol is provided in casinos. I would interpret that, and I am sure some other people would interpret that, as getting people intoxicated in order to more easily take money off them.”480

321. DCMS does not propose a general prohibition on inducements as it is “not convinced that all inducements […] represent a risk that would justify a measure so broad in its effect.” 481 Instead, it proposes to give the Gambling Commission the flexibility to place controls on inducements through the imposition of licence conditions and the use of codes of practice. An additional clause published on 12 March 2004 provides that a condition may restrict or make provision about the “making of offers designed to induce persons to participate, or to increase their participation in […] licensed activities” as well as the “participation in arrangements for inducing[…] persons to gamble”.482 In addition, the Government will “retain the option of imposing a general condition on operating licences that would have the effect of prohibiting all inducements to gamble”.483

322. We recognise that determining which inducements to gamble should be allowed and which should be prohibited is difficult. Accordingly, we agree with the Government’s proposal not to impose a blanket ban on all inducements. We also agree

478 Blackpool Coalition against Gambling Expansion (BCAGE), Ev 21, para 13 and St Saviour’s Church, Ev 631, para 4.3

479 Q 43



482 Additional Clause (1)(b) & (c) on “Credit and Inducements” published on 12 March


89

with the current proposal to give the Gambling Commission the power to control the offer of inducements by operators, whether by way of stringent codes of practice issued under Clause 16 and/or licence conditions under the new Clause published on 12 March. We believe that the licensing objective to protect the vulnerable under Clause 1 would make it incumbent upon the Commission to use these powers to prevent inducements which amount to predatory marketing and which threaten the ability of consumers to control their gambling behaviour.

Loyalty cards

323. When asked about the more complex inducements that can be offered through loyalty cards, Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told us that:

“I think that loyalty cards have very significant advantages[…]it enables us to identify people who are gambling; it enables us to get information about where they come from and who they are[…]; and, of course, the casinos keep records of the amounts they gamble. This could be helpful in the control of problem gambling; it could be helpful in identifying the effects of gambling on individuals and communities.”484

324. The casino industry has reiterated these potential advantages and has also commented on the benefits of loyalty schemes as a marketing tool.485 In particular, they have told us how such schemes help the operator to understand their customers and the response of customers to the products they offer.486

325. Other witnesses have disputed the claim that loyalty cards are an effective way of tackling problem gambling: “the suggestion by the Minister that loyalty cards are a way of controlling pathological gambling indicates that he is remarkably ill informed”.487 The Royal College of Psychiatrists has described loyalty cards as “a device to stimulate gambling”,488 and the Australian Centre for Gambling Research has warned that in their experience “Aggressive marketing and promotions (eg loyalty programs, note acceptors and smart card technology that encourage increased gambling), […] have undermined the regulatory standards established when operators were first licensed” (emphasis added).489

326. We recommend that the Gambling Commission consider the risk associated with loyalty cards alongside other forms of inducement. If the Gambling Commission concludes that loyalty cards do not pose disproportionate risks, we recommend that the ability of such cards to collect information on those who gamble should be harnessed to help address problem gambling. Conditions might then be attached to licences under the Clause published on 12 March to this effect. Obtaining information about people

484 Q 42. See also Q 288

485 Q 464-475

486 Q 468 and 472

487 Royal College of Psychiatrists, Ev 64, para 5.4

488 Royal College of Psychiatrists, Ev 66, para 7

489 The Australian Centre for Gambling Research, Ev 694

90

with a gambling problem could also be an additional benefit of casinos retaining membership schemes, as we discuss below.

Credit

327. The existing Gaming Act prohibits operators licensed under that Act (i.e. casinos and bingo-halls) from offering credit for the purposes of gaming or discharging a gambling debt. Neither may credit cards be used in gaming machines. Such prohibitions do not however cover betting or lotteries, or gaming on the internet. The Government has also noted that customers may use credit cards “to withdraw cash from automatic tellers situated in casinos and other licensed premises”.490

328. The current proposals with respect to credit have been described as follows:

“The draft Bill will make provision to continue the prohibition on the offering of credit at casinos and bingo premises […]. The draft Bill will also maintain the prohibition on the use of credit cards in gaming machines and also in lottery vending machines. Outside these categories, the draft Bill gives the Gambling Commission the power to judge whether, and to what extent, gambling operators should be permitted to provide credit to customers.”491

The proposals are, therefore, to retain limitations on the availability of credit for gambling. Any restrictions that the Commission wishes to impose on the offering of credit will be applied through conditions attached to operating licences. On 12 March 2004 DCMS issued draft Clauses relating to the offer of credit. These expressly provide that licence conditions could restrict the “giving of credit in connection with licensed activities” and that mandatory conditions would be imposed on non-remote casino and bingo operating licences prohibiting operators from giving or facilitating the giving of credit.492 An additional Clause was also published on 12 March prohibiting gaming machines designed or adapted to permit money to be paid by means of a credit card.493

329. We received a significant amount of evidence regarding this policy. A number of commentators have noted that a symptom of problem gambling is spending more than one can afford to lose and that, if it became easier to get into debt in order to gamble, this could increase problem gambling.494 The Mothers’ Union has commented that “[d]ebt incurred through excessive gambling clearly undermines family stability; leading as it does to family breakdown, ill health and job losses.”495 The Salvation Army told us:

“we are all very concerned about the proliferation of gambling on credit. There just seems to be something innately worrying about that and again our poll showed that

490 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para6.10


492 Additional Clause (1)(a) and (2) on “Credit and Inducements” published on 12 March

493 Additional Clause on “Credit” published on 12 March

494 The Salvation Army, Ev 83, para 6.1; the Evangelical Alliance, Ev 72, para 7; and Q 252 [Professor Orford]

495 Mothers’ Union, Ev 729

91

94 per cent of the population feel that allowing people to gamble with credit cards would put people at a greater risk of incurring gambling debts. It sounds obvious.”496

330. Professor Orford told the Committee, “I think credit cards are dangerous. We live in a society now where credit card debt is a major national problem, so I would have thought allowing people to bet with credit cards was a bad thing”.497 The Royal College of Psychiatrists has commented on the anomaly that, although the use of credit will be controlled elsewhere, “the use of credit cards will be allowed for remote gambling”.498

331. During our visit to GamCare we saw at first hand the very high levels of debt that are common for problem gamblers and heard about the immense difficulties that this can cause. We were told at the same time about the irresponsible attitudes of some credit providers, including repeated offers of credit to problem gamblers who had requested that they should not be given credit. We consider this to be incompatible with responsible lending practices.

332. When asked about the proposals on credit the casino industry noted that, given the proposal to permit a wide range of gambling products to be offered within a casino:

“We see that there is a rather strange anomaly in that the betting component will be allowed to issue credit but the casino component will not, so that if you were in one part of the facility you could get credit but in the rest of the place you could not.”499

333. We have been told that, while casinos would like to be able to offer credit, “we are not talking about the issuance of wholesale credit as you see with high street credit cards and store cards” and “[i]t is pre-authorised and it is for high net worth clients only”.500

334. We do not believe that the use of credit should be prohibited on the face of the Bill. We do, however, recommend that the Gambling Commission should be required to issue codes of practice under Clause 16 and to attach licence conditions under the Clause published on 12 March, regulating the offer and acceptance of credit by operators. We note that, in line with the licensing objective under Clause 1 “to protect the vulnerable”, such codes of practice should restrict the use of credit where necessary to protect problem gamblers.

8 Casinos

335. The proposals relating to the regulation of casinos contain some of the most significant provisions in the draft Bill and could transform the casino industry in the UK and have a significant impact on the rest of the gambling industry. We received a substantial amount of evidence on this matter, much of it pointing in different directions. Our task was not assisted by confusion in the Government’s apparent thinking on a number of key issues, namely the mechanism for preventing proliferation, the extent to

496 Q 288 [The Salvation Army]. See also Mr John Wainright, Ev 722

497 Q 252 [Professor Orford] HC 139 - iii

498 Royal College of Psychiatrists, Ev 66, para 20

499 Q 528

500 Q 528 [Mr Tottenham]

92

which it sees casino development as an engine of regional regeneration, how planning gains will be achieved and the application of grandfather rights. We think it useful first to provide a summary of the principal changes in the regulation of casinos that the draft Bill proposes, followed by a resumé of the main issues to which they give rise. We will then turn to consider the evidence and to make our recommendations.

336. Under the Gaming Act 1968, casinos are highly regulated. They can only be located in designated ‘permitted areas’, of which there are 53 in the UK. Local authorities have a responsibility to consider demand before granting a licence. If the demand criterion is not demonstrated an application can be refused. Casinos are required to operate as private members’ clubs with a 24 hours statutory interval between membership and play. This means that casinos in the UK tend to operate as small members’ clubs serving specific and often local social groups rather than the general public.501 They can only open between 2pm and 6am on weekdays and until 4am on Sundays. Advertising is currently restricted and casinos are limited to having a maximum of 10 gaming machines, offering a maximum prize of £2,000. As the policy document accompanying the draft Bill notes “the casino sector is restricted by a series of controls that unnecessarily discourage innovation and restrict consumer choice”.502

337. Under the draft Bill there will be a significant deregulation of the controls governing casinos, including:

• removing the requirement to operate as private members’ clubs, with a statutory interval between membership and play;

• extending the gambling products casinos can offer, including betting and bingo, and the linking of gaming machines within a casino;

• abolishing the demand criterion and ‘permitted areas’ rules;

• allowing large casinos to have an unlimited number of gaming machines with unlimited stakes and prizes; and

• allowing casinos to offer live entertainment and to advertise.

Unresolved issues

338. The modernisation of the law relating to casinos represents a major area of change and uncertainty. The policy, as presented, lacks clarity in a number of areas. First, there are a number of issues relating to the development of casinos and the question of proliferation that could compromise the realisation of the licensing objectives. Second, there is an issue concerning the Government’s policy regarding securing economic benefits that could accrue from casino developments. As we discuss below, this centres on whether, contrary to the provisions in the draft Bill for large and small casinos, the Government intends to create a third category of casino that is specifically intended to provide regeneration benefits. This could lead to the kind of casino developments that the Committee delegation

501 Gambling and the Public Interest, Professor Peter Collins (London, 2003).


93

saw in Australia, which are far more substantial than anything that the law currently allows, and which the Gambling Review Report suggested might be permitted by its recommendations.503 Sometimes referred to as resort casinos, an essential question is how, if at all, they should be differentiated from large and small casinos. Unless resort casinos are differentiated, and given special treatment within the gambling environment, it is questionable whether the concept will succeed in the UK.

339. Another crucial element relating to the issue of preventing proliferation and securing economic benefits is the planning environment. We welcome the Government’s intention to “make it possible for different parts of the country to consider how gambling developments might play a role in securing economic benefits for their area”.504 However, under the proposals in the draft Bill, it is not clear to the Committee how the Government expects planning authorities to achieve local and regional planning gains. As Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, conceded when he gave evidence to the Committee, “it is very difficult to know how to ‘require’ economic benefits”.505 The Committee is also concerned that planning applications that have already been made, many in anticipation of the likely expansion in slot machine entitlements, could compromise the possibility of securing both local and regional planning gains.506 We are concerned at the lack of agreement between ODPM and DCMS on some of the key details in this area. Planning issues relating to casino developments are discussed in more detail below.

340. Finally, there is the question of grandfather rights. The Committee’s understanding of the Government’s position is that all casino operators holding certificates of consent from the Gaming Board and gaming licences issued by the licensing authorities, prior to the enactment of the Bill, will, in effect automatically, be granted an operating licence by the Gambling Commission and a premises licence from the local authority. This could lead to undesirable proliferation and local and regional planning authorities missing out on the opportunity to achieve local planning gains and regeneration benefits. There is a considerable urgency to this issue as plans for the development of a number of large scale casinos are well advanced. If permitted, such developments would seriously undermine the licensing objectives and whatever policy objectives on regeneration the Government decides to adopt.

The Government’s proposals

341. On 7th August 2003, the Government published for consultation a joint position paper by ODPM and DCMS, “The Future Set out For UK Casinos”507 which proposed new definitions for the size and type of new casinos which would be permitted under the draft Bill:508



505 Q 66

506 Q 1111 [Mr Haslam]

507 Future Set Out For UK Casinos – Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing

508 The Committee assumes that the function of Clause 10(5)(c) is to enable the Secretary of State to make special provisions for the grandfathering of existing casinos which are below the minimum size for a small casino.

94

• small casinos, with a table gaming area of between 5,000 sq ft and 10,000 sq ft, with a minimum of 20 gaming tables and a maximum of three gaming machines for each table; and

• large casinos, with a table gaming area of over 10,000 sq ft and an unlimited number of gaming machines provided the casino has more than 40 tables.

342. Currently casinos are only allowed to have up to 10 jackpot gaming machines with a maximum stake of 50p and maximum prize of £2,000. The gaming machines permitted under the draft Bill will be categorised as Category A machines with no limit on stakes and prizes.

343. The Government’s proposal for new casinos to have a table gaming area of not less than 5,000 sq ft, with a gaming machine to gaming table ratio of 3:1, is designed to prevent the proliferation of small casinos. Lord McIntosh, Parliamentary Under-Secretary, DCMS, told the Committee, “our view is that as of 2003 we need greater restriction on the numbers of machines in smaller casinos, and we need a complete ban on new casinos below 5,000 square feet—[…] we do not wish to see the proliferation of small casinos on every street corner”.509

344. However, many existing casinos have a gaming area of significantly less than 5,000 sq ft. The Government has proposed that existing casinos which do not meet the minimum size requirement for small casinos will be granted grandfather rights, and can continue to operate under the draft Bill.

345. Although the November policy document and the Government’s 7th August Position Paper,510 both refer to resort casinos, these are not separately defined in the draft Bill. The lack of a definition has generated speculation that the Government’s policy implies three categories of casino. In written evidence to the Committee Leisure Parcs note “In relation to the definition of a large casino, we are unclear as to whether a distinction is intended between a resort casino development and other large casinos. In other words, is the Government proposing two sub-categories of ‘large’ casinos?”511 It is not clear from the draft Bill how the very largest casinos will be separated, and treated differently from other casinos that also fall into the large category. The North-west Development Agency told the Committee that “the absence of a definition about resort casinos […] is unhelpful”.512

346. A separate definition of resort casinos has been suggested as a means of overcoming this problem.513 In its written evidence to the Committee, Gala propose “that the legislation recognizes the fundamental difference between the very largest Resort Casinos of ‘regional significance’ and other large (40+ table) casinos”.514



511 Ev 164. See also London Clubs International, Ev 627 and Kerzner International, Ev 161, section 3

512 Q 1110 [Nick Gerrard]


514 Ev 598, para 6.3

95

Evidence received

347. While the clauses on casinos represent a small part of the draft Bill they have generated a large amount of evidence on a wide range of issues, including the proposals set out in the Government’s 7th August Position Paper515 and the policy document accompanying the draft Bill. The proposed size categories have prompted much of the evidence we have received.

Size categories

348. The size requirements proposed in the Government’s Position Paper,516 could lead to a major change in the size of casinos that currently operate in the UK, where “three quarters of British casinos are below the minimum size for a new-entrant Small casino”.517 The Committee received evidence from Rank suggesting that differentiating between small and large casinos will give a competitive advantage to large operators while smaller operators miss out.518

349. The Office of Fair Trading is opposed to the 5,000 sq ft threshold, believing that a minimum table gaming area for new casinos could restrict competition, “we believe that the proposal for a minimum size of 5,000 sq ft will be a significant barrier to entry for new casinos”.519

350. However, in its Regulatory Impact Assessment the DCMS states that “the proposed casino reforms in the Bill assist the development of an open, well-informed and competitive casino market”.520 The 5,000 sq ft minimum size for small casinos is also supported by Gala who believe that it will be “sufficient to control proliferation without restricting economic growth”.521 The Committee is not minded to support the Office of Fair Trading’s view and agrees with the Government that a 5,000 sq ft minimum size will aid the objective of preventing proliferation so as to avoid an unacceptable rise in problem gambling and thereby help to secure the statutory objective of protecting the vulnerable.

351. There has also been criticism of the proposed 10,000 sq ft threshold for large casinos and the entitlement that large casinos would have for an unlimited number of Category A machines. For example the Committee received evidence from the Hilton Group suggesting that “10,000 sq ft is too small and could result in an increase in the number of resort casinos which in turn could end up causing a number of social problems”.522 This view was echoed by Rank which noted that:

515 Future Set Out For UK Casinos – Joint Position Paper ODPM and DCMS,August 2003,

www.culture.gov.uk/gambling_and_racing


517 Ev 693, para 3

518 Ev 594

519 Ev 707


521 Ev 599

522 Ev 638

96

“a 10,000 sq ft casino is not a large casino by today’s standards […] the Government has set the threshold much too low, and risks opening the way to the proliferation of large, machine-dominated gaming sheds, of the kind that have developed in Australia and certain parts of the US, and which carry an increased risk of problem gambling.”523

The cliff-edge

352. The dividing line between small and large casinos prompted further evidence from various sources as set out below, suggesting that the proposals could lead to an unnecessary increase in the number of large casinos as firms seek to gain the advantage of having 40 gaming tables and an unlimited number of gaming machines.524

353. The Committee heard evidence from the British Casino Association that the threshold of 40 tables was too drastic. “We consider that the jump from a maximum of 120 machines in a casino having 40 tables, on a gaming floor of 10,000 sq ft or less, to an unlimited number at 10,001 sq ft is too great a leap”.525 Caesar’s Entertainment (formerly Park Place Entertainment) believed that “the proposals in the draft Bill create a ‘cliff-edge’ between ‘small’ casinos which will be allowed a maximum of 120 machines, and the unlimited number of machines permitted in ‘large’ casinos”.526 The British Greyhound Racing Board referred to the “quantum leap into unlimited gaming machines.”527

354. The cliff-edge situation could lead to a large number of developments of just over 10,000 sq ft, with only a small number of casinos between 5,000 sq ft and 10,000 sq ft in operation. Lady Cobham, of the British Casino Association, told the Committee “it is quite hard to imagine large numbers of applications for developments between the 5,000 and 10,000 sq ft gaming floor size, because if you go just over that, you can have unlimited machines”.528

355. It has been suggested that this could be overcome by a combination of staggering the number of machines permitted for casinos of different square footage, increasing the floor space at which unlimited numbers of machines are permitted or removing the right for any casino to have unlimited numbers of gaming machines.

Alternative size formulas

356. The Committee has received several suggestions for formulas to determine the number of gaming tables and machines that different sized casinos should be permitted. Caesar’s Entertainment (formerly Park Place Entertainment) suggest that “the maximum number of gaming machines permitted in any casino should be three times the number of gaming tables with the following exception: up to 30 gaming machines per table may be permitted in large casinos that incorporate more than 40,000 square feet of gaming area on

523 Ev 595

524 Q 436 [Lady Cobham]

525 Ev 139, para 2.3

526 Ev 181

527 Q 989


97

one floor, of which a minimum of 40 table games occupy at least 10,000 square feet of the available gaming space”.529 Alternatives to the Government’s formula have also been suggested by MGM Mirage,530 the Casino Operators Association of the UK,531 Gala,532 the British Greyhound Racing Board,533 the Casino Machine Manufacturers Group,534 and London Clubs International,535 amongst others.

The 3:1 ratio

357. The 3:1 ratio of gaming machines to gaming tables prompted much evidence. The aim of the 3:1 ratio is to address the issue of proliferation and to ensure that machines do not unduly dominate the gambling activities.536 However, this represents a significant shift from the position that the Gambling Review Body took with respect to gaming machines in casinos. The Gambling Review Report recommended that “the maximum number of gaming machines in a casino is determined by the number of gaming tables that are available for play. We suggest that the maximum should be determined by a ratio of eight machines to each table, but that where the number of tables exceeds eighty there should be no maximum on the number of gaming machines”.537 The 8:1 ratio suggested by the Gambling Review Body remains popular with some. Leisure Link argue that “this ratio has the logic of maintaining a fifty-fifty balance between machine and table gaming, thus preventing casinos becoming dominated by machine gaming”.538 The Casino Operators’ Association “feel strongly that the [3:1] ratio flies in the face of all previous proposals and understanding that it would be an [8:1] ratio”.539 We have already referred to evidence from the British Casino Association that the 3:1 ratio was encouraging casinos to be bigger than necessary. 540

358. More significantly the Gaming Board expressed concern that the ratio of 3:1 gaming machines to tables may be too low to satisfy customer demand.541 Gala argue that the proposal will leave small casinos at a competitive disadvantage.542 The Casino Operators’ Association also have concerns that the 3:1 ratio could be harmful to small casinos, “because of the low numbers of tables (40) after which the ratio moves towards infinity, the fairness of competition between small casinos and large ones would be radically removed”.543

529 Ev 181

530 Ev 185

531 Ev 161

532 Ev 598

533 Ev 386

534 Ev 349

535 Ev 719


537 DCMS, Gambling Review Body Report, Cm. 5206, July 2001, recommendation 57

538 Ev 691. The same point was made by the Casino Machine Manufacturers Association (Ev 349).

539 Ev 161

540 Q 446 Chairman: Is it your view that, if the ratio were more generous than 3:1 and it was the eight Budd originally recommended, that some of these casino developments would not be Quite so big?

Mr Ramm: Yes, very much so.

541 Ev 22, para 8

542 Ev 598, para 6.2

543 Ev 161

98

359. The Committee has also received evidence from Rank suggesting that the ratio of gaming machines to tables should be the same for all casinos, regardless of size; “a much more preferable and even-handed approach would be to maintain a fixed ratio of machines to tables, and maintain that ratio irrespective of the size of the casino”.544

360. The Government’s proposals for the 3:1 ratio did receive some support. MGM Mirage “believe the limitation of three slot machines to one table in casinos of between 5,000 square feet and 10,000 square feet in size is appropriate”.545 Kerzner International also supported this view, “we believe the increase to 3 machines per table […] will allow most existing ‘small’ casinos a significant increase over the existing number of machines as well as allowing higher machine stakes and prizes into this environment”.546

Definition of ‘gaming machine’

361. The Government’s proposed ratio permits three gaming machines for every gaming table. The draft Bill, however, does not set out a definition of a gaming machine. In written evidence to the Committee, Gala note that “the Government is asking for a considered industry response on a 3 to 1 ratio without clearly defining what is captured by the term ‘machine’”.547 Rank “requests the Government to establish a more robust definition of gaming machines, regardless of the level of stake or prize”.548 The status of electronic games has caused some concern from operators. Gala note, “we do not believe that electronic versions of bankers games in Casinos should be classified as machines, as they are clearly extensions of existing bankers game offers. If indeed they were, the 3 to 1 ratio would even further disadvantage existing operators”.549 Kerzner International also queried the existing position.550

362. We recommend that the Government should set out a definition of gaming machines which takes account of current and anticipated developments in the technology through which gaming products are delivered.

Three size categories

363. Given the evidence we have received, we believe that the Government’s policy objectives would be better achieved if the draft Bill is amended to accommodate three categories of casino; small casinos; large casinos and resort or destination casinos.

Small casinos

364. We support the Government’s intention to prevent the proliferation of small casinos. For this reason a minimum size threshold of 5,000 sq ft and a gaming machine to gaming table ratio of 3:1 seem on balance to be a suitably cautious approach. We note that even a

544 Ev 596

545 Ev 166, para 2.2

546 Ev 161, para 4

547 Gala response to 7th August Position Paper.

548 Ev 594

549 Ev 598, para 3.1

550 Ev 181

99

ratio of 3:1 gaming machines to tables will result in significant additional availability of gaming machines in small casinos and the localities which they serve.551

365. We therefore support the proposal for small casinos to be defined in the regulations made under Clause 10(5)(b) as having a minimum table gaming area of 5,000 sq ft and a maximum table gaming area of 10,000 sq ft. We agree that casinos of this size should be permitted a 3:1 gaming machine to table ratio, as currently proposed under Clause 142(4)(a) of the draft Bill.

366. We are aware that retaining the 3:1 ratio will disappoint some sectors of the casino industry. The Committee therefore, supports a review of the 3:1 ratio by the Gambling Commission three years after Royal Assent, with a view to recommendations being made to the Government on whether the ratio set out in Clause 142(4)(a) should be adjusted. Such changes could be made pursuant to the delegated power contained in Clause 142(10) of the draft Bill and we agree that any such amendment should be subject to the affirmative procedure.

367. With respect to planning consent for small casinos Yvette Cooper MP, Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, told the Committee that this should be the preserve of local authorities.552 We endorse this view and given the likely limits on floor space and gaming machine numbers we do not feel it is necessary for small casinos to be required to contribute to local planning gains. However, we do anticipate that most small casinos will include additional facilities such as restaurants or entertainment facilities. Provision for such facilities should be incorporated into guidance to local authorities.

Large casinos

368. Having confirmed our support for the Government’s proposal for small casinos we now look in detail at the proposed regime for large casinos. We have already drawn attention to evidence from the British Casino Association and Caesar’s Entertainment (formerly Park Place Entertainment) suggesting that the 40 table threshold for unlimited gaming machines in large casinos is too low.553 Whilst the current total number of gaming machines in casinos in the UK is fewer than 900, recent research by the Henley Centre suggests that the proposals in the draft Bill if implemented could eventually lead to as many as 81,000 casino gaming machines.554 This would present a significant change to the current casino landscape. The Committee has heard evidence from Rank that allowing unlimited numbers of gaming machines is unnecessary and risks creating “the very proliferation that government is seeking to avoid”.555

369. Linked to concerns about proliferation are fears that unlimited numbers of Category A machines could encourage problem gambling. The Committee received evidence from

551 Ev 161

552 Q 1783

553 Ev 139, para 2.3 and Ev 181

554 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004

555 Ev 594

100

Professor Jim Orford, Professor Mark Griffiths and Dr Emanuel Moran warning about this risk,556 which was echoed by the British Beer and Pub Association (BBPA) and Operators of Adult Gaming Centres.557 The BBPA argued that “the expansion of hard gambling will increase problem gambling chiefly through large numbers of unlimited stakes and prize gaming machines in casinos”.558 This concern was also shared by Helena Chambers of Quaker Action on Alcohol and Drugs: “What we would be looking for is no premises to have unlimited numbers [of machines]”.559

370. Evidence from the British Casino Association suggested that unlimited numbers of gaming machines should be reserved for resort casinos. 560 Blackpool Council went further and proposed that casinos with unlimited numbers of gaming machines should be required to make a contribution to regional regeneration: “large casinos which could have an unlimited number of unlimited/big prize machines should be located only in areas where the Regional Economic Strategy (RES) and the Regional Spatial Strategy (RSS) identifies them as contributing to the regeneration and economic prosperity of the region and communities within which they are to be located”.561

371. The Committee also heard opposing evidence from the Casino Operators’ Association of the UK to the effect that “all large casinos should have unlimited gaming machines”.562 They believed that having an unlimited number of gaming machines was vital to attract the investment necessary to develop a very large casino. The Association noted that “machines are core to the operations [of resort casinos] and without them the entrepreneurs involved would not contemplate the project”.563 This view was shared by Ameristar Casinos: “in order to justify the level of capital investment to build this type of facility (large scale casino development) […] casinos must include a large number of slot machines to satisfy free market demand”.564

372. We have received evidence in favour of a cap on the number of gaming machines in casinos. Stanley Leisure suggest “consideration of a cap at a maximum of say 1,000 [gaming machines] per location, to avoid a “machines dominated” Casino environment”.565 The Committee delegation to Australia observed that even the internationally renowned Star City casino in Sydney was limited to 1,500 gaming machines. Evidence from MGM Mirage shows that in casinos across several jurisdictions, including South Africa, California, and France, a maximum number of 1,500 machines in casinos is common.566

373. Having weighed up all the arguments, we feel that allowing unlimited numbers of gaming machines will conflict with the objectives set out in Clause 1 of the draft Bill.

556 Qq 262-65

557 Ev 350

558 Ev 355, para 1.4. See also the memorandum by the British Greyhound Racing Board, Ev 386

559 Q 303 [Ms Chambers]

560 Ev 139, para 2.3, Ev 158, para 3

561 Ev 409

562 Q 412 [Mr Love]

563 Ev 161

564 Ev 701, para 3.3.2

565 Ev 645, para 4

566 Ev 185

101

374. Whilst we appreciate the significant contribution gaming machines can make to a casino’s profits, and their ability to contribute to planning gains for local communities, we believe that allowing certain casinos unlimited numbers of gaming machines as of right will result in a damaging proliferation of gaming machines and risk a significant increase in problem gambling. We therefore recommend that no casino should be permitted an unlimited number of gaming machines and that Clause 142(4)(c) should be amended accordingly.

375. Having concluded that large casinos should not have an unlimited number of gaming machines the Committee considered whether large casinos should be entitled to a bigger ratio of gaming machines to gaming tables than that allowed for small casinos. Whilst we understand the view of small casinos that a bigger gaming machine to gaming table ratio might give large casinos a competitive advantage, large casinos are more likely to be situated in major cities and be part of much larger leisure developments than would be appropriate for a small local casino. It is unrealistic to expect large casinos to provide more gaming tables than the market demand will support, simply in order to gain an entitlement to an increased number of gaming machines which would meet market demand and generate the income required to support other leisure developments and planning gains for the local community. The Committee has therefore concluded that large casinos should be entitled to a greater ratio of gaming machines to gaming tables than that permitted for small casinos.

376. The Committee is attracted to the 8:1 ratio recommended by the Gambling Review Body as a more appropriate ratio for large casinos. We believe that there is merit in the rationale behind the Budd recommendation, that a gaming table accommodates up to eight playing positions.567 Before confirming the precise ratio for large casinos we would want the Government to consult the Gambling Commission and the industry, on whether large casinos should have a statutory maximum number of gaming tables and the appropriateness of the 8:1 ratio applying to each table. This consultation should take into account the recommendation we make below about resort casinos and the outcome of discussions within Government as to which casinos should be considered to be regionally significant and might therefore, be termed resort casinos.

377. We therefore recommend that large casinos should be defined in the regulations to be made under Clause 10(5)(a) as those with a minimum table gaming area of more than 10,000 sq ft and a minimum of 41 gaming tables. We consider that a higher gaming machine to table ratio than that for small casinos should be allowed and that the ratio should be set by the Government following consultation with the industry and further policy development. Any agreed ratio should be subject to review by the Gambling Commission after three years.

Additional facilities for large casinos

378. During the Committee delegation visits to Australia and France, we saw the benefits that can be derived from casinos having additional leisure and cultural facilities, such as restaurants and theatres. A similar arrangement for casinos in the UK would help to create

567 DCMS, Gambling Review Body Report, Cm. 5206, July 2001, recommendation 57

102

an all round leisure experience which could help to attract visitors and boost tourism. The Committee heard evidence from Professor Vaughan Williams that “if it (the plans for large scale casino development) is going to work properly […] then it has to be as part of the entertainment industry, not as part of gambling […] if we cannot make it an entertainment experience then the future is bleak”.568 Additional facilities, ancillary to gambling, could help to regenerate areas in which such developments are located through providing increased jobs and attracting visitors. During its visit to France the Committee witnessed the positive benefits that can be derived from establishing additional facilities alongside gambling developments which we discuss in more detail below.

379. At this point, and as part of the definition of a large casino, we recommend that large casinos should be required to provide leisure and cultural facilities ancillary to gambling.

380. The planning process for large casinos is dealt with below.

Resort casinos

381. The lack of a definition of resort casinos has led to confusion over how such developments will be dealt with in the planning process. We feel that a separate definition of resort casino is necessary to provide clarity and ensure that regeneration benefits can be achieved. ODPM and DCMS have not yet decided where the line will be drawn to distinguish between large and resort casinos.569 The lack of a definitive policy in this area is regrettable and has made the Committee’s work much more difficult.

382. Resort casinos will be large leisure developments consisting of a wide range of gambling activities as well as wider leisure facilities such as hotels, entertainment complexes and restaurants. The Committee accepts that they will be entitled to at least the same ratio of gaming machines to gaming tables as is agreed for large casinos, with the potential for a larger entitlement if considered appropriate by the Gambling Commission. The Committee has received evidence on the size of casinos located in other jurisdictions. Evidence from MGM Mirage shows that international casino sizes vary, from 14,000 sq ft of casino space in the Casino Barriere de Montreaux in France, to 110,000 sq ft of casino space in the Sunset Station Casino in Las Vegas.570

383. The Committee supports the need for a definition of resort casinos that will clearly differentiate them from large casinos, offering them a sufficient margin to ensure that the appropriate regeneration benefits can be achieved in the planning process. However, the Committee feels unable to recommend a minimum floor space for resort casinos because ODPM and DCMS have yet to conclude their deliberations in this area. This is an issue to be determined by ODPM and DCMS as a matter of urgency.

384. The Government proposes that “Regional Planning Bodies will set out planning policies for leisure developments of regional significance, including casinos”.571 A

568 Q 353 [Professor Vaughan Williams]

569 Q 1783

570 Ev 185. International comparisons of machine entitlements were provided by Accor casinos (Ev 711) and the American Gaming Association (Ev 714).


103

definition of what is regionally significant has yet to be agreed by ODPM and DCMS; an announcement is expected “by the summer”.572 When this happens we recommend that this Committee should be reappointed to help the Government determine the correct gaming machine to gaming table ratio for large casinos and the appropriate threshold at which a casino is considered to be a resort casino.

385. The Committee recommends that the draft Bill is amended by the inclusion in the regulations made under Clause 10(5) of an additional definition of a resort casino. Whilst we are not yet in a position to make a detailed recommendation on the definition of resort casinos, we nevertheless believe that the Gambling Commission should be given the discretion to allow resort casinos a greater ratio of gaming machines to gaming tables than that provided for large casinos. For the reasons outlined above regarding the issues of proliferation and risks associated with problem gambling the Committee believes that no casino should have an unlimited number of gaming machines. We recommend that the Government provides in regulations, for a statutory maximum number of machines for resort casinos, in the range of 1,000 or 1,250. We recommend that resort casinos must be subject to requirements to contribute regeneration benefits as discussed below.

386. Resort casinos will have a substantial impact on the economic and social environment of the regions in which they are sited, placing great importance on the way they are planned. The planning process for resort casinos is considered below.

387. We regret that we are unable to make a definitive recommendation on the definition of resort casinos. Given that the gaming machine to table gaming ratio and size thresholds are not in our view issues that should be on the face of the Bill, we do not believe that this should cause unnecessary delay to the progress of the Bill.

Regeneration: general issues

388. There has been much talk of the opportunities for regeneration which new casinos might bring, though much of this has been somewhat vague. We think it is useful, therefore, to begin our discussion of casinos and regeneration with an account of what regeneration means in this context and what different types of regeneration project are most commonly associated with casinos. This account is based on what we have learnt about other jurisdictions from our visits to Australia and France and from other sources.

389. Regeneration, in relation to casinos, refers to the economic benefits which accrue to a previously disadvantaged area as a result of locating a casino there. From the point of view of the residents of the area the benefits are of two types: those which enhance the opportunities for enjoyment by local residents and those which enhance their opportunities for employment.

390. Examples of ways in which the kind of additional non-gambling amenities and facilities which a casino may make available for enjoyment by locals are live entertainment, cinemas, museums, restaurants, subsidising by the casino of improvements to transport

572 Ev 566

104

infrastructure, the restoration of historic buildings or the provision of facilities which would otherwise have to be publicly funded, such as recreational centres for the young, the elderly or the disabled. More generally casinos often deliver regeneration by utilising and rehabilitating previously derelict sites in rundown areas which subsequently become safe, attractive and popular.

391. The increased employment opportunities which a casino may generate are of two main kinds: those which occur during the development and construction of the project and those which result from attracting visitors to spend money in the area.

392. From the point of view of the casino developer, investment in regeneration projects is also of two main types: those which are undertaken in order to increase the profitability of the business and those which are undertaken in order to secure a licence. The former will include the additional non-gambling facilities mentioned above. The latter will typically include the funding of public interest projects identified by local or regional authorities which would otherwise have to be publicly funded. Most commonly these take the form of contributions to cultural and tourism-promoting infrastructure of which conference centres and conservation projects which increase non-gambling tourism, are good examples.

393. Successful regeneration projects associated with casinos of very different kinds include Melbourne, Australia where a derelict area was converted into a tourist attraction with many attractive amenities for locals; Sydney, Australia which saw the enhancement of its Waterfront; Biloxi, Mississippi where the previously impoverished town was transformed into a resort destination for casino gamblers; Cape Town, South Africa where a casino funded a conference centre and the building of a canal linking the waterfront to the city centre. As noted previously, casinos in France have to agree with municipal authorities what local projects, usually of a cultural sort, they will subsidise. It should be noted that it is also possible to point to examples where regeneration opportunities have not been successful. New Orleans is perhaps the most notorious example. Also, unless carefully planned, the benefits of regeneration may be offset by undesirable displacement as happened to some extent in Atlantic City.

394. The Government’s proposals for the largest casinos have been seen by many as providing an opportunity to regenerate run-down urban areas and deprived seaside towns. “International experience suggests that the proposals in respect of casinos will have an overall positive effect upon the economy, with the attendant regeneration of local economies”.573 Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told the Committee that “they [resort casinos] create jobs themselves; they create ancillary jobs from people supplying them—caterers, hotels and so on; and the experience is that, if it is done well, there can be a very beneficial effect on the local economy”.574 His view was echoed by Brigid Simmonds of Business In Sport and Leisure who told the Committee that “there is no doubt that resort casinos will contribute to regeneration”.575

573 Ev 641, para 3.2



105

395. The term resort casinos is used in relation to regeneration but the lack of a clear definition has caused confusion as to which size casinos would be expected to make regenerative contributions to the area in which they locate. Sun International suggest that “with respect to ‘large’ casinos with unlimited slots there will be a two-tier system: one for some ‘very large’ casinos which will make a contribution to regeneration, tourism and economic development and another for casinos which are merely large”.576 Sun International believe that the ability to regenerate areas will help to get public approval for the largest casinos.577

396. The creation of resort casinos has also been hailed as an opportunity for job creation. Mr Kelly of Gala told the Committee, “I have no doubt whatsoever that the expansion of the destination gaming business that might be facilitated by new legislation would have a beneficial effect on jobs. It is going to mean a significant amount of employment service in order to deliver the opportunity”.578 The Transport and General Workers Union, however, dispute claims that casinos can lead to job creation. “There is some data to suggest that, jobs actually created by casinos are minimal”.579

397. The Committee also received evidence that cast doubt on the regenerative properties of the largest casinos: “resort and large casinos will be adult gambling environments providing scant impetus for social and tourism led regeneration”;580 “Experience elsewhere is that new gambling opportunities are developed by integrated companies who offer accommodation, leisure and gambling facilities within a single complex so that their visitors spend entirely within the complex and have no need to visit the remainder of the town.”581 Similar points were made by Councillor Steven Bate from Blackpool.582 The Henley Centre Report for the British Amusement Catering Trades Association (BACTA) sounded a cautionary note that “regeneration is fundamentally very difficult to achieve. Though improving the economic situation may go some way towards statistically proving regeneration has been achieved, it often takes some time to change the attitude and perspectives of residents in those areas”.583

Securing regeneration benefits

398. The Government is keen that local areas benefit from the creation of gambling developments. This objective is set out in the policy document accompanying the draft Bill,

“planning arrangements enable local authorities to ask for contributions towards any area that has a more than trivial connection to the proposed development. The scale and purpose of contributions will be negotiated with the developer but could include improvements to local transport arrangements or contributions to improved

576 Ev 169, para 2.4

577 Ev 169, para 2.1

578 Q 346 [Mr Kelly]

579 Ev 491, paragraph 9

580 BACTA, Ev 295, para 2.2b)

581 Park Baptist Church, Ev 591, para 6.1

582 Ev 685

583 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004, page 158

106

community safety. This means casinos can offer additional benefits to local communities”.584

399. The Committee heard evidence from Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, that regenerative benefits could be secured in the form of planning gains from casinos through Section 106 agreements. “It is very standard practice to have Section 106 agreements which do exactly the kind of thing you are talking about, and would require investment in affordable housing, perhaps, or new community facilities and things like that as part of the agreement for getting planning permission on a particular site”.585 The Committee saw on its visit to France the extent to which local areas benefit from large casino developments. Economic benefits are derived in the form of facilities ancillary to gambling such as theatres, high quality restaurants and conference facilities. In its written evidence to the Committee, Accor casinos noted that “on an equal footing to gaming, the operator must develop tourism and cultural oriented activities, entertainment and an appropriate food and beverage offer”.586 We were given the example of a recent casino development that had been required to build a 700 seat theatre as part of the agreement to develop the casino. This can have a significant effect not only on the economy but also on the cultural life of areas in which casinos develop.

400. The Committee visited a casino in Enghien les Bains, where the casino operator makes a considerable contribution to the cultural life of the area through arranging festivals and staging an annual jazz show. The relationship between a casino and the area in which they locate was described as being like a marriage, and as Accor note in their written evidence, “Casinos are economic and social partners of their municipalities”.587

401. As recommended in paragraph 379, the Committee recognises the potential benefits that can be derived from large casinos for a local community. We therefore recommend that, in addition to requiring large casinos to provide leisure and cultural facilities, local authorities should also seek appropriate planning gains from all large casinos, as part of the planning process.

Regional regeneration: Free market v. locational controls

402. In its 7 August Position Paper, the Government states that it envisages “that the market will determine the number, size and character of casinos, and where they will be located” but also notes that it is “keen to secure […] benefits where they can make the greatest contribution to its objective of encouraging economic development and creating sustainable communities”.588 London First Centre note that “the draft legislation appears to be unclear as to whether it allows for a free market system to determine location […] or whether regional planning bodies will have the right to determine the location of the (as yet undefined) ‘casinos of regional significance’”.589


585 Q 1802 [Yvette Cooper MP]

586 Ev 671

587 Ev 671


589 Ev 687

107

403. The Committee received evidence suggesting that a free market would be incompatible with achieving regeneration benefits from large casino developments. “If you want to get significant regeneration benefits in any area then if there are too many casinos, the investment will be smaller and therefore consequently the regeneration benefits are going to be less. The Government has to decide what it wants out of it”. 590 Research by the Henley Centre for the British Amusement Catering Trades Association (BACTA) supports this point:

“The efficacy of allowing the market to determine where investment is made, for example in new casinos and at the same time meet requirements for regeneration is uncertain. If they have a choice, operators will site the new casinos in affluent areas where their return will be higher. There is a significant risk therefore that market-determined growth may not occur in the areas most needing regeneration or that regeneration investment may be challenged by investment in a neighbouring area”.591

404. Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, conceded that “there is a tension between an unfettered free market and a planning system – there is. Those tensions are in-built”.592 Research by Ernst & Young for Business In Sport and Leisure suggests that “demand for resort casinos will only be able to support a limited number [of resort casinos] in the UK as there is doubt regarding the size of the potential increase in tourist levels both from overseas and also from within the UK. Accordingly we believe the number of resort locations is more likely to be closer to 3 than 20”.593 It is not clear from the Government’s proposals how the number of large casinos could be limited. Experience from overseas has shown that auctioning of licenses and the granting of exclusivity is one way of limiting the number of casinos and achieving regenerative benefits.

405. The Committee received mixed views on the possibility of limiting the number and location of casinos. Lady Cobham of the British Casino Association told the Committee, “I do not think the BCA could support what might be termed exclusion zones”.594 Other witnesses suggested that exclusion measures would be necessary for resort casinos to succeed.595 But Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, told the Committee that there would not be a national strategy for the location of casinos, “I do not think it would be appropriate for us to have pinpoints on a map strategy from a national level as to where a casino should go”.596

The viability of resort casinos

406. While having a national plan for the location of casinos may not be the most appropriate way of deciding where such developments are sited, the Committee has heard

590 Q 499 [Mr Byrne]

591 Economic and Social Impact Study of the Proposed Gambling Bill, para 2.4


593 A Winning Hand – The Modernisation of UK Gambling – Ernst & Young, commissioned by Business in Sport and Leisure

594 Q 423

595 Q 431 [Mr Love]


108

evidence expressing concern over the viability of resort casinos if there are large casinos located nearby. This point was made by Leisure Parcs, who questioned the viability of a resort casino development in Blackpool, if there are large casinos in, for example, Manchester and Liverpool.597 Blackpool Council note that

“the major UK and international casino operators are excited by the ambition and vision in Blackpool’s Master Plan and will participate in its realisation but only if investment in Blackpool is not threatened by competition in locations more convenient to the region’s urban populations”.598

407. In oral evidence Mr Love of the Casino Operators Association told the Committee, “if you put a major resort casino costing millions of pounds in Blackpool, I find it very difficult to believe that it will work unless they have an area of non-exclusion or non-commercial intervention.”599 This is another area where the Government’s policy lacks clarity. It is unclear from the proposals in the draft Bill how Government policy would resolve this dilemma.

Regional Planning Bodies

408. The ODPM has confirmed that it would be for “Regional Planning Bodies to set out, where they deem it appropriate, planning policies for leisure development of regional significance, including the largest casinos, which identify suitable locations within the region that would optimise their contribution to tourism and regeneration.”600 Ameristar Casinos are opposed to “giving regional planning bodies the power to mandate the location of casinos”.601 The Government’s view was reinforced by Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM, who told the Committee that “big-scale resorts which are going to have a massive impact need to fall into the category of those that should be dealt with at the regional level, and should be considered as part of the regional spatial strategies and so on”.602 Local planning bodies will also be involved, with responsibility to “develop policies and identify sites for such development in their local plans which are consistent with regional policies”.603

Planning for resort casinos

409. The Committee heard evidence that in order to achieve regenerative benefits from the largest casinos, “investment must be guided and directed. Without it, we will not see the regeneration benefits”.604 Harnessing regenerative benefits will depend greatly on how the largest casinos are planned for and located. The Henley Centre Report notes that “the

597 Ev 164

598 Ev 419

599 Q 431 [Mr Love]


601 Ev 701


603 Future Set Out For UK Casinos – Joint Position Paper ODPM and DCMS,August 2003, www.culture.gov.uk/gambling_and_racing, para 4

604 Q 1110 [Mr Reg Haslam]

109

siting of these new casino developments is a critical issue, whatever their size”.605 Evidence from Mr Anthony Jennens indicates the importance of the planning process in this regard: “The large casino is an extraordinary animal which is entirely new to the Planning system and special provision must be made if it is to prosper”.606 This view was echoed by the Local Government Association, “casino developments of the scale envisaged are unprecedented in this country and therefore has not been tested through the current statutory planning process”.607 John Kelly of Gala expressed the importance of the planning system in relation to attracting investment, “if the planning regime around the new legislation was not investment encouraging, that would again impact almost inevitably on that £5bn estimate of inward investment”.608

410. The Committee heard evidence stressing the importance of Regional Economic Strategies in ensuring that the economic impacts of major developments are taken into account. The Government’s proposals do not make specific reference to Regional Economic Strategies. Nick Gerrard of the North-west Development Agency believed this to be a mistake. “The fact that there is no reference to the only existing statutory document which identifies the tourism and economic development priorities for the region is a weakness and does need to be specifically included”.609

411. DCMS and ODPM are as yet unclear on where the line will be drawn between designating a casino as large or resort. This will determine whether planning for the casino takes place at the local or regional level. Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM told the Committee:

“The issue we are still in discussion with at DCMS is what the dividing line should be. Clearly, you can imagine that big-scale resorts which are going to have a massive impact need to fall into the category of those that should be dealt with at the regional level, and should be considered as part of the regional spatial strategies and so on. However, equally, the very small-scale ones […] should simply be dealt with by the local planning authorities as part of their normal processes. Where I think we have not made the decision yet is exactly where you draw the line between those two”.610

412. The Committee has grave concerns that the lack of clarity in this area, particularly the failure of DCMS and ODPM to have decided where to draw the line between large and resort casinos, could have serious consequences. Regeneration cannot be achieved until the process for achieving planning gains and regenerative benefits has been resolved. This has become a matter of some urgency as casino licences are being granted without relevant planning gains having been negotiated. This issue is discussed in more detail below.

413. Resort casinos have the potential to have a significant impact on the economies of the regions in which they are located. The Committee recommends that plans for resort

605 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA,

February 2004

606 Ev 418

607 Ev 405

608 Q 344 [Mr John Kelly]


610 Q 1783 [Yvette Cooper]

110

casino developments are considered in line with Regional Economic Strategies and the regional planning process to ensure that the economic impacts of any such developments are properly considered. This will encourage the benefits ensuing from such a development to be maximised.

414. Given the potential for regeneration from resort casinos we believe that planning for such developments should be the responsibility of Regional Planning Bodies. As recommended in paragraph 385, we reiterate our view that all resort casinos should provide regenerative benefits. They should be required to do so by Regional Planning Bodies. We so recommend.

Planning and licensing

Planning Use Class

415. Under the proposals in the draft Bill, prospective operators of premises, such as casinos, which require a premises licence will need to obtain a licence before using the premises for that purpose: “The licensing requirements are additional to, and not in place of, the normal planning process”.611 An operator will not need to obtain planning permission if they intend to use the premises for a business that is in the same planning Use Class as the existing premises.612

416. Within the planning system, buildings and areas of land are categorised according to their use. Casinos currently fall within the D2 Use Class: Assembly and Leisure.613 Under the Use Classes Order, where a building or land is used for a purpose within a specified class, its use for any other purpose in the same class does not require planning permission. This means that premises that share the D2 Use Class with casinos, for example, bingo halls, could convert their premises into a casino without the need for further planning permission or consultation with their local authority, as long as this did not involve making alterations to the premises.614 The Local Government Association has expressed concern about this:

“Should casinos remain in the same Use Class as community uses such as cinemas and sports facilities some member authorities have expressed concern that operators will target such premises which could be changed to a more profitable gambling use without the need for planning permission”.615

417. However, Clause 125(1) provides that subject to Clause 143(4) in respect of casinos, a premises licence can only authorise the premises to be used for one category of gambling activity. Therefore, a licence permitting premises to be used for the provision of betting could not also be used to enable those premises to be used for bingo and vice versa. Furthermore, Clause 125(2) provides that only one premises licence can be held for a single set of premises. This would mean that bingo clubs would not be able to convert to casinos

611 DCMS, Ev 1, para 2

612 DCMS, Ev 1, para 2

613 www.odpm.gov.uk

614 DCMS, Ev 1

615 Ev 405

111

without applying to the local authority to ask for a new casino premises licence. The extent to which this would enable local authorities to prevent a bingo club converting to a casino will depend on the discretion that local authorities can lawfully exercise under Clause 127. This is a particular example of the general point concerning a local authority’s discretion to refuse a premises licence that we discussed in paragraphs 186-189. The Committee is concerned at the potential for proliferation of small casinos developing through conversions of this sort, over which a local authority may have inadequate control. This general issue must be addressed in the guidance given to local authorities by the Gambling Commission.

Change of Use Class

418. If a change of Use Class is intended, or if the building requires significant alterations, planning permission would have to be sought in the normal way.616 This would lead to interaction between the planning and licensing system. The draft Bill:

“seeks to cater […] for the needs of prospective operators who have secured planning approval for building work but do not want to incur the risk of undertaking it without a reasonable measure of assurance that an application for a premises licence will be successful. Clauses 166 and 167 accordingly provide for a local authority to issue a provisional statement that has the effect of restricting its ability subsequently to refuse a licence application or grant a licence on different conditions”.617

A separate planning use class for casinos

419. The Committee received evidence suggesting that it would be appropriate for casinos to be categorised as sui generis and afforded a separate use class. Mr Haslam of Blackpool Council told the Committee, “large establishments are able to slide out of one entertainment use into casino use. I think the casino use has to be sui generis.618 Mr Anthony Jennens was in favour of having a separate planning use class, “In the first instance any variance in ownership or substantial change in the operation of the premises would require a new consent, in the second, casino operators would be afforded more latitude”.619 This view was not shared by representatives from the Local Government Association, “why create another class? What is so special about casinos that they should have a particular class?”.620 Having a separate use class for casinos would prevent other businesses from being able to turn their premises into casinos without having to obtain planning permission.

Casino applications prior to Royal Assent

420. The Committee has heard evidence suggesting that there should be no granting of applications for casinos that were made after the Government published its position paper

616 Ev 1, para 3

617 Ev 1, para 4. See also paras 190 to 191 on Provisional Statements.

618 Q 1111

619 Ev 418. See also memorandum from Councillor Audrey Lewis, Westminster Council, Ev 708.

620 Q 1104 [Cllr Brown]

112

on casinos on 7 August 2003. Mr Haslam, of Blackpool Borough Council, told the Committee, “there is a need […] to ensure that new licences for casinos emerging from the new legislation should be associated with planning applications considered and granted after that legislation is enacted”.621

421. Licences granted since August 7 2003 could give casinos grandfather rights without ensuring that where appropriate, they have been considered in line with regional and local plans. This could mean that the opportunity for Regional Planning Bodies and local authorities to achieve planning gains is lost. There have been numerous press reports of casino developments that are already underway, highlighting the risk of losing planning gains.

Grandfather rights

422. Under the proposals in the draft Bill, it is not clear whether all existing casinos will receive grandfather rights or whether this will be limited to those below 5,000 sq ft that were operating before the Government produced its position paper on casino sizes on the 7 August 2003.622 The Gaming Board believe “there is a need for clarity about the grandfather rights of casinos falling below the new minimum area of 5,000 sq ft”.623 The Committee has received evidence from Sun International suggesting that grandfather rights should be limited to those casinos that were operating before the 7 August.624

423. The aim of grandfather rights is to protect the position of casinos with a table gaming area of less than 5,000 sq ft that would otherwise not be able to continue to operate under the new regime. In its 7 August Position Paper, the Government notes that “there are a number of casinos with gaming areas of less than 5,000 sq ft already in use. We are clear that these will continue to operate as small casinos under the licensing framework which we envisage”.625 Due to the lack of clarity surrounding the issue, it now appears that grandfather rights could be used by operators to establish large or resort casinos without having to involve local authorities or Regional Planning Bodies, something that would be necessary once the Bill is passed. Mr Anthony Jennens, a planning consultant, told the Committee, “If I were a casino operator and I were now to purchase the David Lloyd tennis clubs throughout the land of which there are 28, I could turn all of those immediately into casinos and put in 40 tables, and whatever the statutory amount is now for machines, wait and get grandfathered in and have 28 very large casinos around the country”.626

424. The Committee is concerned that the lack of clarity over grandfather rights could lead to the undesirable proliferation of casinos and to the loss of planning gains and regeneration benefits in some areas. Planning permission and casino licences granted prior to the Bill achieving Royal Assent could invalidate much of the Government’s

621 Q 1111 [Mr Reg Haslam]


623 Ev 22, para 8

624 Ev 169, para 5.2


626 Q 1111 [Mr Anthony Jennens]

113

policy in this area. It could also result in there being considerable inconsistency in the interpretation of grandfather rights in different areas.

425. Casino licences can currently be granted for premises in permitted areas only. There have been numerous press reports of proposals for large scale casino developments in a number of cities including London, Glasgow, Newcastle, Manchester and Liverpool.627 Such developments are likely to fall into the Committee’s recommended large or resort categories of casino, with the ensuing benefits of Category A gaming machine entitlements. Because planning permission and a casino licence would have been granted before the Bill gained Royal Assent, it will be very difficult for the situation to be reversed. Under the proposals in the draft Bill, planning permission previously granted will not be able to be reversed and the local authority will be required to grant a premises licence. While the Gambling Commission is not required to grant an operating licence, there would have to be a justification for not doing so. If the casino continues to operate then local authorities and regional planning bodies will not be able to negotiate planning gains or regeneration benefits from a development that already exists. This is a considerable cause for concern as while the situation could only arise in existing permitted areas, this means that large areas of the country could miss out altogether on the positive benefits that can arise from such developments. Mr Haslam of Blackpool Borough Council told the Committee, “permissions granted now by sleight of hand in the hope that licence will come automatically could also puncture a sensible regional strategy”.628

426. This is unfortunately another area where government policy has failed to take account of developments in the industry. The lack of clarity on grandfather rights could lead to a series of missed opportunities for certain areas and risks an inconsistent approach being taken across the country. The Committee considers this to be most regrettable.

Planning at the local level

427. While resort casino developments will be for consideration by Regional Planning Bodies, large and small developments will be the preserve of the local planning process. “Proposals for casino developments which are not of regional significance should preferably be bought forward through local development plans in order to capture the benefits for the local evening economy by locating them in locations, such as town centres, consistent with government planning policy on the location of development”.629 Yvette Cooper MP, Parliamentary Under-Secretary of State, ODPM told the Committee “the very small-scale ones […] should be dealt with by the local planning authorities as part of their normal processes”.630

428. While local authorities will no longer be able to refuse planning permission for casinos using the demand test, there is concern that planning permission may be refused on grounds of ‘need’. Anthony Jennens, a planning consultant, told the Committee “one

627 See for example, ‘Casino plan to raise stakes in soccer rivalry’ Evening Chronicle (Newcastle) March 19 2004 and

‘Council happy to bet on blue-chip plan for Ibrox casino and resort’ The Herald (Glasgow) March 25 2004

628 Q 1111[Mr Haslam]

629 Ev 571, para 5


114

stated aim of the Gambling Bill is the removal of the unstimulated demand test, yet the Planning System can reimpose it by means of the requirement to demonstrate ‘need’”.631 This will be an area in which the Gambling Commission guidance to local authorities will be very important. We deal with the demand test in the Chapter on licensing (paragraphs 186 to 189).

Interaction between planning bodies

429. As it is currently outlined, the planning process for resort casinos will involve a range of stakeholders, including Regional Planning Bodies, Regional Development Agencies and local authorities.632 Operators of Adult Gaming Centres noted that “the roles and responsibilities of local authorities/Regional Development agencies need to be clarified to ensure fairness and consistency of approach”.633

430. The Government “expects Regional Planning Bodies to set out, where they deem it appropriate, planning policies for leisure developments of regional significance, including the largest casinos […] Local planning authorities will need to develop policies and identify sites for such developments in their local plans which are consistent with regional policies”.634

431. The interaction between the Gambling Commission, Regional Planning Bodies, Regional Development Agencies and local authorities will be vital to the success of the Government’s proposals. The Local Government Association expressed concern about how interaction might be achieved in practice, “although it is unclear whether regional planning bodies would be given direct powers over councils, the proposals might set up a worrying framework that could see input from councils and local residents vetoed at regional level”.635

Miscellaneous Issues

Linking Machines

432. The Gambling Review Report contained no restrictions on linking machines (also known as wide area progressives) between casinos.636 The 7th August Position Paper outlined a change to Budd’s approach stating that

“casinos, while free to install gaming machines with no fixed prize limits, are not able to link them to machines on other premises to create progressive jackpots. Such linking would undercut effective controls over the availability of machines which

631 Ev 418

632 See diagram in earlier section.

633 Ev 350, para 22


635 Ev 389

636 DCMS, Gambling Review Body Report, Cm. 5206, July 2001

115

evidence from overseas suggests importantly influence the incidence of problem gambling”.637

433. Accordingly Clause 203(1) generally prohibits the linking of machines. This general prohibition on linked machines is, however, subject to the exception in Clause 203(2) that machines may be linked within a single casino. The Committee received mixed views on this subject. Those in favour of the proposals include Kerzner who concur that “linking gaming machines between premises would lead to further proliferation in the number of small casinos”.638 Those against, including Rank and Gala which argued that the Government’s rejection of proposals to allow gaming machines to be linked across a number of premises would be detrimental to their ability to compete with larger casinos:

“We believe that the proposal is illogical because we can see no difference in practice between the linking of, say, 500 machines in one casino and the linking of 500 machines located in a number of different casinos […]. We consider that the proposal is unfair because it further disadvantages operators of existing small casinos. If they cannot link machines in different casinos they will not be able to match the prizes offered by larger new casinos and will therefore be unable to compete […]. The inability to link machines would only exacerbate the two-tier nature of the Government’s proposals”.639

This view is shared by the British Casino Association, which argued that the restriction on linking machines between casinos “would be a serious anti-competitive restriction particularly for existing casinos, which would only be able to link a small number of machines, whilst a new competitor which opens a casino in the same catchment area could link 1000+ machines, thereby offering more attractive prizes”.640 Leisure Link endorse this view, arguing that restrictions on limiting machines “will undermine the economic viability of many smaller casinos”.641

434. The evidence that linking machines can lead to problem gambling was disputed by the Casino Machines Manufacturers’ Group. In oral evidence to the Committee, Mr Wimsett said “we, through our best endeavours […] have failed to find any such material”.642 However, Professor Griffiths told the Committee of the importance of the size of the jackpot, “the jackpot prize for instance is most important in why people first start to play an activity”.643 Leisure Link,644 the Casino Machine Manufacturers’ Group645 and the Barcrest Group646 have all suggested that a delegated power should be included in the Bill to enable the linking of machines.

637 Future Set Out For UK Casinos – Joint Position Paper ODPM and DCMS,August 2003,

www.culture.gov.uk/gambling_and_racing

638 Kerzner, Ev 161, para 5

639 Rank, Ev 594

640 Ev 158, para 2.1

641 Ev 691

642 Q 906 [Mr Wimsett]


644 Leisure Link, Ev 600, para 5 and Ev 691, para 2.

645 CMMG, Ev 323 para 6.7.

646 Barcrest Group, Ev 641, para 3.2.1.

116

435. Most existing casinos are small. If, as is likely, grandfather rights permit such casinos to install their entitlement under the Bill of new Category A machines immediately after Royal Assent, linking of machines would enable small local casinos the opportunity of offering very high jackpots in a number of locations where until now there has been only a limited gaming machine availability, if any.

436. On balance, we agree with the general prohibition on the linking of gaming machines situated in different casino premises, contained in Clause 203 of the draft Bill. We consider the prohibition to be necessary at this stage to prevent the proliferation of high-value gaming machines which, as discussed elsewhere, we consider to pose a considerable threat to the prevalence of problem gambling. However, we recommend that Clause 203 should be amended to give the Secretary of State the power to remove this prohibition at a future date, subject to the affirmative procedure. The Committee recommends that the Gambling Commission and Ministers monitor the extent to which the ability to link machines within premises results in a proliferation of high value jackpot offers and what effect, if any, this has on competition between small and large casinos.

Available for use

437. The Government’s proposals provide for a link between the number of gaming tables and the number of gaming machines. In order to avoid casinos increasing the number of gaming tables they have, to increase their entitlement to gaming machines, gaming tables must be ‘available for use’. Disappointingly DCMS have yet to have come to an agreement with the industry about what ‘available for use’ means. The Committee received evidence from the Casino Operators Association that “the definition in our opinion should be a table which has a live operative”.647 The British Casino Association concurred with this view.648

438. There is a risk that casino operators will increase the number of tables that they have, in order to increase their machine entitlements by having ‘dummy tables’. Stanley Leisure have suggested that the Gambling Commission should be responsible for checking that gaming tables are actually in use, “we strongly recommend that there is an Audit by the Gaming Commission on ‘Table utilisation’ measurements to ensure that the 40 Gaming Tables are substantiated by ‘customer demand’ and not simply ‘made available’ in large Casinos”.649

439. Given the importance of the issue DCMS need to agree a definition of “available for use” as soon as possible. The Committee encourages the Gambling Commission to monitor the availability of gaming tables and the levels of consumer demand. If tables are not being used on a regular basis then the corresponding number of gaming machines should be removed from play. We so recommend.

647 Q 448 [Mr Love]


649 Ev 549. See also MGM Mirage, Ev 166, para 2.4.3

117

Membership of casinos

440. The draft Bill removes the requirement for casinos to operate as private members’ clubs and abolishes the 24 hour rule, which creates a statutory interval between membership and play. This means that casinos will be able to attract spontaneous, walk-in customers. However, under the EU Directive on Money Laundering, casinos will still have to positively identify customers who participate in gaming activities, in order to satisfy ‘know your customer’ regulations. As it would be very difficult for a casino to differentiate between customers who gamble, and customers who do not, they will effectively have to identify anyone who enters the gaming floor.

441. The Committee has received evidence in favour of maintaining some record of membership. Stanley Leisure “would like to retain a membership position even though people can come in off the street. By continuing to have a membership form to be completed, it does give us control over the people who may come into the casino”.650 The Evangelical Alliance is in favour of maintaining the 24 hour rule for playing in casinos, to “avoid the dangers of people walking off the street to gamble in highly vulnerable states”.651

Employment in casinos

442. The Committee heard evidence from the Transport and General Workers Union about the risks involved in working in a casino. “It is […] our contention that jobs in the casino industry are often very low paid with poor conditions. The casino business is mainly night work which according to recent research is a severe danger to an employee’s health”.652

Smoking in casinos

443. The Committee has received evidence suggesting that the ability of customers to smoke in casinos should be restricted. One basis for this argument is that smoking in casinos is harmful to casino employees. The Transport and General Workers Union have told us that:

“To go back to passive smoking, very often in a casino there is poor ventilation and poor air-conditioning and the legal protection from health and safety is just not there, so there is a big problem for casino workers”.653

444. It further noted that: “there are particular problems in casinos in that mainly a lot of gamblers do smoke, but the Code of Practice, as far as we are concerned, gives us no protection whatsoever and we just suffer in silence.”654 We are concerned by the evidence we have received regarding the detrimental impact of passive smoking on casino employees.

650 Ev 679

651 Ev 72, para 10

652 Ev 491, para 9

653 Q 1466 [Mr Bunn]

654 Q 1467

118

445. In addition, banning smoking in the gaming areas of casinos has been proposed as a means of addressing problem gambling. For example, we have received evidence from the Blackpool Coalition Against Gambling Expansion that the Bill should:

“Allow local authorities to introduce smoking bans in the slot machine areas if Public Protection Committee Councillors vote to do so. Evidence from Australia indicates smoking breaks get people away from the slots, enough to significantly halt the addictive hold they have on some people”.655

During our visit to Australia, we learnt that smoking bans in casinos had been introduced in the State of Victoria in September 2002. Mike Hill, of Community Action on the Pokies Problem, has been reported as saying that, while the intention was not to reduce the time problem gamblers spend at machines, “it has been by far the most effective thing the Government has done to address the high levels of addiction.”656 In addition to the arguments regarding the health of casino workers, TGWU has also commented that “More important to this legislation, it would make the majority of customers break from play. There are no figures on the prevalence of gamblers that smoke, but in casinos the percentage is high.”657

446. We believe that non-smoking policies in the gaming areas of casinos would be an effective means of helping to protect casino employees from the dangers of tobacco smoke. We accordingly recommend that the Gambling Commission should incorporate provision for a non-smoking policy in either licence conditions or the codes of practice to be issued under Clause 16 of the draft Bill.

Alcohol in casinos

447. While Budd was generally “anxious that gambling and alcohol should not mix more than they do already”,658 it considered restrictions preventing alcohol being taken onto the gaming floor of casinos to be artificial, noting that alcohol was already available a few feet away from the gaming floor.659 Budd therefore recommended that “the current restrictions on alcohol on the gaming floor should be lifted.”660 The Government has accepted this, 661 and the current law has already been amended accordingly. 662

448. We have, however, received a number of criticisms of this policy. For example, the Evangelical Alliance has commented that it “firmly opposes the proposed relaxation of alcohol rules and urges the complete ban on the sale of alcohol in gaming establishments”;663 and Stanley Leisure have stated that “the permission of people to drink alcohol at tables and at machines is wrong and we would like the Scrutiny Committee to

655 Ev 21, para 12

656 Reported in The Age, 29 February 2004.

657 TGWU, Ev 491, para 10.




661 DCMS, A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002, para 4,24


663 Evangelical Alliance, Ev 72

119

change the recommendation as this in itself can cause problem gambling”.664 The Transport and General Workers Union explained that:

“It is accepted that alcohol may be obtained at a bar, which is situated nearby, but because the punter has to physically leave the gaming tables in order to drink, this acts as a disincentive to excessive alcohol intake and may create a break in play.”665

449. Dr Moran has told us of the risks of mixing alcohol and gambling:

“It has also been found that normal, social levels of drinking alcohol alter self-control over decision-making. This results in regular gamblers finding it more difficult to decide at what point to stop, when losing.”666 [and] “Alcohol impairs judgment. It clearly increases impulsivity. Therefore, the association between gambling and alcohol is, I think, a very hazardous one.”667

Inter Lotto has countered this evidence, stating that “The link between drinking and gambling is anecdotal, as little relevant research has been undertaken, but in its 1996 Report ‘Casinos and Bingo Clubs’, the Home Office states ‘We are not aware of any evidence to suggest that this (alcohol) is a factor in excessive gambling or other problems.’”668

450. A number of commentators have suggested that further research should be conducted into the link between alcohol and problem gambling. Quaker Action on Alcohol and Drugs has recommended that “the effects of alcohol consumption on gambling be a priority area for research by the Gambling Trust [and] that evidence will result in government willingness to use “the flexibility available in the legislation” to review and amend these provisions if necessary.”669 The Drug and Alcohol Foundation has urged “why not use the change in gambling regulations as the opportunity to research the link between gambling and alcohol usage?”670

451. We agree with the decision to remove restrictions on alcohol on the gaming floor of casinos. However, in view of the fact that serious concerns have been expressed as to the relationship between gambling and alcohol the Committee considers it is an aspect that needs to be monitored by the Commission and included in its third year report.

664 Stanley Leisure, Ev 679, para 5

665 TGWU, Ev 491, para 17

666 Dr Moran, Ev 64, para 3.3

667 Q 256 [Dr Moran]

668 Inter Lotto, Ev 666, para 8

669 QAAD, Ev 30, para 4.3

670 Drug and Alcohol Foundation, Ev 664, para 5.4

120

9 Bingo

Provisions in the draft Bill

452. The Government has taken forward a significant deregulation of bingo clubs following the Gambling Review Body Report in 2001.671 The provisions in the draft Bill further deregulate the industry by abolishing the requirement for bingo clubs to operate as members’ clubs and removing the limits on prizes for linked and multiple bingo which holders of standard operating licences will be able to offer. Bingo premises and casinos licensed to provide bingo will also be permitted to operate bingo rollovers, taking money from players’ stakes in one bingo game to add to the prize pool in another.672 This will not be permitted in pubs, clubs or other areas. We believe that these are sensible proposals.

Bingo in casinos

453. The draft Bill provides for casinos with the appropriate operating licences to be able to offer bingo. This proposal has met with a mixed response from the bingo industry with some seeing it as an opportunity for bingo clubs, while others regarded it at a commercial threat. Concern was expressed by the Bingo Association and some individual bingo operators who provided evidence to the Committee,673 that this would end the traditional separation between hard and soft forms of gambling and threaten the viability of stand-alone bingo clubs. Sir Peter Fry, Chairman of the Bingo Association, told the Committee,

“I would very strongly argue on behalf of my Association that some kind of distinction should still exist between hard and soft gambling because some people who have only been subjected to soft gambling are suddenly translated into a hard gambling environment and could easily be led astray, particularly if they have been in a bingo environment where they think, "That is as much as I can spend." Where they go to play a machine or even a game of roulette, they are suddenly going to find they can chase their losses”.674

454. The Bingo Association argued that, “bingo players used to playing in the soft gambling environment of today’s licensed bingo club could be adversely affected by the harder gambling environment found in a casino”.675 The Committee also heard evidence that the proposal could lead to the closure of some bingo clubs, reducing consumer choice and threatening the future of bingo as a stand alone activity.676 We were told by the Australian Centre for Gaming Research that “bingo […] was a very popular and accepted gambling activity in Australia until the 1970s. The introduction of more commercial forms of gambling, particularly gaming machines, has reduced bingo to a marginal activity.”677 When asked in oral evidence about excluding bingo from casinos Lord McIntosh of

671 DCMS, Gambling Review Body Report, Cm. 5206, July 2001

672 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003.

673 Ev 609

674 Q 542

675 Ev 189, para 13


677Ev 694

121

Haringey, Parliamentary Under-Secretary of State, DCMS, told the Committee, “that smacks of protectionism to me. It seems to me if people want to go to casinos and if they want bingo as an ancillary or other forms of gambling, it is not necessary for the state to intervene”.678

Soft v. hard gambling

455. Bingo is widely seen as an activity at the ‘soft’ end of the gambling industry. “Successive governments and many Members of Parliament have come to appreciate that bingo is soft gambling and it does play a part in the fabric of life in many localities”.679 If it became unviable for bingo to operate as a stand-alone activity, then in order to play bingo, customers would have to visit premises where ‘harder’ gambling activities were available. Castle Leisure “believe that bingo will be used by casinos to encourage C2, D and E bingo customers to trial casinos to upscale them to harder gaming options”.680 Maintaining a distinction between ‘hard’ and ‘soft’ gambling maintains the viability of bingo as a stand alone product.

The social aspect

456. The proposal to allow bingo to be played in casinos is considered by some to pose a risk to the social aspect of bingo which is at the heart of many clubs.681 Sir Peter Fry, of the Bingo Association, told the Committee, “two-thirds of our customers are women. They can go to a bingo club. It is comfortable; it is warm; they see their friends and it is comparatively cheap. I do worry that the reduction in the number of stand alone bingo clubs could have an adverse public effect”.682 Bingo clubs, he argued, are also popular venues for the elderly and can provide a positive social benefit: “For some people, it is the only place they go to apart perhaps from the supermarket. That is their main activity”.683

457. Some parts of the bingo industry have however welcomed the proposal, seeing it as an opportunity for them to convert their premises to a casino, apply for a casino operating licence and widen the gambling products that they can offer.684 Gala “stress the fundamental strength and resilience of Bingo” and “do not believe that the social element of the bingo experience will be lost and it is unlikely that there will be a mass conversion of Bingo sites to Casinos”.685 The potential for bingo clubs to convert their premises raises the risk of a proliferation of small casinos.

458. The Committee has reservations about the potential consequences of all casinos being able to offer bingo. We acknowledge that some of these concerns could be addressed under Clause 125 (1) of the draft Bill, which would require existing bingo


679 Q 558 [Sir Peter Fry]. See also memorandum by Leo Leisure, Ev 706.

680 Ev 607, para 7

681 Ev 189

682 Q 550 [Sir Peter Fry]. See also memorandum by Leo Leisure (Ev 706)


684 Ev 598, para 10. The Rank Group, a casino operator, argued in evidence to us that casinos were a regulated environment, and no problems would be caused by them offering bingo [Ev 727]

685 Ev 598, para 10.3

122

clubs intending to operate as casinos to obtain a new premises licence. As we discuss in paragraph 417, we consider that the guidance issued by the Gambling Commission to local authorities under Clause 17 should clarify that local authorities should be able to take account of potential problem gambling implications of such conversions and the accompanying risks of merging soft and hard forms of gambling when deciding whether or not to grant a casino premises licence.

459. Under Clause 143 of the draft Bill casino premises would be entitled to offer bingo. We consider that bingo should be ancillary to the casino’s core and traditional gaming activities. We would not, therefore have concerns about large or resort casinos offering bingo. However, we consider that Clause 143 should be amended to enable local authorities to prevent small casinos offering bingo. We would expect this discretion to be exercised in accordance with strict guidance issued by the Gambling Commission pursuant to Clause 17, which should take account of the proximity of existing bingo clubs.

Bingo in pubs and clubs

460. The proposed rules applying to offering bingo in pubs and clubs represents a significant change from the current law. Pubs and clubs will have to apply to the Gambling Commission for an ‘additional bingo licence’ if they have had any period of seven days in which either stakes or prizes have totalled £1,000 or more. The Committee received evidence suggesting that the proposed £1,000 limit was too low.

461. The Committee of Registered Clubs’ Associations (CORCA) told the Committee that “the need for an additional bingo licence would be a further bureaucratic burden on private clubs involving, as it must, an extra cost […] the proposed threshold of £1,000 a week is derisory in comparison with the stake and prize levels typically involved in commercial bingo”.686 The Bingo Association has told the Committee that its members would have no objection to an increase in the limit to £2,000 “if this was properly regulated and enforced”.687

462. The Committee recommends that pubs and clubs should have to apply to the Gambling Commission for an additional bingo licence if in any period of seven days stakes or prizes have totalled £2,000 or more. Clause 238 of the draft Bill should be amended accordingly.

10 Gaming Machines

463. The Government’s proposals for gaming machines include making a clear distinction between gaming machines (Categories A, B and C) and machines that are essentially for amusement but which offer prizes for stakes (Category D). The four categories of gaming machines are not defined on the face of the draft Bill but will instead be defined in regulations made by the Secretary of State. The Committee received evidence from the

686 Ev 609

687 Ev 204

123

British Amusement Catering Trades Association (BACTA) that “too much of the future of the gaming industry is dependent on decisions taken by the Secretary of State and the Gambling Commission and we would like to see more of the principles of the regime enshrined in primary legislation”.688

464. Clause 195(1) of the draft Bill gives the Secretary of State the power to make regulations defining Categories A, B, C and D gaming machines. These regulations can be annulled by a resolution of either House (the negative procedure). The House of Lords Select Committee on Delegated Powers and Regulatory Reform commented that, given the significant effect of these regulations, it “would be inclined to recommend that they should be subject to the affirmative procedure”,689 which would mean that each House would be required to approve the regulations by resolution.

Categories of machines

465. The table below sets out the categories of gaming machines proposed by the Government, which are defined in terms of their maximum stakes and prizes.

Category Location Limits A Casinos only Unlimited stakes and prizes –

may be linked within the casino to create potential large jackpots

B Bingo premises, betting offices, adult gaming centres (up to four each), or registered club (up to three each)

Maximum stake £1; Maximum prize £500, or £250 in a registered club

C Bingo premises, betting offices, adult gaming centres, adult-only areas of family entertainment centres, pubs and other premises with an alcohol on-licence

Maximum stake 50p; Maximum prize £25

D Family entertainment centres (including seaside arcades, bowling alleys, motorway services and theme parks) and other non-gambling outlets such as cafes, fish and chip shops, takeaways, cab offices, etc.

Maximum stake 10p; Maximum prize £5 (Where the machine pays out non-money, non-exchangeable prizes the maximum stake will be 30p)

Category A machines

466. Category A machines, with unlimited stakes and prizes, will be a new feature of the gambling industry in the UK. The Committee received evidence suggesting that the proposed machines, with unlimited stakes and prizes, ‘will be the most addictive yet’.690 Professor Griffiths told the Committee, “the interesting thing about playing a slot machine is that you have an unlimited prize, if you are losing lots and lots of money there is always a chance on the next go you can completely recoup your losses. The thing about unlimited jackpot prizes is that it will facilitate […] one of the biggest risk factors in problem gambling is chasing losses. Those people who consistently chase losses are the ones that tend to get into problems”.691 Professor Griffiths also raised the interesting issue of the role


689 See Annex 2



124

unlimited prize machines may play in the psychology of adolescent gaming, “adolescents who basically drop out of playing slot machines when they get to 15 or 16 because they realise the jackpot sizes are incontestably small compared with other forms of gambling are more likely to carry on playing for these huge unlimited prizes. I do think this is an important factor, this may be one factor that where adolescents may have dropped out previously the unlimited jackpot prize might be something that will keep them carrying on playing”.692 Evidence that the size of the jackpot can influence problem gambling was disputed by Mr Fahrenkopf Jr of the American Gaming Association. In oral evidence he told the Committee, “neither, in lotteries nor in linked machine instances, is there any evidence, because they (gamblers) want to play for the bigger prize, that prevalence of pathological gambling rises because of their existence”.693

467. We accept that Category A machines pose particular risks and, as a new feature of gambling in the United Kingdom, must be introduced gradually. We therefore recommend that Category A machines should be limited to those permitted venues as listed in the draft Bill and should not be permitted in unlimited numbers.

Category D machines

468. For Category D machines, the Government has proposed a new definition of amusement-with-prizes (AWPs), lowering the prize to a maximum of £5 (whether in cash or cash equivalents). Where the machine pays out non-money, non-exchangeable prizes, the maximum stake will be 30p, rather than 10p as for cash-only AWPs. The Committee heard evidence that non-monetary prize machines should have higher stakes and prizes than cash-only machines. Mr Batstone of the British Amusement Catering Trades Association (BACTA) told the Committee: “there is already a distinction between the prize level for cash machines, the £5 and the prize level for the non-monetary prize machines of £8. We are saying, let us maintain that distinction. We do not want to deprive customers of value which they are used to”.694 This view was shared by the British Association of Leisure Parks, Piers and Attractions (BALPPA), which argued that “machines offering non-monetary prizes will cease to be financially viable and result in the removal from the offer available to families who find these machines not only enjoyable to play but an economic opportunity to obtain quality gifts for their children as a souvenir of their visit. We propose retention of the current level of 30p stake and £8 maximum non-monetary prize value”.695

469. We recognise the validity of the distinction between the prize level for cash and non-monetary prizes and therefore propose retention of the current level of 30p stake and £8 maximum non-monetary prize value.

470. Children and Category D machines are also discussed in the earlier Chapter of this Report on problem gambling. We have already commented on the provision of these machines in fish and chip shops, etc. (see paragraph 285 to 289).


693 Q 912 [Mr Fahrenkopf Jnr]. See also supplementary memorandum from the American Gaming Association, Ev 714, Section 3.


695 Ev 353

125

Returns to customers

471. The Committee heard evidence that it would be beneficial to customers if gaming machines had to display the returns that they offer. In oral evidence Professor Mark Griffiths told the Committee, “I certainly think people should be informed of what the pay-back rates are on the machine”.696 All gaming machines currently display both the payouts for each winning reel combination and the overall percentage payout of the machine. The overall percentage payout can be misunderstood if players think that it applies to a number of consecutive games rather than the complete cycle of play. Players may benefit from information showing the chances of getting a winning combination. In addition to the current requirements as to the display of information on gaming machines, the Committee recommends that the Regulations under Clause 199(2) should also require machines to display information regarding the chance players have of winning major prizes.

Machine numbers in licensed premises

Pubs and clubs

472. The Government initially rejected the proposal by Budd that pubs should be allowed to retain their current number of machines, and proposed that they should have to apply to local authorities to have more than two Category C machines. The Committee received a great deal of evidence on this point.

473. Bell Fruit Games argued that by “limiting the number of Category C machines in pubs to two by right will create a mountain of post-Bill bureaucracy as some 11,000 pubs currently having two to four machines or more apply for special permits”.697 The Committee also heard evidence from Leisure Link that the proposal for pubs to have only 2 machines by right, was inadequate: “11,000 pubs currently have more than two machines. Therefore, the currently proposed entitlement of 2 machines is much too low”.698 The British Amusement Catering Trades Association (BACTA) stated that “the draft Bill leaves the pub sector very vulnerable”.699 Similar points were made by Gamestec700, the British Beer and Pub Association,701 and the Association of Licensed Multiple Retailers.702

474. However, the Government amended its policy in this area when it published further clauses of the draft Bill in February. The new policy proposes that premises licensed for the consumption of alcohol under the Licensing Act 2003 will be entitled to continue to operate as many Category C or D gaming machines as are already authorised under those licences. This may help to alleviate the concerns of the Scottish Licensed Trade Association who believe that “Public Houses, ‘pubs’, will be greatly disadvantaged and will see little benefit from the proposals”.703 The Regulatory Impact Assessment refers to the British Beer

696 Q 253 [Professor Mark Griffiths]

697 Ev 628, para 3.2

698 Ev 600, section 1.2

699 Ev 295, para 2.6

700 Ev 652, section 2

701 Ev 355

702 Ev 613

703 Ev 592

126

and Pub Association’s concern over the impact on pubs given that “income derived from machines could represent up to 15% of gross profits in smaller premises and in larger ones 6-8%”.704

475. We support the change to the Government’s initial policy, granting pubs grandfather rights for as many Category C or D gaming machines as are already authorised under those licences.

476. In line with its general view that higher-value gaming machines should be restricted to specific gambling premises, Budd recommended that “jackpot machines should be removed from private clubs”.705 Instead, the Report recommended that “clubs should have the same entitlement as entitlements to […] machines as pubs and other premises licensed for the sale of alcohol” (i.e. Category C and D machines only). 706

477. The Government has rejected this recommendation and, under the draft Bill, clubs and institutes would be able to retain their current entitlement to three Category B gaming machines, with a maximum prize of £250.707 We agree with the Government’s conclusion that clubs should continue to have the same gaming machine entitlement as at present.

Tenpin bowling centres

478. We have also received evidence concerning the machine entitlements of tenpin bowling centres. The Tenpin Bowling Proprietors Association of Great Britain,708 and the British Amusement Catering Trades Association (BACTA) queried the position of bowling alleys under the draft Bill;709 Business In Sport and Leisure (BISL) has commented that:

“Most of the 300 tenpin bowling centres in the UK have a liquor operating licence and so under the new clauses they will be treated as pubs. Their design, style or operation is however very different from a pub…The average number of machines in tenpin bowling centres is 17. They are type C&D machines and their contribution to the viability of the business is critical[…]The draft legislation allows tenpin bowling centres to have only two category C machines as of right.”710

It also sought clarification of the treatment of tenpin bowling centres under the draft Bill.

479. In the Schedule of Detailed Comments on the draft Bill (Annex 1), the Government acknowledged that “consideration will have to be given to the position of bowling alleys, which may hold an on-premises licence and might also wish to apply for a family entertainment licence. This would not be possible presently under Clause 34 (Feb 04) of the draft Bill.”711 We welcome the Government’s acknowledgement that consideration




707 Draft Gambling Bill, Supplementary Policy Memoranda, February 2004, Policy Note 2, para 3. The machine of clubs is set out in Part 12 of the draft Bill.

708 Ev 689

709 BACTA, Ev 295

710 BISL, Ev 112, paras 6.1 to 6.3.

711 DCMS response to Clause 146 (Feb Draft) of the Schedule of Detailed Comments on the Draft Bill (Annex 1).

127

must be given to the treatment of tenpin bowling centres under the draft Bill. We recommend that further thought must be given to the appropriate number and mix of machines in these premises, to the licensing requirements that should be applied to them under the draft Bill, and to the provision of possible grandfather rights for machines which currently exist.

480. The segregation of adult gaming machines in premises such as pubs and ten-pin bowling centres is discussed in the context of problem gambling above.

Machine testing

481. The Committee received evidence from Bell Fruit Games expressing concern over the proposed testing regime for category B, C and D machines: “The draft Bill appears to enable change to the currently successful testing regime of category B, C and D machines. We are concerned that if this will be the case, the speed and effectiveness by which new products are currently taken to market could be impaired”.712 This view was shared by BACTA when they gave oral evidence to the Committee. “By its very nature the testing of US-style slot machines [Category A machines] would impede the whole process of bringing products to market because of the timescales involved. What has happened in the UK […] is a system of testing with the Gaming Board that sees us supplying software that replicates the machines so the compliance of those machines to the agreements we have made with the Gaming Board are checked. That system has been working very, very well for many years”.713

482. We recommend that the Gambling Commission should take account of world best-practice when formulating its policy on the regulatory standards to be applied to the testing of gaming machines. However, this best-practice has been designed in the context of casino slot machines and the Gambling Commission must take account of the differences between these machines and the types of machine that are currently available in the UK. If the Gambling Commission considers that the existing testing regime for Category B, C and D machines is adequate to satisfy the licensing objectives, we recommend that this should be maintained and that a uniform testing regime should not be imposed for the sake of consistency.

Linking of machines

483. As discussed in the context of casinos, Clause 203(1) of the draft Bill generally prohibits the linking of machines, with the exception of machines within a casino. The Committee has received evidence from other sectors of the gambling industry that are critical of these proposals.

484. Adult gaming centres criticised the limitation that the draft Bill would impose on the linking of gaming machines. Mr Harding, representing Operators of Adult Gaming Centres, told the Committee that linking machines could improve the offering to customers: “if we could link some of the machines together within a small unit it would

712 Ev 628, para 3.10

713 Q 885 [Mr Jarrold]

128

provide something more interesting for some of the customers”.714 As we recommend in paragraph 436, we agree that, at this stage, the limitations on the linking of gaming machines contained in Clause 203 of the draft Bill are appropriate.

Fixed Odds Betting Terminals (FOBTs)

485. FOBTs, also known as Fixed Odds Betting Machines (FOBMs), are a recent development in the gambling industry that have proved to be enormously successful and have become commonplace in licensed betting offices. As discussed below, the precise legal definition of FOBTs is unresolved. However, to the consumer, they would in most respects appear to be the same kinds of gaming machines traditionally found elsewhere, offering casino style games like roulette and blackjack.

486. Their status was subject to legal action between the Gaming Board and the Association of British Bookmakers but this was settled out of court on 19th November 2003. The case centred on whether FOBTs should be defined as gaming machines or as betting machines. The Gaming Board for Great Britain argued that they were “for all practical purposes identical to gaming machines and should be treated as such”715. The ABB argued that the machines provided a betting activity which should therefore be permitted in licensed betting offices.

487. Under the agreement reached in November;

• licensed betting offices will be able to operate no more than 4 machines in total (whether conventional gaming machines or FOBTs, or a mix of the two);

• the maximum prize on FOBTs will be £500 and the maximum stake £100, with a chip size no greater than £15;

• no casino games other than roulette will be allowed on FOBTs; and

• the speed of play on FOBTs will be restricted.

488. The importance of the agreement on FOBTs was noted by Lord Lipsey, Chairman of the British Greyhound Racing Board, when he gave oral evidence to the Committee: “the alternative to the deal, I feel […] is too awful to contemplate, because once they have proliferated everywhere you would never get them out again”.716 It was not, however, welcomed by everyone. Phil Jarrold of BACTA told the Committee in oral evidence that, “the deal that has been put together to put a brake on proliferation and public policy interest on the matter, in our opinion, will do exactly the opposite”.717

714 Q 966 [Mr Harding]

715 Speech to BACTA convention by Peter Dean, Chairman of the Gaming Board for Great Britain, London 26th November 2003

716 Q 1010 [Lord Lipsey]

717 Q 917 [Mr Jarrold]

129

Categorisation

489. Under the provisions of the draft Bill, it is unclear how FOBTs will be categorised.718 Leisure Link argue that “these should be a separate category”719 while the Association of British Bookmakers contend that “the fundamental differences between FOBTs and gaming machines lead logically to the conclusion that FOBTs should be defined as bet acceptance terminals and placed in a separate machine category”.720 In oral evidence to the Committee, the Secretary of State, the Rt Hon Tessa Jowell MP, confirmed that FOBTs would be classed as category B machines: “our intention has been that they should be classified as Category B machines and therefore available in adult gaming centres, bingo clubs […] as well as in betting shops”.721 This would lead to a considerable expansion of the locations in which FOBTs are available, increasing their availability to customers and considerably changing the gambling offering currently available in Adult Gaming Centres and bingo clubs. Lord Lipsey stressed that reserving FOBTs to betting shops could have a negative impact on the rest of the industry. “If you go to a betting shop in the evening now you have got FOBTs and you have got greyhound racing on the screens and you can bet on those. If we cannot have any machines on the track, you go to the track, you pay your admission, pay the expense of getting there and you can only do the one kind of betting, not two”.722 Increasing the availability of FOBTs, however, may lead to concern about their impact on problem gambling. This is discussed in more detail below.

Stakes

490. Under the agreement reached between the ABB and the Gaming Board, FOBTs have significantly higher stakes than currently proposed for Category B machines. They are in effect Category A– or B+ machines. It is not clear how this situation will be resolved; whether the stakes on FOBTs will be reduced or whether the stakes on other Category B machines will be increased. Consistency will be needed between the stakes on FOBTs and the stakes on other gaming machines in the same category. However, reducing the stakes of FOBTs could be problematic as it would breach the agreement reached between the ABB and the Gaming Board. A final decision on their categorisation will be made following publication of research by the Association of British Bookmakers, into the impact of FOBTs on problem gambling. The Secretary of State told the Committee that if “it was clear that Fixed Odds machines were driving an increase in problem gambling I would be very concerned about that. We would then look at a range of possible options with the industry in order to assess that”.723

491. The Committee is concerned that categorising FOBTs as Category B machines would significantly increase their accessibility by placing them in Adult Gaming Centres and bingo clubs and risk contributing to an increase in problem gambling. We therefore recommend that FOBTs are defined as a separate category of gaming

718 As noted by Business in Sport and Leisure, Ev 111, para 11.1.

719 Ev 600

720 Ev 206, para 3.4

721 Q 1738 [Secretary of State]

722 Q 1009 [Lord Lipsey]

723 Q 1742 [Secretary of State]

130

machine in the regulations to be made under Clause 195(1) of the draft Bill. The draft Bill should be amended to ensure that FOBTs may only be located in casinos and licensed betting shops, with stakes and prizes as set out in the agreement between the Gaming Board and the Association of British Bookmakers to be enshrined in regulations.

FOBTs and problem gambling

492. Concerns have been expressed to the Committee about the potential impact of FOBTs on problem gambling. Mr Cox of GamCare told the Committee: “it seems as if there is an increasing trend for asking us for help on FOBTs; from a few calls per month in early 2003 we are now receiving between 40 and 50 calls a month. So it is a rising trend”.724 This view was echoed by Faith Freestone of Gordon House who told the Committee, “these are not my words, they are a recent applicant who we have just taken into Gordon House. He actually said ‘FOBTs are the crack cocaine of gambling.’ What we are seeing is not only a numerical increase, we are seeing a new form of hybrid gambler. FOBTs are like a catalyst or an accelerant”.725 Evidence from Kossway, a company supplying gaming and amusement machines suggests that allowing FOBTs to be more widely available would be “social irresponsibility. They are highly addictive and will proliferate problem gambling”.726

493. We recommend that these comments on the impact of FOBTs on problem gambling are considered as part of the Association of British Bookmaker’s research project.

494. The Committee has received some evidence criticising the fact that the Association of British Bookmakers, (ABB) who have a vested interest in the area, are carrying out the research into FOBTs. While we acknowledge this point, we hope that the research being conducted by the ABB will not be the only research in this area. We have recommended that a prevalence survey should be carried out, which would cover all aspects of the gambling industry, including FOBTs.

11 Betting and bookmakers

495. The draft Bill will impact on the betting industry in several ways, both directly and indirectly. Modernisation of the legislation covering betting will see the removal of the demand test for betting offices and the relaxation of restrictions surrounding advertising.

496. Removal of the ‘demand test’ may lead to changes in the structure of the industry. There have been concerns that this could lead to a proliferation of bookmakers on the high street. Equally, it may result in the continuation of a recent trend that has seen the major players consolidating their premises and concentrating efforts on improving the appearance and attractiveness of their shops. Bookmakers may be adversely affected by the

724 Q 1380 [Mr Cox]

725 Q 1382 [Ms Freestone]

726 Ev 738

131

increased number of licences they may require as a result of the proposals for personal licensing,727 which is covered in another chapter of this Report.

497. The Association of British Bookmakers argued that definitions of “bookmaking” and “bookmaker” should be included in the draft Bill for the sake of clarity.728 We are content that the current common law definition is sufficient, although this is something that may need to be revisited at a later stage by the Department, particularly if the Government pursues our recommendations on betting exchanges. The definitions of "betting" and “gaming” in Clauses 6 and 7 were also queried, particularly in the context of Fixed Odds Betting Terminals (FOBTs) and betting exchanges, both of which are dealt with in other chapters of this Report.

498. The greatest impact on UK bookmakers is likely to arise from the deregulation and expansion of other areas of the gambling industry, particularly casinos,729 remote gambling and betting exchanges730 (as to which see Chapters 8 and 12 and paragraphs 503 to 547 respectively). Future treatment of Fixed Odds Betting Terminals (FOBTs) or FOBMs will also be crucial. This is covered in Chapter 10.

499. We have already noted the Government's intention that the Bill should be future-proof. In a fast moving sector such as betting in general and remote betting in particular, the Government must take steps to ensure that new developments are covered as appropriate by operating licences issued under Clause 53, whether these are general betting operating licences (Clause 53(2)(c)), or betting intermediary operating licences (Clause 53(2)(e)). Furthermore, the conditions issued under these categories by the Gambling Commission under Clauses 62 to 64 of the draft Bill should reflect developing circumstances. Towards the end of our inquiry, the Committee heard of a number of developments. One of these involved the establishment of licensed betting exchange shops in Scotland. We understand that this was the subject of an unsuccessful legal challenge by William Hill bookmakers. However, we have no authoritative source to comment further on the possibility that brokers may lawfully act on others’ behalf to place and lay bets on betting exchanges. It is important that such developments are covered as part of the regulatory framework.

500. The point was made by the Association of British Bookmakers that the provision of betting shops in casinos would displace business from bookmakers. This is a natural market process, to which the ABB admitted it had no objection. 731 We note that it could have a significant impact on existing premises and, more seriously, draw betting shop clients into a Category A gaming machine environment, which could have implications for problem gambling.

501. Under Clause 143 of the draft Bill casino premises would be entitled to offer both bingo and betting. We consider that such activities should be ancillary to the casino’s core and traditional gaming activities. We would not, therefore have concerns about


728 Ev 206, para 2.1

729 Q 612

730 Q 613

731 Q 612

132

large or resort casinos offering betting. However, we consider that Clause 143 should be amended to enable local authorities to prevent small casinos offering betting. We would expect this discretion to be exercised in accordance with strict guidance issued by the Gambling Commission pursuant to Clause 17, which should take account of the proximity of existing betting shops.

502. Much of the evidence we received from the Association of British Bookmakers,732 the National Joint Pitch Council733 and the National Association of Bookmakers734 (which represent the interests of on-course bookmakers) concentrated on the arrangements to be made for licensing betting exchanges, which are dealt with in the next section of this Report.

Betting Exchanges

503. Betting exchanges enable punters to bet directly with each other, rather than with bookmakers. The operator matches opposite bets and takes a commission from the winner. It has no interest in the outcome of the bet. 735

504. Exchanges, the largest of which is Betfair, have recently become an important and lucrative element of the gambling industry. Existing operators have all sought and been granted bookmakers’ permits and arrangements have been made for them to pay gross profits tax on the commissions they receive.

505. There is nothing inherently perverse about the fundamental concept of betting exchanges where individuals may wager against each other on the future result of an event. Modern technology has now made this possible on a scale previously unforeseen through the agency of the exchanges.

506. Clause 8 of the draft Bill provides for betting exchanges to be covered by a specific licence permitting the holder to establish betting markets and to receive and hold monies on behalf of its users. They will be bound by general licence conditions but will also be prevented from initiating bets in any way on the exchange and may not permit their customers to identify themselves to each other.

507. The status of exchanges, and the fiscal and regulatory arrangements that apply to them, have proved to be one of the most controversial areas of our work, and were the subject of a great deal of media attention during the later stages of our inquiry. We received evidence that they could pose risks to the integrity of racing and other sports as well as to the public, and comments that those who lay on exchanges should be subject to the same fiscal and regulatory regime as bookmakers; points which were firmly rejected by the operators and users of exchanges, as set out in greater detail below. It is also clear that the exchanges pose a serious challenge to the business model of the existing bookmaking industry.

732 Ev 206

733 Ev 211

734 Ev 735

735 For a further explanation of the operation of betting exchanges, including the term ‘to lay’, see para 523.

133

508. Our view, on which we expand in the following paragraphs, is that betting exchanges are an example of a low-cost, high turnover, form of remote gambling. Their success reflects a shrewd business model, and we note that Betfair was awarded the Queen’s Award for Enterprise in 2003.

509. Furthermore, we found the exchanges we dealt with to be helpful witnesses. Betfair in particular supplied us with important information on a confidential basis. It would be highly unfortunate if, as a result of this legislation, betting exchanges decided no longer to base themselves in the United Kingdom, and steps must be taken to avoid this.

510. At the same time, however, the Government must ensure that the exchanges are regulated effectively so that the integrity of sports events is maintained and that consumers placing bets on the exchanges are protected. Questions have been raised about the integrity of certain sports in the light of suspicious patterns detected by betting exchanges and urgent action must be taken. The involvement of the exchanges themselves, the DCMS, the Gambling Commission and the sporting regulators will be crucial.

511. We believe that the best way of achieving a balance between these points is to ensure that those using the exchanges to lay bets professionally are identified, regulated, made subject to the appropriate levy arrangements, and have their status checked. There is an opportunity here in that the audit trail produced by betting exchanges is far superior to that produced by ordinary bookmakers, as acknowledged by the Chief Executive of the Association of British Bookmakers.736 We expand on this in the sections below.

512. It is worth noting at this point that some of the issues in terms of laying bets on betting exchanges also apply to spread betting, which is not to be regulated by the Gambling Commission under the terms of the draft Bill. We have already recommended that this should be subject to review by the Government after five years, and suggest that this review should include a consideration of the impact of sports spread betting on event integrity.

The fiscal and regulatory regime

513. The ABB and others, including the National Joint Pitch Council, argue that the layers of bets on Betting Exchanges fall within the definition of bookmakers under Section 55(1) of the Betting, Gaming and Lotteries Act 1963 and that they should, therefore, be required to be licensed as such.737

514. At the time of publication of the November policy document, DCMS took the view that it was not necessary for the users of betting exchanges to be licensed, because the licence conditions proposed for betting exchanges would be sufficient to ensure that the aims of gambling regulation could be achieved without the administrative burden of regulating the user: “the Government believes it quite unnecessary to license betting

736 Q 638

737 Q 638

134

exchange customers. That would constitute superfluous over-regulation.”738 It reflected this position in the draft Bill.

515. Licensing for the users of betting exchanges has become an issue for two reasons: the fiscal regime applicable to layers, and the possible misuse of betting exchanges by those with inside information. We deal with these two issues in turn.

Taxation and the horseracing betting levy

516. We were presented with varying analyses of this subject. The ABB’s memorandum set out its view of the differential in tax and levy paid by those who lay on betting exchanges and traditional bookmakers: “Under the current […] regime for betting exchange transactions […] revenue to the Government [is generated] only on the commission paid to the betting exchange. This commission is typically a maximum of 5% of the layer’s profit, although likely to be less for large players such as this. [Tax] at 15% is then charged only on this commission, not on the customer’s gross profit. This amounts to maximum revenue to the Government of only £3.38. By contrast, under the current […] regime a traditional bookmaker must pay [tax at] […] 15% of gross profit. On the same winnings of £450, this amounts to revenue to the Government of £67.50, being 15% of his £450 gross win [...] Therefore, on a betting exchange, the transaction will generate a maximum of only 1/20th of the […] revenue for the Government.” 739 The ABB added that it took the view that the same differential applies to the payment of the levy to British horseracing.

517. This analysis was, however, disputed by Betfair in a submission to us which we received at a very late stage in our deliberations. The submission noted that the ABB’s analysis was incomplete because traditional bookmakers offset their gains:740 “It is […] hugely misleading to suggest that a bookmaker will pay £15 when a customer loses £100, for the following reason: the customer who loses £100 does not do so in isolation. If he did, bookmaking would be the fastest way to becoming a millionaire. The reality is that when one customer loses £100 to the bookmaker, another one wins £85 from the bookmaker, which the bookmaker can offset before he pays any tax. The differential between the two is therefore how the bookmaker makes his money. He does not make it on the £100.”

518. Rob Hartnett from Betdaq and Mark Davies from Betfair noted during evidence to the Committee that betting exchanges pay Gross Profits Tax on the same basis as commercial operators,741 and also make contributions to the horseracing industry. 742 The British Greyhound Racing Board acknowledged that while Betfair had “hardly done any greyhound sponsorship […] it is not entirely their fault because we have never been able to make up our mind whether we want to take their money or not.”743

519. On the basis of individual contributions, Mr Davies asserted: “There is no tax on punters in this country. There is no tax on punters when they bet on Betfair, whether they


739 Ev 206

740 Ev 734

741 Q 765

742 Q 784

743 Q 1013

135

bet on an outcome to happen or not to happen, and there is no tax on punters at William Hill, whether they bet on an outcome to happen or not to happen. The call from our commercial competitors at the moment is that those who bet on Betfair on an outcome not to happen, those who lay, in Betfair’s terminology, should be taxed. That would mean that you could walk into your high street this afternoon and you could bet that England would not win [Euro] 2004 and you could do so without paying tax, but to express that same view on Betfair, you would be classified as a layer and you would be taxed. Nobody is suggesting that you, as a passenger, should pay anything different on one airline from any other and nobody should be suggesting that you, as a punter, should be paying differently with one betting operator than with any other.”744

520. A week before we formally agreed our Report, the Chancellor of the Exchequer referred, as part of his budget speech, to a review of “the tax treatment of betting exchanges and their clients.”745 We look forward to learning of the Treasury’s assessment of this complex situation.

Betting exchanges and the integrity of sports

521. The Committee received evidence from the Association of British Bookmakers746 and key organisations in the horseracing industry, for example the National Trainers Federation747 and the Jockey Club,748 that betting exchanges pose a risk to the horseracing industry in the United Kingdom.

522. The Association of British Bookmakers argued that [betting] “exchanges are eroding and under present plans will continue to damage, this country’s reputation for firm and sensible regulation of gambling”.749 The Jockey Club stated that “The problems associated with the misuse of inside information and the potential corruption of sports events are exacerbated by the emergence of betting exchanges […] which have expanded the ability to lay a horse to lose.” 750 The British Greyhound Racing Board also expressed concern about the potential impact on greyhound racing.751

523. The degree of risk posed was questioned by some within the sport, the exchange companies and their users. The National Trainers’ Federation concluded “Our own view is therefore that the current level of damage to integrity is limited. However, the fact remains that the opportunity and incentive [for improper interference in the outcome of a race] has increased enormously.”752 The difference in opinion within the horseracing sector was summarised by Peter Savill, of the British Horseracing Board, in the following terms: “Mr

744 Q 813

745 HC Deb, 17 March 2004, col. 237.

746 Ev 206

747 Ev 238

748 Ev 236

749 Ev 206, para 4.3

750 Ev 236, para 10.

751 Q 1013

752 Ev 238, para 4.4

136

Foster [of the Jockey Club] says that betting exchanges highlight the problem, but I think betting exchanges exacerbate the problem.” 753

524. The concerns centre on the fact that betting exchanges present an opportunity for those with ‘inside information’, which may be acquired improperly, to make a profit from the uninformed punter, by allowing customers to place bets that a particular horse will lose. It is argued that this presents a temptation for owners, trainers, jockeys and others working in the industry to compromise the integrity of racing.

525. Specific worries have been expressed in the United Kingdom about an increasing number of suspicious betting patterns and incidents where odds on horses have changed significantly between bets opening and the race taking place. There were a number of articles in the press in early March 2004, particularly concerning the horses Ballinger Ridge, running at Lingfield on 2 March, and Ice Saint, running at Fontwell on 8 March.

526. Clive Reams, representing the organisation Racefax, stated that “I would say that the betting exchanges are used on a daily basis by those with inside information to make a profit from less informed punters. To take the second part of the question and I have produced a report that underpinned that, I would say it is so widespread that minor incidents occur not just on a daily basis but almost on a race by race basis. The exchanges have made it very easy for anyone connected to a horse to profit from the knowledge that they have even though that horse may not win on that particular day. The range of candidates for that is extensive, from the owner to the stable lads’ girlfriends or whatever.”

754

527. Similar concerns have been expressed in Australia. No betting exchanges have been licensed there, and state governments are trying to dissuade Betfair from accepting bets on Australian racing at all. The recent ‘Betting Exchange Task Force Report’, made to the Australian Racing Ministers Conference, stated that “the two most significant issues associated with betting exchanges are the enhanced levels of risk (both real and perceived) to the integrity of the Australian racing product, and the likelihood of substantially diminished commercial returns to the racing industry and to State, Territory and Commonwealth governments.”755 The Committee also received evidence from the Asian Racing Federation, stating that “it is the view of our Executive Council that betting exchanges are incompatible with the best interests of racing and should be prohibited from operating on our sport.”756

528. Betfair responded to these concerns by pointing out that it has signed a Memorandum of Understanding with the Jockey Club to report suspicious betting patterns,757 which both sides agree is working successfully. Christopher Foster, Executive Director of the Jockey Club, stated in oral evidence that “There is very close co-operation between our security department and Betfair in particular and there is a great willingness on the part of Betfair

753 Q 681

754 Q 672

755 Report of the betting exchange task force to the Australasian Racing Ministerial Conference, 10 July 2003

756 Ev 670

757 Q 772

137

to try and root out malpractice.”758 We also received written evidence from the Football Association which made clear that participants in the game are forbidden to bet on matches in which they have a direct interest. 759

529. Mark Davies of Betfair, giving oral evidence, added that betting exchanges had not created the problem, but were merely making movements in odds more visible: “I think there are no new regulatory questions that we raise as an operator or that are raised by our customers. I think it is quite clear that we are raising the fight against corruption and for evidence of that I would cite the fact that bookmakers have recently followed our lead in signing a memorandum of understanding which puts in place a much better structure for the Jockey Club to be able to access information. The reason that you are hearing the negative comments is there has been a lot of talk about the price of horses and the length of them and people are equating that with corruption, and I think that is a step which is completely wrong to take. This is now a free market where all of the prices on both sides of the market are visible to everyone. Previously one set of people could see all of the prices and another set could not […] People have pointed to 171 horses which Clive Reams organisation Racefax has identified as being potentially problematic. People comment on drifting horses when they lose, they do not comment on drifting horses that win. In 2003 more than 1,700 horses on Betfair compared with 171 Clive Reams pulled out, drifted out, lengthened in price to more than double their price and won, some of which were absolutely extraordinary examples. At Stratford in October a horse called Boing Boing went from 7-1 to 80-1 and won by 10 lengths […] It is not a question of the horse drifting that applies to corruption any more than it is true than when you suddenly put a speed camera on a road and you discover that 20 cars were speeding overnight you have suddenly increased speeding, what you have done is put in place something that allows you to see what has happened.” 760 This point was endorsed by users of betting exchanges.761

530. The Government’s position is that “it is only right that sports regulators take the leading role in controlling the betting behaviour of participants in their sport.” 762 However, the Committee received evidence that this was unrealistic because of the anonymity of those placing bets on betting exchanges and the high volume of such bets. The Jockey Club stated in written evidence to the Committee that “criminal behaviour linked to racing is a matter for the police and for the Gambling Commission when it is linked to betting malpractice”. 763

531. The Gaming Board stated in a supplementary memorandum to the Committee that “we believe the Commission will need the power, in licence conditions, to require exchanges to monitor their sites for unusual/suspicious betting patterns, to investigate those found and to report concerns to the GC, the ability to investigate and act in the cases of those concerns that the exchanges bring to its attention, up to and including prosecution, the ability to require exchanges to take steps to deny access to certain classes of punter (eg horserace trainers and jockeys) and the right to exchange information with

758 Q 675

759 Ev 732

760 Q 772

761 For example David Morgan, Ev 683

762 DCMS, Draft Gambling Bill: Policy document, Cm. 6014 – IV, November 2003, para 4.27.

763 Ev 236, para 6

138

the relevant supervisory bodies for the activities (such as the Jockey Club and other sports regulators) when any mischief occurs so that such a body can act against those it is responsible for regulating.” 764

532. In our view there are no general issues arising from people laying, or backing, horses on betting exchanges recreationally. We accept the arguments of Betfair that it would be unreasonable to subject all layers to a particular tax, levy or regulatory regime, as was initially suggested by the Association of British Bookmakers765 and “in an ideal world” by the British Horseracing Board.766 This would simply drive the exchanges offshore by unnecessarily increasing the regulatory burdens upon them. The policy of the Association of British Bookmakers seems to have modified in this regard, as its most recent submission, to the Department for Culture, Media and Sport, suggested that only customers “operating outside the parameters of recreational laying activity” should be affected by the provision to pay tax on profits.767

533. We do not, however, accept, that those using the exchanges to lay professionally, effectively earning a living, should be entitled to the same exemption. We were told by the National Association of Bookmakers that several of its members were operating as de facto bookmakers on the exchanges.768 Whilst we note the points made to us on this issue by users of exchanges,769 the Committee believes that anyone using the exchanges as a de facto bookmaker should be registered and taxed accordingly.

534. Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, Department for Culture, Media and Sport, acknowledged that there was a difference between recreational and non-recreational layers on the exchanges and challenged the Committee to come up with a suitable definition.770 The Committee has concluded that the transparent audit trail of exchanges makes it entirely feasible to identify these users by reference to the volume and frequency of the bets they lay on exchanges. We refer to this group as Non-Recreational Layers (NRLs).

535. We heard evidence questioning whether existing bookmakers should be able to use the exchanges,771 whether as NRLs or not. As long as these bookmakers are entering the moneys they make into their trading account, they will be satisfying the necessary requirements for taxation and the levy. They are also, of course, already subject to the current ‘fit and proper’ test.

536. However, in order to prevent any misuse of the exchanges, we recommend that the Gambling Commission takes steps to ensure that where existing bookmakers are using

764 Ev 43, para 4

765 Q 644

766 Q 691

767 Submission by the Association of British Bookmakers to the DCMS consultation.

768 Q650

769 David Morgan, Ev 683, Anthony Clare, Ev 721, Mr Singh, Ev 730.

770 Q 1746

771 Q 650

139

the exchanges, or causing others to operate on them on their behalf, that this is treated as part of their regulated activity.772

Non-recreational layers

537. In our view these users, at least in the first instance, are only likely to be identified retrospectively. A betting pattern above a certain threshold needs to be established. The submission by the ABB to the Economic Secretary to the Treasury773 suggests registration at £1,000 per month profit from laying, or an activity level of 60 lays a month. Betfair, when giving oral evidence to the Committee, referred to the fact that 0.71% of its accounts were “active customers who made more than £15,000 last year [from backing and laying]”,774 having previously referred to the fact that it has 200,000 registered clients.775 This implies that around 1,400 people are making this amount of money on the exchange.776

538. We believe that it will be necessary to have regard to the amount laid as well as the frequency of laying. We saw on our visit to Betfair examples of individuals laying a large number of bets on a single event in a short space of time so as to benefit from fluctuating price movements, but only generating a very small profit. At the other extreme, the Committee has noted the recent publicity surrounding the laying of substantial sums on the outcomes of minor horse races, wholly out of proportion to the value of the race; we believe that activity of this latter nature should trigger the immediate interest of the Gambling Commission.

539. Setting the level of the threshold will be a task for the DCMS once it has established firm policy objectives for the regulation. It will then require consultation and co-ordination with the Gambling Commission and the exchange companies. We anticipate that HM Treasury’s review of the tax treatment of betting exchanges and their clients will also include consideration of these criteria. The Government will then have to give some thought to how this system would work in practice.

540. The Committee is anxious to protect from unnecessary regulatory requirements, genuine recreational users of exchanges, including those who choose to lay bets. We suspect that the vast majority of such users back or lay relatively modest sums of money. However, the Committee suggests that there will be some users who, by the very nature and frequency of the sums they lay, cannot be said to be recreational.

541. The Committee recommends that DCMS should consult the exchanges on whether a ceiling on the sum which may be laid “recreationally” would be appropriate. We are also attracted to the idea that all transactions above a certain level should automatically be reported to the Gambling Commission to assist the Commission’s monitoring of integrity. Such arrangements could be included either in regulations or codes of practice.

772 Clause 75(1)

773 Part of its response to the DCMS consultation.

774 Q 822

775 Q 768

776 The Association of British Bookmakers pointed out in its response to the DCMS consultation (para 4.22) that this is more than the number of “active holders of bookmakers’ permits operating off-course in this country.”

140

542. In any event we think it likely that the Inland Revenue may wish to impose regulatory requirements on the exchanges as part of any money laundering or taxation arrangements for non-recreational layers as is the case with banks and other financial institutions.

Regulation

543. Once a non-recreational layer has been identified, we believe that he or she should be registered with the Gambling Commission. Any registered layer who is found cheating, or in breach of sporting codes, should have their registration cancelled and be prohibited from using a UK-based betting exchange for a set period of time. In addition we would encourage the Gambling Commission to initiate prosecutions as appropriate. Regulation could also be put in place to render certain categories of user, such as those covered by the rules of the Jockey Club and other sporting bodies, ineligible to be registered. Employees of betting exchanges should also be prohibited from using the exchanges.

544. We have no wish to put in place unduly onerous obligations on the operators of betting exchanges. However we believe that the image of the exchanges has been tarnished, however unfairly, as a direct consequence of the fact that they were the preferred betting medium in a number of recently publicised cases involving suspicious betting patterns. We therefore believe it is in the interests of the exchanges to work with the Government and the Gambling Commission on these issues.

545. We therefore recommend that betting exchange operators should be made responsible, as part of the conditions attached to their operating licences under Clauses 62 to 65 of the draft Bill, for the operation of a system of registration of Non-Recreational Layers and the transmission of information to the Gambling Commission about such users. We note that if betting exchanges are also to be treated as a collecting agency, their own accounting practices will become more expensive, costs which they may have to transfer to those using the exchanges, though we think this cost would be marginal.

Sporting levy

546. The Committee also believes that non-recreational layers should be contributing more in terms of sporting levies. Once a user has been assessed as ‘non-recreational’ they should be required to pay levies to particular sports over and above the commission they pay to the exchange. The precise amount of this will be subject to the negotiations that apply to particular sports. Sporting bodies will therefore need to ensure that betting exchange companies, and relevant users, are included in all appropriate levy consultations. We note that a court case last year concluded that the Horserace Betting Levy Board’s decision setting the levy to be paid by betting exchanges was not fair and not lawful, in part because “the approach taken […] on the issue of consultation was seriously flawed.”777

777 R (on the application of Sporting Options plc) v Horserace Betting Levy Board, unreported, 28 August 2003.

141

Voiding of bets and cheating

547. On 7 October, Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, announced proposals that the Gambling Commission would be given the power to freeze bets that it believed to be unfair and to void them if they were. The power would be available where the Commission had reason to suspect that there had been unfair activity in relation to a particular event and that an individual has sought to profit from it. It would only be available where a transaction had not been settled. Once frozen, the Commission would investigate the events surrounding the bet and, if satisfied that some improper activity has taken place, would have the powers to void the bet and return the stakes to the participants.

548. The Committee questioned the effectiveness of this provision778 and in the latest set of clauses published in February, DCMS extended the provision beyond bets that were not settled immediately. We welcome this change in policy by DCMS.

549. The draft Bill also includes a Clause, Clause 30, on cheating. Clause 30(3) states that “Without prejudice to the generality of subsection (1) cheating at gambling may, in particular, consist of actual or attempted deception or interference in connection with – (a) the process by which gambling is conducted, or (b) a real or virtual game, race or other event or process to which gambling relates.”

550. We heard somewhat confusing evidence on the question of whether the use of “inside information” falls within this definition from Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, during the following exchange with Viscount Falkland:779

“Could I ask Lord McIntosh to be a bit more precise and tell us exactly how he perceives betting when a bet is unfair? If I could help him, supposing somebody gets information at a cocktail party on a Sunday that a horse is sick for a Monday and he lays against that horse, as it were, on the betting exchange.

Lord McIntosh of Haringey: That is cheating.

Q1749 Viscount Falkland: That is cheating?

Lord McIntosh of Haringey: Yes.”

551. This runs contrary to our understanding, and that of other eminent witnesses, for example Peter Savill of the British Horseracing Board who, when given a similar scenario, stated: “My view would be that there has been no malpractice because, as we said earlier, horseracing and betting on horses is very much tied up inextricably with inside information. The moment you arrive on a racecourse there will be 50 people coming up and telling you what is fancied and what is not and all the reasons.”780

552. We believe that DCMS should review the wording of Clause 30 and redefine the offence of cheating, assessing in particular whether there is a case for incorporating the

778 Q 88

779 Qq 1748-49

780 Q 688

142

misuse of information into this definition in such a way that does not catch the long-standing practice of sharing information, as described by Mr Savill.

553. The combination of these clauses means that if there are continued questions about the underlying integrity of certain sports, there could be a rush of court cases relating to bets. We note a telling comment from the Select Committee on Betting Duty of 1923, which reported that when in the nineteenth century bets could be enforced by an action at law: “Causes to enforce bets became very numerous, and […] the Judges, grudging the amount of time consumed upon what were often exceedingly frivolous wagers when other more important causes were awaiting trial, took upon themselves to postpone all actions of this kind until the rest of the business had been disposed of or, in the words of Lord Ellenborough, ‘until the courts had nothing better to do.’”781

554. Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, when giving oral evidence to us, confirmed that the Gambling Commission would have to address this issue with sporting bodies of all kinds.782 The Gaming Board told us that the Commission would need “the right to exchange information with the relevant supervisory bodies for the activities (such as the Jockey Club and other sports regulators) when any mischief occurs so that such a body can act against those it is responsible for regulating.”783 This is exactly the kind of information exchange to which we have already referred in the context of non-recreational layers on betting exchanges. As a further example, we note that substantial measures are already taken in greyhound racing, for example by ensuring that when greyhounds arrive at NGRC licensed race courses they are inspected by a qualified vet, and monitored for weight change, a practice we wholeheartedly endorse.784 We note that the British Greyhound Racing Board is making efforts to ensure that all tracks conform to these standards.785

555. We therefore believe that DCMS should take immediate steps to work with sporting bodies in an effort to ensure that those who participate in sports understand the dire consequences of any involvement in illegal betting, whether with traditional bookmakers or on betting exchanges. The detail of this regulation is not a matter for us, but in the context of this Bill it is vital that this consultation takes place.

12 Remote gambling

556. The Government has acknowledged its aim for the UK to become “a world leader in all fields of gambling activity”.786 Increasingly, gambling takes place remotely and it has been predicted that the remote gambling industry will be worth £10 billion globally by 2006.787 The Henley Centre predicts that net revenues for the UK from remote gambling

781 Report of the House of Commons Select Committee on Betting Duty, Session 1922-23, HC 139, para 3.

782 Q 1756

783 Ev 43

784 Q 1026. This also has advantages in terms of the welfare of the animals involved see, for example, the memorandum by the League against Cruel Sports, Ev 713, which also refers to microchipping of dogs.

785 Q 1037

786 DCMS, Future Regulation of Remote Gambling: A DCMS Position Paper, April 2003, para 16

787 Estimate taken from iGGBA’s submission to the Culture, Media and Sport Committee, Volume 3, Appendix 1

143

sources would rise to £613 million by 2010 with the changes proposed in the draft Bill.788 It is thought that this could provide a huge opportunity for governments to raise taxes.

557. The Government and remote gambling businesses have also noted that, given the global nature of the business, it is not feasible to prevent UK citizens from engaging in remote gambling and that it is, therefore, preferable to have a well-regulated UK-based industry than for consumers to continue to have no choice but to use services based overseas, which are frequently unregulated. For example, in the USA, despite the apparent illegality of cross-border gambling, more people gamble on-line than anywhere else in the world.789 Similar attempts have been made to prohibit online gaming in Australia and the Australian Centre for Gambling Research has commented:

“I am not convinced that prohibition, whether directed towards providers or consumers, is effective for [remote] gambling. Despite current restrictions, my research has shown that Australians continue to gamble with offshore online casinos that may not provide the safeguards which Australian gamblers have come to expect.”790

558. For the first time the draft Bill would enable remote gambling businesses to obtain operating licences to provide remote gambling products from within the UK.791 It would legalise the provision of remote gambling by UK-based operators and provide a regulatory framework for this, requiring separate operating licences for remote and player-present activities, as well as requiring some staff to hold a personal licence. As with other licence applications, before granting a licence the Gambling Commission will check the probity, financial resources and expertise of applicants.792 Much of the detailed regulation of the business, including codes of practice will, however, be determined by the Commission. It is hoped that this will enable regulation to be flexible enough to respond to technological developments.

559. We congratulate the Government on its decision to regulate the remote gambling industry within the United Kingdom and to enable the Gambling Commission to issue remote gambling licences under Clause 55 of the draft Bill. Not only could this have significant fiscal advantages but it also recognises the fact that, even if it were desirable, it would be impossible to prohibit the use of remote gambling services by UK citizens effectively. The proposals would create safe areas for gambling on the internet and give UK consumers the option to use well-regulated services.

Regulation

560. The remote gambling industry are very keen to be regulated. 18 months ago, the Interactive Gambling, Gaming and Betting Association (iGGBA) told the Culture, Media and Sport Committee (the CMS Committee) that the UK may have missed the opportunity

788 Economic and Social Impact Study of the Proposed Gambling Bill, Henley Centre study commissioned by BACTA,

February 2004, para 2.3.8

789 This example is cited in DCMS, Future Regulation of Remote Gambling: A DCMS Position Paper, April 2003, para 102


791 Clause 55

792 See Part 5 of the draft Bill

144

to become the world leader in remote gambling if reform is delayed until after Autumn 2004.793 iGGBA raised similar arguments with us and sought the early establishment of the Commission so that it would be able to provide remote gambling licences as soon as possible.794 When we asked the Gaming Board about the comments iGGBA made to the CMS Committee, Mr. Dean stated:

“I would have thought that that was somewhat of an exaggeration, as a matter of fact […]. The UK will be the first major developed country which will be doing that and there is considerable interest shown in that. I do not think missing that particular timescale will be the end of the world”.795

iGGBA have, however, commented that “Recent discussions of a staggered award of licences cause concern among members that licences will take too long to be granted.”796

561. The regulation of remote gambling operators should not be delayed. The licensing regime proposed in the draft Bill should be introduced at the earliest opportunity and preparations for the licensing of remote gambling operators should commence as soon as possible.

562. DCMS has acknowledged that “[l]icensing and regulating online gambling will present a number of challenges that do not necessarily arise through more traditional forms of gambling media.”797 As noted above, there is currently no system for the licensing of remote gambling and this is an area in which the Gambling Commission will need to develop expertise quickly. We understand that the Gaming Board has started to do this. When we asked the Board whether they felt they would be able to keep abreast of developments in the remote gambling industry, Mr. Dean explained to us:

“I think there is a sense in which any regulator […] is going to lag behind technological change. Companies are constantly going to be doing their best to improve their products and so on. However[…] with the facility for responding to change relatively simply […] it seems to me that we should be as well placed as any regulator in the world to cope with the challenges that have to be met.”798

563. Perhaps more than in any other area, it is vital that the Gambling Commission is given the resources to enable it to develop the necessary expertise and to prepare itself for the regulation of remote gambling. We recommend that these resources should be made available at the earliest opportunity.

564. As with many other areas of the draft Bill, the industry has told us that there is a lack of detail as to the proposed regulatory regime for remote gambling. The Interactive Gambling, Gaming and Betting Association (iGGBA) has commented that “the success of any remote gambling licence will rest on the interpretation of this draft Bill by the

793 Commons Culture, Media and Sport Committee, Seventh Report of Session 2001-02, The Government’s proposals for

gambling: nothing to lose? HC 827-III, Ev 118

794 Interactive Gambling, Gaming and Betting Association, Ev 255, para 11

795 Q 172



798 Q 170

145

Gambling Commission”.799 The Association of British Bookmakers, in the context of remote betting businesses, also told us:

“Lastly, there is a concern that the considerable delegated powers [proposed to be given] to the Gambling Commission, together with the lack of detail on regulation and taxation, make it impossible at the present time to assess the impact that the Bill will have on operators.”800

565. While we acknowledge these concerns, we recognise that, more than in any other, this is an area in which it will be necessary to achieve flexibility if the Commission is to be able to regulate the sector effectively. Accordingly, we agree that the precise detail of the proposed regime cannot be set down on the face of the Bill. However, we recommend that, as soon as possible, the Gambling Commission should begin consultation on the details of the proposed regulation for UK-based remote gambling operators.

Principles of regulation

566. The future success of online gambling in the UK will depend not only on an appropriate taxation regime,801 but also on an appropriate regulatory regime. The experience of other jurisdictions has shown that the combination of both is important in making an attractive environment which will encourage businesses, which are potentially free to site themselves anywhere in the world, to locate in the UK. We have been told that:

“The only way to attract operators to the United Kingdom would be with the appropriate regulation which means the right balance between protection for the consumer and the commercial requirements of the operating company.”802

567. However, we have also been made aware of the potential benefits for operators in locating themselves in the UK:

“the benefits for us in coming back to the United Kingdom are about perception in the [C]ity, probity, making sure we are well regulated and that we have one regulator to deal with rather than several, about locating some of our operations here without having to travel back and forth from Alderney.”803

It is not only the consumer that will benefit from an effectively regulated remote gambling industry. Effective regulation also has significant reputational benefits for operators.

568. In general, we also agree with the principle put forward by BSkyB of “technological neutrality”, which has informed recommendations elsewhere in this Report.804 The Secretary of State for Culture, Media and Sport endorsed this view in “broad terms”, while


800 Q 702 [Mr Haygarth]

801 See for example, Chapter 14 of this Report; BSkyB, Ev 257, para 2.3; Interactive Gambling, Gaming and Betting Association, Ev 255, para 7; Association of British Bookmakers, Ev 222, para 3; and the Secretary of State for Culture Media and Sport, Ev 566

802 Q 705 [ABB]

803 Q 715 [BSkyB]

804 Memorandum by BSkyB, Ev 257, para 5.3

146

noting that some additional measures would be needed for remote gambling in particular areas, such as participation by children.805

569. We recommend that operators should be subject to the same standards of regulation, regardless of whether they provide their services remotely or non-remotely. As with all sectors, the regulation of remote gambling should not be excessive or disproportionate. It must, however, be effective. Care should be taken to ensure that the threat of operators locating themselves in other jurisdictions with less restrictive regulation should not lead to the creation of a UK regime that fails to protect the consumer and to deliver the reputational benefits sought by the industry. We therefore welcome the assurance of the Secretary of State that “we will definitely not get involved in a race to the bottom with any other jurisdictions; or be willing to lower our standard by forgoing necessary safeguards.”806

Licensing requirements

570. The draft Bill provides that an operating licence, which authorises activities to be carried on remotely, would not also be able to authorise activities which are provided non-remotely.807 It would, however, permit operating licences to authorise more than one category of activity and it would, for example, be possible for a single operating licence to permit the holder to provide both betting and gaming remotely.808 Where the relevant licence is a casino operating licence, it could, however, only permit the provision of facilities for betting or bingo “as part of the arrangements by which the casino is operated”.809 Some confusion has been expressed by the remote gambling industry about the meaning and interaction of these requirements (these are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1)). BSkyB has, for example, commented that “remote gambling might more naturally lend itself to a single licence structure” and has explained that remote operators would be unlikely to rely on a single casino operating licence given uncertainty about the meaning of “as part of the arrangements by with the casino is operated”.810

571. We have received a great deal of evidence suggesting that certain providers of technology for remote gambling should be regulated under the draft Bill, on the basis that “[t]he Software Provider is a critical component of the operations of an Operator’s business and can significantly affect the outcome of games and wagering”.811 The Alderney Gambling Control Commission, which has significant experience of regulating remote gambling businesses located within its jurisdiction, has explained that the draft Bill and policy statements do not make specific provision for the approval of system and software providers, and has described this as a “material omission”:

805 Secretary of State for Culture Media and Sport, Ev 566, written response to Question 20

806 Secretary of State for Culture Media and Sport, Ev 566, written response to Question 21

807 Clause 55(2)

808 Clause 56

809 Clause 56(3) & (4)

810 BSkyB, Ev 257, Appendix, para 4.2

811 Cyptologic, Ev 646, para 3.1. See also Alderney Gambling Control Commission, Ev 607, para 2.3

147

“The providers of software in the remote gambling industry can best be compared with the manufacturers and suppliers of gambling machines [to] terrestrial casinos. The significant difference is that a gaming machine only affects a small part of the casino operation, while remote gambling software in effect constitutes the whole casino. It is the software providers who develop and maintain software which ensures the games are fair and that the systems are secure and auditable. Furthermore, it is common practice in the remote gambling industry for casino operators to contract with software providers to operate their casinos on a revenue sharing basis.”812

572. In its response to such comments, included in the Schedule of Detailed Comments on the draft Bill (Annex 1), DCMS has helpfully explained their policy with respect to the regulation of software providers:

“The intention is that suppliers of software for use in remote gambling operations will be required to hold a remote operating licence for the type of gambling facilities they generate[…]Clauses 4 and 21 capture such software providers, but DCMS will look further at how to clarify the need for an operating licence in this respect.”813

This has also been confirmed in written evidence from the Secretary of State: “[software providers] like gaming machine suppliers, perform an important gambling function, and they need to be licensed to ensure that they are suitable and competent for those tasks.”814

573. We recommend that the draft Bill should be amended to clarify that relevant software providers would be required to be licensed under the new regime. We consider that this is not adequately clear from the existing wording in Clauses 53(2)(h) and 194(3)(b), as DCMS has acknowledged in the Schedule of Detailed Comments on the draft Bill (Annex 1).

Social responsibility

Safeguards

574. Online gambling greatly increases accessibility and is at odds with the Government’s policy of destination gambling, discussed above. We have also been told that certain of its attributes, such as its ease of use and the type of products available, may exacerbate problem gambling. Professor Orford has, for example, explained the risks associated with the rapidity of play on the internet:

“On the internet some of the slot machines’ reels spin every second, so theoretically people can play thirty or forty times a minute on a slot machine on the internet and the capacity to lose money in a given time period is greater.”815

812 Alderney Gambling Control Commission, Ev 607, para 2.3

813 The Schedule of Detailed Comments on the Draft Bill (Annex 1), comment on Clause 74(2)(d)

814 Secretary of State for Culture Media and Sport, Ev 566, written answer to Question 23

815 Q 264

148

The emergence of internet betting and gaming as a primary mode of problem gambling is indicated by Figure 5 (Primary Mode of Client Gambling 2001) and Figure 6 (Primary Mode of Client Gambling 2002).

Figure 5 Figure 6 (Primary Mode of Client Gambling 2001) (Primary Mode of Client Gambling 2002)

Off and OnCourse Betting

50%Fruit Machines

35%

Casino5%

Spread Betting 3%

Internet Betting& Gaming 3%

Private Card Games 2%

Bingo 2%

Spread Betting 3%

Off & On CourseBetting

35%

Internet Betting& Gaming

24%

Fruit Machines28%

Casinos10%

GamCare Care Services Report 2001 GamCare Care Services Report 2002

575. Despite such risks, remote gambling already exists and as noted above it is not realistic to propose that it be prohibited. A number of commentators, such as the Salvation Army, have accepted that it is better for regulated remote gambling sites to be available in the UK than for UK citizens to be using unregulated sites:

“it has to be recognised that internet gambling is already available to British citizens through websites registered abroad which are subject to minimal or no regulation. Therefore, with great caution, the Salvation Army supports the Government’s proposals to licence internet gambling in Britain as long as the most rigorous responsibility codes are enacted to protect children and vulnerable adults.”816

576. By regulating online gambling operators based in the UK, it is possible to require them to follow social responsibility codes. DCMS have suggested that, in the context of remote gambling, these codes might include: (i) transparency requirements, such as information on rules of play, game representation and rates of return; (ii) practical measures, including with respect to privacy and security; and (iii) safeguards to protect the young and vulnerable, such as the screening of website users and reality checks which will make players aware of how much they have spent and how long they have gambled.817 The Association of British Bookmakers (the ABB) has developed a code of conduct for

816 Salvation Army, Ev 83, para 7

817 DCMS, Future Regulation of Remote Gambling: A DCMS Position Paper, April 2003, para 37

149

members operating remote betting services.818 The Interactive Gambling, Gaming and Betting Association (iGGBA) told us that they also have agreed a social responsibility code with Gamcare:

“It is a 50 point code which we negotiated with them which tries to mitigate some of the risks that might be associated with remote gambling. The type of things we are talking about are loss limits, periods where somebody can self exclude themselves for periods of time, if they have been playing for two hours a pop up will come on and it will say, ‘You have been playing for X number of times, do you wish to continue playing’, and they actively have to do something. Those are the types of things our members have put in place.”819

577. Despite the risks that may be associated with remote gambling, we acknowledge that it is preferable for this sector of the industry to be effectively regulated within the UK than for consumers to have no option but to use offshore sites, many of which appear to be poorly regulated. We recommend that, as soon as possible, the Commission should start to consult the industry and those with expertise in the field of problem gambling in order to draw up stringent codes of social responsibility for this sector. We further recommend that the Commission should use those codes that have been voluntarily adopted as a basis for the statutory codes to be issued under Clause 16 of the draft Bill.

Controlling access

578. Concerns have been expressed about the difficulties faced by operators in preventing children accessing their services. When asked about under-age access, iGGBA told us “We do not want it, we will do our best to stop it”.820 We have heard about the various preventative measures operators currently employ.821 They have explained that they require players to open an account and that, in order to do so, the gambler must hold a credit card, which are only available to over-18s. Where the gambler seeks to register using a Solo or Switch card, which are also available to under-18s, many operators require a second level of checks, using agencies that check sources such as the electoral register. We understand such measures to be required under the existing voluntary codes of practice. However, the operators have themselves acknowledged that these checks are not “100% perfect”.822 In particular, they have noted that “[w]e could be much more helped by the banking sector in identifying people that are under 18 than we currently are”:823

“Age verification could be so much better achieved if the banking industry could be made to co-operate, and the way they could help would be to have an identifier on cards held by those underage”.824

818 Association of British Bookmakers, Ev 222, Annex B

819 Q 742 [Mr Tottenham]

820 Q 746

821 Q 745

822 Q 745

823 Q 746

824 Betfair, Ev 292, para 2

150

579. It is important that the remote gambling industry takes measures to prevent children accessing its services. However, we acknowledge that existing technology does not make it possible to eliminate this possibility entirely. We recommend that codes of practice should be adopted under Clause 16 that require operators to take all possible steps to prevent under-age access. We also acknowledge that this responsibility should not be borne solely by the operator. We recommend that banks should be encouraged to assist operators in this respect and that parents should also be encouraged to use the technology that is currently available, such as internet filtering services, to control the websites their children are able to access.

Other jurisdictions

580. Some countries seek to restrict the gambling services available to their citizens and some, like the USA, have sought to make it illegal to gamble online. This has given rise to complaints about the proposals in the draft Bill which could enable consumers from such countries to gamble on British-registered sites. Such complaints have been received from the Finnish Ministry of the Interior,825 the Norwegian Ministry of Culture and Church Affairs,826 the Swedish Ministry of Finance,827 the Icelandic Ministry of Justice and Ecclesiastical Affairs,828 and the Danish Ministry of Taxation.829

581. In line with this, the Gaming Regulators’ European Forum has stated that “Gambling offered should be restricted to residents of the jurisdiction concerned and residents of such other jurisdictions with whom there are co-operative or reciprocal arrangements”.830 The European Lotteries made a similar point.831

582. The Government has responded to such comments as follows:

“If other jurisdictions wish to prevent their citizens from gambling with British based operators that is of course open to them. There are numerous mechanisms they might be able to use, such as restricting advertising or making it an illegal act for the players […] Rather than this the Government favours a much more free market approach. This is the preferred option as it is the one that most closely matches the Government’s vision of a global market where a well-regulated British based industry is able to establish itself as a world leader.”832

583. We agree with the Government’s vision of “a global market where a well-regulated British based industry is able to establish itself as a world leader” and would not generally consider it appropriate to prevent UK-based operators providing remote gambling services to non-UK consumers.

825 Finnish Ministry of the Interior, Ev 661

826 Norwegian Ministry of Culture and Church Affairs, Ev 639

827 Swedish Ministry of Finance, Ev 634

828 Icelandic Ministry of Justice and Ecclesiastical Affairs, Ev 605

829 Danish Ministry of Taxation, Ev 638

830 Gambling Regulators European Forum, Position Statement, available at: http://www.gref.net/statements.html

831 European Lotteries, Ev 679

832 DCMS, Future Regulation of Remote Gambling: A DCMS Position Paper, April 2003, paras 106-107

151

Prohibited territories offence

584. Despite this approach, Clause 32 of the draft Bill contains a reserve power that would enable the Secretary of State to designate certain territories as being “prohibited”. If territories were so designated, it would be unlawful for UK-based operators to invite or enable persons in those territories to participate in remote gambling. The remote gambling industry has expressed concerns about this provision, arguing that once an operator has a UK licence it should be free to provide its services globally.833 When asked whether the Government intended to use this power, Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, explained:

“Not at the moment, no. This is a reserve power which will give us a leeway to act if necessary. Let me give you a hypothetical example. In Utah no gambling is allowed at all, no citizen of Utah is allowed to gamble there or anywhere else, according to Utah law. Unless we were lent on very heavily by the United States federal authorities and/or the state of Utah I think we would be very reluctant to declare them to be a prohibited territory. It is their problem, not ours.”834

585. The decision to designate any territory as being prohibited for the purposes of Clause 32 should be subject to full Parliamentary scrutiny. We note that Clauses 32 and 263 of the draft Bill would require an order to be laid before and approved by both Houses of Parliament. We consider that this would provide adequate opportunity for Parliament to consider any such proposals.

Advertising by offshore operators

586. The Government had originally proposed that advertising in the UK by non-EEA operators would be prohibited.835 The Alderney Gambling Control Commission submitted evidence explaining that although “Alderney has over the last three years established itself as a ‘first tier’ remote gambling jurisdiction”836 the Government’s initial proposals would have prevented it advertising its service in the UK.837 It commented that such a blanket prohibition would be disproportionate and that:

“From our discussions with DCMS it seems that the most important consideration for introducing such a prohibition relates to the protection of UK residents from remote gambling operators that are subject to less stringent regulation.”838

587. DCMS has since changed its mind and now proposes that there will be no such general prohibition in the draft Bill. Instead, it is proposed that the draft Bill will contain a more targeted power to designate advertisements of certain types and from certain


834 Q 107

835 The Future Regulation of Remote Gambling: A DCMS Position Paper, DCMS, April 2003, para 126.

836 Alderney Gambling Control Commission, Ev 607



152

countries as prohibited, a power which would be kept in reserve.839 It has justified this approach on the basis that:

“this would avoid penalising countries which both provided acceptable standards of regulation and allowed British-based remote operators fair access to their own market. Indeed the power could assist international discussions aimed at achieving consistent standards of regulation and fair access rules.”840

588. Sportingbet has commented that the proposal will impact adversely on the confidence of the consumer in the industry “in the initial period after the introduction of the Act when it would appear that there will be an advertising free-for-all”.841 It further notes that this open-door policy will “dramatically reduce the attractiveness of applying for a British operating licence and in turn will significantly decrease the positive impact of the proposed framework of licences for consumers and the industry alike.”842

589. We agree with the Government’s decision not to prohibit all non-EEA advertisements. However, we are concerned that the current proposal would make the UK a less attractive destination for remote gambling operators. We also consider that the proposed power to designate jurisdictions as prohibited for these purposes would be cumbersome and that it would not be possible to exercise it sufficiently quickly to prevent advertisements from unregulated overseas operators, especially in the initial period after the Bill receives Royal Assent. We recommend that the Bill should instead contain a general prohibition on advertisements from non-EEA operators but that the Gambling Commission should be able to designate non-EEA territories as permitted if it is satisfied that the standards of regulation in those territories are adequate. We believe that this would address the concerns of the Alderney Gambling Control Commission.

13 Lotteries (except the National Lottery)

590. The draft Bill proposes to retain the four existing legal types of lottery, in addition to the National Lottery: small incidental lotteries,843 private lotteries,844 societies’ lotteries845 and local authority lotteries.846 It would also create an additional permitted category of customer lottery (discussed below).847 Large society lotteries and local authority lotteries would be licensed by the Gambling Commission;848 small society lotteries would not require a licence but must be registered with a local authority; 849 and private lotteries, small

839 Draft Gambling Bill: Supplementary Policy Memoranda, February 2004, Policy Note 6, paras 16-18


841 Sportingbet, Ev 706, para 3

842 Sportingbet, Ev 706, para 3

843 Schedule 8 Part 1

844 Schedule 8 Part 2

845 Schedule 8 Part 4 and Clause 78(1)(a)

846 Clause 78(1)(b)

847 Schedule 8, Part 3

848 Clause 78(1)

849 Schedule 8, Part 5 and para 34

153

lotteries and customer lotteries would be neither licensed nor registered.850 In addition, the Commission would regulate external lottery managers acting on behalf of non-commercial societies or local authorities, such as Inter Lotto and Littlewoods.851

591. Budd concluded that lotteries should be preserved for the “exclusive purpose of good causes”.852 The Government accepts this general principle, commenting that:

“Lotteries – whether run by the National Lottery, by societies, or by other lawful means – must be seen as the preserve of good causes”.853

Accordingly, lotteries run for commercial profit would continue to be illegal under the draft Bill.854 In order to achieve this general policy objective the underlying law must: (a) clearly define what is, and is not, a lottery; (b) prevent lotteries being used other than for good causes; and (c) be enforced. Following its own review of the current law, the Government identified two areas that threaten this policy: first, ambiguity in the current legal distinction between lotteries and prize competitions; and secondly, lack of enforcement.855

Enforcement

592. We have been told that “over the years there has been a lamentable lack of enforcement of the existing law [on lotteries and prize competitions]”.856 At present, there is no single national agency with the remit and resources to take action against unlawful lotteries and prize competitions. The Gaming Board for Great Britain does not have the power to initiate public prosecutions. Instead, it has relied on the police to do so and, understandably, the police have not historically prioritised enforcement of the law in this area: “from the police point of view they do not understand [the issues relating to lotteries] and say ‘What is the problem? We have more important things to do’”.857

593. Another reason the law is not currently enforced is a lack of resources. Hundreds of illegal lotteries and prize competitions are conducted in the UK and the Gaming Board could not pursue all of them. Instead, it has prioritised those schemes about which it has received complaints and has determined that it would not be in the public interest to expend public resources in prosecuting all small-scale schemes.

594. Under the draft Bill the Gambling Commission would be responsible for enforcing the law against unlawful gambling, including unlawful lotteries. It would have the power to initiate public prosecutions, which would enable it to tackle unlawful lotteries directly, without the need to make demands on police resources. As noted above, the Commission

850 Schedule 8, Parts 1-3

851 Clause 78(1)(c)


853 DCMS Statement “Law on prize competitions and lotteries – statement by the Department for Culture, Media and Sport”, June 2003


855 DCMS Statement “Law on prize competitions and lotteries – statement by the Department for Culture, Media and Sport”, June 2003

856 Q 1603 [Philip Circus]. See also Q 1618 [Susanna FitzGerald QC]


154

will need to be adequately resourced if it is to use these new powers. Even then, it would not be able to prosecute every unlawful lottery, of which there are many at present:

“I do not think for one moment that the Gambling Commission is going to go round having to do hundreds and thousands of prosecutions; one or two well-publicised ones will probably do the trick, and then everybody will know where they are.”858

595. We recommend that adequate resources should be available to the Gambling Commission to enable it to initiate prosecutions against those conducting lotteries that would be illegal under the Bill and, thereby, help to preserve lotteries for good causes.

Definition of “lottery”

596. Clause 208 of the draft Bill provides the first statutory definition of a “lottery” and Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, has told us that the definition is trying to “introduce an element of clarity”.859 It starts by restating the current common law definition of a lottery,860 providing that an arrangement is a “lottery” if:

a) one or more prizes are allocated to one or more members of a class (or to each member of a class);

b) the system for determining the allocation of prizes relies wholly on chance (but, see the discussion of Clause 208(4) below); and

c) individuals are required to pay in order to enter the Lottery (see below).

Payment to Enter

597. Under the current law an arrangement will only be a lottery if the participants have paid to enter it. This would continue to be the case under the draft Bill and, accordingly, free-draws would not be required to be regulated as lotteries.

598. The Government has acknowledged that the meaning of “payment to enter” is not clear under the current law, stating:

“Many prize competitions and prize draws currently employ so-called free entry routes which nevertheless do effectively require the participant to make a payment, such as by premium rate telephone call, in an effort to avoid being caught by lottery law. To avoid this abuse of lottery law, the draft Bill will provide clarity about what is meant by payment for entry into a lottery.”861

It seeks to achieve this in Schedule 7 of the draft Bill which defines “payment to enter”.


859 Q 115

860 Per Lord Widgery CJ in Readers Digest Association Ltd v Williams, 1976, 1 WLR 1109 at 1113

861 DCMS Statement “Law on prize competitions and lotteries – statement by the Department for Culture, Media and Sport”, June 2003, para 16

155

599. We have received a number of negative comments on the wording of this Schedule. These have highlighted some significant omissions and areas in which the commercial impact of the Schedule could be unexpected. These are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1). In particular, the following areas have been noted.

Premium-rate calls

600. As noted above the Government is keen to ensure that schemes requiring participants to call premium rate numbers in order to enter should be treated as requiring “payment to enter” the lottery.862 It seeks to achieve this in paragraph 5 of Schedule 7 of the draft Bill which provides that “a reference to paying does not include a reference to incurring the expense, at a normal rate of […] making a telephone call”. A normal rate is defined as “a rate which does not reflect the opportunity to enter a lottery”.863

601. Susanna FitzGerald QC has commented that this definition of “normal rate” is not clear enough to catch premium-rate calls and that, if this is the desired intention, it should be expressly stated on the face of the Bill:

“Let us take the example of a television company because it is popular. The only way of getting hold of this television company might be through a premium rate telephone number so the only way to get into the Lottery is going to be via the premium rate telephone number, so the normal rate for contacting that particular company is going to be via premium rate. Now at the moment, because it is via premium rate it would be held to be a lottery, and under these provisions probably not.”864

602. Premium rate telephone calls are a very common feature of existing lottery-type schemes and we consider it to be vital that the use of such calls to enter lotteries should be treated as a form of payment to enter under the Bill. We recommend that Schedule 7, paragraph 5(2) of the draft Bill should be amended to clarify that this would be the case.

Normal retail price

603. Under the current law if a person buys goods and with them acquires the chance to win a prize, it would be considered that s/he had paid for the chance. This would be the case even if the goods were sold at their normal retail price. Accordingly, such schemes would constitute lotteries. The draft Bill proposes to relax this rule and states that, in such circumstances, the chance to win a prize will not be considered to have been “paid for” unless the price of the goods “reflects the opportunity to enter the Lottery” (this concept is based on New Zealand law and is commonly referred to as the New Zealand Model).865 If it cannot be established that the chance of winning a prize is reflected in the price of the goods, the scheme cannot be a lottery and will not therefore be regulated.

862 DCMS Statement, “Law on prize competitions and lotteries – statement by the Department for Culture, Media and

Sport”, June 2003, para 16

863 Schedule 7, paragraph 5(2)(a)

864 Q 1629

865 Schedule 7, para 2(c)

156

604. Evidence has suggested that the introduction of the New Zealand model could threaten the preserved status of lotteries, by enabling unregulated, overseas operators to enter the UK market by the use of bogus sales promotions.866 Philip Circus has warned that “It is virtually impossible in the majority of cases to establish what the ‘normal’ price [for goods] is”.867 He also noted that these provisions would put the UK out of step with the rest of Europe and could prejudice the development of the pan-European promotional marketing strategy.868

605. We agree with the Government’s position, as set out in Schedule 7, paragraph 2(c), that buying goods should not be considered as payment to enter a “lottery” accompanying those goods, unless the price of the goods reflects the chance to win the lottery. However, we also acknowledge the concerns that have been expressed about the possible abuse of these provisions and recommend that the Gambling Commission should issue guidance on the meaning of a “normal price” for goods. For this purpose, it should consider using trading standards rules as a guide to determining what is normal.

Payment to take possession of a prize

606. We have also received comments about the effectiveness of paragraph 6 of Schedule 7, which seeks to bring payments necessary to take possession of a prize within the definition of “payment to enter”. As currently drafted, this provision would not cover a situation in which a payment (such as a premium rate call) is needed to ascertain whether one has won a prize and/or to find out what that prize is.869 The Explanatory Notes to the draft Bill state that it is intended that such cases should be covered:

“A payment required to take possession of a prize or to find out what a person has or might have won in a lottery counts as if it were payment to enter it”.870

607. We welcome DCMS’ willingness, expressed in the Schedule of Detailed Comments on the draft Bill (Annex 1), to amend paragraph 6 of Schedule 7 to rectify the existing omissions.

608. In addition, Philip Circus told us that, as currently drafted, paragraph 6 of Schedule 7 is “far too sweeping, because it would rule out, potentially, a lot of very, very substantial and legitimate prizes”:

“It would put in doubt, for example, “win this car” but you have to pay insurance and road fund licence. You cannot really take possession of a car until you have road fund licence and insurance. Are we saying that people cannot offer a car as a prize in a promotion because of the effect of this provision?”871

866 The Institute of Sales Promotion Limited, Ev 527 and Q 1629

867 Q 1629

868 Q 1629

869 The Lotteries Council, Ev 547, para 3(b) and Q 1633 [Susanna FitzGerald QC]

870 DCMS, Draft Gambling Bill: Explanatory notes, Cm. 6014 – II, November 2003, para 482

871 Q 1633

157

609. We do not consider that such sales promotions should be treated as lotteries and recommend that paragraph 6 of Schedule 7 is amended to clarify that this would not be its effect.

Skills Test

Policy Aim

610. Under the current law, if prizes are not allocated purely on the basis of chance an arrangement will not be a lottery. This has lead to the development of arrangements which involve some skill (meaning that they cannot, legally speaking, be lotteries) but in which the level of skill is so minimal that the outcome is, in reality, determined by chance (e.g. “What is the capital of France?”).872 The ultimate winner of such competitions is frequently decided by randomly selecting one out of the many who answered the question correctly. Although such arrangements should be treated and regulated as lotteries, the existence of a minimal skill element means that under the current law they are not.

611. The existing law on illegal prize competitions was developed to prevent these schemes. It prohibits competitions “in which success does not depend to a substantial degree on the exercise of skill”.873 The draft Bill proposes to remove the prohibition on such prize competitions. By so doing, it does not, however, intend to permit schemes employing minimal tests of skill to avoid the laws on lotteries. Instead, the draft Bill seeks to bring these schemes within the statutory definition of a lottery. While Clause 208(1) starts by saying that the allocation of prizes must rely wholly on chance, Clause 208(4) goes on to state that:

“ […] a system […] relies wholly on chance despite the fact that persons are required to exercise skill in order to enter a lottery, if the requirement is not likely to prevent persons who want to enter the lottery from doing so”.

612. So where a “competition” includes a skill requirement that is not likely to prevent persons who want to enter the lottery from doing so, it will constitute a lottery under the draft Bill. Accordingly, it would be illegal unless it is licensed or falls within one of the limited exemptions in the draft Bill.

613. We have received a wide range of comments on Clause 208(4). Some of these have questioned the policy of seeking to prevent minimal-skill competitions. The Newspaper Society has commented that “If the draftsman had stopped at [Clause 206(1)], all would have been well”,874 effectively recommending that any arrangement which involves even a “scintilla of skill” should not be considered a “lottery”.875 The television industry has made similar comments about the potential impact of the skills test on televised contests, which it notes are a long-standing and integral feature of a number of television programmes. It has also explained that the application of Clause 208(4) will create significant practical

872 Example given in DCMS, Gambling Review Body Report, Cm. 5206, July 2001, para 28.57

873 Lotteries and Amusements Act 1976, Sections 14(1)(b). They are only unlawful if conducted in or through any newspaper, or in connection with any trade or business or the sale of any article to the public (Lotteries and Amusements Act 1976, Sections 14(1))

874 Newspaper Society, Ev 606. See also News International Limited, Ev 662

875 See Pessers v. Catt (1913), 77 J.P. 429

158

difficulties and “might be deemed to require far more arcane and difficult questions than are routinely employed in television competitions at present, and which would not engage or interest viewers”876:

“We see no pressing social or economic needs, and no public support whatever, for any legislative measure that might equate such prize competitions to lotteries, or that might render such competitions unlawful.”877

614. Some of the evidence we have received has commented that the current wording could bring a number of schemes which are presently lawful, such as crossword competitions or fantasy football games, within the definition of illegal lotteries.878

615. The majority of our evidence has, however, recognised the need to protect lotteries and to preserve them for good causes. It has acknowledged that this requires minimal-skill “competitions” either to be treated as lotteries (as the draft Bill proposes) or prohibited as unlawful prize competitions (as is the case under the current law):

“If no definition is given to a skill or challenge then the weakest of competitions will be able to operate without regulation when in reality they are pure lotteries, the [skill] element merely being a device to circumvent legislation”.879

616. We agree with the Government’s general policy aim of preserving lotteries for good causes and agree that, if this is to be achieved, it is necessary to prevent competitions in which the level of skill involved is so minimal that they are, in effect, lotteries.

Drafting

Clarity 617. Despite agreeing with the general policy aim, many commentators have expressed concerns about the way the skills test is incorporated into the draft Bill. The Gaming Board itself which, under the guise of the Gambling Commission would be responsible for enforcing the new law, has stated that the proposed wording “does not provide the clarity in the law that the Gambling Commission will need”,880 and even the lawyers Philip Circus and Susanna FitzGerald QC have commented that they are not clear about the meaning of the words “if the requirement is not likely to prevent persons who want to enter the Lottery from doing so”.881 The latter told us: “I think the drafting is tortuous and it is very difficult to know exactly what it means”.882

618. We acknowledge and agree with the Government’s aim to preserve non-commercial lotteries and to distinguish them from commercial prize competitions. We

876 ITV, GMTV, Channel 4 and Five, Ev 690, para 7

877 ITV, GMTV, Channel 4 and Five, Ev 690, para 8

878 Newspaper Society, Ev 606. See also News International Limited, Ev 662

879 Letter dated 12 January 2004 from St Giles Hospice (Promotions) Limited to Janet Dean MP, copied to Mr John Greenway MP


881 Q 1618


159

are not, however, persuaded that Clause 208(4) of the draft Bill is sufficiently clear to create a workable and certain regime that will achieve this. We recommend that further thought should be given to the wording of this Clause.

A separate statutory definition of prize competitions 619. Many of the suggestions as to how the drafting of Clause 208(4) could be improved are included in the Schedule of Detailed Comments on the draft Bill (Annex 1). However, one comment which was repeatedly made by our expert witnesses was that the Clause seeks to do too much in a very limited number of words:

“perhaps Clause 208 is trying to be all singing all dancing and losing clarity by doing it. Perhaps we should take a deep breath and start again and keep the concept of the Lottery separate and concept of a prize competition separate, so you have two separate clauses dealing with it rather than one”.883

The Lotteries Council also told us that “the definitions need to be tightened but if you do not have a separate category of prize competitions then you are opening the way to some of the abuses which were mentioned earlier on.”884

620. Such comments reflect the perception that a clearer distinction would be drawn between lotteries and prize competitions if the latter were defined in the draft Bill, rather than treating some prize competitions as lotteries that are unlawful, unless regulated, and ignoring all others, as in the current draft of Clause 208. In the Schedule of Detailed Comments on the draft Bill (Annex 1), the Government has responded to such comments as follows:

“The Government does not intend that the Gambling Bill regulate or control prize competitions. As Susanna FitzGerald QC explained during her evidence to the Committee, some prize competitions are more akin to gambling than others. The effect of the Bill is that, where a so-called ‘prize competition’ does actually represent gambling – whether it is betting, gaming, or a lottery – the Gambling Commission will be able to take action if that gambling has been offered unlawfully. The Government is not convinced that there is anything that a clause about prize competitions in this Bill could usefully say. It is not intended that prize competitions be subject to a licensing regime, and […] we do not think it would be helpful to replicate the existing law at Section 14(1)(b) of the Lotteries and Amusements Act 1976.”885

621. We would suggest that greater clarity could be achieved by including a definition of prize competition in the draft Bill. This would make it easier to draw a distinction between lotteries, on the one hand, and prize competitions, on the other. If a definition of prize competition were provided, it would then be easier to distinguish between those prize competitions which are illegal, because they have an inadequate skill element, and those which are legal, because the skill element is adequate.


884 Q 1671 [Mr Head of the Lotteries Council]

885 DCMS response to Clause 206(4) of the Schedule of Detailed Comments on the Draft Bill (Annex 1). See also Secretary of State for Culture, Media and Sport, Ev 566, written response to Question 26

160

Hybrid competitions 622. In addition to seeking to merge lotteries and unlawful prize competitions in one definition, Clause 208(4) seeks to address hybrid schemes, such as those starting with a skill test in which the ultimate winner is randomly selected from many correct answers. Of this, Susanna FitzGerald QC commented:

“Bring hybrid competitions into legislation, therefore, and decide what a hybrid competition is going to be so that you can have a mixture of skill and chance, and then you can decide how you are going to do it and you can put in a definition of what skill is or however you word it, and just do it perhaps in two clauses and make it rather simpler.”886

623. The Government has acknowledged that “there is scope for increasing the clarity of the Bill in so far as it applies to schemes which have different stages, some of which require skill, others depending purely on chance.“887 We urge the Government to clarify the treatment of hybrid schemes under the draft Bill.

Statutory definition of “lottery” and the National Lottery

624. As discussed above, the National Lottery will not be regulated under the draft Bill. The draft Bill achieves this in Clause 222 by providing that the Bill should not apply to the National Lottery. We have, however, received evidence from the National Lottery Commission (the NLC) that it would be useful if the definition of “lottery” provided in the draft Bill were also applicable to the National Lottery. The NLC can only authorise lotteries and it would be useful for it to be able to rely on a statutory definition rather than the existing case law.888

625. We consider that there would be advantages to the single statutory definition of “lottery” covering the National Lottery. We welcome the Government’s statement, in the Schedule of Detailed Comments on the draft Bill (Annex 1), that they will consider this request and urge it to amend Clause 222 accordingly.

Rapid-draw lotteries

626. Clause 79(2) of the draft Bill would impose a mandatory condition on lottery operating licences, requiring there to be a lapse of 24 hours between the sale of a ticket in a regulated lottery and the prize draw.889 The Explanatory Notes to the draft Bill state that “this restriction is intended to limit the possibility for repetitive play in lotteries”.890 The Committee has received a number of submissions commenting that there is no evidence that rapid draw lotteries contribute to problem gambling.891 The charity Addiction Today stated in its submission: “we highlighted the fact that there was no evidence that rapid-

886 Q 1626

887 DCMS response to Clause 206(4) of the Schedule of Detailed Comments on the draft Bill (Annex 1)

888 Q 1150 [Ms Black]

889 Clause 79(2)

890 DCMS, Draft Gambling Bill: Explanatory notes, Cm. 6014 – II, November 2003, para 205

891 Addiction Treatment Today, Ev 630 and Inter Lotto (UK) Ltd, Ev 666

161

draw lotteries cause excessive play” and requested “If you have such evidence, please do show it to me”.892

627. Much of the evidence we have received has noted how damaging this prohibition would be to many existing lotteries. Inter Lotto commented that Clause 79(2) “by restricting the frequency of society lotteries, would render the existing business of Inter Lotto illegal, resulting in the withdrawal of its only game and removing a vital source of income from the charities for which Inter Lotto operates”.893 It has noted that “If applied to the National Lottery, all the current games (with the exception of ‘Instants’) would be unlawful”.894 The Lotteries Council told us that the provision would prevent half time lottery draws in rugby, football and cricket matches,895 a consequence recognised by Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS,896 and later by the Secretary of State for Culture, Media and Sport.897 GamingKing have commented: “What is the magic of 24 hours? If the objective is to prevent rapid draw games then a much smaller period of time such as 2 hours would be more than sufficient”.898 The Secretary of State has added that she is “looking into the options for reserving a flexible power to deal with these types of lotteries.”899

628. If the Government has evidence as to the risks of rapid draw lotteries, we recommend that it publish this evidence and that it apply any proposed restrictions equally to the National Lottery. If rapid draw lotteries do pose risks, we recommend that the required period between ticket purchase and draw be set at that necessary to address this risk, rather than at 24 hours as currently proposed in Clause 79(2). We recommend that the Gambling Commission be given the discretion to attach a condition to this effect.

Statutory limits

629. Budd recommended that the existing limits on the size of stakes, prizes and maximum annual proceeds of society lotteries should be removed.900 This proposal has been rejected by the Government on the basis that “removal of the current limits would allow charities to compete head to head with the National Lottery”901 By statutory instrument, the Government instead doubled the proceeds limit for a single lottery to £2 million; the aggregate annual total for a single charity or local authority to £10 million; and the maximum possible prize to £200,000.902 These limits, already in existence since 17 June

892 Addiction Treatment Today, Ev 630

893 Inter Lotto (UK) Ltd, Ev 666, para 1

894 Inter Lotto (UK) Ltd, Ev 666

895 Q 1662

896 Q 114

897 Secretary of State for Culture, Media and Sport, Ev 566, written answer to Question 24

898 GamingKing, Ev 651

899 Secretary of State for Culture, Media and Sport, Ev 566, written answer to Question 24

900 DCMS, Gambling Review Body Report, Cm. 5206, July 2001, paras 28.28 & 28.29


902 DCMS, A safe bet for success – modernising Britain’s gambling laws, Cm. 5397, March 2002, para 4.42. Lotteries (variation of monetary limits) order 2002-3 (SI 2002/1410).

162

2002, have been included on the face of the draft Bill as mandatory conditions of lottery operating licences.903

630. The Lotteries Council has stated that society lotteries need the ability to operate with “Freedom from arbitrarily applied limits on maximum lottery size”; “the ability to charge for entry into a lottery whatever the public are willing to pay”; and “The ability to feature prizes which retain their attraction in relation to inflation”.904 It has told us that:

“we did not request [removal of the limits] in our submission to the gambling review because we did not think we would get away with it but when the review body came out in favour of it and also the Gaming Board itself did not see a problem with it, we have pursued it vigorously ever since. We do believe, as I said earlier, that lotteries should be allowed to find their own level.”905

631. The “inordinate amount of time [spent] accounting for lotteries and ensuring that they do not breach arbitrary limits” and the desire “to clean away administrative bunkum” has also been described to us.906

632. The Lotteries Council explained that they consider the Government’s concerns about head to head competition with the National Lottery to be unrealistic:

“A more important point, perhaps, going to the reason why those limits are there is that I simply cannot – and this is purely an impressionistic view – envisage any consortium of really big charities ever getting together on a scale which would seriously threaten the operations of the National Lottery. I think that is the crucial thing.”907

633. It has been also noted that the decision to include the proposed limits on the face of the draft Bill is inconsistent with the aim of achieving flexibility and avoiding the frequent need for primary legislation. We have received suggestions that any limits imposed should be capable of variation by statutory instrument or by the Commission in consultation with the Secretary of State (these are set out in the Schedule of Detailed Comments on the draft Bill (Annex 1)). DCMS has commented, in the Schedule, that a power will be added to enable the Secretary of State to amend the financial limits on lotteries, without the need for primary legislation.908

634. We believe that the Budd recommendation to remove financial limits on lotteries has merit and recommend that it should be achieved progressively over time. We welcome DCMS’ acceptance that the limits should be capable of amendment by secondary legislation. We recommend that Clause 79 of the draft Bill should include an additional delegated power of this type and that the Secretary of State should use this power on the recommendation of the Gambling Commission.

903 Clause 79

904 The Lotteries Council, Ev 538 para 3

905 Q 1665 [Mr Austin]

906 Q 1666 [Mr Boardley]

907 Q 1666 [Mr Head]

908 The Lotteries Council, Ev 547, para 7(b)

163

Customer Lotteries

635. We have heard some concerns about the introduction of the new category of legal lottery – the customer lottery which will neither be registered nor licensed. This will allow an occupier of any business premises to promote a lottery for the benefit of its customers.909 Susanna FitzGerald QC has expressed concerns about their potential scope:

“Sainsbury’s, Tesco’s, Boots, W H Smith, you think of a high street national chain, would be able to do this nationally, across the country. The potential for people to enter these things is huge - you are talking about millions of people every week going into a customer lottery. Has this been thought out? Has it been worked out what the ramifications are?”910

636. Many such outlets are major sellers of National Lottery and/or society lottery tickets and customer lotteries could compete with these sales. To illustrate the eagerness of commercial operators to use customer lotteries, Sky have queried in written evidence whether it could use such a lottery to enable BSkyB to operate a weekly lottery for Sky Digital customers.911

637. We note that there are conditions relating to tickets912 and the price of tickets for such lotteries – no ticket may result in the winner receiving a prize worth more than £50, rollovers are prohibited and only one draw is allowed in any seven day period.913

638. We believe that some of the examples used to illustrate the potential for the abuse of “customer lotteries” may be exaggerated. However, while we agree that small raffles by local businesses should be regularised, we recommend that DCMS re-consider the existing wording in Part 3 of Schedule 8 to remove any possible scope for abuse.

14 Economic impact

639. The proposals in the draft Bill will have a significant impact on the gambling industry and the wider leisure economy, creating new business opportunities whilst also posing threats to existing sectors of the industry. Leisure Link note that “legislative reform […] will enable gambling to join the mainstream of leisure activities and make a proper economic contribution to society”.914 London First Centre observed that while the Government has “clearly outlined and addressed the social policy rationale in the draft legislation [it] has been less clear in expressing its overriding economic rationale”.915

640. The Government has produced a Regulatory Impact Assessment which it published alongside the draft Bill. This “assesses the impact of the measures to be included in the Gambling Bill” and “identifies the costs and benefits associated with the Government’s


910 Q 1611

911 BSkyB, Ev 257, Appendix, para 7.1

912 There are restrictions on who may buy and sell tickets, and where. They may only be advertised on the premises.


914 Ev 600

915 Ev 687, para 3

164

preferred option of “implementing the recommendations set out in A Safe Bet for Success and additional government proposals”.916 It notes that “additional regulatory costs for this option will be in the region of £12 million - £16 million per year, set against a projected annual average increase in net expenditure on gambling of at least £500m over the period 2004/05 to 2008/09”.917 The Government will be one of the main beneficiaries of the proposals, with Pion Economics suggesting that the proposals could generate an additional £3bn in tax revenue. The Committee has received from the Mothers Union that “the social good should not be compromised for the economic benefits to be gained from the liberalisation of gambling”.918

Economic research

641. The Committee received evidence criticising the Government for the lack of independent economic research into the effect of its proposals. Operators of Adult Gaming Centres argued that “the Government should, before proceeding further, undertake its own independent study of the wider economic and social impacts of the proposals”.919 This view was shared by Mr Batstone of the British Amusement Catering Trades Association (BACTA) who, when asked why BACTA had felt it necessary to commission their own research in this area, told the Committee: “we felt that there was a dearth of really independent and thorough study on the totality of the impact of this Bill and we felt it was important, certainly for our members, for that to come out into the open”.920

642. The Committee has received several economic impact studies including the Pion Report, commissioned by the Cross-Industry Group on gaming deregulation,921 Ernst & Young’s, “A Winning Hand” report for Business in Sport and Leisure922 and the Henley Centre study commissioned by the British Amusement Catering Trades Association.923 These studies estimate the impact that the Government’s proposals could have on the gambling industry and the wider economy. While the figures vary all predict that the gambling industry will increase significantly as a result of the Government’s proposals, with ensuing benefits to the Exchequer. The Pion Report for the Cross-Industry Group on gaming deregulation estimates that “the new Gambling act will increase net output by up to £8bn pa, create more than 100,000 new jobs and generate an additional £3bn pa in tax revenue for the Exchequer”.924 In its Regulatory Impact Assessment, DCMS estimates that modernisation will lead to an increase of spending on gambling of £567m,925 while the

916 DCMS, Draft Gambling Bill: Regulatory Impact Assessment, Cm. 6014 – III, November 2003


918 Ev 729

919 Ev 350, para 9


921 Gambling Deregulation Impact Study – Pion Economics, commissioned by the Cross-Industry Group on gambling deregulation, October 2003

922 A Winning Hand – The Modernisation of UK Gambling – Ernst & Young, commissioned by Business in Sport and Leisure


924 Ev 598, para 1.5


165

Henley Centre study estimates that the proposals in the draft Bill will only lead to an increase of 2,000 jobs.926

643. Job creation and growth of the gambling industry are reported to be amongst the key benefits of the new legislation. While the economic studies submitted to the Committee all conclude (to varying degrees) that this will be an outcome of the legislation, this conclusion is however based on the assumptions used in the various studies; assumptions which may not be borne out over time. In work commissioned by the Committee, Professor Vaughan Williams observes, that “the validity of the economic impact studies depends […] critically on the assumptions made and the modelling used”.927

Economic regeneration

644. As discussed in the chapter on Casinos, regeneration of deprived areas and seaside towns has been put forward as a key potential benefit arising from the development of large casinos. In the policy document accompanying the draft Bill, the Government notes that it is “important that new casino developments […] are not only profitable for operators but also bring tangible benefits for the areas in which they are to be located”.928 Large gambling developments could impact considerably on the economies of areas in which they locate. The Committee has received mixed evidence on this subject which is discussed in greater detail in paragraphs 388 to 401.

Displacement

645. When considering the economic impact of the proposals in the draft Bill, the Committee has examined the displacement that may occur from other industries. The Pion Report produced for the Cross-Industry Group on gaming deregulation assumes that displacement will come from other forms of gambling, other leisure activities and non-leisure activities.929

646. Mr Twomey of Pion Economics described displacement as a positive thing: “a key driver into the way in which economies develop and in which products emerge and produce efficiencies, and consumers benefit”.930 The Henley Centre study notes that displacement can have a negative effect on those businesses that lose out, “it is likely that local businesses would suffer from increased competition for customers and increased competition on prices. Depending on the local situation, this could, in some cases, potentially undermine the business’ financial viability”.931 In his work for the Committee, Professor Vaughan Williams quotes a study by Anders, Siegel and Yacob (1998), who find that “four major sectors appear to experience significant revenue displacement from increases in gaming spend, notably retail, restaurants and bars and hotels and motels and

926 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA,

February 2004

927 Ev 739


929 Ev 118

930 Q 332 [Mr Twomey]

931 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004, para 2.4

166

amusements”.932 This conclusion is reiterated in the Henley Centre study which notes that “certain sectors of the leisure industry, for example pubs, restaurants and hotels, will be put under great pressure in their competing leisure offerings with casinos”.933

Cannibalisation

647. While regeneration has been hailed as a major potential benefit of the new legislation, as discussed above, the establishment of large scale gambling developments carries risks for local businesses. The Henley Centre study notes that “it is inevitable that local operators will suffer as a result of increased competition through the arrival of new casino developments”.934 The potential for cannibalisation of local businesses is noted by the Reverend Derrick Hill:

“Experience elsewhere is that new gambling opportunities […] offer accommodation, leisure and gambling facilities within a single complex so that their visitors spend entirely within the complex and have no great need to visit the rest of the town […] the proceeds of gambling will enrich large multi-national companies rather than local enterprises”.935

648. The British Amusement Catering Trades Association (BACTA) have a similar view.

“Large casinos offering food, drink, entertainment and several forms of gambling under one roof […] could herald the demise of city centre businesses including adult gaming centres, clubs, pubs, restaurants and bingo halls, in exactly the same way that large out of town supermarkets have damaged the vibrancy of town centres for retailing”.936

Winners and losers

649. The impact of the draft Bill will vary between different sectors of the gambling industry. Casinos are widely perceived to be the main beneficiaries of the legislation. The study by the Henley Centre predicts that “by 2010 the number of casinos is expected to grow from the 2002 figure of 122 to 241, with gambling revenues more than quadrupling (from £0.7bn to £2.9bn)”.

650. Bingo is expected to be negatively affected by the proposals in the draft Bill. The Pion Report for the Cross Industry Group on gaming deregulation notes that, “increasing casino gambling may have some substitution effects on bingo activity”.937 In their evidence to the Committee, Castle Leisure explain that “displacement and cannibalisation of spend from

932 Ev 739



935 Ev 591

936 Ev 342

937 Gambling Deregulation Impact Study – Pion Economics, commissioned by the Cross-Industry Group on gambling deregulation, October 2003

167

bingo to casinos will have a [large] scale adverse impact on the bingo market and lead to substantive decline”.938

651. Pubs and the existing gaming machine industry are also likely to be negatively impacted by the Government’s proposals.939 The Henley Centre estimate a 10% fall in machine revenue generated by pubs, due to the proposals in the draft Bill.940

Overall net benefit

652. The Committee appreciates the difficulties involved in estimating the economic impact of the proposals in the draft Bill. While the economic impact studies presented to us suggest varying increases in employment and growth in the gambling sector, we feel that such estimates may be over optimistic. Once account has been taken of the potential for substitution between sectors of the gambling industry, the wider displacement effects for the rest of the leisure industry, the potential cannibalisation of local businesses and the costs associated with addressing problem gambling, we conclude that the overall net benefit could be smaller than has been estimated.

Taxation

653. When giving evidence, Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, DCMS, told the Committee that he saw gambling reform, “as having three aspects: one is regulation, […] the second is the tax regime; and the third is the location regime. You will not fully understand the gambling reform unless you have all those three legs of the stool in place”.941 Whilst the Government admits the importance of the tax regime to the impact of their proposals, the draft Bill does not contain any proposals relating to tax. London First Centre note that “the ‘make or break’ issue of tax policy, which will determine the viability of any business model, still remains a mystery”.942 This has made it difficult for the industry to comment on some of the impacts that the draft Bill may have. For example the British Casino Association note that, “nobody can assess the future viability of a casino until the future tax and duty regime has been resolved”.943

Changes to the taxation regime

654. The Economic Secretary to the Treasury, John Healey MP, told the Committee that the tax regime for gambling could not be finalised until the modernisation of gambling legislation has taken place: “in terms of sequencing, the conclusion I would suggest is we can do the tax work and we can conclude our tax work only after elements of the regulatory regime have been properly settled”.944

938 Ev 609

939 Ev 600 see also supplementary memorandum by BACTA, Ev 342

940 Economic and Social Impact Study of the Proposed Gambling Bill, A Henley Centre Study commissioned by BACTA, February 2004, section 2.3.3


942 Ev 687

943 Ev 139, para 3

944 Q 378 [John Healey MP]

168

655. The proposals in the draft Bill, particularly relating to casinos, will lead to a significant change to the gambling industry. There are currently “six different duty regimes covering general betting, pool betting, bingo, casino gaming, machines and the Lottery”.945 Under the Government’s proposals, casinos will be able to offer a wide range of gambling products within the same premises, most of which will be subject to different tax regimes. Written evidence from the Treasury concedes that “the proposed programme of deregulation raises a number of challenges and issues on tax”.946 Barcrest note that “it is difficult to see how the existing taxation regime will fit with these proposals, as the profile of the casino sector will be dramatically altered”.947 This view was echoed by Business In Sport and Leisure, in their oral evidence to the Committee. Brigid Simmonds told us, “it would certainly be ridiculous to have four or five different types of taxation in a resort casino. I do not think it would work”.948 Mr Kelly, Chief Executive of Gala told the Committee, “my view, and the view of the Cross-Industry Group is quite clear that there should be a gross profit tax regime (that is the most appropriate regime), that it should be a non-VAT regime - as the licensed betting offices and pools operators are - and that it should be levied at around 15 per cent”.949

Inward investment

656. The future tax regime, along with the regulatory environment, will be a critical factor in determining the level of inward investment that occurs as a result of the modernisation of gambling legislation. Brigid Simmonds of Business In Sport and Leisure told the Committee “investment will be dependent on taxation”.950 The economic impact study carried out by Pion Economics for the Cross-Industry Group on gaming deregulation estimated that the level of inward investment could be as much as £5bn.951 Several foreign investors have expressed an interest in developing gambling businesses in the UK. Mr Byrne of Sun International told the Committee, “we have been planning to invest upwards of £500 million if the regulatory conditions are absolutely right and taxation and so on”.952 The London First Centre “urges for the setting of a sensible tax policy with a rate attractive to inward investors”.953 Mr Kelly of Gala stressed the importance of a having a suitable taxation regime when he told the Committee: “Were the taxation regime deemed to be "draconian", then that might well have a negative effect - in fact, I think it is almost inevitable it would have a negative effect - on […] inward investment […] and on the investment decisions that overseas operators are currently making”.954 The Association of British Bookmakers noted that this was particularly important for remote gambling. “It is

945 Ev 127, para 1

946 Ev 127

947 Ev 641, para 3.7





952 Q 510 [Mr Byrne]

953 Ev 687


169

essential that a competitive low-rate taxation regime for remote gambling is put in place if operators are to be persuaded to establish (or indeed retain) businesses in the UK”.955

657. The Committee accepts that it is difficult to finalise the tax regime until the legislation is complete but encourages close co-operation between the Treasury and the DCMS on this matter.

955 Ev 222

170

Conclusions and recommendations

1. We recommend that, in future, the Government should ensure that the full text of draft Bills is available to pre-legislative scrutiny committees in good time before they are asked to report. We further recommend that the clauses of this draft Bill yet to be published are, at the very least, referred to an appropriate Select Committee for consideration, and that the proposals relating to other parts of the United Kingdom are considered either by the appropriate devolved parliamentary body or territorial affairs Committee in the House of Commons, depending on whether they cover devolved or reserved matters. (Paragraph 20)

2. We believe that there are a number of key questions yet to be answered by the Government concerning the draft Bill. The most important of these, we would suggest, is the threshold at which casino developments are considered by Regional Planning Bodies and are obliged to contribute to regeneration. We gather that a decision on this matter is due to be made by the Department for Culture, Media and Sport (DCMS) and the Office of the Deputy Prime Minister (ODPM) before the summer of 2004. In this context there is a strong case for putting motions before both Houses to renominate this Committee in order for us to make a further Report on those matters. We urge the Government to consider tabling motions to reappoint this Committee so that we can finish the task we have started. (Paragraph 21)

3. As a Committee, we are content that the objectives in Clause 1 of the draft Bill are balanced and appropriate, and recommend that they be included unamended in the final version of the Bill. (Paragraph 34)

4. The fact that we have not been able to scrutinise in draft the various codes of practice and other guidance to be issued by the Gambling Commission, in particular under Clauses 15 to 17 of the draft Bill, is regrettable. We understand the reasons why they have not been produced, given the lack of a formally appointed shadow Commission, which we consider later in this Report. However, their absence hampered our consideration of the draft Bill. (Paragraph 42)

5. We agree with the Lords Delegated Powers and Regulatory Reform Committee’s comments about the delegated powers relating to certain key policy areas in the draft Bill, and recommend that the Department for Culture, Media and Sport (DCMS) should accept the Lords Committee’s points. (Paragraph 46)

6. It is clear that the Secretary of State would be granted significant delegated powers by the Bill. Parliament must retain control over key policy issues. We suggest that there should be a presumption that statutory instruments concerning key policy areas should be subject to affirmative, rather than negative, resolution procedure. (Paragraph 47)

7. We welcome the acceptance by the Department for Culture, Media and Sport (DCMS) in the Schedule of Detailed Comments on the draft Bill (Annex 1), that there are areas in which the draft Bill should contain additional delegated powers. (Paragraph 49)

171

8. We are very disappointed that not enough has been done to ensure that the Gaming Board has the resources and authority to conduct its diverse and complex transitional responsibilities. We recommend that the Department for Culture, Media and Sport (DCMS) and HM Treasury address this together as a matter of urgency. If necessary, a paving Bill should be presented to Parliament to establish the necessary authority for this expenditure. In the meantime, DCMS must do all it can to ensure that additional funding requested by the Gaming Board for 2004-05 is made available and can be used to full effect. (Paragraph 64)

9. It is essential that the Gambling Commission has sufficient resources, once established, to carry out its diverse and substantial responsibilities. These include various new and complex areas, such as social responsibility and remote gambling. Once the issue of transitional funding has been resolved, we would expect DCMS and the Gaming Board to maintain an ongoing dialogue about whether the present figure of between £9 million and £11 million needs to be reviewed in the light of experience, and of the assumption of any new responsibilities that are suggested in this Report which the Government accepts. We note that a recent press report referred to a significantly higher estimate, of £14 million. On the basis of the estimates we have seen, even the higher figure would be likely to be a small fraction of the additional revenues that will be generated both for the industry and the Government. (Paragraph 69)

10. The sanctions given to the Gambling Commission in Clauses 95 to 97 of the draft Bill and the direct access to be given to the Crown Prosecution Service, represent a substantial increase in the regulator’s capacity to enforce compliance. We are satisfied that these additional enforcement powers are sufficient. We also consider the additional powers in Part 14 of the draft Bill, together with the establishment of formal gateways, to be adequate for the Commission to inspect gambling operators and premises. However, we emphasise that the Commission’s success can only be guaranteed if adequate resources are made available to it. (Paragraph 85)

11. The Committee believes that there is a strong case for a single regulator for the whole of the gambling industry, which we expand on in the next chapter of this Report. We note the arguments made by the Gaming Board and others as to why the Gambling Commission should assume responsibility for certain aspects of spread betting. However, given the potential difficulties of disentangling sporting spread betting from spread betting on other products, as noted by the Budd review, we recommend that this should be monitored and made subject to review after five years or so, rather than at the time of Royal Assent. We note that this flexibility could be achieved by including a power for the Secretary of State to include spread betting in the definition of “betting” in Clause 7 of the draft Bill. In the meantime, liaison between the Gambling Commission and the Financial Services Authority in this area will be crucial. (Paragraph 97)

12. We look forward to the Commons Culture, Media and Sport Committee’s Report on this issue of the proposed changes to the licensing of the National Lottery, which is to be published as we conclude consideration of this Report. Having heard the arguments from various sources on the Government’s proposals, we are not

172

convinced of their practicality, and believe that the Department for Culture, Media and Sport (DCMS) should reconsider its future policy in this area. (Paragraph 112)

13. The Committee is attracted to the idea of a single regulator, and takes the view that there would be distinct advantages for the National Lottery if it were to be included within the remit of the Gambling Commission rather than excluded from it as proposed in Clause 222 of the draft Bill. We are not convinced that the proposed structure will ensure consistency of approach across the gambling sector, particularly on key issues such as problem gambling and player protection. (Paragraph 126)

14. Despite the apparent deficiencies of the National Lottery Commission, given the comments we have already made about the volume of the Gambling Commission’s transitional responsibilities, we do not think that it would be feasible to transfer the regulation of the National Lottery to the Gambling Commission before the next licence competition for the Lottery, in 2007. (Paragraph 128)

15. We accept that the National Lottery Commission will continue to regulate the National Lottery after the Gambling Commission comes into existence. As soon as possible after the next licensing round is complete, this arrangement should be monitored with reference to the possibility of placing the Lottery under the Gambling Commission, and to the outcome of the value for money study referred to below. (Paragraph 129)

16. Michael Grade of Camelot suggested that one way of encouraging [the National Lottery Commission and the Gambling Commission] to work together would be to have the “Chairman of the NLC sitting ex officio on the new Gambling Commission just to be present and to argue the case where there is conflict between [the …] Lottery and the other gaming products”. We so recommend. (Paragraph 130)

17. In the light of the fact that there will be two regulatory structures, we recommend that there should be a detailed value for money study of the National Lottery Commission two years after the Bill receives Royal Assent. (Paragraph 131)

18. We believe that limited duration operating licences, imposed by Clause 89(2) of the draft Bill, could deter investment in gambling developments in the UK and would unnecessarily add to the Gambling Commission’s and the industry’s regulatory burden. We therefore recommend that, in line with the default position for premises licences, operating licences should have an indefinite duration. (Paragraph 139)

19. If the Government is not minded to amend Clause 89(2) of the draft Bill to remove the limited duration of operating licences, we recommend that the time limit for renewal applications set out in Clause 93(3) should be more flexible, reflecting the type of operation to which the licence relates. (Paragraph 141)

20. Given the fundamental way in which conditions, attached to operating licences under Part 5 of the draft Bill, could impact on all aspects of an operator’s business, we recommend that guidance is issued, as soon as possible, as to the standard conditions that are likely to be applied to categories of licence. (Paragraph 144)

173

21. We agree with the Government’s view that the costs of regulation should be borne by those that are regulated, broadly in proportion to the amount of regulation that each operator requires. We recommend that this should be achieved in the regulations prescribing the fees payable under Clauses 57 and 80 of the draft Bill. (Paragraph 146)

22. The agreement of an equitable fee structure will be a major and challenging task. We recommend that, as soon as possible and before the second reading of the Bill, the Government should publish drafts of the regulations to be made under Clauses 57(5) and 80(2) of the draft Bill, that will prescribe the fee levels. These should be subject to consultation with the industry and the Gaming Board. (Paragraph 148)

23. As with many other aspects of the draft Bill, a lack of available detail has restricted our ability to assess whether the personal licence regime will strike the right balance between regulating key staff and avoiding unnecessary regulatory burdens. Given the potential impact of this regime on the industry and employees, we recommend that draft guidance is produced as soon as possible, for consultation with the industry. (Paragraph 154)

24. We recommend that draft regulations to be made under Clause 104(2) of the draft Bill, defining “small-scale operators”, be produced as soon as possible for consultation with the industry. (Paragraph 157)

25. The Gambling Commission’s proposed powers to sanction non-compliance with licence conditions under Clauses 95 to 97 of the draft Bill are irrelevant if the Commission is not given adequate resources to enable it to monitor compliance and to identify breaches. Accordingly, we recommend that adequate resources must be made available to it for this purpose. (Paragraph 160)

26. Although we acknowledge the concerns about the ability of the Gambling Commission to impose unlimited fines under Clause 97 of the draft Bill, we recommend that this power should be retained and note that the Financial Services Authority has been given a comparable power. Such a sanction would only be a concern to those who have breached their licences and, for some, would be a preferable alternative to the ultimate sanction of revoking a licence under Clause 96. Society lotteries and those who promote them should be required to abide by regulatory requirements and the ability to sanction non-compliance by imposing a fine, however sparingly applied, should be retained. (Paragraph 162)

27. While we have received some evidence suggesting that appeals from the Gambling Appeals Tribunal should be in respect of both law and facts, we agree with the Government’s assessment that the appeals provisions in Part 7 of the draft Bill, which already exceed those suggested by Budd, are adequate. (Paragraph 163)

28. We concur with Budd’s recommendation that ultimately premises licensing should be a matter for local authorities. We consider that the principle underlying such an approach has a number of advantages, including consistency with the regime under the Licensing Act 2003. However, local authorities must be fully prepared before

174

assuming this additional responsibility, which could have significant resource implications. (Paragraph 168)

29. Balancing the industry’s need for certainty and consistency of approach with the requirement that local authorities are able to take account of local circumstances is one of the most challenging aspects of the draft Bill. Our ability to assess whether the proposed regime would achieve this balance has been restricted in part because we have not seen drafts of key information such as the guidance the Gambling Commission would issue to local authorities under Clause 17. We recommend that drafts of this guidance are issued as soon as possible for consultation. (Paragraph 175)

30. We recommend that the draft Bill is amended to clarify that any change to a local authority’s three-year licensing policy to be issued under Clause 126 would not prejudice the status of existing premises licences. We also recommend that the duration of operating and premises licences in respect of the same activity should be consistent. (Paragraph 179)

31. The assumption of the proposed premises licensing function by local authorities will require a great deal of preparation with potentially significant resource implications. Accordingly, we support the recommendation of the Commons Culture, Media and Sport Committee that local authority staff should be trained before the premises licensing function is transferred to them and that the Government should meet the cost of such training. It is also imperative that residual powers are in place to ensure that sufficient funding is available to meet the ongoing costs of local authorities if, for any reason, this is not adequately met by the licence fees payable by operators under Clause 148 of the draft Bill. (Paragraph 182)

32. We recommend that the Department for Culture, Media and Sport (DCMS) and the Office of the Deputy Prime Minister (ODPM) work together to clarify the interaction of planning permission and premises licensing for gambling premises. Although local people should retain adequate opportunities to have their concerns about proposed gambling developments heard, double jeopardy for the operator should be kept to a minimum. (Paragraph 185)

33. We recognise the industry’s concern that the ability of local authorities to reject planning applications on the basis of need threatens the policy aim of removing the “demand test”. However, we consider it appropriate that local authorities should retain the power to prevent the proliferation of gambling premises and, in particular, unlimited stake and prize gaming machines within their areas. We recommend that the model applied to address saturation of on-licensed premises, in the context of the Licensing Act 2003, should be adopted and that, where relevant, local authorities should be able to address proliferation in the three-year licensing policies they issue under Clause 126 of the draft Bill. We further recommend that the Gambling Commission’s guidance to local authorities under Clause 17 should regulate the means by which local authorities are able to address proliferation in order to ensure consistency and transparency of approach. (Paragraph 189)

175

34. We welcome the Government’s clarification, in the Schedule of Detailed Comments on the draft Bill (Annex 1), that operators may apply for a full premises licence under Clause 132 at any time, provided that they have a right to occupy the premises to which the application relates. As in the Licensing Act 2003, where an applicant does not have the right to occupy the premises, they could obtain a provisional statement under Clauses 168 and 169 of the draft Bill. We consider that the combination of these provisions would provide adequate certainty for operators. However, we recommend that further consideration should be given to the “change in circumstances”, referred to in Clause 169(2)(b), that would justify a local authority having regard to representations made when a full premises licence is sought that were not made in the context of the provisional statement application. (Paragraph 191)

35. We agree that licensing decisions by local authorities must be subject to review by the courts, as is proposed in Clauses 170 to 173 of the draft Bill. However, we are concerned about the likely number of such appeals and the impact that this could have on both local authorities and operators. As discussed above, we recommend that the risk of double jeopardy with respect to appeals should be removed and that it should not be possible to use the same grounds of appeal against both the licensing and planning decisions of local authorities. (Paragraph 194)

36. We welcome the recent guidance on the proposed arrangements for the transition to the new licensing regime. However, we do not think that this staggered implementation should be used to justify delays in any preparations that the Gaming Board and local authorities could make before the Gambling Bill receives Royal Assent. In particular, as discussed in Chapter 12 of this Report, we recommend that remote gambling licences should be issued as soon as possible after the Bill is enacted. (Paragraph 200)

37. We are particularly concerned about the challenges that local authorities would face in the assumption of their proposed licensing function. We recommend that the transitional arrangements should take account of the additional burdens recently placed on local authorities under the Licensing Act 2003. We further recommend that the Government should consult on and then publish a timetable for the transition to the premises licensing regime proposed in the draft Bill. (Paragraph 203)

38. The new premises licensing regime should be introduced at the earliest opportunity. As we discuss in Chapter 8 of this Report, this is necessary to prevent authorisations for new casinos continuing to be granted without regard to either the licensing objectives set out in Clause 1 of the draft Bill or the possible objective of regeneration. If the full preparation of local authorities for this task would delay the introduction of this regime, we recommend that, as a transitional measure, the Government should consider enabling magistrates to grant premises licences under the Gambling Act, subject to Gambling Commission guidance. (Paragraph 204)

39. We recommend that, prior to the implementation of the Bill, the Government should commission and publish the results of a baseline prevalence study against which the impact of the Bill can be measured. We recommend that this should cover

176

all existing forms of gambling including those which have become more widespread since 1999, namely spread betting, betting exchanges, remote gaming and FOBTs. We believe that such a comprehensive study is necessary in order to provide data on gambling that will be needed to inform future regulatory decisions. (Paragraph 215)

40. We would expect the draft Bill to lead to an increase in the prevalence of problem gambling, even if only as a result of an increase in the numbers of those who gamble. We do, however, expect that a number of the recommendations in this Report would, if implemented, contribute to a reduction in the scale of any increase which might otherwise occur. (Paragraph 220)

41. We recommend that the Government should fund prevalence studies at five-yearly intervals. These measures would enable the impact of the Bill to be accurately measured and also enable the Government and the Gambling Commission “to take the toughest possible action if there is any evidence that modernisation has given rise to an increase in problem gambling”. We further recommend that, in order to monitor the impact of change closely and adjust regulations according to the findings, the Gambling Commission should undertake appropriate studies and publish a report within three years of enactment of the Bill. (Paragraph 221)

42. We welcome the provisions of the draft Bill, such as the licensing objectives in Clause 1, that address problem gambling and recommend that the Gambling Commission is given adequate resources and time to enable it to carry out its many important responsibilities in this area. We also recommend that the Commission should use the existing codes of practice voluntarily adopted by the industry as a starting point for those it is to issue under Clause 16 of the draft Bill and that it should start consultation on the new codes of social responsibility as soon as possible. (Paragraph 227)

43. We consider an effective, independent and adequately-funded Trust that provides support for treatment, education and research to be a crucial counterbalance to the deregulatory aspects of the draft Bill. We greatly welcome the steps that have been taken to date to establish the Responsibility in Gambling Trust and consider that it might provide a valuable model for other jurisdictions. (Paragraph 230)

44. The Committee recommends that, in the run up to enactment of the Gambling Bill, the Responsibility in Gambling Trust provides funding for the provision of treatment for problem gamblers and their families; education programmes to promote responsible gambling and highlight dangers of excessive gambling; public awareness campaigns to inform everyone as to the help available; and research into aspects of gambling and of problem gambling. (Paragraph 233)

45. While industry representation [on the Responsibility in Gambling Trust] is of clear benefit in the context of fundraising, it is important that sectional interests and bias do not impact on the way those resources are allocated. (Paragraph 238)

46. We recommend that the Responsibility in Gambling Trust continue with its proposals to achieve a majority of independent Trustees. We further recommend that “industry trustees” should not be appointed to act as representatives of trade

177

associations, but that they should be appointed and should act on the basis of their experience of problem gambling from an industry perspective. In particular, we recommend that the distribution of resources by the Trust should be assessed by the Gambling Commission and should be included in their three-yearly monitoring report to the Government (which we recommend in paragraph 221). (Paragraph 239)

47. We recommend that industry contributions made directly to service providers should also be taken into consideration as a demonstration of operators’ social responsibility. (Paragraph 241)

48. We recommend that before the Bill receives Royal Assent, the Responsibility in Gambling Trust should commission an independent assessment as to the cost of: (i) providing the services required to run a nationwide education campaign; (ii) raising public awareness of the help that is already on offer; (iii) providing efficient counselling and other treatment, for both problem gamblers and their dependants; and (iv) determining and conducting the research needed to inform decision-making. We recommend that the industry should contribute the funds that are determined to be necessary to meet those costs and consider that, given the industry’s current value and likely growth as a result of the proposals in the draft Bill, this would not be an unreasonable burden. (Paragraph 245)

49. In principle, and subject to any legal restrictions preventing this, every commercial operator should contribute something to help address problem gambling. (Paragraph 248)

50. The contributions that the industry might be required to make in order to address problem gambling adequately, are likely to represent a tiny fraction of the industry’s profits. We, therefore, recommend that, as far as legally possible, all sectors of the industry should contribute to the Responsibility in Gambling Trust. We note that, by making such contributions voluntarily, businesses will not only illustrate that they are socially responsible but will also avoid the imposition of the statutory levy. (Paragraph 249)

51. We recommend that the ability to impose a statutory levy under Clause 98 of the draft Bill should be retained. We acknowledge Lord McIntosh’s comment that “I do not see how you can make contributions to a voluntary trust a condition of licensing”. However, we do not believe that this would prevent the Gambling Commission taking account of an operator’s financial contributions, whether to the Responsibility in Gambling Trust or direct to a service provider, when considering, under Clause 58 of the draft Bill, whether they are suitable to carry on a licensed activity. We consider that such an approach would encourage operators to make voluntary contributions, but we would not expect non-payment to be a reason, in itself, for the Gambling Commission to refuse to issue or renew a licence. (Paragraph 253)

52. The Responsibility in Gambling Trust should not absolve the Government of its responsibilities with respect to problem gambling. We recommend that the Government should accord greater priority and resources to problem gambling and

178

that problem gambling should be recognised as a public health issue. (Paragraph 257)

53. Earlier in this Chapter (paragraphs 221 and 239), we recommended that, three years after the Bill has received Royal Assent, the Gambling Commission should publish a report into the impact of the Gambling Act on problem gambling and the effectiveness of the distribution of resources by the Responsibility in Gambling Trust. We recommend that following this, the Secretary of State for Culture, Media and Sport should report to both Houses of Parliament on: (a) the success of the Trust in meeting its objectives and in particular the distribution of funds; (b) the steps the Gambling Commission has taken to address problem gambling; and (c) the work the Government, and particularly the Department of Health, have done to address problem gambling. (Paragraph 258)

54. We also recommend in paragraph 221 that prevalence studies should be conducted at five yearly intervals. We recommend that, after the results of the first post-enactment prevalence study are available, the Secretary of State for Culture, Media and Sport should update both Houses of Parliament on the impact of the Gambling Act on problem gambling prevalence. (Paragraph 259)

55. We recommend that the minimum age to buy and sell pools coupons and lottery tickets, including for the National Lottery, should remain at 16, as is currently proposed in Clauses 36(2) and 42 of the draft Bill, given the lack of evidence that this causes harm. We recommend that the Government commission further research to ascertain whether 16 and 17 year olds are harmed by this experience and that the age-limit should be re-assessed in the light of that research. (Paragraph 264)

56. We welcome the Government’s clarification that young persons will be able to be employed in areas of casino complexes in which gaming does not take place. We consider that Clauses 41 to 45 of the draft Bill should not prevent young persons being employed in gambling premises, provided that the employment does not relate to the gambling provided in those premises. As discussed above, we consider it to be appropriate that Clause 42 permits over-16s to be employed to sell lottery tickets and pools coupons. (Paragraph 266)

57. We agree with the conclusions of Budd and the Commons Culture, Media and Sport Committee that there is an absence of sufficient evidence to show that the playing of Category D machines by under-18s causes problem gambling. We recommend that the Government commission research to ascertain whether there is any causal link between the playing of Category D machines by under-18s and problem gambling. The decision to permit the playing of Category D machines by under-18s should be reviewed in the light of that research. We do not, however, agree with their recommendations that a formal review should take place after a specific period of time. Such a measure would unfairly penalise the industry by creating unacceptable uncertainty and deterring investment. (Paragraph 276)

58. Given the existing lack of clear evidence as to whether machine gaming by under-18s causes problem gambling, we recommend that children should continue to be permitted to play Category D machines in adequately supervised family

179

entertainment centres as is currently envisaged in Clauses 36(2)(e) and 37(5) of the draft Bill. We also recommend that family entertainment centres should be subject to strict codes of social responsibility to be issued by the Commission under Clause 16, like those voluntarily adopted by British Amusement Catering Trades Association (BACTA) members including, as discussed below, strict enforcement of segregated areas in which adult gaming machines are sited. (Paragraph 278)

59. We agree with the Government’s position that under-18s should not be able to play Category A, B or C gaming machines and support the Clauses of the draft Bill designed to ensure this. We recommend that detailed codes of social responsibility relating to the enforcement of those rules should be issued by the Gambling Commission under Clause 16. Such codes should, however, take account of practicalities and of the effectiveness of measures in the context of different types of premises. (Paragraph 284)

60. We recommend that, in general, gaming machines should not be permitted in premises where gambling is ancillary to the main services provided. We do not, however, consider that this should apply to pubs, clubs and tenpin bowling centres, on the basis that these premises are licensed and gambling has become an accepted and important part of the facilities they offer. (Paragraph 289)

61. We are concerned about the difficulties in ensuring that illegal machines are not sited in premises like cafes and taxicab offices and that children are adequately supervised when using machines in these premises. Accordingly, we recommend that the draft Bill should be amended to prohibit Category D gaming machines from such locations. We consider that this should be a blanket prohibition rather than a prohibition that local authorities are able but not required to impose, as is currently proposed in paragraph 7(2)(a) of Schedule 7 of the draft Bill. As discussed above, we do not, however, consider that this prohibition should extend to motorway service stations, pubs or bowling alleys, subject to compliance with strict codes of social responsibility and the provision of appropriate physical supervision. (Paragraph 294)

62. We recommend that further detail on the proposed regulation of gambling advertisements, including additional clauses of the draft Bill, should be published as soon as possible for consultation with stakeholders. (Paragraph 299)

63. We recommend that the Clauses on the advertising of illegal gambling should be drafted so as to provide a flexible legislative framework that could take account of future European developments. (Paragraph 301)

64. We agree that gambling advertisements should not be directed at children and that operators should take care to identify and control their actual audience. However we recommend that Clause 36 of the draft Bill, and any guidance or codes made under Clause 16, should not penalise operators that have taken all reasonable steps to prevent children receiving gambling advertisements. (Paragraph 305)

65. As gambling does not cause problems for the majority of people who gamble we are not convinced that health warnings, like those used for tobacco products, would be appropriate. We also have doubts as to the effectiveness of some cautionary

180

statements included in advertisements such as those for financial products. Nevertheless, we recommend that gambling advertisements should include information about sources of help for problem gamblers and that the future regulator should consult relevant stakeholders before agreeing any detailed rules on advertising content, for example those to be specified in codes to be issued under Clause 16 of the draft Bill. (Paragraph 308)

66. We recommend that the draft Bill should not prejudice the continuation of the existing and seemingly effective self-regulatory model for gambling advertisements. This would have a number of benefits, including relieving the Gambling Commission of one of the many burdens that would be placed on it under the draft Bill. We do, however, recommend that the draft Bill should contain a reserve power that would enable the Commission to assume regulatory responsibility if it is determined that self-regulation is not a success in any particular area. (Paragraph 315)

67. We recommend that the Gambling Commission should be a backstop regulator for gambling advertisements. We consider that one simple way of helping to achieve this might be for compliance with advertising codes to be attached as a condition of operating licences pursuant to Clause 62 of the draft Bill. (Paragraph 317)

68. We recognise that determining which inducements to gamble should be allowed and which should be prohibited is difficult. Accordingly, we agree with the Government’s proposal not to impose a blanket ban on all inducements. We also agree with the current proposal to give the Gambling Commission the power to control the offer of inducements by operators, whether by way of stringent codes of practice issued under Clause 16 and/or licence conditions under the new Clause published on 12 March. We believe that the licensing objective to protect the vulnerable under Clause 1 would make it incumbent upon the Commission to use these powers to prevent inducements which amount to predatory marketing and which threaten the ability of consumers to control their gambling behaviour. (Paragraph 322)

69. We recommend that the Gambling Commission consider the risk associated with loyalty cards alongside other forms of inducement. If the Gambling Commission concludes that loyalty cards do not pose disproportionate risks, we recommend that the ability of such cards to collect information on those who gamble should be harnessed to help address problem gambling. Conditions might then be attached to licences under the Clause published on 12 March to this effect. Obtaining information about people with a gambling problem could also be an additional benefit of casinos retaining membership schemes, as we discuss below. (Paragraph 326)

70. We do not believe that the use of credit should be prohibited on the face of the Bill. We do, however, recommend that the Gambling Commission should be required to issue codes of practice under Clause 16 and to attach licence conditions under the Clause published on 12 March, regulating the offer and acceptance of credit by operators. We note that, in line with the licensing objective under Clause 1 “to protect the vulnerable”, such codes of practice should restrict the use of credit where necessary to protect problem gamblers. (Paragraph 334)

181

71. There is a considerable urgency to the issue [of grandfather rights for casinos] as plans for the development of a number of large scale casinos are well advanced. If permitted, such developments would seriously undermine the licensing objectives and whatever policy objectives on regeneration the Government decides to adopt. (Paragraph 340)

72. The Committee is not minded to support the Office of Fair Trading’s view [that the proposed minimum size for casinos is anti-competitive] and agrees with the Government that a 5,000 sq ft minimum size will aid the objective of preventing proliferation so as to avoid an unacceptable rise in problem gambling and thereby help to secure the statutory objective of protecting the vulnerable. (Paragraph 350)

73. We recommend that the Government should set out a definition of gaming machines which takes account of current and anticipated developments in the technology through which gaming products are delivered. (Paragraph 362)

74. We support the proposal for small casinos to be defined in the regulations made under Clause 10(5)(b) as having a minimum table gaming area of 5,000 sq ft and a maximum table gaming area of 10,000 sq ft. We agree that casinos of this size should be permitted a 3:1 gaming machine to table ratio, as currently proposed under Clause 142(4)(a) of the draft Bill. (Paragraph 365)

75. We are aware that retaining the 3:1 ratio will disappoint some sectors of the casino industry. The Committee therefore, supports a review of the 3:1 ratio by the Gambling Commission three years after Royal Assent, with a view to recommendations being made to the Government on whether the ratio set out in Clause 142(4)(a) should be adjusted. Such changes could be made pursuant to the delegated power contained in Clause 142(10) of the draft Bill and we agree that any such amendment should be subject to the affirmative procedure. (Paragraph 366)

76. Whilst we appreciate the significant contribution gaming machines can make to a casino’s profits, and their ability to contribute to planning gains for local communities, we believe that allowing certain casinos unlimited numbers of gaming machines as of right will result in a damaging proliferation of gaming machines and risk a significant increase in problem gambling. We therefore recommend that no casino should be permitted an unlimited number of gaming machines and that Clause 142(4)(c) should be amended accordingly. (Paragraph 374)

77. We recommend that large casinos should be defined in the regulations to be made under Clause 10(5)(a) as those with a minimum table gaming area of more than 10,000 sq ft and a minimum of 41 gaming tables. We consider that a higher gaming machine to table ratio than that for small casinos should be allowed and that the ratio should be set by the Government following consultation with the industry and further policy development. Any agreed ratio should be subject to review by the Gambling Commission after three years. (Paragraph 377)

78. As part of the definition of a large casino, we recommend that large casinos should be required to provide leisure and cultural facilities ancillary to gambling. (Paragraph 379)

182

79. We feel that a separate definition of resort casino is necessary to provide clarity and ensure that regeneration benefits can be achieved. The Office of the Deputy Prime Minister (ODPM) and the Department for Culture, Media and Sport (DCMS) have not yet decided where the line will be drawn to distinguish between large and resort casinos. The lack of a definitive policy in this area is regrettable and has made the Committee’s work much more difficult. (Paragraph 381)

80. The Government proposes that “Regional Planning Bodies will set out planning policies for leisure developments of regional significance, including casinos”. A definition of what is regionally significant has yet to be agreed by the Office of the Deputy Prime Minister (ODPM) and the Department for Culture, Media and Sport (DCMS); an announcement is expected “by the summer”. When this happens we recommend that this Committee should be reappointed to help the Government determine the correct gaming machine to gaming table ratio for large casinos and the appropriate threshold at which a casino is considered to be a resort casino. (Paragraph 384)

81. The Committee recommends that the draft Bill is amended by the inclusion in the regulations made under Clause 10(5) of an additional definition of a resort casino. Whilst we are not yet in a position to make a detailed recommendation on the definition of resort casinos, we nevertheless believe that the Gambling Commission should be given the discretion to allow resort casinos a greater ratio of gaming machines to gaming tables than that provided for large casinos. For the reasons outlined above regarding the issues of proliferation and risks associated with problem gambling the Committee believes that no casino should have an unlimited number of gaming machines. We recommend that the Government provides in regulations, for a statutory maximum number of machines for resort casinos, in the range of 1,000 or 1,250. We recommend that resort casinos must be subject to requirements to contribute regeneration benefits as discussed below. (Paragraph 385)

82. As recommended in paragraph 379, the Committee recognises the potential benefits that can be derived from large casinos for a local community. We therefore recommend that, in addition to requiring large casinos to provide leisure and cultural facilities, local authorities should also seek appropriate planning gains from all large casinos, as part of the planning process. (Paragraph 401)

83. The Committee has grave concerns that the lack of clarity, particularly the failure of the Department for Culture, Media and Sport (DCMS) and the Office of the Deputy Prime Minister (ODPM) to have decided where to draw the line between large and resort casinos, could have serious consequences. Regeneration cannot be achieved until the process for achieving planning gains and regenerative benefits has been resolved. This has become a matter of some urgency as casino licences are being granted without relevant planning gains having been negotiated. (Paragraph 412)

84. Resort casinos have the potential to have a significant impact on the economies of the regions in which they are located. The Committee recommends that plans for resort casino developments are considered in line with Regional Economic Strategies and the regional planning process to ensure that the economic impacts of any such

183

developments are properly considered. This will encourage the benefits ensuing from such a development to be maximised. (Paragraph 413)

85. Given the potential for regeneration from resort casinos we believe that planning for such developments should be the responsibility of Regional Planning Bodies. As recommended in paragraph 385, we reiterate our view that all resort casinos should provide regenerative benefits. They should be required to do so by Regional Planning Bodies. We so recommend. (Paragraph 414)

86. The Committee is concerned that the lack of clarity over grandfather rights could lead to the undesirable proliferation of casinos and to the loss of planning gains and regeneration benefits in some areas. Planning permission and casino licences granted prior to the Bill achieving Royal Assent could invalidate much of the Government’s policy in this area. It could also result in there being considerable inconsistency in the interpretation of grandfather rights in different areas. (Paragraph 424)

87. [Grandfather rights] is unfortunately another area where government policy has failed to take account of developments in the industry. The lack of clarity on grandfather rights could lead to a series of missed opportunities for certain areas and risks an inconsistent approach being taken across the country. The Committee considers this to be most regrettable. (Paragraph 426)

88. On balance, we agree with the general prohibition on the linking of gaming machines situated in different casino premises, contained in Clause 203 of the draft Bill. We consider the prohibition to be necessary at this stage to prevent the proliferation of high-value gaming machines which, as discussed elsewhere, we consider to pose a considerable threat to the prevalence of problem gambling. However, we recommend that Clause 203 should be amended to give the Secretary of State the power to remove this prohibition at a future date, subject to the affirmative procedure. The Committee recommends that the Gambling Commission and Ministers monitor the extent to which the ability to link machines within premises results in a proliferation of high value jackpot offers and what effect, if any, this has on competition between small and large casinos. (Paragraph 436)

89. Given the importance of the [meaning of “available for use”] the Department for Culture, Media and Sport (DCMS) need to agree a definition of “available for use” as soon as possible. The Committee encourages the Gambling Commission to monitor the availability of gaming tables and the levels of consumer demand. If tables are not being used on a regular basis then the corresponding number of gaming machines should be removed from play. We so recommend. (Paragraph 439)

90. We are concerned by the evidence we have received regarding the detrimental impact of passive smoking on casino employees. (Paragraph 444)

91. We believe that non-smoking policies in the gaming areas of casinos would be an effective means of helping to protect casino employees from the dangers of tobacco smoke. We accordingly recommend that the Gambling Commission should incorporate provision for a non-smoking policy in either licence conditions or the codes of practice to be issued under Clause 16 of the draft Bill. (Paragraph 446)

184

92. We agree with the decision to remove restrictions on alcohol on the gaming floor of casinos. However, in view of the fact that serious concerns have been expressed as to the relationship between gambling and alcohol the Committee considers it is an aspect that needs to be monitored by the Commission and included in its third year report. (Paragraph 451)

93. The Committee has reservations about the potential consequences of all casinos being able to offer bingo. We acknowledge that some of these concerns could be addressed under Clause 125(1) of the draft Bill, which would require existing bingo clubs intending to operate as casinos to obtain a new premises licence. As we discuss in paragraph 417, we consider that the guidance issued by the Gambling Commission to local authorities under Clause 17 should clarify that local authorities should be able to take account of potential problem gambling implications of such conversions and the accompanying risks of merging soft and hard forms of gambling when deciding whether or not to grant a casino premises licence. (Paragraph 458)

94. Under Clause 143 of the draft Bill casino premises would be entitled to offer bingo. We consider that bingo should be ancillary to the casino’s core and traditional gaming activities. We would not, therefore have concerns about large or resort casinos offering bingo. However, we consider that Clause 143 should be amended to enable local authorities to prevent small casinos offering bingo. We would expect this discretion to be exercised in accordance with strict guidance issued by the Gambling Commission pursuant to Clause 17, which should take account of the proximity of existing bingo clubs. (Paragraph 459)

95. The Committee recommends that pubs and clubs should have to apply to the Gambling Commission for an additional bingo licence if in any period of seven days stakes or prizes have totalled £2,000 or more. Clause 238 of the draft Bill should be amended accordingly. (Paragraph 462)

96. We accept that Category A machines pose particular risks and, as a new feature of gambling in the United Kingdom, must be introduced gradually. We therefore recommend that Category A machines should be limited to those permitted venues as listed in the draft Bill and should not be permitted in unlimited numbers. (Paragraph 467)

97. We recognise the validity of the distinction between the prize level for cash and non-monetary prizes and therefore propose retention of the current level of 30p stake and £8 maximum non-monetary prize value. (Paragraph 469)

98. In addition to the current requirements as to the display of information on gaming machines, the Committee recommends that the Regulations under Clause 199(2) should also require machines to display information regarding the chance players have of winning major prizes. (Paragraph 471)

99. We support the change to the Government’s initial policy, granting pubs grandfather rights for as many Category C or D gaming machines as are already authorised under those licences. (Paragraph 475)

185

100. We agree with the Government’s conclusion that clubs should continue to have the same gaming machine entitlement as at present. (Paragraph 477)

101. We welcome the Government’s acknowledgement that consideration must be given to the treatment of tenpin bowling centres under the draft Bill. We recommend that further thought must be given to the appropriate number and mix of machines in these premises, to the licensing requirements that should be applied to them under the draft Bill, and to the provision of possible grandfather rights for machines which currently exist. (Paragraph 479)

102. We recommend that the Gambling Commission should take account of world best-practice when formulating its policy on the regulatory standards to be applied to the testing of gaming machines. However, this best-practice has been designed in the context of casino slot machines and the Gambling Commission must take account of the differences between these machines and the types of machine that are currently available in the UK. If the Gambling Commission considers that the existing testing regime for Category B, C and D machines is adequate to satisfy the licensing objectives, we recommend that this should be maintained and that a uniform testing regime should not be imposed for the sake of consistency. (Paragraph 482)

103. As we recommend in paragraph 436, we agree that, at this stage, the limitations on the linking of gaming machines contained in Clause 203 of the draft Bill are appropriate. (Paragraph 484)

104. The Committee is concerned that categorising FOBTs as Category B machines would significantly increase their accessibility by placing them in adult gaming centres and bingo clubs and risk contributing to an increase in problem gambling. We therefore recommend that FOBTs are defined as a separate category of gaming machine in the regulations to be made under Clause 195(1) of the draft Bill. The draft Bill should be amended to ensure that FOBTs may only be located in casinos and licensed betting shops, with stakes and prizes as set out in the agreement between the Gaming Board and the Association of British Bookmakers to be enshrined in regulations. (Paragraph 491)

105. We recommend that [the evidence we have received] on the impact of FOBTs on problem gambling is considered as part of the Association of British Bookmaker’s research project. (Paragraph 493)

106. Under Clause 143 of the draft Bill casino premises would be entitled to offer both bingo and betting. We consider that such activities should be ancillary to the casino’s core and traditional gaming activities. We would not, therefore have concerns about large or resort casinos offering betting. However, we consider that Clause 143 should be amended to enable local authorities to prevent small casinos offering betting. We would expect this discretion to be exercised in accordance with strict guidance issued by the Gambling Commission pursuant to Clause 17, which should take account of the proximity of existing betting shops. (Paragraph 501)

107. We believe that the best way of achieving a balance is to ensure that those using betting exchanges to lay bets professionally are identified, regulated, made subject to

186

the appropriate levy arrangements, and have their status checked. There is an opportunity here in that the audit trail produced by betting exchanges is far superior to that produced by ordinary bookmakers, as acknowledged by the Chief Executive of the Association of British Bookmakers. We expand on this in the sections below. (Paragraph 511)

108. We recommend that the Gambling Commission takes steps to ensure that where existing bookmakers are using the exchanges, or causing others to operate on them on their behalf, that this is treated as part of their regulated activity. (Paragraph 536)

109. The Committee recommends that the Department for Culture, Media and Sport (DCMS) should consult the betting exchanges on whether a ceiling on the sum which may be laid “recreationally” would be appropriate. We are also attracted to the idea that all transactions above a certain level should automatically be reported to the Gambling Commission to assist the Commission’s monitoring of integrity. Such arrangements could be included either in regulations or codes of practice. (Paragraph 541)

110. We think it likely that the Inland Revenue may wish to impose regulatory requirements on the exchanges as part of any money laundering or taxation arrangements for non-recreational layers as is the case with banks and other financial institutions. (Paragraph 542)

111. We recommend that betting exchange operators should be made responsible, as part of the conditions attached to their operating licences under Clauses 62 to 65 of the draft Bill, for the operation of a system of registration of Non-Recreational Layers and the transmission of information to the Gambling Commission about such users. We note that if betting exchanges are also to be treated as a collecting agency, their own accounting practices will become more expensive, costs which they may have to transfer to those using the exchanges, though we think this cost would be marginal. (Paragraph 545)

112. We believe that the Department for Culture, Media and Sport (DCMS) should review the wording of Clause 30 and redefine the offence of cheating, assessing in particular whether there is a case for incorporating the misuse of information into this definition in such a way that does not catch the long-standing practice of sharing information, as described by Mr Savill (Chairman of the British Horseracing Board). (Paragraph 552)

113. We believe that the Department for Culture, Media and Sport (DCMS) should take immediate steps to work with sporting bodies in an effort to ensure that those who participate in sports understand the dire consequences of any involvement in illegal betting, whether with traditional bookmakers or on betting exchanges. The detail of this regulation is not a matter for us, but in the context of this Bill it is vital that this consultation takes place. (Paragraph 555)

114. We congratulate the Government on its decision to regulate the remote gambling industry within the United Kingdom and to enable the Gambling Commission to issue remote gambling licences under Clause 55 of the draft Bill. Not only could this

187

have significant fiscal advantages but it also recognises the fact that, even if it were desirable, it would be impossible to prohibit the use of remote gambling services by UK citizens effectively. The proposals would create safe areas for gambling on the internet and give UK consumers the option to use well-regulated services. (Paragraph 559)

115. The regulation of remote gambling operators should not be delayed. The licensing regime proposed in the draft Bill should be introduced at the earliest opportunity and preparations for the licensing of remote gambling operators should commence as soon as possible. (Paragraph 561)

116. Perhaps more than in any other area, it is vital that the Gambling Commission is given the resources to enable it to develop the necessary expertise and to prepare itself for the regulation of remote gambling. We recommend that these resources should be made available at the earliest opportunity. (Paragraph 563)

117. We agree that the precise detail of the proposed regime cannot be set down on the face of the Bill. However, we recommend that, as soon as possible, the Gambling Commission should begin consultation on the details of the proposed regulation for UK-based remote gambling operators. (Paragraph 565)

118. We recommend that operators should be subject to the same standards of regulation, regardless of whether they provide their services remotely or non-remotely. As with all sectors, the regulation of remote gambling should not be excessive or disproportionate. It must, however, be effective. Care should be taken to ensure that the threat of operators locating themselves in other jurisdictions with less restrictive regulation should not lead to the creation of a UK regime that fails to protect the consumer and to deliver the reputational benefits sought by the industry. We therefore welcome the assurance of the Secretary of State that “we will definitely not get involved in a race to the bottom with any other jurisdictions; or be willing to lower our standard by forgoing necessary safeguards.” (Paragraph 569)

119. We recommend that the draft Bill should be amended to clarify that relevant software providers would be required to be licensed under the new regime. We consider that this is not adequately clear from the existing wording in Clauses 53(2)(h) and 194(3)(b), as the Department for Culture, Media and Sport (DCMS) has acknowledged in the Schedule of Detailed Comments on the draft Bill (Annex 1). (Paragraph 573)

120. Despite the risks that may be associated with remote gambling, we acknowledge that it is preferable for this sector of the industry to be effectively regulated within the UK than for consumers to have no option but to use offshore sites, many of which appear to be poorly regulated. We recommend that, as soon as possible, the Gambling Commission should start to consult the industry and those with expertise in the field of problem gambling in order to draw up stringent codes of social responsibility for this sector. We further recommend that the Commission should use those codes that have been voluntarily adopted as a basis for the statutory codes to be issued under Clause 16 of the draft Bill. (Paragraph 577)

188

121. It is important that the remote gambling industry takes measures to prevent children accessing its services. However, we acknowledge that existing technology does not make it possible to eliminate this possibility entirely. We recommend that codes of practice should be adopted under Clause 16 that require operators to take all possible steps to prevent under-age access. We also acknowledge that this responsibility should not be borne solely by the operator. We recommend that banks should be encouraged to assist operators in this respect and that parents should also be encouraged to use the technology that is currently available, such as internet filtering services, to control the websites their children are able to access. (Paragraph 579)

122. We agree with the Government’s vision of “a global market where a well-regulated British based industry is able to establish itself as a world leader” and would not generally consider it appropriate to prevent UK-based operators providing remote gambling services to non-UK consumers. (Paragraph 583)

123. The decision to designate any territory as being prohibited for the purposes of Clause 32 should be subject to full Parliamentary scrutiny. We note that Clauses 32 and 263 of the draft Bill would require an order to be laid before and approved by both Houses of Parliament. We consider that this would provide adequate opportunity for Parliament to consider any such proposals. (Paragraph 585)

124. We agree with the Government’s decision not to prohibit all non-EEA advertisements. However, we are concerned that the current proposal would make the UK a less attractive destination for remote gambling operators. We also consider that the proposed power to designate jurisdictions as prohibited for these purposes would be cumbersome and that it would not be possible to exercise it sufficiently quickly to prevent advertisements from unregulated overseas operators, especially in the initial period after the Bill receives Royal Assent. We recommend that the Bill should instead contain a general prohibition on advertisements from non-EEA operators but that the Gambling Commission should be able to designate non-EEA territories as permitted if it is satisfied that the standards of regulation in those territories are adequate. We believe that this would address the concerns of the Alderney Gambling Control Commission. (Paragraph 589)

125. We recommend that adequate resources should be available to the Gambling Commission to enable it to initiate prosecutions against those conducting lotteries that would be illegal under the Bill and, thereby, help to preserve lotteries for good causes. (Paragraph 595)

126. Premium rate telephone calls are a very common feature of existing lottery-type schemes and we consider it to be vital that the use of such calls to enter lotteries should be treated as a form of payment to enter under the Bill. We recommend that Schedule 7, paragraph 5(2) of the draft Bill should be amended to clarify that this would be the case. (Paragraph 602)

127. We agree with the Government’s position, as set out in Schedule 7, paragraph 2(c), that buying goods should not be considered as payment to enter a “lottery” accompanying those goods, unless the price of the goods reflects the chance to win the lottery. However, we also acknowledge the concerns that have been expressed

189

about the possible abuse of these provisions and recommend that the Gambling Commission should issue guidance on the meaning of a “normal price” for goods. For this purpose, it should consider using trading standards rules as a guide to determining what is normal. (Paragraph 605)

128. We welcome the Department for Culture, Media and Sport’s (DCMS’) willingness, expressed in the Schedule of Detailed Comments on the draft Bill (Annex 1), to amend paragraph 6 of Schedule 7 to rectify the existing omissions [with respect to payments to take possession of a prize]. (Paragraph 607)

129. We do not consider that bona fide sales promotions should be treated as lotteries and recommend that paragraph 6 of Schedule 7 is amended to clarify that this would not be its effect. (Paragraph 609)

130. We agree with the Government’s general policy aim of preserving lotteries for good causes and agree that, if this is to be achieved, it is necessary to prevent competitions in which the level of skill involved is so minimal that they are, in effect, lotteries. (Paragraph 616)

131. We acknowledge and agree with the Government’s aim to preserve non-commercial lotteries and to distinguish them from commercial prize competitions. We are not, however, persuaded that Clause 208(4) of the draft Bill is sufficiently clear to create a workable and certain regime that will achieve this. We recommend that further thought should be given to the wording of this Clause. (Paragraph 618)

132. We would suggest that greater clarity could be achieved by including a definition of prize competition in the draft Bill. This would make it easier to draw a distinction between lotteries, on the one hand, and prize competitions, on the other. If a definition of prize competition were provided, it would then be easier to distinguish between those prize competitions which are illegal, because they have an inadequate skill element, and those which are legal, because the skill element is adequate. (Paragraph 621)

133. We urge the Government to clarify the treatment of hybrid schemes under the draft Bill. (Paragraph 623)

134. We consider that there would be advantages to the single statutory definition of “lottery” covering the National Lottery. We welcome the Government’s statement, in the Schedule of Detailed Comments on the draft Bill (Annex 1), that they will consider this request and urge it to amend Clause 222 accordingly. (Paragraph 625)

135. If the Government has evidence as to the risks of rapid draw lotteries, we recommend that it publish this evidence and that it apply any proposed restrictions equally to the National Lottery. If rapid draw lotteries do pose risks, we recommend that the required period between ticket purchase and draw be set at that necessary to address this risk, rather than at 24 hours as currently proposed in Clause 79(2). We recommend that the Gambling Commission be given the discretion to attach a condition to this effect. (Paragraph 628)

190

136. We believe that the Budd recommendation to remove financial limits on lotteries has merit and recommend that it should be achieved progressively over time. We welcome the Department for Culture, Media and Sport’s (DCMS’) acceptance that the limits should be capable of amendment by secondary legislation. We recommend that Clause 79 of the draft Bill should include an additional delegated power of this type and that the Secretary of State should use this power on the recommendation of the Gambling Commission. (Paragraph 634)

137. We believe that some of the examples used to illustrate the potential for the abuse of “customer lotteries” may be exaggerated. However, while we agree that small raffles by local businesses should be regularised, we recommend that DCMS re-consider the existing wording in Part 3 of Schedule 8 to remove any possible scope for abuse. (Paragraph 638)

138. Once account has been taken of the potential for substitution between sectors of the gambling industry, the wider displacement effects for the rest of the leisure industry, the potential cannibalisation of local businesses and the costs associated with addressing problem gambling, we conclude that the overall net [economic] benefit could be smaller than has been estimated. (Paragraph 652)

139. The Committee accepts that it is difficult to finalise the tax regime until the legislation is complete but encourages close co-operation between HM Treasury and the Department for Culture, Media and Sport (DCMS) on this matter. (Paragraph 657)

Feb 2004 Clauses

Nov 2003 Clauses

Original Text Issue SourceDCMS Comments (Clause references: Feb 04

draft)PART 1 - Interpretation of key concepts

1 1 The licensing objectives

In this Act a reference to the licensing objectives is a reference to the objectives of ...

"The prevention of public nuisance" should be added as a licensing objective. Its omission will seriously hamper the ability of Local Authorities to ensure effective management of the environment around gambling premises and provides residents with little scope to make representations should street nuisance occur.

Local Government Association, DGB 103, para 5.1

City of Westminster, DGB 147, p.3

DCMS note these representations. At present, the objectives proposed are considered sufficient and appropriate for the purposes of regulating gambling. This activity does not appear to involve any particular risks in relation to public nuisance, beyond those generally applying to any retail or leisure uses, which are not already subject to specific provision e.g. the potential nuisance risk associated with the sale of alcohol is already controlled in respect of gambling premises licensed to sell alcohol, under licensing law.

There should be objectives dealing with: (A) ensuring gambling and gaming are carried out in ways that reflect operators’ obligations to the community at large, particularly with respect to minimising anti-social behaviour and the impact on the local environment; (B) ensuring effective coordination of all the licensing and consent regimes involved, and operators’ cooperation with the bodies responsible for their operation (including local authorities and the Police); and (C) ensuring gambling contributes to sustainable economic development.

The Mayor of London, DGB 67, para 3.2

See previous response.

The licensing objectives should include a commitment to protect animals.

League against cruel sports, DGB 74, para 1

At present, the objectives proposed are considered sufficient and appropriate for the purposes of gambling regulation. Animal welfare issues are, in the first place, the responsibility of the Department of Environment, Food and Rural Affairs (DEFRA). DEFRA are alive to the need to protect animal welfare in sport related to gambling, as elsewhere.

Annex 1 - Schedule of detailed comments on the draft Bill. 192

Feb 2004 Clauses

Nov 2003 Clauses


draft)An objective of promoting open and effective fair market competition should be added.

BACTA, DGB 54 The objectives proposed in clause 1 are considered appropriate and sufficient for the purposes of gambling regulation. The Department notes that competition law exists to secure the objective mentioned, and that the competition authorities have powers under that legislation to take action where necessary.

1(a) preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,

This is too widely drawn and reference to “being associated” should be qualified to “direct” association.

BACTA, DGB 54 DCMS note these representations. The prevention of crime is an important objective of gambling regulation. The intention of the draft clause is to ensure that, for example, the Gambling Commission can reject applications on the basis of some connection to crime, whether direct or not. The words proposed would be too narrow to achieve this purpose.

1(c) protecting children and other vulnerable persons from being harmed or exploited by gambling.

The term "vulnerable persons" is commonly used mainly to refer to those of limited mental ability.

Mr Derrick Hill, DGB 1, para 5.5

It is not considered that, as used in the draft clause, the term "vulnerable persons" has the narrow meaning suggested. It refers to anyone who is vulnerable.

This implies that there are certain adults who are especially vulnerable to the effects of gambling because of some weakness. A vulnerability to pathological gambling is inherent in the very activity of gambling.

Royal College of Psychiatrists, DGB 12, para 11

DCMS note these comments, but do not see any need to amend the draft Bill on account of them.

The concept of protecting children and the vulnerable must be extended to include those whose lives are detrimentally affected by problem gambling.

The Gordon House Association, DGB 91, para 4

DCMS does not consider that the protection afforded by the Bill needs to extend to this wider group or persons who may be affected by the gambling of others.

2 2 Gambling3 3 Remote gambling

193

Feb 2004 Clauses

Nov 2003 Clauses


draft)3(2) In this Act, "remote communication

means communication using…A transparent system must be established for determining whether a technology platform comes under the definition of remote gambling.

iGGBA, DGB 86, para 9

DCMS considers that "technology platform" is an imprecise term, and that the scope of clause 3(2) together with the power at clause 3(3) provides sufficient certainty. Concerns about whether a communications provider is providing facilities for gambling are dealt with in clause 4(3) where mere carriers are not treated as providers of gambling, provided they have no interest in the gambling themselves (and see the response on clause 4 below).

Communication in such circumstances must involve a two way process so that, for example, a customer watching a race on television but betting in person would not involve that person 'participating' by way of any remote communication merely by having watched the race on television.

Sky, DGB 58, Appendix, para 1.1

We do not consider that the natural meaning of "participate" in clause 3(1) could lead to a situation where a person placing a bet in person, but watching a race on television would be considered to be a person participating in gambling by using remote communication. He is watching the race. The broadcaster is not providing facilities for gambling. A separate transaction altogether is effecting the bet. We are not convinced that the "two-way process" test is a defining characteristic of remote gambling. It is necessary to read clause 3 in conjunction with clause 4 on providing facilities for gambling. We will review the clause further and have noted the comment.

4 4 Facilities for gambling

For the purposes of this Act a person provides facilities for gambling if he -

This is a very wide definition and could catch a number of activities which Sky currently undertakes and which would not fall within the exceptions of Clause 4(3).


The clause sets out when someone will be providing facilities for gambling and is drafted with the intention of preventing avoidance of gambling regulation. Clause 4(3) provides a number of exceptions, and the comment below on 4(3) details further clarification to that subsection.

4(1)(b) provides, operates or administers arrangements for gambling by others,

The meaning of the word “arrangements” should be clarified.

BACTA, DGB 54 DCMS note these representations. "Arrangement" has its ordinary meaning and users of the legislation should not be in doubt about whether or not they are "providing, operating, or administering arrangements for gambling". It is not intended to provide any particular clarification, beyond that already provided in clause 4(3).

194

Feb 2004 Clauses

Nov 2003 Clauses


draft)4(3) But a person does not provide

facilities for gambling …by virtue only of - …(d) making facilities for electronic communications available for use by-(i) persons carrying on any of those activities, or(ii) persons gambling in response to or in accordance with any of those activities.

The operation of a digital satellite platform itself may be considered to amount to providing facilities. It is not clear that the various services provided by Sky Subscribers Services Limited ("SSSL"), the BSkyB company that operates the platform, could be described simply as "making facilities for electronic communications available for use by [gambling operators]" or, even if it is, that SSSL would be able to avail itself of that exemption where it receives a share of the gambling revenues in connection with its role as operator of the digital satellite platform. Similar concerns could also arise in the context of websites providing links to gambling sites. This would be likely to result in a wide range of "non-operators" seeking licences of one sort or another and would add an unwarranted layer of regulation.


Clause 4 describes when someone will be held to be providing facilities for gambling. Clause 4(3) provides a number of exceptions, and DCMS acknowledges that this needs to be reviewed to ensure that persons who are mere carriers of remote gambling, with no interest in the gambling, should not be deemed to be providing facilities for gambling. The provision currently covers electronic communication, but omits clarity for broadcasters. The clause will be reviewed further to achieve the necessary exclusion.

5 5 Private and non-commercial gaming and betting

6 6 Game of chance Some competitions may still be restricted by the definition of “gaming”. It is not clear whether the definition may capture existing prize competitions.

Mobile Broadband Group, DGB 66, para 6.2

DCMS note the comment. Further provisions are required to deal with the overlap between gaming and lotteries. DCMS will review the position of competitions (being something other than a lottery) and gaming in that work.

6(2)(a)(ii)

(2) In this Act "game of chance" - (a) means … ...(iii) a game that is presented as involving an element of chance.

This may be interpreted as including Skill With Prize machines as gaming machines and could outlaw machine-based tournaments which are linked together via a central server and where the winnings may depend upon all players.

Barcrest Group, DGB 53, para 3.5

DCMS note these representations. It is not the Department's policy intention to capture such skill machines or skill competitions within the gambling regime. DCMS will review the need for subsection (iii).

6(6) The Secretary of State may by regulations provide that a specified activity…is or is not to be treated for the purposes of this section as - (a) a game; (b) a game of chance; (c) a sport.

Clarification is sought on whether the Secretary of State can change categories.

BACTA, DGB 54 Yes, it would be possible for an activity to be re-classified between different categories, but it is not the Department's intention that such switching between categories be the principal purpose of this power. It is intended to permit clarification of where amongst the three alternatives an activity lies if the matter is in doubt.

195

Feb 2004 Clauses

Nov 2003 Clauses


draft)7 7 Betting

In this Act "betting" means making or accepting a bet, other than a spread bet, on -

There is currently no express provision for the Secretary of State to include spread betting in this definition.

Gaming Board, DGB 05, para 19

It is not proposed that the Gambling Bill contain measures at the outset regulating spread betting, which is a matter for the Financial Services Authority. The Bill will make provision for this allocation of responsibilities to be altered in the future. The Bill will contain further clauses on spread betting to deliver DCMS' published policy on this subject.

We note that spread betting will continue to be regulated by the Financial Services Authority pending a review by the Gambling Commission after 5 years, so it is therefore surprising that the Secretary of State does not appear to be empowered to amend sections 7(1) and 7(4).



As spread betting is not included in the definition of gambling there seem to be no restrictions on where it may be carried out.

Gaming Board, DGB 05, para 19


7(4) In subsection (1) "spread bet" means a bet which constitutes a contract to which section 412 of the Financial Services and Markets Act 2000 (c.8) (enforceable gaming contracts) applies.

A spread bet is defined as a bet which constitutes a contract to which section 412 of FSMA applies. However, the rationale behind section 412 is to ensure that gaming law does not make financial services contracts unenforceable. It is unclear what will happen if the relevant provisions of the law relating to the enforceability of gambling contracts are repealed.

Financial Services Authority, DGB 107, para 14

The Department is grateful for this comment and will consider it further.

8 8 Betting intermediary The definition of a "betting intermediary" could conceivably capture a number of activities in addition to those carried on by operators such as Betfair, e.g. the operator of a betting portal which offered a tipster service or a price comparison service could be said to be "facilitating the making or acceptance of bets between others".

Sky, DGB 58, Appendix, para 3

DCMS note these representations. It is not intended to capture such services within the licensing arrangements for betting intermediaries, and we will consider the definition further, together with clause 4.

9 9 Licensing authorities10 10 Casino

196

Feb 2004 Clauses

Nov 2003 Clauses


draft)10(4) The Secretary of State may by

regulations provide that a specified activity…is to be or not to be treated as a casino game for the purposes of this Act.

The discretion given to the Secretary of State is too wide.

BACTA, DGB 54 Clause 10 defines a casino game. The purpose of the regulation making power is to enable the regulatory regime to be modified to cope effectively with changes in technology and the presentation of games, that might otherwise create uncertainty about the status of gambling offerings.

10(5) The Secretary of State shall make regulations by reference to which any casino may be classified as - (a) a large casino, (b) a small casino, or (c) below the minimum size for a licensed casino.

The Secretary of State is given too much discretion. BACTA, DGB 54 It is considered necessary for the Secretary of State to have power to alter the categories of casino in secondary legislation, rather than having to bring forward further primary legislation to effect change. Such regulations will be subject to appropriate scrutiny by Parliament.

10(6) Regulations made under subsection (5) - (a) may make provision by reference to - (i) the number of tables at which specified casino games or classes of casino games are played or are made available,…(c) may include provision for determining - (i) what floor area is to be treated as being made available for use

It is unclear what “made available” or “available for use” means.

For these purposes, a gaming table should be defined as a table which is staffed for a minimum of, e.g., ten hours per week.

MGM Mirage, DGB 56, para 2.4.1

DCMS has been in discussion with industry representatives on this subsection and will clarify the position. The terms "made available" and "available for use" will, of course, have their natural meaning.

11 11 Pool bettingPART 2: THE GAMBLING COMMISSION

12 12 Establishment of the Commission

13 13 Gaming Board: transfer to Commission

197

Feb 2004 Clauses

Nov 2003 Clauses


draft)14 14 Duty to promote the licensing

objectives

In exercising its functions under this Act the Commission shall aim -(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.

An unreasonable discretion is given to the Commission and mandatory guidelines should be established.

BACTA, DGB 54 It is a principle of the Bill that the Gambling Commission should be independent of Government in the pursuit of its licensing objectives. DCMS considers mandatory guidelines for the Commission would defeat this purpose.

15 15 Policy for licensing and regulation

15(5) Before issuing or revising a statement under this section the Commission shall consult -

The requirement for the Commission to consult the National Lottery Commission should be mandatory and extensive to avoid inconsistency and omission.

Camelot, DGB 55, para 1.2

DCMS notes these representations, but considers that it is sufficient that clause 20 makes provision for consultation of the National Lottery Commission.

15(5)(d)

one or more persons who appear to the Commission to represent the interests of persons carrying on gambling businesses,

Gambling businesses that will be directly or indirectly affected must be consulted and there should be a duty to make a public announcement that a revision of codes is taking place in order that all of those affected have an opportunity to make representations.

BACTA, DGB 54 DCMS considers that it is sufficient to require the Commission to consult representatives of business rather than every business. The Commission is also required to consult members of the public in such manner as it thinks appropriate under clause 15(5)(f).

16 16 Codes of practice

The Commission may issue a code of practice about the manner in which facilities for gambling are provided (whether by the holder of a licence under this Act or by another persons)…

There should be an explicit requirement that Codes of Practice dealing with animal welfare be attached to licences for tracks where animals such as greyhounds are bet on.

League against cruel sports, DGB 74, para 2

DCMS does not consider that animal welfare, of itself, is a relevant consideration in the regulation of gambling.

16(7) Before issuing or revising a code under this section the Commission shall consult -

The Greater London Authority should be among the bodies the Gambling Commission should be obliged to consult before they issue or revise a code of practice.


DCMS notes these representations. The Mayor does not, at present, have any licensing functions under the draft Bill but the Department will consider whether it would be appropriate for his office to be added to the consultation list in this subsection or in subsection (8).

See comment on Clause 15(5) (Nov draft). Camelot, DGB 55, para 1.2

Please refer to the response on clause 15(5) above.

198

Feb 2004 Clauses

Nov 2003 Clauses


draft)16(7)(b)

(ii)The procedural model for amending conditions of entitlement set out in section 48 of the Communications Act 2003 seems to us to be suitable for the purposes of the making and revising of codes of practice by the Commission.

Mobile Broadband Group, DGB 66, para 7.3

DCMS does not consider that section 48 of the Communications Act 2003, which is concerned with the setting, modifying and revoking of conditions, is a model for the procedure to be followed on the issue or revision of a code of practice by the Commission.

17 17 Guidance to local authorities

The Commission shall from time to time issue guidance as to - (a) the manner in which local authorities are to exercise their functions under this Act…

See comment on Clause 15(5) (Nov draft). Camelot, DGB 55, para 1.2

Please refer to the response on clause 15(5) above.

17(2) A local authority shall have regard to guidance issued under subsection (1).

It should be clarified that a local authority is to be obliged to adhere to the guidance of the Gambling Commission to avoid a situation where the local authority could have regard to, but choose not to follow, the guidance.

MGM Mirage, DGB 56, para 4.1

It is intended that local authorities have a degree of discretion about the ways in which they exercise their functions under the draft Bill; accordingly the Commission may not direct licensing authorities. But licensing authorities must act in pursuit of the licensing objectives and have regard to guidance issued by the Commission.

17(5) Before issuing guidance under subsection (1) the Commission shall also consult, if and to the extent that the Commission thinks appropriate having regard to the nature of the guidance-...(b) one or more persons who appear to the Commission to represent the interests of people carrying on gambling businesses,

The requirement to consult the industry contained in this clause should be mandatory.

The Bingo Association, DGB 49, para 21

DCMS note these representations and agree. This clause will be amended to include the persons now described at clause 17(5)(b) within the mandatory consultees described in clause 17(4).

Consultation with the industry should be obligatory rather than optional.



199

Feb 2004 Clauses

Nov 2003 Clauses


draft)The list of those consulted should mirror that in Clause 15(5) (Nov draft).

BACTA, DGB 54 See previous response. The persons to be consulted are the same in clauses 15 and 17, but in clause 17 only some are mandatory consultees, while others are to be consulted if and to the extent the Commission thinks appropriate having regard to the nature of the proposed guidance. We will consider whether any further amendment to this division is required.

18 18 Duty to advise Secretary of State

19 19 Licensing authority information

20 20 Consultation with National Lottery Commission

(1) If in the course of the exercise of its functions the Gambling Commission becomes aware of a matter about which the National Lottery Commission is likely to have an opinion, the Gambling Commission shall consult the National Lottery Commission.

Clarification is sought on the weighting that the opinions of the National Lottery Commission will receive by the Commission. In the case that a direct conflict of opinion arises between the National Lottery Commission and the Gambling Commission, we would like clarification as to whose views would take priority.

Leisure Link, DGB 14, para 5 CMMG, DGB 22, para 6.1

In relation to matters arising under the Gambling Bill the Gambling Commission will make the ultimate decision. Decisions in relation to the National Lottery under the National Lottery etc Act 1993 will be for the National Lottery Commission.

PART 3: GENERAL OFFENCES21 21 Provision of facilities for

gambling

(1) A person commits an offence if he provides facilities for gambling unless …

The offence is defined very widely as is the meaning of "providing facilities for gambling". Could this catch activities currently undertaken by BSkyB.


DCMS notes these representations. As indicated in the response on clause 4 it is intended that persons not themselves providing facilities for remote gambling (e.g. mere carriers of remote gambling) should not be treated as providing facilities in the Bill. DCMS is reviewing the relevant clause.

21(3) Subsection (1) does not apply to any activity by a person if -(a) he acts in the course of a business carried on by a person who holds an operating licence authorising the activity, and(b) the activity is carried on in accordance with the terms of and conditions of the licence.

This should extend to anyone whose involvement (whether through the provision of facilities for gambling or otherwise) is merely a preparatory step to that other person performing the activity authorised by the operating licence.


There is nothing special about a preparatory step in this context which merits individual treatment. The question is whether a person is providing facilities for gambling. DCMS believes appropriate protection is achieved by clauses 4 and 21 read together, with the review of clause 4(3) noted above.

200

Feb 2004 Clauses

Nov 2003 Clauses


draft)There should be provision made here ensuring that where persons take such preparatory steps in the reasonable belief that they are in relation to an activity authorised by an operating licence, the fact that the activity is not so authorised (e.g. because the manner in which it is carried on is in breach of the operating licence) should not result in that first person having committed an offence.


See the previous response. It will be the responsibility of any person providing facilities for gambling to ensure that he has the appropriate licence (or other authorisation under the Bill) to cover his activities. If he is not providing facilities for gambling, he has no need for permission under the Bill. The Department believes clause 4 caters for the concerns raised.

22 22 Exception: private and non-commercial gaming and betting

22(2) Section 21 shall also not apply to anything which a person does by way of making or accepting a bet, or offering to make or accept a bet, if he acts otherwise than in the course of a business.

It will be necessary to define what “in the course of a business” means.

Mr Savill, OE Q693 The Department's present view is that the expression cannot be further defined without producing arbitrary or unsatisfactory consequences for the regulation of gambling. We believe that it is an expression understood in law that should be interpreted in conjunction with the facts of any particular case. We will, however, consider whether anything further can usefully be provided.

23 23 Exception: lotteries24 24 Exception: gaming machines

Section 21 shall not apply to making a gaming machine available for use.

Clarification is sought regarding the intention of this exception as all gaming machines of categories A, B and C will require some form of operating licence.

BACTA, DGB 54 Separate provision is made in Part 10 for offences related to gaming machines (clauses 201-204). For clarification, operating licences are not the only means of authorising use of a category B or C machine. Parts 12 and 13 of the Bill (Feb 04) provide the means for clubs and premises with alcohol licences to make such machines available without an operating licence.

25 25 Territorial application

201

Feb 2004 Clauses

Nov 2003 Clauses


draft)25(4) In this Act “remote gambling

equipment” means... electronic or other equipment used by or on behalf of a person providing facilities for remote gambling-(a) to register a person's participation in the gambling,…

As currently drafted, it seems that operators would be committing an offence if they provide customer registration and payment processing facilities in the UK even if this is in respect of their offshore remote casino operations and the actual gaming is taking place on equipment located outside the UK. As it is not an offence under either current or proposed legislation for a UK resident to gamble remotely in an offshore casino, the provision of these ancillary services in the UK to assist that gaming should not be regarded as aiding an illegal activity and require the operator to obtain a remote gambling licence here.

Association of British Bookmakers, DGB 96, paras 5&6

DCMS notes these representations. We will consider them further.

25(4)(b) to present, to persons who are participating or may participate in the gambling, a virtual race or other virtual event or process by reference to which the gambling is conducted,

This could be construed as covering offshore operators offering gambling in the UK and this requiring them to procure a licence.

Sportingbet plc, DGB 99, para 11

DCMS does not agree with the comment made. DCMS considers that equipment performing the activities described will be offering facilities for gambling and that consequently where such equipment is located within Great Britain, remote gambling is being provided in Great Britain. DCMS is not aware that this has any particular impact upon an operator who wishes to be based overseas: he will need to locate all such equipment outside GB and is able to do so. A specific exemption is provided for a computer being used by a consumer to take part in remote gambling (whether delivered from a GB or overseas operator).

26 26 Use of premises27 27 facilities for remote gambling28 28 Exception: occasional use notice

29 29 Exception: football pools30 N/A Cheating31 30 Advertising (BLANK)

202

Feb 2004 Clauses

Nov 2003 Clauses


draft)32 31 Provision of unlawful facilities

abroad

(1) A person commits an offence if he does anything in Great Britain, or uses remote gambling equipment situated in the Great Britain, for the purposes of inviting or enabling a person in a prohibited territory to participate in remote gambling.

If other jurisdictions want to prevent their citizens engaging in remote gambling that should be an issue for them and their citizens, not British-based operators providing services legally under the law in this country.



DCMS notes these representations. The Government has included this reserve power so that it might assist other jurisdictions who wish to restrict the delivery of remote gambling products to their citizens. The Government has complete discretion, of course, as to whether to use this power at any point in the future. Paragraph 101 of the Explanatory Notes published in November 2003 describes the sort of considerations that might arise for use of this clause.

31(2) In subsection (1) "prohibited territory" means a country or place designated for the purpose of this section by order made by the Secretary of State.

The Secretary of State should not be able to determine in which countries an operator may not take bets. It is the operators responsibility to obey the laws of other jurisdictions and once an operator has a UK licence it should be free to provide such services globally. The liability of obtaining bets from other jurisdictions is the business of the operator and international treaty obligations.



33 32 Giving false information

(1) A person commits an offence if without reasonable excuse he gives to the Commission … information which is-(a) false, or(b) misleading.

Any misstatement should be of a material nature. BACTA, DGB 54 DCMS considers that the clause as drafted provides sufficient safeguards. An offence is only committed if false or misleading information is given "for a purpose connected with a provision of this Act".

This should be limited to knowingly giving information which is false or misleading.

BACTA, DGB 134, p.8

DCMS considers that the clause as drafted provides sufficient safeguards. An offence is only committed if false or misleading information is given "without reasonable excuse".

34 N/A Supply of alcohol, &cPART 4: PROTECTION OF CHILDREN AND YOUNG PERSONS

35 33 Meaning of "child" and "young person"

203

Feb 2004 Clauses

Nov 2003 Clauses


draft)36 34 Invitation to gamble

(1) A person commits an offence if he invites, causes or permits a child or young person to gamble.

The offence should only apply if a person “knowingly” permits a child or young person to gamble.

BACTA, DGB 54 It is not considered that the word "knowingly" adds anything to the word "permit". Clause 52 (Feb 04) provides a defence of reasonable belief about a person's age.

Often advertising media are of such a nature as to be visible to under 18’s. It is unclear whether this would mean a potential liability for the operator.



DCMS note these representations. The intention of clause 36 (Feb 04) is to make it an offence to target information at children and young persons.

34(5) If information about gambling is brought to the attention of a child or young person ... (“the advertiser”) shall be treated as having committed the offence under subsection (1) unless he proves that the information was brought to the attention of the child or young person …(b) as an incident of the information being brought to the attention of adults and without a view to encouraging the child or young person to gamble.

Given the number of invitations to bet or game which are sent via email or mobile phone 'spam', without any effort to find out whether the phone or email account is owned by a child, we hope that such contact will not be covered by this exclusion.

The Methodist Church, DGB 13, para 4.3.4

The Bill contains many provisions designed to prevent children from having access to gambling, or being encouraged to gamble. However, it is not the intention to bring activities within the scope of this particular offence merely because they may be accessible to children, incidentally to their being accessible to adults. The exclusion at (b) has been scoped to prevent the offence being committed, provided the advertiser can fulfil both parts of the test.

It is unclear whether advertising an internet site for use by over 18’s, if such advertisement can be seen by under 18’s, would be caught. Advertising should restrict the element of invitation to play for under 18’s, but the posting of a web site should not imply an offence under the Act.



204

Feb 2004 Clauses

Nov 2003 Clauses


draft)37 35 Invitation to enter premises

A person commits an offence if he invites a or permits a child or young person to enter premises if -

A child and/or a young person should be able to enter the “premises” (for example, a gaming and entertainment resort or complex) but not the actual gaming floor of any casino. Among other matters, this will allow families to enjoy the non-gaming elements together and enable more effective and focused security preventing children and young people from entering an actual casino floor.


The Department acknowledges that there will be a difference in some cases between licensed casino premises and ancillary areas such as a hotel or restaurant forming part of an overall complex. The basic position is that children and young persons should not be invited to enter casino premises as defined on a casino premises licence. The draft Bill does not prevent distinctions being drawn between such premises, and other areas which may be related to a casino, but which are not licensed as a casino. However, it is not proposed to introduce any further limitation that children and young persons only be restricted from the gaming floor areas of casinos. Casinos are places for over 18 year olds.

35(5)(c) at the time when the child or young person is permitted or invited to enter a Category C gaming machine is available for use.

We hope that this will not be taken to mean that a machine which is being used by another person will not be "available for use" under this Clause. Otherwise children would be able to be present in such premises provided that the machines were in use by others.


That is not the intention of the clause.

38 36 Gambling

(1) A young person commits an offence if he gambles.

Is it wise to criminalise young persons in this way? Sky, DGB 58, Appendix, para 5

The offence applies only to 16 and 17 year olds and DCMS has taken the policy decision not to extend this to children. The Department consider that young persons (16 and 17) are able to appreciate that gambling activities of the sort included in the offence are for adults only.

36(2)(e) But subsection (1) does not apply to-…(e) the use of a Category D gaming machine.

Clarification is sought on why Category D is referred to as “gaming” rather than “amusement” machines.

BACTA, DGB 54 The Department is not adopting the terminology that has arisen from the 1968 Act in relation to machines. A category D gaming machine offers gambling, and it is not considered appropriate to call it an "amusement machine" albeit that children may use it.

39 37 Entering premises

A young person commits an offence if he enters premises...

See comment on Clause 35 (Nov draft). MGM Mirage, DGB 56, para 5.1

See response above on clause 35 (Nov 03).

See comment on Clause 36 (Nov draft). Sky, DGB 58, Appendix, para 5


205

Feb 2004 Clauses

Nov 2003 Clauses


draft)40 38 Provision of facilities for

gambling

A young person commits an offence if he provides facilities for gambling.

See comment on Clause 36 (Nov draft). Sky, DGB 58, Appendix, para 5


41 39 Employment to provide facilities for gambling

A person commits an offence if he employs a child or young person to provide facilities for gambling.

Children and young people are traditionally employed on a casual basis in seaside family entertainment centres and in non-adult designated areas. Confirmation is sought that such employment will be permitted continue.

BACTA, DGB 54 The intention is to allow such employment to continue in so far as it does not involve performing a function in connection with gaming machines. This is reflected in clause 44 which deals with employment on premises with gaming machines.

42 40 Employment for lottery or football pools

43 41 Employment on bingo and club premises

44 42 Employment on premises with gaming machines

(1) A person commits an offence if-(a) he employs a child or young person to perform any function on premises where a Category A, B, C or D gaming machine is situated,

“any function” is too broad. There should be a connection between adult gambling and the child or young person for an offence to be committed, and then only at the time of the operation.

BACTA, DGB 54 Subsection (1)(a) is qualified by subsection (1)(b), the effect of which is that an offence is only committed if the child or young person is or may be required to perform a function in connection with a gaming machine, whether or not a person is playing on it.

We note that Family Entertainment Centres are not mentioned and request that the legislation expressly exempts Family Entertainment Centres.

BACTA, DGB 54 It is not the policy intention to exempt family entertainment centres from clause 44.

45 43 Employment in casino, &c.

(1) A person commits an offence if he employs a child or young person to perform any function on premises in respect of which any of the following have effect-(a) a casino premises licence…

A young person (not a child) should be able to be employed in the non-gaming areas of a gaming complex (for example, as a junior waiter in a restaurant) as long as he does not enter the gaming floor and/or perform a gaming related function.


See response in relation to clause 37 (Feb 04).

46 44 Invitation to participate in lottery

206

Feb 2004 Clauses

Nov 2003 Clauses


draft)47 45 Invitation to participate in

football pools48 46 Return of stake49 47 Temporary use notice50 48 Meaning of employment51 49 Penalty52 50 Reasonable belief about a

person's agePART 5: OPERATING LICENCES

53 51 Nature of licence51(2)(e) An operating licence is a licence

which states that it authorises the licensee-…(e) to act as a betting intermediary (a "betting intermediary operating licence")

It is unnecessary to have a separate licensing category for betting exchanges which could create a “political football” which traditional bookmakers will use to lobby for unnecessary regulation.

Betfair, DGB 71, para 19

The Government believes that a separate class of operating licence is required for betting intermediaries because they provide facilities for gambling that are different from those offered by 'traditional' bookmakers (who will require a general betting operating licence). In particular, different licence conditions will be needed for each class of licence. The Department does not consider that this will lead to any unnecessary regulation of betting intermediaries, but, rather, to appropriate regulation.

51(4) The Secretary of State may by order amend subsection (2) so as to-(a) add a class of operating licence,(b) remove a class of operating licence, or(c) vary a class of operating licence.

We are concerned that the Secretary of State will have the right to 'remove a class of operating licence' without consulting parliament.

Kerzner, DGB 34, paragraph 10

In the event that the Secretary of State makes regulations removing a class of operating licence she will have to lay draft regulations for the approval of both Houses of Parliament (the affirmative resolution procedure). The Department considers that this provides the appropriate degree of Parliamentary scrutiny for the subject matter.

The amendments which the Secretary of State is permitted to make could fundamentally affect traditional businesses and must be subject to consultation.

BACTA, DGB 54 See the previous answer on Parliament scrutiny of this matter. As a matter of good administration the Secretary of State would also wish to consult interested parties prior to the exercise of this power. In the event that the Secretary of State decided to remove a class of licence, such action would not be retrospective on licences already granted and the Human Rights Act 1998 would apply to any steps taken. The intended use of this power would be to remove a class, and replace it with another class or classes.

207

Feb 2004 Clauses

Nov 2003 Clauses


draft)The Secretary of State should not be enabled “by order” to “remove a class of operating licence”. This should require an Act of Parliament, rather than secondary legislation, in the case of casinos if large-scale investment, job creation and tax growth is to be encouraged.


See the previous response. The Department believes that entrenching the classes of licence in the Bill, without a power to amend them by secondary legislation, makes the Bill an ineffective tool for regulation of a fast-developing and technologically innovative industry. The Department considers that this flexibility (to add, vary or remove a class of licence) is of benefit to the industry, consumers and regulators alike.

54 52 Form of licence55 53 Remote gambling

(1) An operating licence must state whether or not it authorises a class of activity to be carried on-(a) in respect of remote gambling, or(b) by means of remote communication.

There is vagueness surrounding which companies will be required to seek an operating licence, particularly companies involved in the provision of services but which are not the actual operator. For instance, there seems to be no clear indication of which companies would require an operating licence for the provision of software to operators for remote gambling services.


Any person (including a company) who provides facilities for gambling by remote communication requires an operating licence. It is not the Department's policy to require "mere conduits" to hold a licence i.e. those who provide the means of communication only and who have no interest in the gambling itself. The Department has agreed to look further at clause 4(3) to ensure that the Bill achieves this. So far as software providers are concerned it is intended that, as with software in gaming machines, providers of gambling software for use remotely will require operating licenses. The Department will consider whether amendment is required to provide further clarity on the meaning of providing facilities for gambling in this context.

Clarification is needed on how software providers are to be regulated.

BACTA, DGB 54 DCMS notes these representations. It is intended that software companies be licensable as described in the previous answer. The Department is considering what further amendment would clarify this matter.

We recommend provision be made for the approval of a system of software providers.

Alderney Gambling Control Commission, DGB 18, para 2.3

See the previous two responses.

56 54 Multiple licence

208

Feb 2004 Clauses

Nov 2003 Clauses


draft)54(3) A casino operating licence may not

also be a general betting operating licence or a bingo operating licence except in so far as it authorises the licensee -(a) to provide facilities for betting together with the operation of a casino;(b) to provide facilities for the playing of bingo together with the operation of a casino.

The BGRB is vehemently opposed to the proposal to permit betting in casinos.

British Greyhound Racing Board, DGB 40, para 13.1

DCMS notes these representations. No change is proposed to the policy objective in relation to betting in casinos at this time.

No rationale is offered by the Government for changing the cardinal tenet of gaming policy that soft and hard forms of gambling should not mix. Bingo customers will in many cases be exposed to hard gaming by default.


DCMS notes these representations. It remains the present policy, in line with the Budd Report recommendations, that casinos should be capable of offering bingo and betting where the appropriate licences are held, and that the necessary regulation will be in place to deal with such combined facilities.

54(4) For the purposes of subsection (3) facilities are provided together with the operation of a casino only if they are provided-(a) on the premises where the casino is operated, or(b) in the case of a remote casino operating licence, as part of the arrangement by which the casino is operated.

Whilst an Internet or interactive television-based casino may well include certain forms of betting and bingo opportunities, this clause would appear to require an operator of such a combined service to get a separate general betting operating licence if it wants to operate a separate betting website or telephone betting (since neither could be said to be provided "as part of the arrangements by which the casino is operated").

Sky, DGB 58, Appendix, para 4

Operating licences are either granted for the provision of remote facilities or non-remote (premises-based) facilities. A remote casino operating licence can authorise betting and bingo as well, provided these are part of the arrangements for the remote casino. If remote betting facilities are being provided, separate from the remote casino, this would require a remote betting licence. Under clause 56 (Feb 04 draft) a single licence can be issued to the one operator authorising these different (multiple) remote activities. Two licence fees would continue to be payable, unless the licence fee regulations prescribe combined fees for combinations of multiple licences.

209

Feb 2004 Clauses

Nov 2003 Clauses


draft)Operators provide a mix of casino, gaming and betting options to consumers. To obtain all three licenses and their remote gambling extensions would be an undue regulatory burden on remote gambling operators.


An operator wishing to offer casino games, other gaming, and betting, all remotely, will not need to obtain "three licences and their remote gambling extension". They will need to obtain two licences: a remote operating licence to operate a casino, and a remote operating licence authorising general betting (assuming no pool betting is being offered). Clause 55 provides that licences can authorise remote or non-remote activities, but cannot authorise both. This means someone wishing to operate only remote facilities needs a remote version of each relevant class of operating licence. In the example given a casino and a betting licence are needed. Clause 73(2) authorises the playing of games of chance other than casino games, so no third licence for gaming is needed. Clause 56 allows licences to be combined as a single licence where all the activities are remote activities.

It is unclear whether a remote gambling licence for multiple games could only be made available under a casino operating licence.


A licence authorising remote casino games brings with it the right to operate other gaming (clause 73(2)) remotely. There is no separate licence for remote non-casino gaming as it is not believed there is any demand for such a licence. DCMS has noted the comment and will review the licence categories to ensure appropriate classes are provided.

57 55 Application58 56 Consideration of application:

general principles

210

Feb 2004 Clauses

Nov 2003 Clauses


draft)56(1)(c) shall consider the suitability of any

gaming machine to be used in connection with the licensed activity, and

We see no need for the Commission to take into account the suitability of gaming machines or other equipment when considering licence applications. The applicant is unlikely to have decided on the machines to be used and the machine supplier should themselves be licensed.

CMMG, DGB 22, para 6.1

Park Place Entertainment Corporation, DGB 25

Leisure Link, DGB 14, para 5

Machine suppliers are required to hold a gaming machine technical operating licence. Clause 56(5) authorises holders of specified operating licences to make gaming machines available for use of categories A to D. Premises licences granted under Part 8 of the Bill to holders of operating licences will give specific entitlements to make numbers and categories of machines available for use. Nonetheless, the Gambling Commission may wish to ascertain, for example, where an operator proposes to source his machines from, and what categories of machines he proposes to use. This would not undermine the rights of the operator under a premises licence (clause 71), but provides the Commission with appropriate powers to assess applicants. Local authorities will not carry out machine testing functions, which will be a function of the Commission. The Commission will publish its policy on suitability and machines.

Clarification is needed regarding the meaning of “suitability”.

BACTA, DGB 54 See previous response.

56(1)(d) may consider the suitability of any other equipment to be used in connection with the licensed activities.

With respect to technical requirements, world best-practice in gaming regulation and control should be mandatory.

Technical Systems Testing North America Inc., DGB 77, page 2

The Government agrees that standards of regulation in Great Britain should have regard to emerging best practice across the world. The Commission will be able to take account of world practice in its regulatory standards.

See comment on Clause 56(1)(c) (Nov draft) BACTA, DGB 54 The Commission will develop and publish its policy on suitability of equipment and the licensing process. It is not considered that any greater amplification is needed in the Bill.

211

Feb 2004 Clauses

Nov 2003 Clauses


draft)56(2) ... the Commission may, in

particular, have regard to -(a) the integrity of the applicant or of a person relevant to the application;(b) the competence of the applicant ... to carry on the licensed activities in a manner consistent with pursuit of the licensing objectives; (c) the financial and other circumstances of the applicant or of a person relevant to the application (and, in particular, the resources likely to be available for the purpose of carrying on the licensed activities).

We strongly recommend that a reference to the Social Responsibility Codes should be included in the Bill itself…the concept of social responsibility is so central to the new regime that it merits a specific reference in legislation…in addition to integrity, competence and financial circumstances, the Commission should also have regard for whether the applicant has a demonstrable commitment to operating in a socially responsible way.


Ms Lampard, OE Q292

The Government agrees that social responsibility is an important part of a robust, safe and credible licensing process. Codes of practice will support licence conditions, and the Commission will publish its policy on what matters it will take into account in assessing suitability to hold an operating licence. The Commission will need to be satisfied that applicants for licences will be able to comply with expectations in relation to the protection of children and the vulnerable, so that although the expression "social responsibility" itself is not used in the Bill the point of the comment is already met.

More objective criteria than “other circumstances” should be specified.

A demonstration of social responsibility via Training Certification and GICT contributions should be included.

BACTA, DGB 54 DCMS believes the Commission is the best person to assess what matters should be taken into account in assessing suitability, and believes "financial and other circumstances" is an appropriate provision to permit this. The Commission will be able to take account of social responsibility in considering applications, in accordance with its policy, and nothing in clause 58 limits the Commission in this regard.

Payment to GICT should form part of the “fit and proper” test.

BACTA, DGB 54 The clause as drafted allows the Commission to take such actions into account as a positive demonstration of suitability. It is not proposed that failure to pay into the Responsibility in Gambling Trust (previously the GICT) should lead to a determination of unsuitability. The RIGT is a voluntary arrangement, and there may be other ways for an operator to demonstrate commitment to social responsibility in gambling.

59 57 Consideration of application: criminal record

60 58 Procedure61 59 Determination of application

212

Feb 2004 Clauses

Nov 2003 Clauses


draft)62 60 General conditions imposed by

Commission

The Commission may specify conditions to be attached…

Further clarification is needed on the nature of the conditions that may be attached.




DCMS considers that the consultation and publication provisions at clause 63 will give ample opportunity for operators to understand general licence conditions set by the Commission. Clause 14 sets the aims to be pursued by the Commission in exercising this function. Individual licence conditions will be set in accordance with the Commission's licensing statement.

63 61 General conditions: procedure

The Commission may amend or revoke a condition

Would welcome further clarification as to the nature of the conditions that may be attached.

The terms of the consultation are not sufficiently far-reaching and should be increased.





61(4)(a) Where the Commission proposes to specify a condition-(a) at least three months before making the specification the Commission shall give notice to the holder of each licence...

The time that might be required should depend on upon the particular conditions.

BACTA, DGB 54 DCMS considers the time period appropriate for all general licence conditions. This provides certainty for all concerned.

64 62 Individual condition imposed by Commission

Where the Commission issues an operating licence it may attach a condition to the licence.

Would welcome further clarification as to the nature of the conditions that may be attached.




It will be for the Commission to publish its policy on licence conditions and the circumstances when they will be imposed on an individual basis.

213

Feb 2004 Clauses

Nov 2003 Clauses


draft)65 63 Condition imposed by Secretary

of State

The Secretary of State may by regulations provide for a specified condition to be attached to operating licences falling within a specified class.

See comment on Clause 62 (Nov draft). Leisure Link, DGB 14, para 5



The Secretary of State may impose conditions on classes of operating licence by regulation. There may be circumstances where this power provides the most suitable means of attaching a general condition, on a matter where the Government believes central regulation is required.

The Secretary of State should not be given this discretion without consultation or restriction.

BACTA, DGB 54 The Secretary of State will be required to lay a draft of the order before Parliament, using the negative resolution procedure, prior to such regulations coming into force. DCMS would expect consultation to take place prior to regulations being introduced, unless the matter was one of urgency.

66 64 Scope of powers to attach conditions

(1) … a condition attached … may ... do any of the things specified in this section.

See comment on Clause 62 (Nov draft) Leisure Link, DGB 14, para 5



DCMS does not consider that any further expansion of this clause is needed.

The powers are too broad and will prohibit large-scale investment.


DCMS believes the scope of the powers set out in clause 66 (Feb 04 draft) are measured and appropriate. The discretion is needed to ensure proper regulation of gambling in accordance with the licensing objectives (clause 1). DCMS does not consider that the clause will prohibit large-scale new investment.

64(5) In regulating the licensed activities a condition may make provision about -(d) any other matter.

The broad powers to attach conditions give no certainty for applicants and must be limited as suggested in “A Safe Bet for Success”.

BACTA, DGB 54 See response above. Commission powers to impose conditions are limited by its duty to promote the licensing objectives in the pursuit of its functions (clause 14).

214

Feb 2004 Clauses

Nov 2003 Clauses


draft)64(6) …in particular, a condition may

make provision about the maintenance of reserves in respect of potential liabilities.

Such a provision could fundamentally affect operators’ businesses.

BACTA, DGB 54 This provision replicates the existing practice of the Gaming Board to require gaming reserves to be held by casino operators. The Bill does not require all operators to hold reserves, but gives the Commission power to attach conditions requiring reserves where it considers it appropriate. The Commission will be expected to publish its policy on this.

64(7) A condition of a remote operating licence may restrict the methods of communication that may be used …

The uncertainty of allowing a licence to be arbitrarily amended for any number of items, particularly restricting means of communication, will make it more difficult for offshore operators to take up a UK licence.


Sportingbet, DGB 99, para 16

There is no intention for this power to be used arbitrarily. It is intended for use in two circumstances (a) where an applicant only applies for authorisation for certain types of communication e.g. television and not the internet or (b) where an applicant has not demonstrated competence in the use of a particular technology for gambling to the Commission's satisfaction. In either circumstance the Commission will wish to attach a condition limiting the methods of communication which may be used. The alternative to this approach was to produce lots of sub-sets of remote licences which we considered unwieldy and inappropriate. The draft Bill makes provision for variation of licences (clause 83) should an operator wish to apply to change or add to the communication methods he uses. It is not anticipated that this will cause any particular problems for offshore operators who wish to enter the GB regime.

67 65 Requirement for personal licence

215

Feb 2004 Clauses

Nov 2003 Clauses


draft)65(6) In this section "operational

function" means:(a) any function which enables the person exercising it to influence the outcome of gambling.(b) receiving or paying money in connection with gambling, and(c) manufacturing, supplying, installing, maintaining or repairing a gaming machine.

The provision is too broad and the impact on Adult Gaming Centres and Family Entertainment Centres could be severe.

BACTA, DGB 54 Every operator is required to have one person in a management office who holds a personal licence (clause 67 Feb 04). After that, it is for the Commission to judge what further personal licences need to be held by persons engaged in management offices or operational functions. For example, AGCS and FECs will have different personal licensing requirements to casinos. The discretion in clause 67 has been designed expressly to cater for the different types of operation which the Commission will license. Clause 104 (Feb 04) also makes provision for small-scale operators to be exempted from this general requirement to have personal licences.

68 66 Return of stakes to children69 67 Premises

67(b) An operating licence -(b) may include a condition about - (i) the number of sets of premises on which the licensed activities may be carried on;(ii) the number of persons for whom facilities may be provided on any premises where the licensed activities are carried on.

It would be inappropriate to limit the number of casinos under an operating licence, or to limit the number of persons for whom casino facilities may be provided, as this could prevent large-scale casino projects and is in conflict with the cornerstone abolition of the “demand” test. The Explanatory Notes to the Draft Gambling Bill suggest that Clause 67(b) is directed at betting shops and bingo halls and we suggest that this be reflected in the draft Gambling Bill by specifically excluding casinos.


Examples provided in Explanatory Notes are merely illustrative. It is intended that this power should be available with respect to all classes of operating licence. The Gambling Commission may take the view that a given applicant is not yet competent or suitable (in terms, for example, of management capacity or experience) to meet the terms of its licence conditions in more than a specified number of premises.

The power to limit the number of premises and customers should be removed as it is a limitation which does not exist under the current law and could create unnatural restraints.

BISL, DGB 37, paragraph 10.6

See previous response. The power is considered appropriate and necessary.

There is no justification for this Clause which adds a potential new power to restrict the number of customers for whom premises can be operated.

Operators of Adult Gaming Centres, DGB 82, para 19


216

Feb 2004 Clauses

Nov 2003 Clauses


draft)The size of the lottery will limit the numbers and there seems no need for any limit on the numbers of premises in the case of lotteries.

The Lotteries Council, DGB 110, para 4(e)

DCMS agrees that lotteries are not regulated as premises based activities. Accordingly, it is difficult to foresee when the Commission would exercise this power in relation to lotteries requiring an operating licence. As this is a discretion for the Commission DCMS does not consider the clause needs further amendment.

70 68 Equipment

A condition attached to an operating licence … may make provision about equipment to be used in the provision of licensed activities.

See comment on Clause 62 (Nov draft). Leisure Link, DGB 14, para 5


The intention of this clause is to allow the Commission to regulate the equipment, other than gaming machines, that may be used to provide gambling. This power is necessary to allow the Commission to control numbers or specifications of pieces of equipment which deliver the gambling itself, particularly computers. An example would be terminals for playing a live game of roulette, which does not constitute a gaming machine under the Bill, but which will require regulation.

It is unclear why such provisions are necessary and how much power might be used.

BACTA, DGB 54 See response above.

See comment on Clause 64 (Nov draft). MGM Mirage, DGB 56, para 7.1

See response above.

A condition which could limit the number of tables in a casino thereby putting an operator above or below the threshold for unlimited slot machines should not be possible.


Numbers of gaming tables permitted in casinos is addressed by clause 142 in relation to premises licences. It is not the intention that clause 70 should be used to force a casino to take a particular number of tables, and DCMS will consider if further clarification of the drafting is required.

71 69 Gaming machines It is unclear how grandfather rights will be protected from the imposition of conditions.

BACTA, DGB 54 Further clauses of the draft Bill will make transitional provision for existing operators. A policy paper was published in February 2004.

217

Feb 2004 Clauses

Nov 2003 Clauses


draft)72 70 Remote operating licence To the extent that they apply to remote betting

operations, these provisions are excessively restrictive . Future remote betting legislation should be no more onerous than the existing, effective law.

BBA, DGB 96, para 7

DCMS does not agree that the present law is effective. DCMS considers that the proposed regulation of remote betting is not unnecessarily restrictive, but contains appropriate measures for regulating operators of remote betting who wish to be based in Great Britain. There is no existing law designed for the purpose of regulation of remote betting from Great Britain and the current 1963 Act does not provide adequately for this growing market.

70(2) A remote gambling licence shall…be subject to the condition that remote gambling equipment used by the licensee in connection with the licensed activities must be situated in Great Britain.

Ancillary technology such as “on the edge” and game download servers, call centres and bank processing are not core to the game determination and should not be required to be situated in Great Britain. The “primary determination” server should be located in Great Britain where authorities have access to the logs and player database, but there should not be a requirement for all equipment involved in remote gambling to be located in the country.


Clause 25(4) (Feb 04) defines what equipment needs to be located in Great Britain pursuant to clause 72(2). DCMS notes the comments, and will consider further whether the list of matters at clause 25(4) needs to be narrowed, without harming the regulatory aim of locating key equipment generating remote gambling opportunities in Great Britain.

“Remote gambling equipment” should be required to be situated in the UK if used to i) register a person’s participation in gambling (player database server); and ii) enable the player to participate in a virtual game or gambling (gaming server or random number generator). The presence of any one piece of “remote gambling equipment” located within the UK, which may be secondary servers, would inadvertently require each operator accessing that piece of equipment to be licensed in the UK.

Cryptologic, DGB 60, para 3.2.

DCMS note this comment. See response above.

218

Feb 2004 Clauses

Nov 2003 Clauses


draft)70(4)(d) In particular, the Commission may -

(d) … require the licensee under a remote licence - (i) to submit to a test in accordance with arrangements made under paragraph (c) above, and(ii) to produce specified evidence of the result of the test.

The software provider must be approved as ‘fit and proper’ as it is a critical component in the operations of an Operator’s business and can significantly affect the outcome of games and wagering. In most cases, a Software Provider’s interest is aligned with the Operator because the Software Provider earns its fee through a revenue sharing arrangement. The probity review should include transparency of ownership and software should be certified by an accredited testing organization.

Cryptologic, DGB 60, para 3.1

DCMS agrees with this comment. Suppliers of software to gaming machines are required to hold a gaming machine technical operating licence (clause 53(2)(h) together with clause 194(3)(b) (Feb 04)). The intention is that suppliers of software for use in remote gambling operations will also be required to hold a remote operating licence for the type of gambling facilities they generate e.g. casino games or virtual betting. Clauses 4 and 21 capture such software providers, but DCMS will look further at how to clarify the need for an operating licence in this respect.

The regulatory approach for checking and verifying the integrity of online gaming systems should be based on checking the operation of systems as a whole, rather than the outdated source code testing regime currently used in the land-based environment.

Association of British Bookmakers, DGB 96, para 11

This will be a matter for the Commission to determine. DCMS would want the Commission to use the most appropriate testing systems for the facilities in question.

73 71 Casino operating licence71(4) In determining whether to grant a

casino licence the Commission may not have regard to - (a) the area in Great Britain within which it is proposed to operate a casino, or(b) the expected demand for the facilities which it is proposed to provide in a casino.

This merely requires the Gambling Commission, when granting an operating licence, not to have regard to the demand for facilities or the place where they will be operated. It should also govern the granting of premises licences by local authorities.

Paradign Service, DGB 06, para 3


DCMS do not intend there to be any continuation of the permitted area regime, and will consider whether the effect of this clause is required elsewhere in the draft Bill.

74 72 Bingo operating licence75 73 General betting operating

licence76 74 Pool betting operating licence77 75 Horse-race pool betting

operating licence78 76 Lottery operating licence

219

Feb 2004 Clauses

Nov 2003 Clauses


draft)76(6) In issuing a lottery operating licence

the Commission may attach a condition … preventing, restricting or controlling the use of a rollover.

The limits on the use of rollovers seem unnecessary given limits already imposed on maximum size of rollover prizes.

GamingKing plc, DGB 63

There is nothing in the draft Bill preventing or restricting licensed lotteries from holding rollovers. The policy intention is that rollovers should be permitted for these lotteries. It is nevertheless considered that the flexibility to restrict or limit this privilege should be retained, in the event that rollovers prove to be a source of harm.

As there is a limit on the maximum prize , which includes any rollover, there is no need for the Commission to be able to prevent or restrict the use of a rollover.

The Lotteries Council, DGB 110, para 11(a)


79 77 Mandatory conditions of lottery operating licence

Clause 77 does not require there to be a ticket, and does mention a “right” in respect of membership of the class among whom prizes are to be allocated. At present, tickets or “chances” may be distributed in a lottery, but any tickets must contain certain information. Retaining the word “chance” (as in the present legislation) would broaden the scope of the legislation concerning lotteries and we see no reason for it not to be included.


DCMS' policy is that in licensed lotteries it is necessary that any ticket to enter the lottery must be a document, and must contain certain information. This is necessary for consumer protection. 'Ticket' is defined at clause 210 (Feb '04 draft Bill) as including any document or article which confers or can be used to prove membership of a class for the purpose of the allocation of prizes. It is not intended that there should be scope for lotteries to offer 'chances' which avoid the requirements for information to be displayed. We will consider whether additional wording is required to clarify this intention.

77(2) The first requirement is that no draw in a lottery … may take place unless at least 24 hours have elapsed since the last sale of a lottery ticket...

This is too restrictive and will render almost all society lotteries, except scratch cards and raffles, illegal.

Inter Lotto (UK) Ltd, DGB 87

DCMS note this comment and have indicated already to the Committee that we are actively considering this policy.

Even specifying that the last ticket must be sold no later than, say, 30 minutes before the draw of the lottery would catch "Golden Goal" ticket lotteries where the interval could in theory be 30 seconds or less. The present proposal in clause 77(2) places unreasonable restriction on the work of non-commercial lotteries.

The Lotteries Council, DGB 110, para 6(b)


If the objective is to prevent rapid draw games then a much smaller period of time, such as 2 hours, would be more than sufficient.



220

Feb 2004 Clauses

Nov 2003 Clauses


draft)In seeking to restrict repetitive play in rapid draw lotteries, this clause could unintentionally trap non-rapid draw lotteries.

Littlewoods Gaming Ltd, DGB 69, para 6.6


77(5)-(6) (5) The third requirement is that - (a) the proceeds of a lottery…may not exceed £2,000,000, and(b) the aggregate of the proceeds …in a calendar year…may not exceed £10,000,000.(6) The fourth requirement is that it must not be possible for the purchaser of a ticket...to win...more than - (i) £25,000, or(ii) if more, 10% of the proceeds of the lottery.

If decided that limits on sizes of lotteries should be retained, they should be capable of variation in the light of experience and with reasonable speed. This could be done either by Statutory Instrument or preferably by the Commission in consultation with the Secretary of State. Clause 77 would not at present permit such a procedure, and primary legislation would be required if it were desired to vary any of the limits mentioned in clause 77.


It is intended that the final version of the Bill will contain a power for the Secretary of State to amend these monetary limits by delegated legislation.

Given that these limits are likely to change over time, they should not be enshrined in the Act. Instead the Secretary of State should be able to determine them by Regulation.

GamingKing plc, DGB 63.


77(7)(a) The fifth requirement is that each ticket in any lottery…-(a) must be a document,

It would be helpful if the Act could specify a definition of “document” that included tape recordings, computer files and databases, and microfilms, and other non paper means


The policy intention is that the term 'document' should be wide enough to include non-paper documents. DCMS are considering whether it is necessary to provide an express definition of the term in the final Bill.

Is an electronic version a “document”? GamingKing plc, DGB 63


77(8) The sixth requirement is that the price payable for each ticket…

A provision should be included in the Bill making it clear that no condition may be attached to an operating licence to limit the ticket price, nor may it be limited in any other way.


The draft Bill does not provide that there should be any limits on the price of tickets in licensed lotteries, and it is not the policy intention that any such limit should be set through licence conditions. DCMS will consider this point.

80 78 Annual fee

221

Feb 2004 Clauses

Nov 2003 Clauses


draft)81 79 Change of circumstance

(1) The Secretary of State may make regulations requiring the holder of an operating licence - (a) to notify the Commission of any change of circumstance ...

Would welcome further clarification as to what will be considered as relevant 'changes of circumstance'.

Leisure Link Group, DGB 14, para 5


Park Place, DGB 25, para 6.2

The provision has its natural meaning and it is not considered that it merits further definition. The Commission will be able to impose licence conditions prescribing when licensees must notify changes which affect their licence or the conditions attaching to it. This power is a reserve power for the Secretary of State to prescribe particular circumstances requiring notification.

82 80 Change of corporate control83 81 Application to vary licence84 82 Amendment

The Commission may require the holder of an operating licence to submit it to the Commission…

It is hard to see why a system is being established which relies on production of bits of paper. This is understandable for personal licenses (for ID purposes) but not for premises and operating licences. It is assumed that the Gambling Commission will maintain a computerised record of licences issued and that this will be publicly available. It is therefore hard to see what value the production of a piece of paper adds to this process and it would seem unnecessary to create a criminal offence in respect thereof.


The requirement to produce a licence is a necessary part of the regulatory regime. It is not intended that anything in the Bill prevent electronic documents being used in the regulatory process, and the clauses do not require paper. DCMS will consider whether further modification is required to any provision of the Bill to enable the Secretary of State or Commission to determine the best physical means of using, amending, varying and replacing a licence. There are, however, particular issues about inspection of licences that may necessitate the continued production of paper licences for the time being.

85 83 Register of Operating Licences86 84 Copy of licence87 85 Production of licence

A constable or gambling inspector may require the holder of an operating licence to produce it…within a specified period.

See comment on Clause 82 (Nov draft). GamingKing plc, DGB 63


It seems unnecessary to make non-production a criminal offence, particularly as the fact that the licence has been lost, stolen or damaged is not a reasonable excuse for failing to produce it.


Loss, theft or damage of a licence is a reasonable excuse for non-production, provided the licensee has applied for a copy of his licence.

88 86 Conviction

222

Feb 2004 Clauses

Nov 2003 Clauses


draft)89 87 Initial duration

(1) The Commission shall determine the period during which operating licences are … to have effect.(2) The period must … -(b) end with a date not more than ten years after the date on which it has been issued.

Further clarification and detail regarding the initial duration of operating licences is sought.



BACTA, DGB 54

DCMS believes the provision is clear. Operating licences will last for a maximum period of 10 years. The Commission will set the length of particular classes of licence, within this overall duration. The Secretary of State may amend the 10 year maximum duration, or may impose a particular duration herself on a particular class of licence, thereby overriding the Commission's determination. Such regulations cannot apply retrospectively to licences already granted. It will be for the Commission to publish its policy on the duration of operating licences using its expertise and experience.

To avoid an ad hoc approach to licence terms, a standard term should be established for each class of licence. The Commission's other powers with respect to licences (including the power to revoke) will enable it to protect integrity.


DCMS does not believe the proposed provisions will lead to an "ad hoc" approach to licence terms. The Commission will set standard terms for classes of licence, within the overall 10 year duration set by the Secretary of State, using its expertise and experience. DCMS does not consider the term for classes of licence should be set in the Bill, but believes better regulation will be achieved by the Commission taking charge of this area.

The time limit imposes extra unnecessary costs and burdens on operators and is not a feature of the current law.


The Government believes open ended operating licences are undesirable, and that they should require renewal at least every ten years. It will be for the Commission to determine the exact length of classes of licence. There is no parallel between the existing licensing system for gaming, requiring a certificate of consent from the Gaming Board for each licence application, and an annual licence application to a magistrates' court and the proposed regime of operating and premises licences in the Bill. DCMS considers the right balance has been struck between requiring renewal of operating licences, and allowing premises licences to last indefinitely (subject to cancellation or other early termination).

223

Feb 2004 Clauses

Nov 2003 Clauses


draft)It is unclear why the duration of licences is restricted to ten years. This will have major implications for significant investment projects….Furthermore it is inconsistent with premises licences which 'will not be time limited'.

Kerzner International, DGB 34, para 9

See previous response. Under the Bill operators will have a significant advantage from premises licences being of indefinite duration. As a balanced regulatory measure the Government is clear that operating licences should be renewed periodically, and that the maximum duration of 10 years is the longest that any licence should subsist without the Commission looking again at the operator.

There should be consistency between operating licences and premises licences and we believe that licences should not be subject to a particular duration. A fixed duration is wholly impractical and raises uncertainty for investment as well as accounting and staffing issues. If the applicable authorities approve the application for a licence, the licence should be of indefinite duration and automatically renew each year, subject to the payment of an annual continuation fee, continued probity and compliance with licence conditions.


See previous responses. The Government believes the opposite of the view expressed. If premises licences are to be of indefinite duration, operating licences should be subject to periodic renewal. The system proposed is achievable and practicable and will ensure the gambling industry in Great Britain is regulated effectively.

90 88 Surrender91 89 Lapse

(1) In the case of an operating licence issued to an individual, the licence shall lapse if the licensee - (a) dies,…

Clarification is sought of how this is to apply in a family business. There should be a provision for surviving relations to apply and there should be a transition period.

BACTA, DGB 54 The policy intention is that operating licences will not be transferable, but that premises licences will be (to the holder of an operating licence). A business can protect its position by incorporating, so that the death of an individual concerned in the business does not cause the licence to lapse. Where a business chooses to operate as a sole trader (i.e. unincorporated) DCMS have provided that the premises licence can survive and be transferred, but that the operating licence will lapse and a new operating licence holder must be found to take over the premises licence.

92 90 Forfeiture

224

Feb 2004 Clauses

Nov 2003 Clauses


draft)93 91 Renewal of licence Clarification is sought regarding modifications that can

be made to a licence, and the discretion to review or reject.

BACTA, DGB 54 Renewal of a licence proceeds on the same principles as apply to the initial grant of a licence. Clearly, the track-record of the operator under his previous licence will form part of the evidence used by the Commission to assess his suitability to receive a renewed licence. The clauses on review and associated regulatory powers are separate from the renewal provisions, and exist alongside the grant/renewal provisions, to be used by the Commission as prescribed. The renewal is not a review in the sense of clauses 94 and 95 (Feb 04), it is an application to be considered under the principles set out in clauses 57 to 61 (with appropriate procedural modifications to take account of this being a renewal, not a first application). The Commission will issue licensing statements on how renewal is to operate.

91(3)(a) An application for renewal of an operating licence may be made only during the period which -(a) begins three months before the date on which the licence would otherwise expire…; (b) ends one month before the date on which the licence would otherwise expire...

If a fixed duration is to be enacted, it is wholly impractical for a large scale operating business to apply for a renewal only three months prior to the expiration of a licence. Two years would be more appropriate.


DCMS note this comment, but consider that the time period is practical. It is, however, capable of amendment by the Secretary of State, by regulations, in the event that circumstances demonstrate that the period is not appropriate.

Three months is not enough time to enable businesses to plan effectively and creates uncertainty about the continued existence of the business.

Earls Court and Olympia Group, DGB 39

See response above.

This is unnecessarily restrictive and the Gambling Commission should be allowed to consider late renewal.

BISL, DGB 37, para 10.7

See response above.

94 92 Review

225

Feb 2004 Clauses

Nov 2003 Clauses


draft)92(2)(c)

(ii)The Commission may review any matter connected with the provision of facilities for gambling if the Commission - (c) for any reason…(ii) thinks that a review would be appropriate.

The provisions are too broad and more justification should be needed for a review.



Park Place Entertainment Corporation, DGB 25, para 6.2

The Government believes that the Commission should have wide ranging powers of review to enable it to pursue its licensing objectives. DCMS proposes to retain the provision.

95 93 Regulatory powers96 94 Revocation

94(2)(a) In considering the licensee's suitability… the Commission may…have regard to -(a) the integrity of the licensee…

Contributions to the GICT and social responsibility training should be tests of “integrity”.

BACTA, DGB 54 The Commission has discretion to consider such actions as evidence of suitability in the application process (see comments on clause 56 (Nov 03) above). The Commission will be able to take account of these matters in assessing the integrity of an operator when considering revocation. However, it is not the intention of the Bill to make non-payment into the GICT (now the Responsibility in Gambling Trust) a ground of automatic failure to demonstrate integrity. It will be a matter of overall judgement for the Commission.

97 95 Financial penalty95(3) The Commission may not give a

notice [of a penalty] after the period of two years beginning with - (a) the day on which the breach occurred or began to occur, or(b) if later, the day on which the breach came to the knowledge of the Commission.

Two years is too long. There is no reason why it should take this long.




DCMS note this comment. Two years is considered an appropriate period after which action may not be taken. It provides a balance of protection, allowing proper investigations to take place, and evidence to be obtained, while not leaving the operator in a position of uncertainty for longer than merited.

226

Feb 2004 Clauses

Nov 2003 Clauses


draft)No limit is put on the fines. In the case of a non-commercial society whose purposes must be that of supporting good causes, any fine would merely be taking money away from these good causes. Sufficient sanction is provided by the Commission’s ability to review or revoke the operating licence and therefore the Commission’s Financial Penalties should not apply to non-commercial lotteries.

The Lotteries Council, DGB 110, para 14

DCMS note this comment. Imposing a financial penalty upon review is a matter of discretion for the Commission, taking into account a number of factors, for example, the nature of the licensee, to be exercised in accordance with its published statement (clause 97 (6) and (7) (Feb 04)). It is not intended to alter the present policy position.

98 96 Levy

(1) The Secretary of State may make regulations requiring the holders of operating licences to pay an annual levy to the Commission.

In the case of non-commercial societies, licensed to raise funds through lotteries, the levy should be waived because it would merely amount to a reduction in the sums available to be given to good causes.


DCMS note the comment. It is not intended to alter the present policy position.

96(5) The Commission shall…expend money received … for projects related to - (a) addiction to gambling,(b) other forms of harm or exploitation associated with gambling, or(c) any of the licensing objectives.

Too vague. A further clause should be added covering transitional arrangements between the Responsibility in Gambling Trust and the Gambling Commission




It is not intended to limit the discretion of the Government and the Commission by specifying bodies through whom proceeds from the levy must be directed. The intended purpose of levy monies is adequately set out in clause 98(5) (Feb 04), and provides the appropriate parameters for how it may be used.

99 97 Directions and requirements100 98 Relevant offence: disapplication

of rehabilitation101 99 Interpretation

227

Feb 2004 Clauses

Nov 2003 Clauses


draft)99(2)(b) In this Part "relevant offence"

means - (a) an offence listed in Schedule 4, and(b) an offence under the law of a country or territory outside of the United Kingdom…which prohibits a kind of activity prohibited by an offence listed in that Schedule…

As currently drafted, were a licensed UK online casino, operating in accordance with its licence, to be convicted in the US, in connection with that remote gambling, then that US offence would be a 'relevant offence' under Part 5 of the Bill potentially jeopardising the operator's licence. This would be the case even if the Secretary of State had not designated the US a "prohibited territory" under Clause 31.


Relevant offences (Schedule 4) are those offences which are considered sufficiently serious to merit special treatment in the Bill. For example, a conviction for a relevant offence will not be a spent conviction for the purposes of the suitability test in the licence application process. Moreover, where a person commits an offence abroad, and that offence equates to a relevant offence, then the Commission may take account of such a foreign conviction when considering an application for grant of a licence, or review proceedings. It will be for the Commission to decide in any given case whether a conviction for a relevant offence abroad is a relevant consideration. This is a separate matter to the powers under clause 31 for the Secretary of State to prescribe territories to which a licensed GB remote operator may not offer facilities for gambling. This latter provision, should it ever be exercised, will concern protecting overseas citizens. The relevant offence provision is concerned with protecting citizens here.

PART 6: PERSONAL LICENCES102 100 Nature of personal licence103 101 Application of provisions of Part

5104 102 Exemption for small-scale

operatorsThere does not seem to be any need to have a personal licence in addition to an operating licence when the society, in practice the officers of the society, will already have to have satisfied the Commission on the fit and proper test. As there is no definition given of what a “small scale operator” may be, the Council does not know how many of the non-commercial societies will be exempt.


A small-scale operator is likely to be defined by reference to the number of staff or premises he operates. It is considered advantageous to set out the precise definition in delegated legislation so that amendments may be made over time to obtain the correct balance and reduce unnecessary regulatory burdens. Assuming the small-scale operator test is not fulfilled, it will be for the Commission to determine, over and above the one mandatory personal licence for an office holder in a licensed organisation, whether a lottery operator needs any additional personal licences.

228

Feb 2004 Clauses

Nov 2003 Clauses


draft)102(2) In this section "small-scale operator"

shall have such meaning as the Secretary of State may prescribe by regulations.

The definition of “small-scale operators” is critical and should be set out in the primary legislation.


105 103 Application106 104 Initial duration107 105 No annual fee108 106 Multiple licences109 107 Production of licence We believe that the wide variation of requirements will

cause huge confusion.Leisure Link, DGB 14, para 5


DCMS do not believe the clause on production of personal licences creates any confusion. In circumstances where the licensed person is performing gambling functions relevant to his licence, or where he is on licensed gambling premises he needs to be able to produce the licence immediately. In all other circumstances he must produce the licence within a specified period. He will only commit an offence if he fails to produce the licence without reasonable excuse. A small scale operator excused from holding any personal licences will need to produce his operating licence instead.

110 108 Review111 109 Renewal Confirmation is sought that, in the absence of a

conviction, renewal will be a right.BACTA, DGB 54 Renewal of a licence proceeds on the same principles

as apply to the initial grant of a licence. Clearly, the track-record of the operator under his previous licence will form part of the evidence used by the Commission to assess his suitability to receive a renewed licence. There will be no renewal as of right.

112 110 Disqualification113 111 Notification of operating

licensee114 112 Conviction

229

Feb 2004 Clauses

Nov 2003 Clauses


draft)115 113 Breach of personal licence

conditionThere appears to be no provision for a remodel or transition period or for a remedy, if an operator’s licence contains a condition that personal licences are obtained and a personal licence is revoked. Consideration should be given to a period in which an alternative person can be licensed to prevent a business from breaching its operating licence.

BACTA, DGB 54 DCMS note this comment. The purpose of clause 115 (Feb 04) is to assist operators by placing a duty on the Commission to notify operators where they believe a problem with personal licences exists. The Commission will, of course, have discretion about whether to take action against an operator for any infringement of a condition pertaining to a personal licence (under clause 67).

PART 7: OPERATING AND PERSONAL LICENCES: APPEALS

116 114 The Gambling Appeal Tribunal Clarification is required as to whether the onus to provide evidence is on the licensee or the Gambling Appeal Tribunal.



The Gambling Appeal Tribunal will be an impartial tribunal, and as such will not have a role to play in providing evidence. This will be a matter for the parties concerned. The rules of the tribunal will be prescribed in regulations.

117 115 Appeal to Tribunal118 116 Timing 119 117 Appeal from Tribunal

(1) A party to proceedings before the Tribunal … may appeal on a point of law to - (a) the High Court…

Appeals should be in respect of both law and fact.

If additional evidence becomes available, there must be appeals on questions of fact.

BACTA, DGB 54 It is generally incumbent upon the parties to present the full facts to the tribunal, and it is usual that the right to appeal a decision of a tribunal should only be available on a point of law. Where a decision of the Commission is appealed to the Gambling Appeal Tribunal, the facts of the matter will have already been considered once by the Commission. The tribunal will then consider the facts again on appeal, and will, under clause 120(3) (Feb '04 draft Bill) be able to take account of evidence which was not available to the Commission. This means that there are two opportunities for the facts to be considered. As part of the process of finalising the Bill, we will ensure that it contains the elements necessary for a fair appeals procedure. In particular, we will consider the procedure in the event that new evidence emerges which could not reasonably have been disclosed to the tribunal.

120 118 Powers of Tribunal121 119 Stay pending appeal

230

Feb 2004 Clauses

Nov 2003 Clauses


draft)PART 8: PREMISES LICENCES

123 121 Nature of licence124 122 Form of licence125 123 Multiple licences126 124 Three-year licensing policy A policy changing every three years will lead to

uncertainty.BACTA, DGB 54 It is not envisaged that the policy will change every

three years. In preparing its statement of principles a licensing authority will always have to apply the principles set out in clause 127 (Feb 04).

The clause should require consultation with all relevant businesses within the Local Authority's area.

Earls Court and Olympia Group, DGB 39, para 5(g)

Under clause 126(3) a licensing authority is required to consult persons they believe to represent those likely to be affected by the exercise of its functions. It is considered that this is a sufficient obligation to consult.

There should be full consultation, including with relevant trade associations.


It is crucial that this guidance emphasises the need to seek the breadth of opinion in their locality. Authorities should take into account the specific concerns of their electorate.

The Methodist Church, DGB 13, para 7.2


127 125 Principles to be applied

In exercising their functions under this Part a licensing authority shall aim to permit the use of premises for gambling in so far as the authority think it - (a) in accordance with any relevant code of practice ..., (b) in accordance with any relevant guidance issued by the Commission ..., (c) reasonably consistent with the licensing objectives.

Local Authorities should have the discretion to impose an area wide ban on particular types of gambling premises or to otherwise restrict premises that are to be granted licences, where such restrictions are reasonable to secure the social well being of the area and to protect children, young people and vulnerable adults.


DCMS note this comment. The Government set out its present position in Chapter 3 of its White Paper "A Safe Bet for Success" March 2002.

The presumption to grant an application unreasonably limits the discretion of councils and does not allow flexibility according to local conditions.


Clause 127 sets out the principles to be applied in considering applications. These may well lead to the rejection of applications for premises licences and the draft Bill makes provision for this.

The Local Authority's discretion is too wide. BACTA, DGB 54 Clause 127 describes the principles that must be applied by each licensing authority.

231

Feb 2004 Clauses

Nov 2003 Clauses


draft)128 126 Delegation to licensing

committeeThis indicates that the same Committee and procedures will apply as under the Licensing Act 2003 but the secondary legislation or guidance under the 2003 Act relating to Licensing Committees is not yet available.


The Government intends to make it available in due course.

129 127 Register130 128 Responsible authorities

(1) the following are responsible authorities in relation to premises -(i) any other person prescribed for the purposes of this section by regulations made by the Secretary of State.

We would like further information regarding who could be included as a result of this clause and for what reasons.




The list does not yet contain relevant authorities for Scotland. Apart from this there is no intention to add to this list. This is a reserve power in the event that persons are identified who merit inclusion in the licensing process.

131 129 Interested party

For the purposes of this Part a person is an interested party ... if ... the person -(a) lives sufficiently close to the premises to be likely to be affected by the authorised activities,(b) has business interests that might be affected by the authorised activities

Full account should be taken of the entire market catchment area when proposed gambling developments are being considered. It is simply not good enough to have regard only for those who "live sufficiently close to the premises ..."

The Evangelical Alliance, DGB 09, para 3

The present policy is to limit clause 131(a) to persons living sufficiently close to the premises to be likely to be affected by the activities. DCMS considers this provides the appropriate coverage.

Local Authorities should be required to consider the views of a wide range of individuals including schools, community groups and local 'addictive support' groups located within a generous radius.

The Methodist Church, DGB 13, para 7.3


232

Feb 2004 Clauses

Nov 2003 Clauses


draft)More clarification is needed on how it will be determined that a person lives "sufficiently close" to mean that they are likely to be affected. Clarification is also needed on how it will be determined that a business will be affected.




The degree to which persons and businesses are affected by the premises proposed will be a question of fact for the licensing authority to judge. It is not thought helpful to limit the discretion of licensing authorities by setting an arbitrary geographical limit, or to list particular impacts on other businesses that might be thought relevant.

132 130 Making of application133 131 Notice of application134 132 Representations135 133 Requirement for hearing

133(3)(c)

A licensing authority may also determine an application for a premises licence without a hearing…if the authority think that the representations… -(c) will certainly not influence the authority's determination of the application.

The ability of Local Authorities to decide that representations will not influence their decision, may contravene the rules of natural justice and Human Rights Act requirements for a fair hearing.


Clause 135(3) (Feb 04) sets out the circumstances in which a licensing authority may determine an application without a hearing. It will be for the authority to ensure that it complies with the rules of natural justice and the Human Rights Act.

136 134 Determination of application137 135 Grant of application138 136 Rejection of application139 137 Mandatory conditions

(1) The Secretary of State may by regulations provide for a specified condition to be attached to premises licences.

A condition should be imposed in respect of all licensed premises requiring that any music, dancing or live entertainment shall: (A) be ancillary to the gaming/gambling use concerned; (B) not disrupt the proper control of gambling or gaming; (C) be appropriate in scale and content to the premises, to the locality and to any seasonal, ethnic or cultural celebrations; (D) not be performed at a level causing disturbance to adjoining owners or to people in the vicinity of the premises; and (E) not include and lap/table dancing or any performance of a sexual nature.


It is not the present policy to make the matters suggested mandatory conditions.

233

Feb 2004 Clauses

Nov 2003 Clauses


draft)It is unclear which conditions are likely to be mandatory and which default.


This is a matter for the regulations to be made by the Secretary of State. Proposals on these will be brought forward as soon as possible.

140 138 Default conditions See comment on Clause 137 (November draft). The Bingo Association, DGB 49, para 19


141 139 Conditions imposed or excluded by licensing authority

See comment on Clause 137 (November draft). The Bingo Association, DGB 49, para 19


142 140 Gaming machines The number of gaming machines should not be listed in the Act. The Secretary of State should have discretionary powers over the limits.



Clause 142(10) provides for the Secretary of State to amend the provisions in clause 142 by order, including the number of machines permitted.

140(10) The Secretary of state may by order amend a provision of this section.

This power to vary should be limited to an increase and not a decrease in numbers of machines if large-scale investment, job creation and tax growth is to be encouraged.


The policy is to enable controls to be varied in either direction in the light of all relevant factors, including evidence about problem gambling.

143 141 Casino premises licence144 142 Door supervision145 143 Pool betting on track146 144 Exclusion of children from track

areasClarification is sought of the position in relation to bowling alleys.

BACTA, DGB 54 Bowling alleys will not be licensed as betting tracks under the draft Bill. DCMS acknowledges, however, that consideration will have to be given to the position of bowling alleys, which may hold an on-premises alcohol licence and might also wish to apply for a Family Entertainment Centre licence. This would not be possible presently under clause 34 (Feb 04) of the Bill.

144(2) But subsection 1(a) - (a) shall not apply to a dog-race track on a day on which dog-racing takes place…

The clause should not refer to days on which 'dog racing' takes place but to days on which 'live racing' takes place to avoid confusion over whether children are allowed into other tracks such as those for vehicle racing.

British Greyhound Racing Board, DGB 40

DCMS note this comment, but do not believe that the clause should cause the confusion suggested.

147 145 Prohibition of membership condition

148 146 Annual fee

234

Feb 2004 Clauses

Nov 2003 Clauses


draft)149 147 Availability of licence

(1) The holder of a premises licence shall - (a) keep the licence on the premises, and(b) arrange for the licence to be made available on request to …

See comment on Clause 82 (Nov draft). GamingKing plc, DGB 63

See the response to clause 82 (Nov 03) above. DCMS cannot see any good reason why the licence should not be available for inspection on the licensed premises.

150 148 Change of circumstance151 149 Application to vary licence152 150 Transfer153 151 Transfer: supplemental154 152 Copy of licence155 153 Initial duration

(1) The Secretary of State may by regulations prescribe a period at the end of which premises licences expire...

Further clarification is sought regarding the length of period from prescription being issued and licence expiring.




Premises licences are to be of indefinite duration, subject to matters such as surrender, revocation or lapse. There is no present intention to use this power to prescribe a period at the end of which a premises licence expires.

156 154 Surrender157 155 Revocation for failure to pay fee

158 156 Lapse

(1)….the licence shall lapse if the licensee - (a) dies

This should not happen automatically. There should be scope to transfer the licence to a successor.




Clauses 159 and 160 (Feb 04) make such provision in relation to individual i.e. unincorporated licence holders.

159 157 Reinstatement

235

Feb 2004 Clauses

Nov 2003 Clauses


draft)157(2) During the period of 21 days

beginning with the date of the lapse … for the licence to be reinstated with the applicant as the licensee.

A minimum of three months should be allowed. BACTA, DGB 54 DCMS note this comment, but believes that 21 days is a sufficient period for an application for transfer to be made following the realisation of the circumstances described in clause 158.

160 158 Reinstatement: supplemental161 159 Application for review

159(3) The Secretary of State may make regulations requiring an applicant - (a) to give notice of application to the licensee; (b) to give notice of his application to the responsible authorities…

Further clarification as to the length of the notice period is sought.




DCMS note this request. This is a matter for the regulations to be made by the Secretary of State. Proposals on these will be brought forward as soon as possible.

162 160 Rejection of application163 161 Grant of application164 162 Initiation of review by licensing

authority165 163 Review166 164 Action following review

(1) As a result of a review of a premises licence … a licensing authority may - (a) revoke the licence;(b) suspend the licence...;(c) exclude a condition…;(d) add, remove or amend a condition.

The ability to fine an offending operator should be added to the list of possible actions that a licensing authority can take as a result of a review of a premises licence as a less onerous alternative to the actions currently listed.


It is not the present policy to give licensing authorities power to fine in these circumstances.

167 165 Determination 168 166 Application169 167 Effect

236

Feb 2004 Clauses

Nov 2003 Clauses


draft)167(2) The licensing authority shall

disregard any representations made ... unless they think that the representations:(a) address matters that could not have been addressed in representations in relation to the application for the provisional statement, or(b) reflect a change of circumstances.

This implies that objections could be made which delay, restrict or even prevent the opening of the gaming facility after all works have been completed and staff employed.

Provision should be made to allow applications for a full premises licence even before work has started which would give a level of certainty that the provisional statement does not.

Earls Court and Olympia Group, DGB 39, para 5(i)

Applicants may seek a full premises licence at any time provided that they have a right to occupy the premises to which the application relates.

A provisional statement must provide a promise to the successful applicant that if they complete the premises in accordance with the deposited plans and are considered a fit and proper person, they will be granted the licence.


It is not the present policy intention to provide the assurance requested. Rather, it is thought desirable to give the licensing authority and others scope to raise objections to the grant of the premises licence following the completion of works, if the works are not completed in the way outlined in the application for a provisional statement, or if some other circumstance of significance has changed. DCMS acknowledge that some further consideration may be required with respect to the type of circumstances that might be thought appropriate for consideration at this stage and will look at the clause further.

Confirmation is sought that the provisional statement can be relied upon for all purposes.


170 168 Rights of appeal Appeals against decisions of Local Authorities should be “de novo”. The provisions are similar to those in the Civic Government Scotland Act, which the Scottish Courts treat as implying more of a “review” of the lower tribunal’s decision than a “de novo” appeal. The power of the Court to “remit back” supports this and could cause delay and costly litigation, involving politically motivated decisions instead of the quasi-judicial balance required in relation to discussions on which large investments may hang.

Operators of Adult Gaming Centres, DGB 82, para 14

Clause 171(3) gives magistrates' courts a wide discretion as to how to deal with the appeal. This includes substituting for the decision appealed against any decision which the licensing authority could have made. It will be for the court to decide which course is appropriate in the circumstances of the particular case.

Explicit powers should be given to magistrates to award costs against either party, including the Local Authority.


Clause 171(3) gives the magistrates' power to make an order as to costs. It will be able to make such an order against any party to the appeal.

237

Feb 2004 Clauses

Nov 2003 Clauses


draft)168(2)

(a)Where a licensing authority grant an application … any of the following may appeal -(a) a person who made representation in relation to the application,

Further clarification as to whether the objections raised at the appeal stage can be the same as those raised originally is sought.


Such representations may be raised.

This could slow down the licensing process. Kerzner International, DGB 34, para 1

DCMS note this comment, but does not propose to change its approach on rights of appeal.

171 169 Process172 170 Stay pending appeal173 171 Further appeal

A party to an appeal…may appeal to the High Court on a point of law.

Appeals should be to the High Court on matters of law and fact.

BACTA, DGB 54 It is considered appropriate to limit appeals to the High Court to appeals on points of law.

174 172 InterpretationPART 9: TEMPORARY USE OF PREMISES

We are concerned the measures contained here could encourage the proliferation of gambling through the emergence of 'mobile casinos'.




Clause 176(2) (Feb '04 draft Bill) provides the Secretary of State with powers to specify which activities may be the subject of a temporary use notice. It is not the intention to allow notices to 'cover' the range of activities provided by casino premises. In particular, it is not the intention to allow gaming machines to be provided in reliance on a temporary use notice.

175 173 Exception to offence of using premises for gambling

176 174 Nature of notice177 175 Form of notice178 176 Effect of notice179 177 Maximum permitted period180 178 Giving notice181 179 Acknowledgement of notice182 180 Objections183 181 Hearing of objections184 182 Modification by agreement185 183 Counter-notice

238

Feb 2004 Clauses

Nov 2003 Clauses


draft)186 184 Dismissal of objection187 185 Appeal188 186 Endorsement of notice189 187 Consideration by licensing

authority: timing190 188 Availability of notice191 189 Withdrawal of notice192 190 Delegation of licensing

authority functions193 191 Register

PART 10: GAMING MACHINES194 192 Gaming machine Confirmation is sought that FOBMs are covered as

“machines”.BACTA, DGB 54 Yes. Clause 194 (Feb 04) defines a gaming machine as

any machine which is designed or adapted for use by people to gamble. Where a machine is used to bet on real events it will not be a gaming machine (194(2)(c)). Where a machine is used to bet on virtual events (be they virtual games, races, or other things) it will be a gaming machine. This achieves the Government's stated policy that the machines known as Fixed Odds Betting Terminals / Machines will be regulated in future as gaming machines.

This proposes that virtual betting (i.e. random number generated bets graphically presented as horse and greyhound racing) should be re-classified as gaming simply because it is “virtual”, even though such bets are in every respect fixed odds betting opportunities. There is no logic, or advantage, in redefining virtual events and we strongly recommend that the status quo be maintained.

ABB, DGB 33, para 2.4

DCMS note these comments. See previous response. The Department believe such activities are defined appropriately in the draft Bill. It is not proposed to change the present policy position.

239

Feb 2004 Clauses

Nov 2003 Clauses


draft)192(2)

(d)But - (d) a machine other than a computer is not a gaming machine by reason only of the fact that it is designed or adapted for use in playing a real game of chance,

It is not clear what is meant by this sub-clause. Leisure Link, DGB 14, para 5



Machines that are used during the operation of real games of chance are not to be treated as a gaming machine. Thus, a roulette wheel, to the extent it is a machine, is not a gaming machine, and an electronic card shuffler used in a game of poker will not be a gaming machine. This clause is needed because the definition of gaming machine no longer contains any requirement that money be inserted into the machine to activate gambling. As a result, certain exceptions are provided expressly in clause 194 to prevent unwanted consequences from the deliberately broad main definition. Where machines are for use in playing virtual games they will be gaming machines.

The definition of gaming machine should be clarified and the status of electronic bankers games remains particularly unclear.

Gala Group, DGB 11

See previous response. DCMS considers the main definition of gaming machine to be correct and not to need further clarification. DCMS will look further at the exceptions in clause 194(2) and see if clarification is needed on machines which are used as automated terminals for playing a real casino game. i.e. to take part in a live game of roulette.

192(2)(e)

a machine is not a gaming machine by reason only of the fact that it is designed or adapted for use to enter a lottery before any draw in the lottery has taken place.

Machines selling lottery tickets are not gaming machines provided no draw has already taken place. However with scratch cards, the winning tickets have already been printed so technically the draw has already taken place. The Council would like to see section 192(2)(e) amended to include such pre-drawn lotteries.


DCMS policy is that lotteries which are pre-drawn and offer a virtual scratchcard to the user should be regulated as gaming machines. DCMS note this comment and will consider whether any clarification is required to deal with the vending of pre-drawn real (i.e. paper) scratchcards, equivalent to the vending of tickets for lotteries where the draw has yet to take place.

240

Feb 2004 Clauses

Nov 2003 Clauses


draft)195 193 Gaming machines: Categories A

to D

The Secretary of State shall make regulations defining four classes of gaming machine for the purposes of this Act (to be known as Categories A, B, C, and D).

The clause should be worded to permit the Secretary of State to impose minimum standards consistent with those adopted internationally.




The definition of categories of gaming machine is for the Secretary of State to determine, by reference to matters such as maximum stake and prize. The Secretary of State may further prescribe regulations on how machines are to be used, which will have an impact on how machines are configured and manufactured. The Commission will license manufacturers and suppliers of gaming machines. It is not considered that any additional provision is needed to take account of minimum international standards, of which both the Commission and the Secretary of State will be able to take account as appropriate under the Bill.

Any amendments or definitions made by the Secretary of State should involve a proper consultation process with the industry, and to remain in force for a considerable period of time (say, 10 years) so that businesses may have the stability to invest in their long-term plans.


Regulations on this matter will be subject to an appropriate level of Parliamentary scrutiny and it would also be the intention of the Government to consult widely before bring forward proposals. It is not desirable to have a set duration for the effect of any regulations.

196 194 Adult gaming centre197 195 Family entertainment centre198 196 Prize199 197 Use of machine Confirmation is sought regarding when such a power

may be exercised and in accordance with what criteria.BACTA, DGB 54 The Secretary of State expects to make regulations

prescribing matters equivalent, in subject matter, though not necessarily in detailed content, to those set out in Part III of the Gaming Act 1968. Therefore, rules on when banknotes, smart-cards, coins or other methods of payment can be used for different categories of machine are likely to be prescribed. New matters, not expressly dealt with in the 1968 Act may also be dealt with, such as the rollover of stakes and prizes. Regulations are considered more appropriate for such matters than licence conditions as they provide uniform, readily accessible law for a wide audience, which can be amended, as appropriate, from time to time.

200 198 Supply, &c201 199 Making machine available for

use

241

Feb 2004 Clauses

Nov 2003 Clauses


draft)202 200 Manufacture, supply, &c.203 201 Linked machines We believe that the proposal is illogical because we can

see no difference in practice between the linking of say, 500 machines in one casino and the linking of 500 machines located in a number of different casinos.

The Rank Group plc, DGB 07, p.4

Government policy on the linking of machines is designed to limit the growth in numbers of small casino premises. Such casinos would be a more attractive commercial prospect were it possible to link gaming machines across premises, and the Government considers that linking should only take place within premises.

There is no justification for such a blanket ban and the Secretary of State should have the power to authorise such products by regulation rather than by primary legislation.

Leisure Link, DGB 14, para 5 and DGB 127, para 2


See response above.

The Secretary of State should be given the powers to allow linking of machines between separate casino premises in line with other jurisdictions.

Barcrest Group, DGB 53, para 3.2.1

See response above.

204 202 Penalty205 203 Category D gaming machine

permits206 204 Free use

A person does not commit an offence ... if he makes a gaming machine available for use by another person who-(a) does not pay for or in connection with the use, and(b) does not, by using the machine, acquire the opportunity to win a prize.

This raises concerns for children's exposure to gambling. Free use machines should only be exempted if they are permanently for free use (i.e. not being used as an inducement to fully play later on at Category C or above) and not a version of a full-play Category C or above machine available elsewhere. They could be used by children to get a taste for gambling.


If there is no stake and no prize involved then there is, by definition, no gambling occurring, hence this clause. The Department is not aware of any evidence of category C machines being made available in this way and the Bill contains provisions preventing children having access to gaming machines of categories A, B or C. This is the sort of matter the Commission will be able to address through licence conditions and codes of practice.

207 205 Single machine supply and maintenance permitsPART 11: LOTTERIES

242

Feb 2004 Clauses

Nov 2003 Clauses


draft)208 206 Lottery

an arrangement is a lottery … if under the arrangement -(a) one or more prizes are allocated to one or more members of a class,(b) the system for determining the allocation of prizes relies wholly on chance, and(c) individuals are required to pay in order to enter the lottery.

In the Readers Digest case, the Lord Chief Justice talked about payment or contribution by the participants. It is not clear whether this is what is meant by “individuals are required to pay in order to enter the lottery”.

Institute of Sales Promotions, DGB 85, para 3(a)

As stated in the Explanatory Notes published in November 2003 with the draft Bill, the definition of the term lottery in this clause derives from the formulation by Lord Widgery, the Lord Chief Justice, in the Readers' Digest case. It is nevertheless a new statutory definition, and as such supersedes old case law. DCMS do not consider the wording of this subparagraph to require further clarification.

206(4) For the purposes of sub-section (1)(b) a system for the allocation of prizes relies wholly on chance despite the fact that persons are required to exercise skill in order to enter the lottery, if the requirement is not likely to prevent persons who want to enter the lottery from doing so.

A condition that the skill required must be such that it is likely to “prevent persons who want to enter the lottery from doing so” seems too slight a hurdle to give effect to the Government’s policy that lotteries must be the preserve of good causes. The clause does not allow for an objective test and does not provide the clarity in the law that the Gambling Commission will need. We would rather see a provision along the lines that to obtain exemption from classification as a lottery, a competition must either be free or require a significant degree of skill to succeed in qualifying for entry (i.e. to reach the stage at which the winner is selected by chance). That would provide the Gambling Commission with the legal authority to issue guidance on what constitutes a “significant degree of skill”.

The Gaming Board, DGB 5, paras 6 and 7

S. Fitzgerald QC and P. Circus, Q1618

It is not proposed that there will be any equivalent in the Bill of s.14 of the Lotteries and Amusements Act 1976, which provides that it is an offence (in certain circumstances) to conduct competitions 'in which success does not depend to a substantial degree on the exercise of skill'. The reason for abandoning this provision is that it has not had the desired effect of restricting such prize competitions (and therefore protecting lotteries). The offence has largely fallen into abeyance, and DCMS consider that the main reason for this is that there is considerable uncertainty about what 'depending to a substantial degree on the exercise of skill' actually means. There is great difficulty in setting out objective standards as to what, in practice, would constitute 'depending to a substantial degree on the exercise of skill'.

Continued answer: DCMS consider that any other formulation which relies on qualitative or quantitative assessments of the skill involved will encounter the same problems, and will not, therefore, do anything to clarify the law or to protect lotteries as the preserve of good causes.

To call for a degree of skill such as to eliminate one or two people is not sufficient to prevent people setting up prize competitions which are effectively lotteries.

Mr Dean, OE Q216 See previous response. 243

Feb 2004 Clauses

Nov 2003 Clauses


draft)This will do nothing to remove the current uncertainty surrounding the notion of what is, or is not, “skill”. Whether or not a skill test acts as a “genuine barrier to entry” will be relative to the target audience for the game or competition and will be a matter of subjective judgment. The burden of proof in applying this test will also be very complicated.

News International Limited, DGB 83, para 2

The formulation chosen relies on the requirement not being 'likely to prevent persons who want to enter the lottery from doing so'. Unlike s.14, this is considered to be a justiciable test, since evidence such as market research will be able to be produced to demonstrate objectively that the level of skill required is of a type which is likely to exclude certain groups falling within the probable audience of the scheme. Nonetheless, the Department remains open to dialogue on this point.

It would be clearer if this said “not likely to prevent persons – or a majority of them – who want to enter the lottery from doing so”. Even the simplest question will prevent some people from entering. Thought should be given to what will happen if a significant degree of skill is used in the first stage and then selection is on the basis of chance.

Institute of Sales Promotions, DGB 85, para 3(b).

S. Fitzgerald QC, Q1623


In line with the Government's Policy Statement, we would urge the deletion altogether of sub-clause 206(4).

Newspaper Society, DGB 16

ITV, GMTV, Channel 4 and Five, DGB 126


244

Feb 2004 Clauses

Nov 2003 Clauses


draft)The concept of a lottery and of a prize competition should be kept separate and there should be two separate clauses.

S.Fitzgerald QC and P. Circus, Q1625-Q1626

The Government does not intend that the Gambling Bill regulate or control prize competitions. As Ms Fitzgerald explained during her evidence to the Committee, some prize competitions are more akin to gambling than others. The effect of the Bill is that, where a so-called "prize competition" does actually represent gambling – whether it is betting, gaming, or a lottery – the Gambling Commission will be able to take action if that gambling has been offered unlawfully. The Government is not convinced that there is anything that a clause about prize competitions in this Bill could usefully say. It is not intended that prize competitions be subject to a licensing regime, and for the reasons explained above, we do not think it would be helpful to replicate the existing law at section 14(1)(b) of the Lotteries and Amusements Act 1976.

Continued answer: In light of the above, it is not clear to what restrictions prize competitions should be subject, except that they should not consist of gambling, unless they are suitably licensed or otherwise authorised under the Bill. The Bill provides for that already.

Hybrid competitions should be dealt with more clearly. S.Fitzgerald QC and P. Circus, Q1626

DCMS agrees that there is scope for increasing the clarity of the Bill in so far as it applies to schemes which have different stages, some of which require skill, others depending purely on chance.

What is skill, is it skill connected to the lottery, can it be dexterity?

Lotteries Council, Q1671

DCMS consider that the term "skill" has a natural meaning, which is generally understood. It is considered that the term would cover concepts such as 'dexterity', as well as, for example 'knowledge'.

245

Feb 2004 Clauses

Nov 2003 Clauses


draft)The test should be that success depends predominantly on substantial skill. Also consider defining skill in terms of requiring a specified percentage of participants to be eliminated by the skills test.

Lotteries Council, Q1671

This suggestion effectively replaces the current test that success in a legal prize competition must depend "substantially" on the exercise of skill, with a test that it should depend "predominantly" on skill. DCMS do not consider that changing the terminology in this way would solve the fundamental problem, which is that there is no clarity about what "predominantly" or "substantially" mean. As stated above, DCMS consider that any formulation relying on qualitative or quantitative assessments of the skill involved will encounter the same problems as the current test, and will not serve to clarify the law or to protect lotteries as the preserve of good causes. As such, a test along these lines would provide no certainty for any of the parties involved - prize competition organisers, lottery operators, regulators or the public - and would be likely to suffer the same fate as the current formulation. The formulation in clause 208(4) presents a simpler and, we believe, more effective, test, although we are open to dialogue with respect to this test.

Continued answer: equally, we do not consider that imposing (essentially arbitrary) percentage levels offers a satisfactory way forward. These tests are essentially retrospective. Even if the skill tests or questions were trialled in advance, organisers cannot know beforehand what percentage of those who actually enter the competition will get it right.

209 207 Promoting a lottery210 208 Lottery ticket211 209 Proceeds and profits212 210 Draw

246

Feb 2004 Clauses

Nov 2003 Clauses


draft)213 211 Rollover

(1) "rollover" in relation to a lottery means an arrangement whereby the fact that a prize is not allocated or claimed in one lottery increases the value of the prizes available in another lottery.(2) Where prizes are allocated by more than one draw - (a) the draws together constitute a single lottery if the class of persons among whom prizes is allocated is ... the same in the case of each draw...

It is unclear whether subscription lotteries (e.g. clubs where the participants are the same week after week and there are draws each week), would be considered to be "rollovers" and thus treated as a single lottery.


As stated in the Explanatory Notes to this clause, a single lottery may have more than one draw. Multiple draws will form part of the same lottery where the class of persons eligible for prizes remains the same. So, if a subscription lottery had the same members each week, this would be categorised as a single lottery with multiple draws, and the club would be free to arrange its prize payments however it wished, so it could provide something analogous to a rollover if it wanted to. The rollover provisions will only come into effect where the class of persons changes, making the arrangement a new lottery.

214 212 Non-commercial society

… a society is non-commercial if it is established and conducted - (a) for charitable purposes,(b) for the purposes of enabling participation in, or of supporting, sport, athletics or a cultural activity, or(c) for any other non-commercial purpose other than that of private gain.

Under the present law (Section 5(1) of the Lotteries & Amusements Act 1976) a Society must be established and conducted “wholly or mainly” for one or more of the stated purposes. These extra words allow a society to be looked at as a whole over the year but still ensure that lottery fundraising is only a secondary purpose of the Society. e.g. outside of the football season, fundraising may be the main activity for a football supporters' club; although over the year it is not.


DCMS are considering the wording of this clause.

247

Feb 2004 Clauses

Nov 2003 Clauses


draft)212(3) …the provision of goods or services

for the benefit of individuals does not amount to a provision for the purposes of private gain if made in the course of the activities of a society that is a non-commercial society …

Under the present law it is well-established that purposes are not for private gain overall, even if an individual supplying goods or services to a non-commercial society may be paid a commercial rate for them. Section 212(3) is ambiguous about this and should be clarified. Non-commercial purposes other than those of private gain should also be added to this sub-section.


The purpose of clause 214(3) (Feb '04 draft Bill) is to clarify that a society may use its proceeds to benefit an individual without this being 'private gain', and thus preventing the society from being categorised as 'non-commercial' for the purposes of this Bill. This is the successor to s.5(2) of the Lotteries and Amusements Act 1976, which provides that 'any purpose for which a society is established and conducted and which is calculated to benefit the society as a whole shall not be held to be a purpose of private gain by reason only that action in its fulfilment would result in benefit to any person as an individual'. The Bill should not affect the ability of non-commercial societies to purchase goods or services, such as books of tickets, from commercial suppliers.

215 213 External lottery manager216 214 Promotion of lottery217 215 Facilitating a lottery218 216 Misusing profits of lottery219 217 Misusing profits of exempt

lottery220 218 Society lottery: breach of

condition221 219 Penalty222 220 National lottery

Nothing in this Part applies to a lottery which forms part of the National Lottery…

At present there is no statutory definition of lottery which the National Lottery Commission can use when deciding whether a game which it is being asked to regulate is a lottery (they may only authorise "lotteries"). It would be helpful if the definition used in the Bill were applicable to the National Lottery to this extent.

Ms Black, OE Q1150

DCMS notes this comment and will consider the request.

223 221 Territorial applicationPART 12: CLUBS

224 N/A Members' club225 N/A Commercial club226 N/A Miners' welfare institute227 N/A The exemption

248

Feb 2004 Clauses

Nov 2003 Clauses


draft)227(2) N/A The first condition is that it does not

involve playing or staking against a bank.

Greater clarity is requested on the meaning of "staking against a bank".

BACTA, DGB 134, p.11

The term is used in precisely the same way in the existing legislation (see for example s.2(1)(a) of the Gaming Act 1968) without further elaboration and bears its natural meaning. That has caused no difficulty to date. The essential feature of a ‘bank’ in relation to gaming is that it is the entity against which others play i.e. one person manages the game. The bank may be held by a player, as in casino blackjack, or held by the gambling operator, as, for example, in roulette. This is what, under current legislation, distinguishes casino "banker's games" such as casino stud poker from "non-banker's games", such as ordinary games of poker played between equal participants in which everybody plays against everybody else. The Department has so far concluded that no more detailed definition is necessary in the Bill, since it is clear from the rules of any particular game whether a bank is involved, but we will give further consideration to this.

228 N/A Section 227: supplementary229 N/A Club gaming permit

249

Feb 2004 Clauses

Nov 2003 Clauses


draft)229(4)(d) N/A that children and young persons are

excluded from any area of the club's or institute's premises where gaming is taking place.

This is more restrictive than section 229(6)(a) and consistency between the two is sought.


Clause 229 concerns club gaming permits which allow a members’ club or miners welfare institute to operate certain types of gaming, and use gaming machines. Subsection (4)(d) sets out a rule concerning the operation of live gaming in a club with a permit and subsection (6)(a) sets out a rule concerning the use of gaming machines in a club with a permit. The two are intended to be different and this is entirely in line with the general policy of the Bill. For live gaming it is a condition that people under 18 are excluded from areas where the gaming is taking place. For machines it is a condition that people under 18 are not allowed to use category B or C machines. The Government considers that these measures are appropriate in the circumstances, since they ensure children and young persons are not allowed or encouraged to gamble, but recognise that it is not practical to require people under 18 to be excluded from all areas of a club where a machine may be situated.

Continued from previous answer: For example, a category C machine may be situated in an entrance area of the club. Subsection (6)(a) requires that children do not play such a machine, which is considered a sufficient safeguard. The Commission will be able to issue codes of practice under clause 16 which advise clubs on what practical steps they can take to abide by these conditions.

250

Feb 2004 Clauses

Nov 2003 Clauses


draft)N/A This could be interpreted as a physical exclusion or lines

on the floor. It has always been understood that children and young people should be forbidden from playing machines, but in the case of a snooker club, for example, physical separation would be impossible.


A club gaming permit is not available to commercial clubs, and most snooker clubs are likely to be commercial clubs. However, a commercial club can obtain a club machine permit under clause 231, and this contains a condition at subsection (4)(a) that, again, persons under 18 must not use a Category B or C machine in the club. This does not require physical exclusion of children from areas where the machines are located, and the Commission will issue guidance on the steps that clubs should take to ensure that children and young people do not use category B or C gaming machines.

230 N/A Section 229: supplemental231 N/A Club machine permit

231(3)(a) N/A …each person to whom a machine is made available for use …(a) is a member of the club or institute who applied for membership…at least 48 hours before he uses the machine.

What is the basis for distinguishing between casinos and clubs regarding the 48 hour rule?


Part 12 of the Bill sets out a special regime for clubs to provide gaming facilities, without being subject to the full force of regulation by the Gambling Commission. This recognises that members' clubs and miners welfare institutes, while established for non-gambling purposes, currently provide limited gaming for their members, including the use of a small number of gaming machines. Given the small-scale nature of such gambling, clubs are not required to obtain operating, personal and premises licences, but are given certain authorisations in the Bill, and may, in addition, apply for permits from a local authority. The purpose of clause 229(3)(a) (and clause 229(5)(a)) is to ensure that clubs use their permit entitlements to offer their gaming machines, and their live gaming, only to people who are genuine club members, or their guests. The 48 hour requirement is considered the best means of achieving this. There is a similar restriction in current law (cf s.12(6) of the Gaming Act 1968).

251

Feb 2004 Clauses

Nov 2003 Clauses


draft)Continued from previous answer: If there were no such time restriction, anyone would be able to enter the club at any time and use its gaming facilities. The intention is that the law require that these be available only to the club's members and guests, since they are not intended to be commercial gambling establishments open to the public. In contrast, the Bill abolishes the current requirement that casinos operate on a members-only basis. This is because casinos will be subject to the new, comprehensive regime of operating, personal and premises licensing, one of whose key features is that it ensures that operators act in a socially responsible fashion. As a result of the new regulation the need for retention of the 24 hour memberships rule for casinos (and bingo premises) no longer applies.

232 N/A Procedure, &c.233 N/A Bingo: turnover limit for

exemption or permit233(9) N/A The Secretary of State may by

regulation substitute [new maximum stakes and winnings limits]

This should require consultation. BACTA, DGB 134, p.12

Appropriate consultation will take place where these powers are exercised.

234 N/A InterpretationPART 13: PREMISES LICENSED FOR SUPPLY OF ALCOHOL

252

Feb 2004 Clauses

Nov 2003 Clauses


draft)235 N/A Alcohol licence

In this Act-…(b) "on-premises alcohol licence" means a licence under [Part 3 of the Licensing Act 2003] which authorises the supply of alcohol for consumption on the licensed premises.

The Licensing Act 2003 does not distinguish between on and off-licences. The Bill seems to reintroduce that distinction by referring to "on-premises licence". This should be clarified.

At present, the exemption from Clauses 21 and 26 would cover many venues that are not currently within the existing definition of a full on-licence and could permit Category C machines in restaurants and hotels which currently hold only residential licences and therefore do not currently have such permission.

BBPA, DGB 143, paras 2.3-2.4


Under the Licensing Act 2003 ("the 2003 Act"), the distinction between "on" and "off" licences made in the Licensing Act 1964 has not been retained. Under section 17 of the 2003 Act, an application for a premises licence must be accompanied by an 'operating schedule', which must, under section 17(4)(f) specify whether alcohol is to be supplied on or off the premises, or both. It is not intended that the distinction between "on" and "off" licences should be reintroduced, merely that the provisions in this Part should apply where a premises licence is granted in accordance with an operating schedule specifying that alcohol is to be provided for consumption on the premises, and which thereby authorises the supply of alcohol for consumption on the licensed premises. This has been done to ensure that premises which merely sell alcohol for consumption off the premises do not acquire rights to provide gambling facilities under Part 13.

Continued from previous answer: In the Gaming Act 1968, comparable provisions enabling licensed premises to site machines and to provide 'soft' gaming applied, under the Licensing Act 1964, to premises in respect of which a justices' on-licence other than a part IV licence is in force. It is the Government's intention that under the Bill this gaming and gaming machines should be permitted in all premises for which a licence authorising the consumption of alcohol on the premises, is in force. This will cover a wider variety of establishments, including, for example, restaurants, which would have been covered by a 'part IV' licence under the Licensing Act 1964.

236 N/A Exempt gaming

253

Feb 2004 Clauses

Nov 2003 Clauses


draft)236(6) N/A The fifth condition of gaming … is

that no charge is made for participation.

Pubs do not charge a fee to play machines but as, under 237(3)(c), this would cover any charge to enter the premises, it could create a serious and unnecessary limitation.


This clause does not apply to machine gaming, which is covered by clause 239. Clause 236 works by disapplying the offences of provision of facilities for gambling and use of premises for gambling at clauses 21 and 26 respectively, provided that the conditions are adhered to. So, if the conditions were breached, this would mean that clause 21 and 26 could again apply. This will not apply to machine gaming, because in the case of clause 21, machine gaming is expressly excluded from the offence, and clause 239 provides expressly that sections 26 and 201 shall not apply to the making of one or two gaming machines of category C or D available for use on the premises. Therefore, a charge to enter the premises will only trigger these offences where non-machine 'soft' gaming takes place on the premises.

236(8) N/A The seventh condition of gaming…is that children and young persons are excluded from participation.

As ten-pin bowling centres are covered by this Part, this would mean that, if they are to retain their category D machines, children will not be able to use them.


For the reasons explained above, this condition does not apply to the siting or use of gaming machines, and is only relevant to non-machine 'soft' gaming.

237 N/A Section 236: supplementary237(3)(c) N/A a charge for admission to premises

where gaming takes place shall be treated as a charge for participation in the gaming,

Admission charges should be allowed, especially given that such charges are often used to control numbers.



It is not intended that admission charges should be allowed on alcohol licensed premises where such gaming is taking place, since it is not intended that the gaming should be a commercial activity. This follows the approach taken under the current legislation. It will be incumbent upon the holder of the alcohol licence to take measures to control numbers.

238 N/A Bingo238(9) N/A The Secretary of State may by

regulation substitute [new maximum stakes and winnings limits].

This should require consultation. BACTA, DGB 134, p.13

The Department would expect the use of this power to be subject to prior consultation where appropriate.

239 N/A Gaming machines

254

Feb 2004 Clauses

Nov 2003 Clauses


draft)239(1) N/A Sections 26 and 201 shall not apply

to making one or two gaming machines…available for use on premises in respect of which an on-premises alcohol licence has effect.

Four machines should be permitted as of right as the constraint this imposes is disproportionate to any harm envisaged.

BBPA, DGB 143, para 2.13


DCMS do not intend that an entitlement to more than two machines should be granted by default. Licence holders are entitled to apply for additional machines. The draft Bill provides for more than two gaming machines to be installed with the approval of the licensing authority. An automatic entitlement to double this number would be arbitrary and could, in the Department’s view, entail a progressive and substantial proliferation in the number of gaming machines in general leisure premises.

239(3) N/A A licensing authority to whom an application is made…shall consider it having regard to the licensing objectives and such other matters as they think relevant…

This is much too broad and subjective. BACTA, DGB 134, p.13

The Department considers that the clause as drafted gives licensing authorities an appropriate degree of discretion.

N/A Concerns are expressed about the decision making process for determining the success or otherwise of applications.

The test is too subjective.

BBPA, DGB 143, para 2.15 and 2.17


As above.

239(4) N/A The Secretary of State may make regulations prescribing the procedure to be followed in relation to an application for the addition of a condition

This should be subject to consultation. BACTA, DGB 134, p.13

The Department would expect the use of this power to be subject to prior consultation where appropriate.

239(5) N/A Paragraph 9(1) and (2) of Schedule 5 to the Licensing Act 2003 (c. 17) (appeal to magistrates' court) shall apply to a decision of a licensing authority…

Appeals should be to the High Court. BACTA, DGB 134, p.13

It is considered appropriate for the appeals mechanism to follow that in the Licensing Act 2003, and this is consistent with the other provisions of the draft Bill - see answer to comments on schedule 9 paragraph 24(5).

240 N/A Removal of exemption

255

Feb 2004 Clauses

Nov 2003 Clauses


draft)240(2)(a) N/A A licensing authority may disapply a

section under subsection (1) only if they think that - (a) the application of the section to the premises is not reasonably consistent with pursuit of the licensing objectives,

The phrase "not reasonably consistent with pursuit of the licensing objectives" is too vague.

Would this power also apply to grandfather rights?

BBPA, DGB 143, para 2.24 and para 3.2

The Department considers that the clause as drafted provides licensing authorities with the powers they need to deal with the wide range of circumstances which might arise. Existing licence holders will, of course, be granted the default entitlements in Part 13. Existing licence holders who already hold a permit entitling them to more than 2 machines will, under the 'grandfathering' provisions, continue to have this entitlement. Going forward, all licence holders will be subject to the provisions of Part 13.

240(4) N/A The Secretary of State may make regulations prescribing the procedure to be followed in relation to the addition of a condition under subsection (3)…

The need for this power seems unclear. If granted, these powers should be subject to the affirmative procedure.

BBPA, DGB 143, para 2.26 and 2.27

This provision exists to ensure that procedural consistency between licensing and gambling law can be maintained, in the interests of minimising administrative burdens on licensees themselves. Since the provision relates to matters of procedure rather than substance, the Department does not consider that the affirmative resolution procedure is appropriate.

PART 14: PART 14: INSPECTION241 222 Gambling inspectors242 223 Authorised persons The 'authorised persons' definition covers an extremely

wide range, giving significant powers to those outside the Commission or Local Authorities.


The Department believes it appropriate that such persons have access to gambling premises in pursuit of their statutory functions, and in order to take part in the licensing process.

243 224 Suspected offence244 225 Inspection of gambling We trust that CORCA clubs, which are after all private

premises, will not become subject to any wide ranging or indeed routine power of entry by regulators.

CORCA, DGB 20, para 3.1

Clause 247 (Feb 04) provides for the inspection of gaming in clubs.

245 226 Operating licence holders246 227 Category D gaming machine

premises247 N/A Clubs248 228 Licensed premises249 229 Lotteries: registered societies250 230 Temporary use notice251 231 Authorisations: production on

demand252 232 Powers 253 233 Evidence of authorisation

256

Feb 2004 Clauses

Nov 2003 Clauses


draft)254 234 Use of force255 235 Obstruction

PART 15: LEGALITY AND ENFORCEABILITY OF GAMING CONTRACTS

256 N/A Repeal of provisions preventing enforcement

257 N/A Enforceability of gaming contracts

258 N/A Power of Gambling Commission to void bet

259 N/A Interim moratorium260 N/A Section 258: supplementary

PART 16 PART 16: GENERAL261 N/A Offence: commission by body

corporate, &c.262 236 Interpretation Little guidance is given as to the definition of a

“Society”. The guidance in the present law should be adopted.


Clause 214 provides a definition of non-commercial societies.

A definition of “body corporate” should be included. BACTA, DGB 54 DCMS note this comment and will consider it.263 237 Regulations, orders and rules264 238 Amendments265 239 Money266 240 Commencement267 241 Extent268 242 Short title

Sched. 1 Sched. 1 Private and non-commercial gaming and betting

Part 1 Part 1 GamingPart 2 Part 2 Betting

Sched. 2 Sched. 2 The Gambling CommissionSched. 3 Sched. 3 Transfer from Gaming Board to

Gambling Commission: Supplementary Provision

Sched. 4 Sched. 4 Relevant OffencesPart 1 Part 1 The OffencesPart 2 Part 2 Power to Amend Part 1

Sched. 5 Sched. 5 Gambling Appeal Tribunal

257

Feb 2004 Clauses

Nov 2003 Clauses


draft)Sched. 6 Sched. 6 Category D Gaming Machine

PermitsThis should refer to “amusement” rather than “gaming” machines.

BACTA, DGB 54 DCMS note this comment. DCMS has decided not to continue with the terminology that has arisen from the 1968 Act and consider that "gaming machine" is the appropriate title for machines regulated by the Bill.

The procedure in Schedule 6 should more closely reflect that for other licences to ensure that sex offenders and persons with relevant criminal convictions cannot hold permits for Category D machines.


The provisions of Schedule 6 were designed intentionally to mirror, so far as possible, the present procedures for the granting of permits for "coin-or-token" gaming machines which are set out in Schedule 9 of the Gaming Act 1968. This is a less intensive and involved process than the Bill's licensing procedures for operators and premises, since the gambling concerned is the use of Category D machines, being at the lower end of the gambling spectrum. Nonetheless, DCMS notes the comment and will consider it.

Para 3(a) Para 3(a) An application may not be made if-(a) [an alcohol licence has effect in respect of premises]

It is unclear why a permit cannot be applied for if an alcohol licence has effect in respect of the premises.

Leisure Link Group, DGB 14, para 5



Part 13 (published in February 2004) allows alcohol licensed premises to have machines in Category D if they want them . See clause 239 (Feb 04). There is no need for separate provision here.

Para 7(2)(a)

Para 7(2)(a)

A statement prepared by an authority under this paragraph may in particular provide that the authority will not issue or renew a permit in respect of a specified class of premises other than a family entertainment centre

The Local Authority should not have the power to ban particular types of gaming premises from designated areas.

ALMR, DGB 23 DCMS note this comment. The Bill maintains the position in current law, allowing licensing authorities to designate specified classes of premises as ineligible to receive permits for category D gaming machines, or to prescribe maximum numbers of machines that it will allow pursuant to a permit in specified classes of premises. Use of this power cannot extend to family entertainment centres. DCMS propose to retain this position as it is an appropriate tool for local decision-makers to use in relation to the siting of category D machines in their area.

258

Feb 2004 Clauses

Nov 2003 Clauses


draft)Para

7(3)(a)Para

7(3)(a)In exercising their functions under this Schedule a licensing authority - (a) need not (but may) have regard to the licensing objectives…

This leaves unacceptable discretion that could damage existing businesses and destroy grandfather rights.

BACTA, DGB 54 The procedure for the grant of Category D gaming machine permits is based upon that set out in Schedule 9 of the Gaming Act 1968, which is a considerably less demanding process than that set out for operating and premises licences in the Bill. Paragraph 7(3) requires licensing authorities to have regard to guidance issued by the Gambling Commission under clause 17, as well as enabling authorities to have regard to the licensing objectives. Full appeal rights are available against decisions of an authority, who must also act in accordance with public law principles (including human rights law). DCMS considers authorities are afforded appropriate discretion in relation to category D gaming machine permits, with checks on that discretion as needed.

Sched. 7 Sched. 7 Lotteries: Definition of Payment to Enter

Para 2(b) Para 2(b) …a reference to paying includes a reference to - (a) paying money,(b) transferring money's worth, and

This should finish with the word “or” rather than “and”.

Institute of Sales Promotions, DGB 85, para 4(a).

DCMS consider that in this context, the word "and" is correct. The actions at subparagraphs (a), (b) and (c) are all things which are included within the meaning of 'paying'. This means that a reference to any one of these actions will be a reference to 'paying'.

Para 2(c) Para 2(c) (c) paying for goods or services at a price or rate which reflects the opportunity to enter the lottery.

The wording could be clarified with the addition of the following words at the end “…in addition to the price of goods or services”.

News International Limited, DGB 83, para 3

DCMS consider that the subparagraph as drafted has this effect without the need for additional clarification.

259

Feb 2004 Clauses

Nov 2003 Clauses


draft)The introduction of the “New Zealand” model (i.e. the allowance of product purchase within the definition of “free”) will open the UK to a flood of promotional offers from foreign operators e.g. lotteries, which will sell products (probably of worthless quality) and offer enormous prizes. It will be impossible to say whether an element of the prize is payment for entry into the lottery. These will compete directly with the UK National Lottery and also provide commercial activity in this area with prizes with which UK promoters could not compete. What is now an area of healthy brand competition will become a battle of foreign lotteries with very little relevance to the UK marketplace. There also appears to be little or no protection against the exploitation of minors who could well be targeted by unscrupulous promoters.


P. Circus, Q1629

This subparagraph is intended to prevent this abuse from occurring. DCMS intend to allow the 'New Zealand' model of sales promotions to the extent that goods or services are sold at their normal price. Any uplift to reflect the chance to enter a lottery will be considered 'payment' and the scheme will be subject to the regulatory regime for lotteries. It will be an evidential matter whether or not the promoted goods or services are being provided at the normal price. If a sales promotion is a lottery, it will be subject to the controls in the draft Bill for the protection of minors.

This wording is ambiguous. S Fitzgerald QC, Q1628

DCMS will consider further

This could put the UK out of step with other EU Member States and make progress on the EU Sales Promotion Regulation and Unfair Commercial Practices legislation more difficult to achieve.


P. Circus, Q1613

DCMS is in consultation with other Government Departments in relation to the legislation referred to.

If introduced, the model should be limited to prize funds of no more than £50,000.


P. Circus, Q1630

Sales promotions which are not lotteries within the meaning of the draft Bill are outside the scope of the draft Bill, and DCMS will not be including any provisions to regulate them.

Para 5 Para 5 … a reference to paying does not include a reference to incurring the expense, at a normal rate, of - (a) sending a letter by ordinary post,(b) making a telephone call, or

There is no exception for the situation where BT or Royal Mail are the promoter and are, therefore getting a profit from the call or postage.

Institute of Sales Promotions, DGB 85, para 4(b)

DCMS will consider this suggestion further.

260

Feb 2004 Clauses

Nov 2003 Clauses


draft)Para

5(2)(a)Para

5(2)(a)a "normal rate" is a rate which does not reflect the opportunity to enter a lottery,

Some might consider that there is a normal rate for premium rate services and it would be prudent for the Bill specifically to exclude premium rate telephone calls.


This provision is designed to cover premium rate calls. Premium rate calls are calls where a 'premium' is added to the normal rate to reflect the opportunity to enter the lottery. DCMS do not consider that it is necessary to make further express provision that premium rate calls constitute payment.

Para 6 Para 6 A requirement to pay in order to take possession of a prize which has or may have been allocated to a person in a lottery shall be treated as a requirement to pay in order to enter the lottery.

The Guidance Notes to the Bill suggest that a requirement to pay to “take possession of a prize” or “to find out if you have won” would be considered to be payment. However this is not made clear in the Bill. It should specify expressly that a payment to discover what a participant has won or if he has won is also a payment to enter a lottery.

The Lotteries Council, DGB 110, para 3(b).

S. Fitzgerald QC, Q1633

DCMS intend to make provision to this effect in the final Bill.

This would seem to eliminate discounts as prizes. A promoter may offer a 50% discount off a world cruise. It is a meaningful prize and this would seem to outlaw it. The apparent purpose of the paragraph is to stop people in various scams telling people they have won, but in which to find out what they have won or to take possession they must pay an administration fee. This wording eliminates perfectly justifiable and valuable prizes.

Institute of Sales Promotions, DGB 85, para 4(c)

P. Circus, Q1633

DCMS will consider this suggestion further.

Para 7(1)(b)(ii)

Para 7(1)(b)

(ii)

the communication…must be -(i) a letter sent by ordinary post, or(ii) another method of communication which is neither more expensive nor less convenient than entering the lottery by paying,

The words “another method of communication which is neither more expensive nor less convenient than entering the lottery by paying", means that free entry routes are actually eliminated, because no free entry route would actually meet that standard. Free entry routes are always less convenient than paying for the product and service, that is why instant on-pack wins are such a success.

Institute of Sales Promotions, DGB 85, para 4(b)

DCMS will consider this point further.

Sched. 8 Sched. 8 Exempt LotteriesPart 1 Part 1 Small Incidental LotteriesPart 2 Part 2 Private Lotteries

261

Feb

20

04

C

lau

ses

No

v 2

00

3

Cla

use

sO

rig

inal

Text

Issu

eSo

urc

eD

CM

S C

om

men

ts (

Cla

use

refe

ren

ces:

Feb

04

d

raft

)Para

13

Para

13

Each

tic

ket

in a

pri

vate

lott

ery

mu

st

be

a d

ocu

men

t…Is

th

is in

ten

ded

to

pre

ven

t e-

vers

ion

s o

f p

riva

te lo

tter

ies

wh

ich

are

in e

very

oth

er r

esp

ect

iden

tica

l to

th

e p

aper

al

tern

ativ

e?

Gam

ing

Kin

g p

lc,

DG

B 6

3Th

is w

as n

ot

the

inte

nti

on

beh

ind

th

is p

rovi

sio

n.

Nev

erth

eles

s, it

is n

ot

inte

nd

ed t

hat

on

-lin

e lo

tter

ies

will

be

per

mit

ted

exc

ept

in s

oci

ety

and

loca

l au

tho

rity

lo

tter

ies

app

rop

riat

ely

licen

sed

by

the

Gam

blin

g

Co

mm

issi

on

, or,

in t

he

case

of

smal

ler

soci

ety

lott

erie

s,

reg

iste

red

wit

h t

he

loca

l au

tho

rity

.

Para

17

Para

17

No

arr

ang

emen

t fo

r a

pri

vate

lott

ery

mu

st in

clu

de

a ro

llove

r.Th

ere

seem

s to

be

no

just

ific

atio

n f

or

pro

hib

itin

g

pri

vate

lott

erie

s fr

om

hav

ing

ro

llove

rs.

The

Lott

erie

s C

ou

nci

l, D

GB

110

, p

ara

11(c

)

The

po

licy

po

siti

on

is t

hat

ro

llove

rs s

ho

uld

no

t b

e p

erm

itte

d in

pri

vate

lott

erie

s. T

his

fo

llow

s an

d

clar

ifie

s th

e p

osi

tio

n in

th

e cu

rren

t la

w. S

oci

ety

and

lo

cal a

uth

ori

ty lo

tter

ies

are

to b

e lic

ense

d b

y th

e G

amb

ling

Co

mm

issi

on

(o

r, in

th

e ca

se o

f sm

alle

r so

ciet

y lo

tter

ies,

reg

iste

red

wit

h t

he

loca

l au

tho

rity

),

wh

ich

will

ove

rsee

th

e co

nd

uct

of

thes

e lo

tter

ies

and

en

sure

th

at t

hey

are

co

nd

uct

ed p

rop

erly

an

d f

airl

y.

Priv

ate

lott

erie

s o

n t

he

oth

er h

and

will

no

t b

e so

st

rin

gen

tly

reg

ula

ted

, an

d t

his

, ad

ded

to

th

e fa

ct t

hat

th

ey a

re n

ot

sub

ject

to

max

imu

m li

mit

s o

n p

rize

s,

mak

e ro

llove

rs in

app

rop

riat

e.

The

just

ific

atio

n f

or

pro

hib

itin

g r

oll-

ove

rs in

pri

vate

lo

tter

ies

is u

ncl

ear,

esp

ecia

lly g

iven

th

e m

axim

um

lim

its

on

val

ue

of

rollo

ver

pri

zes

wh

ich

are

low

er t

han

th

ose

fo

r so

ciet

y lo

tter

ies.

Gam

ing

Kin

g p

lc,

DG

B 6

3Se

e p

revi

ou

s re

spo

nse

.

Part

3Part

3C

ust

om

er

Lott

ery

Co

uld

th

ese

rule

s b

e ap

plie

d m

ore

wid

ely

so t

hat

b

usi

nes

ses

that

pro

vid

e th

eir

serv

ices

rem

ote

ly m

igh

t al

so b

e ab

le t

o o

per

ate

such

lott

erie

s fo

r th

e b

enef

it o

f th

eir

cust

om

ers,

i.e.

to

en

able

BSk

yB t

o o

per

ate

a w

eekl

y lo

tter

y fo

r Sk

y D

igit

al c

ust

om

ers

thro

ug

h it

s in

tera

ctiv

e te

levi

sio

n s

ervi

ces?

Sky,

DG

B 5

8,

Ap

pen

dix

, par

a 7.

1D

CM

S d

o n

ot

inte

nd

to

per

mit

th

is. T

his

exe

mp

tio

n

will

on

ly a

pp

ly t

o lo

tter

ies

on

pre

mis

es. I

t is

no

t co

nsi

der

ed s

uit

able

th

at s

uch

lott

erie

s sh

ou

ld b

e p

rovi

ded

rem

ote

ly, t

o a

mu

ch w

ider

au

die

nce

th

an

cou

ld b

e re

ach

ed o

n o

ne

sin

gle

pre

mis

es, w

ith

ou

t o

vers

igh

t b

y th

e G

amb

ling

Co

mm

issi

on

, an

d w

ith

ou

t a

con

trib

uti

on

bei

ng

mad

e to

go

od

cau

ses.

Part

4Part

4Sm

all

So

ciety

Lo

tteri

es

Part

5Part

5R

eg

istr

ati

on

wit

h L

oca

l A

uth

ori

ty

262

Feb

20

04

C

lau

ses

No

v 2

00

3

Cla

use

sO

rig

inal

Text

Issu

eSo

urc

eD

CM

S C

om

men

ts (

Cla

use

refe

ren

ces:

Feb

04

d

raft

)Para

s 4

0&

42

Para

s 4

0&

42

40…

a lo

cal a

uth

ori

ty s

hal

l… -

… (c)

no

tify

th

e G

amb

ling

Co

mm

issi

on

o

f th

e re

gis

trat

ion

.… 42

(1)

a n

oti

ce…

mu

st b

e ac

com

pan

ied

by

such

par

t o

f th

e fe

e as

may

be

pre

scri

bed

.

It is

no

t cl

ear

wh

at t

he

role

of

the

Gam

blin

g

Co

mm

issi

on

will

be

in r

elat

ion

to

su

ch lo

tter

ies,

an

d it

is

the

LGA

’s v

iew

th

at t

his

pas

sin

g o

n o

f m

on

ies

is a

n

un

nec

essa

ry b

ure

aucr

atic

bu

rden

on

Lo

cal A

uth

ori

ties

, th

e co

st o

f w

hic

h m

ust

be

met

by

the

lott

ery

org

anis

er.

The

pro

ced

ure

sh

ou

ld b

e am

end

ed t

o r

emo

ve t

he

req

uir

emen

t fo

r m

on

ies

to p

ass

to t

he

Gam

blin

g

Co

mm

issi

on

un

less

a c

og

ent

bu

sin

ess

case

can

be

mad

e.

Loca

l Go

vern

men

t A

sso

ciat

ion

, DG

B

103,

par

a 8

The

reas

on

fo

r th

e p

ow

er t

o p

resc

rib

e th

at a

po

rtio

n

of

this

ap

plic

atio

n f

ee is

pas

sed

to

th

e G

amb

ling

C

om

mis

sio

n a

lon

g w

ith

no

tice

of

the

app

licat

ion

, is

to

cove

r th

e G

amb

ling

Co

mm

issi

on

's e

xpen

ses

in r

esp

ect

of

reco

rdin

g t

he

app

licat

ion

an

d m

ain

tain

ing

a

reg

iste

r. It

is n

eces

sary

fo

r th

e G

amb

ling

Co

mm

issi

on

to

hav

e a

reco

rd o

f th

e lo

tter

ies

wh

ich

are

reg

iste

red

in

th

is w

ay, i

n o

rder

th

at t

hey

are

ab

le t

o c

arry

ou

t th

eir

enfo

rcem

ent

fun

ctio

n in

res

pec

t o

f lo

tter

ies

wh

ich

exc

eed

th

e m

on

etar

y lim

its

for

reg

istr

atio

n

wit

h a

loca

l au

tho

rity

, an

d a

re r

equ

ired

to

be

licen

sed

b

y th

e G

amb

ling

Co

mm

issi

on

. It

is a

lso

nec

essa

ry t

o

hav

e ce

ntr

al o

vers

igh

t b

y o

ne

bo

dy

to e

nsu

re t

hat

lo

tter

ies

do

no

t m

ove

th

eir

reg

istr

atio

n b

etw

een

d

iffe

ren

t lo

cal a

uth

ori

ties

to

eva

de

the

mo

net

ary

limit

s.

Part

6Part

6Po

wers

to

im

po

se A

dd

itio

nal

Rest

rict

ion

s, &

c.Part

7Part

7In

terp

reta

tio

nSch

ed

. 9

N/A

Clu

b G

am

ing

Perm

its

an

d C

lub

M

ach

ine P

erm

its

Para

6

(1)(

c)

N/A

A li

cen

sin

g a

uth

ori

ty m

ay r

efu

se a

n

app

licat

ion

fo

r a

per

mit

on

ly o

n o

ne

or

mo

re o

f th

e fo

llow

ing

gro

un

ds…

-... (c

) th

at a

n o

ffen

ce, o

r a

bre

ach

of

a co

nd

itio

n o

f a

per

mit

, has

bee

n

com

mit

ted

in t

he

cou

rse

of

gam

ing

ac

tivi

ties

car

ried

on

by

the

app

lican

t,

(c)

sho

uld

rea

d "

that

an

off

ence

, or

a m

ater

ial b

reac

h o

f a

con

dit

ion

of

a p

erm

it,

wh

ich

has

no

t b

een

rem

edie

d

has

bee

n c

om

mit

ted

in t

he

cou

rse

of

gam

ing

act

ivit

ies

carr

ied

on

by

the

app

lican

t in

th

e la

st f

ive

year

s "

Ho

w c

an t

his

ap

ply

giv

en t

hat

a lo

cal a

uth

ori

ty c

ann

ot

atta

ch c

on

dit

ion

s to

a p

erm

it (

par

a 8(

2))?

BA

CTA

, DG

B 1

34,

p.9

The

loca

l au

tho

rity

gra

nti

ng

th

e p

erm

it w

ill n

ot

be

able

to

att

ach

co

nd

itio

ns

to it

. A

ll p

erm

its

will

, h

ow

ever

, bea

r th

e st

and

ard

co

nd

itio

ns

set

at c

lau

se

229

(clu

b g

amin

g p

erm

it)

and

cla

use

231

(cl

ub

m

ach

ine

per

mit

) o

f th

e B

ill.

Th

e lo

cal a

uth

ori

ty w

ill

hav

e re

spo

nsi

bili

ty f

or

ensu

rin

g p

erm

it h

old

ers

com

ply

wit

h t

hes

e st

and

ard

co

nd

itio

ns.

Th

e au

tho

rity

w

ill b

e ab

le t

o ju

dg

e th

e m

ater

ialit

y o

f an

y b

reac

h in

ex

erci

sin

g it

s d

iscr

etio

n o

ver

wh

eth

er t

o g

ran

t a

per

mit

. We

do

no

t co

nsi

der

th

e w

ord

s su

gg

este

d a

ssis

t th

e re

gu

lati

on

of

per

mit

-ho

lder

s b

y a

loca

l au

tho

rity

.

263

Feb

20

04

C

lau

ses

No

v 2

00

3

Cla

use

sO

rig

inal

Text

Issu

eSo

urc

eD

CM

S C

om

men

ts (

Cla

use

refe

ren

ces:

Feb

04

d

raft

)Para

1

0(3

)(c)

N

/ATh

e au

tho

rity

to

wh

om

an

ap

plic

atio

n t

o w

hic

h t

his

par

agra

ph

ap

plie

s is

mad

e sh

all g

ran

t it

un

less

th

ey t

hin

k -

... (c)

that

a c

lub

gam

ing

per

mit

or

a cl

ub

mac

hin

e p

erm

it is

sued

to

th

e ap

plic

ant

has

bee

n c

ance

lled

du

rin

g

the

per

iod

of

ten

yea

rs e

nd

ing

wit

h

the

dat

e o

f ap

plic

atio

n.

This

sh

ou

ld d

epen

d o

n t

he

reas

on

fo

r th

e ca

nce

llati

on

.B

AC

TA, D

GB

134

, p

.9C

ance

llati

on

of

a p

erm

it (

as o

pp

ose

d t

o c

essa

tio

n,

lap

se o

r su

rren

der

) ca

n o

nly

occ

ur

for

the

reas

on

s se

t o

ut

at p

arag

rap

h 2

0(a)

or

(b),

nam

ely

that

th

e p

rem

ises

are

bei

ng

use

d b

y p

eop

le u

nd

er 1

8, o

r an

o

ffen

ce o

r b

reac

h o

f p

erm

it c

on

dit

ion

has

bee

n

com

mit

ted

by

the

per

mit

ho

lder

. D

CM

S co

nsi

der

th

at

if a

per

mit

has

bee

n c

ance

lled

fo

r ei

ther

of

thes

e g

rou

nd

s th

en t

he

fast

-tra

ck p

roce

du

re s

ho

uld

no

t b

e av

aila

ble

to

th

e cl

ub

, an

d it

sh

ou

ld b

e re

qu

ired

to

go

th

rou

gh

th

e fu

ll ap

plic

atio

n p

roce

du

re s

o t

hat

th

e au

tho

rity

can

loo

k at

th

e ci

rcu

mst

ance

s o

f th

e ca

nce

llati

on

an

d d

eter

min

e w

het

her

th

e p

erm

it

sho

uld

be

gra

nte

d.

Para

24

(5)

N/A

An

ap

pea

l un

der

th

is p

arag

rap

h

mu

st b

e in

stit

ute

d -

(a)

in t

he

mag

istr

ates

' co

urt

…

Ap

pea

ls s

ho

uld

be

to t

he

Hig

h C

ou

rt.

BA

CTA

, DG

B 1

34,

p.1

1Th

e p

olic

y o

n a

pp

eals

is c

on

sist

ent

wit

h t

hat

el

sew

her

e in

th

e B

ill.

All

app

eals

(in

En

gla

nd

an

d

Wal

es)

are

in f

irst

inst

ance

to

th

e M

agis

trat

es C

ou

rt.

Para

26

N/A

In e

xerc

isin

g a

fu

nct

ion

un

der

th

is

Sch

edu

le a

lice

nsi

ng

au

tho

rity

sh

all

hav

e re

gar

d t

o -

The

licen

sin

g a

uth

ori

ty s

ho

uld

be

req

uir

ed t

o a

ct

"co

nsi

sten

tly

wit

h"…

B

AC

TA, D

GB

134

, p

.11

DC

MS

con

sid

er t

hat

th

e fo

rmu

lati

on

of

"hav

ing

re

gar

d t

o"

pro

vid

es a

sat

isfa

cto

ry b

asis

fo

r n

atio

nal

co

nsi

sten

cy, w

ith

ou

t el

imin

atin

g t

he

abili

ty o

f lic

ensi

ng

au

tho

riti

es t

o t

ake

into

acc

ou

nt

spec

ific

loca

l ci

rcu

mst

ance

s an

d t

he

par

ticu

lars

of

the

app

licat

ion

.

Sch

ed

. 1

0Sch

ed

. 9

Co

nse

qu

en

tial

Am

en

dm

en

ts

264

265

Annex 2: Programme of visits undertaken by the Joint Committee on the draft Gambling Bill during the course of its inquiry

Details of informal meetings and visits:

Visit to meet remote gambling operators, 18th November 2003

• Betfair and interactive Gaming, Gambling and Betting Association (iGGBA)

Visit to Great Yarmouth, 1st December 2003

• Senior Planning Officers and Head of Tourism for Great Yarmouth Council

• Tour of Grosvenor Casino and meeting with Leisure Industry representatives, Casino and arcade operators

• Tour of Atlantis Resort Hotel and meeting with Tourist Authority, and further Leisure Representatives

• Tour of Regent Bingo facilities and meeting with General Manager/Deputy Manager of Regent Bingo

• A group with opposing views on the draft Gambling Bill and Borough Council Officials with responsibilities for Licensing, Development Control and Economics

Visit to the National Lottery Commission, 2nd December 2003

Visit to Blackpool, 8th and 9th December 2003

On Monday 8th December:

• Blackpool Borough Council, North West Development Agency, and Peter Moore, author of Sea Changes Report

• The Noble Organisation Ltd

• Blackpool Coalition Against Gambling Expansion (BCAGE)

• Blackpool Pleasure Beach, Leisure Parcs and Foreign investor(s) who have expressed interest in the UK

• North West Development Agency and Lancashire West Partnership and Chair of the Lancashire West Partnership Casino Sub Group

266

On Tuesday 9th December:

• Tour of Blackpool & Fylde College and meeting with the Principal of the Blackpool and Fylde College, Lifelong Learning Partnership, Strategic Director, Blackpool Borough Council, Faith Groups and Police Authority representatives

• Representatives of a Social Club

Visit to a Licensed Betting Office, 11th December 2003

Visit to a Casino, 16th December 2003

Visit to a Welfare Organisation for Problem Gamblers, 7th January 2004

Visit to Australia, 9th – 15th February

Monday 9th February: Melbourne

• Consul-General

• Chairman, Community Action on Pokie Problems & Members of the Interchurch Gambling Task Force

• Directors of Tabcorp

• Casino and Gaming Authority

Tuesday 10th February

• Directors of Tattersall’s

• Tour of the Crown Casino and its teaching and counselling facility, followed by a meeting with Directors

• Head of Office, Australian Government Productivity Commission

Wednesday 11th February: Sydney

• Minister for Gaming and Racing

Thursday 12th February

• Director General, Department of Gaming and Racing, and the Assistant Director, Racing

• Chief Executive, Casino Control Authority

• Tour of Star City casino with the Regulatory Affairs Manager and the Chief Executive, of the Casino Control Authority

• General Manager of Wentworthville Leagues Club, and Betsafe

267

Friday 13th February

• Deputy Director of Psychiatry Research, University of NSW and Director of Impulse Control Research Clinic

• Executive Officer, Australian Gaming Machine Manufacturers Association (AGMMA)

• Executive Officer, Internet Industry Association and the CEO of Global Gaming Services

• Clubs Australia and New Zealand

Visit to France, 26th – 27th February

Thursday 26th February, Enghien les Bains

• Mayor of Enghien les Bains

• Representatives from the Ministere de l’Interieur (Ministry of the Interior)

• Casino representatives from Barrière and Accor Casinos

• Tour of the Accor Casino, and meeting with representatives from the Casino

Friday 27th February, Le Touquet

• Consul General for Lille

• Place de l’Hermitage Casino representatives

• Mayor and MP for Enghien, Mr Deprez

268

Annex 3: List of acronyms

AA Advertising Association

ASA Advertising Standards Authority

ABB Association of British Bookmakers

ACPO Association of Chief Police Officers

ALMR Association of Licensed Multiple Retailers

AWP Amusement with prize machine

BACTA British Amusement Catering Trades Association

BALPPA British Association of Leisure Parks, Piers and Attractions

BBPA British Beer and Pub Association

BCA British Casino Association

BCAGE Blackpool Coalition Against Gambling Expansion

BGRB British Greyhound Racing Board

BGRF British Greyhound Racing Fund

BHB British Horseracing Board

BISL Business in Sport and Leisure

COA Casino Operators’ Association (UK)

CPS Crown Prosecution Service

CRB Criminal Records Bureau

DCMS Department for Culture, Media and Sport

FOBMs/FOBTs Fixed Odds Betting Machines/Terminals

FSA Financial Services Authority

GBGB Gaming Board for Great Britain

GICT Gambling Industry Charitable Trust

GREF Gaming Regulators European Forum

HBL Horserace Betting Levy

HBLB Horserace Betting Levy Board

HMCE HM Customs & Excise

HMT HM Treasury

IBAS Independent Betting Arbitration Service

ICSTIS Independent Committee for the Supervision of Standards of Telephone Information Services

iGGBA interactive Gaming, Gambling and Betting Association

269

LBO Licensed Betting Office

LGA Local Government Association

NAB National Association of Bookmakers

NAO National Audit Office

NBGA National Bingo Game Association

NCIS National Criminal Intelligence Service

NGRC National Greyhound Racing Club

NJPC National Joint Pitch Council

NLC National Lottery Commission

NLDF National Lottery Distribution Fund

ODPM Office of the Deputy Prime Minister

OFCOM Office of Communications

ONS Office of National Statistics

RCA Racecourse Association Limited

RDA Regional Development Agency

RIA Regulatory Impact Assessment

RNG Random Number Generator

RPB Regional Planning Body

RSS Regional Spatial Strategy

SFA Securities and Futures Authority

SIS Satellite Information Services

SP Starting price

SSG Society for the Study of Gambling

WMCIU Working Men’s Club & Institute Union

270

Formal minutes

Extract from House of Lords Minute of 2 July 2003

Gambling—It was moved by the Lord President (Lord Williams of Mostyn) that it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on any clauses of a draft Gambling Bill presented to both Houses by a Minister of the Crown, and that the Committee shall report on the draft Bill by 8th April 2004; the motion was agreed to; and a message was ordered to be sent to the Commons to seek their agreement thereto.

Extract from Votes and Proceedings of the House of Commons of 10 July 2003

Draft Gambling Bill (Joint Committee),-Ordered, That the Lords Message of 2nd July relating to a Joint Committee of both Houses to consider and report on any Clauses of a draft Gambling Bill presented to both Houses by a Minister of the Crown be now considered.

That this House concurs with the Lords in their Resolution relating to the said Joint Committee.

That a Select Committee of eight honourable Members be appointed to join with the Committee appointed by the Lords to consider any clauses of a draft Gambling Bill.

That the Committee shall have power;

(i) to send for persons, papers and records;

(ii) to sit notwithstanding any adjournment of the House;

(iii) to report from time to time;

(iv) to appoint specialist advisers;

(v) to adjourn from place to place within the United Kingdom; and

That Janet Anderson, Mr Tony Banks, Jeff Ennis, Mr John Greenway, Mr Alan Meale, Mr Richard Page, Dr John Pugh and Mr Anthony D. Wright be members of the Committee — (Charlotte Atkins.)

Message to the Lords to acquaint them therewith.

Extract from House of Lords Minute of 9 September 2003

Gambling—It was moved by the Chairman of Committees that the Commons message of 10th July be now considered, and that a Committee of eight Lords be appointed to join with the Committee appointed by the Commons, to consider and report on any draft Gambling Bill presented to both Houses by a Minister of the Crown;

271

That, as proposed by the Committee of Selection, the Lords following be named of the Committee:

L. Brooke of Sutton Mandeville

L. Donoughue

V. Falkland

L. Faulkner of Worcester

B. Golding

L. Mancroft

L. Wade of Chorlton

L. Walpole;

That the Committee have power to agree with the Commons in the appointment of a Chairman;

That the Committee have leave to report from time to time;

That the Committee have power to appoint specialist advisers;

That the Committee have power to adjourn from place to place within the United Kingdom;

That the reports of the Committee from time to time shall be printed, notwithstanding any adjournment of the House;

That the Committee do report on the draft Bill by 8th April 2004;

And that the Committee do meet with the Committee appointed by the Commons on Tuesday 16th September at half past nine o’clock in Committee Room 3;

The motion was agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

Extract from Votes and Proceedings of the House of Commons of 20 October 2003

Draft Gambling Bill (Joint Committee) (Power to Travel Outside the United Kingdom),-Ordered, That the Order of the House of 10th July 2003 appointing a Select Committee to join with a Committee of the Lords to consider and report on any Clauses of a draft Gambling Bill presented to both Houses by a Minister of the Crown be amended by leaving out the words 'within the United Kingdom'. — (Margaret Moran.)

Extract from the House of Lords Minute of 23 October 2003

Gambling—It was moved by the Chairman of Committees that the Order of the House of 9th September appointing a Select Committee to join with a Committee of the Commons to consider and report on any clauses of a draft Gambling Bill presented to both Houses by a Minister of the Crown be amended by leaving out the words “within the United

272

Kingdom”; the motion was agreed to and a message was ordered to be sent to the Commons to acquaint them therewith.

Proceedings of the Joint Committee

Die Martis 16º Septembris 2003

Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Mancroft Lord Wade of Chorlton Lord Walpole

Janet Anderson Mr Tony Banks Jeff Ennis Mr John Greenway Mr Anthony D Wright

The Orders of Reference are read.

The declarations of relevant interests are made (see Appendix).

It is moved that Mr John Greenway do take the Chair.—(Viscount Falkland.)

The same is agreed to.

The Joint Committee deliberate.

Ordered, That Strangers be admitted during the examination of witnesses unless otherwise ordered.


Ordered, That the Chairman write to the Leaders of both Houses asking them to table motions amending the Committee’s orders of reference so as to permit overseas travel.

The Joint Committee deliberate, assisted by members of the bill team.

Ordered, That the Joint Committee be adjourned to Tuesday 21 October at 9.30 a.m.

273

Die Martis 21º Octobris 2003

Present:


Janet Anderson Mr Alan Meale Mr Richard Page Dr John Pugh Mr Anthony D Wright

Mr John Greenway in the Chair

The Order of Adjournment is read.

The proceedings of Wednesday 16 September are read.


Resolved, That two members of the Committee, accompanied by the Clerk, do visit Melbourne and Sydney, and that the Committee do visit Blackpool, Great Yarmouth, the headquarters of the National Lottery Commission and the offices of Betfair. — (The Chairman.)

Ordered, That the Chairman do seek the approval of the Liaison Committee and the House of Lords authorities for expenditure in connection with the delegation visit to Australia.

Further declarations of relevant interests are made (see Appendix).


Ordered, That the Joint Committee be adjourned to Tuesday 18 November at 9.30 a.m.

274

Die Martis 18º Novembris 2003

Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Mancroft Lord Wade of Chorlton

Jeff Ennis Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 21 October are read.


Ordered, That Paul Bellringer OBE, Professor Peter Collins, Bill Galston OBE, and Professor David Miers be appointed as Specialist Advisers to assist the Committee, Paul Bellringer to begin work only when he has ceased to be President of GamCare.


Resolved, That the Committee do visit the headquarters of GamCare, a Loncon casino and a Licensed Betting Office. — (The Chairman.)


Ordered, That the Joint Committee be adjourned to Tuesday 11 December at 9.30 a.m.

The Joint Committee was re-appointed with the same powers and membership at the start of the 2003-04 session (on 1 December 2003 in the House of Lords, and on 3 December 2003 in the House of Commons).

275

Die Martis 11º Decembris 2003

Present:


Jeff Ennis Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 18 November are read.



Ordered, That the Joint Committee be adjourned to Tuesday 16 December at 9.30 a.m.

Die Martis 16º Decembris 2003

Present:


Jeff Ennis Mr Alan Meale Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 11 December are read.


276

Resolved, That the Committee do visit France for two days in February.-(The Chairman.)

Ordered, That the Chairman do seek the approval of the Liaison Committee and the House of Lords authorities for expenditure in connection with the said visit.


The following witnesses are examined:

The Rt Hon the Lord McIntosh of Haringey, Parliamentary Under-Secretary of State, Greig Chalmers, Gambling Bill Manager, Chris Bone, Head, Casino, Bingo and Lotteries team, and Elizabeth Hambley, Legal Adviser, Department for Culture, Media and Sport.

Ordered, That the Committee be adjourned to Thursday 18 December at 9.30 a.m.

Die Jovis 18º Decembris 2003

Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Walpole Lord Wade of Chorlton Lord Walpole




The proceedings of Tuesday 16 December are read.



Mr Peter Dean CBE, Chairman, Mr Tom Kavanagh CBE, Secretary, Ms Geraldine Meneaud-Lissenburg, Transition Manager, The Gaming Board for Great Britain and Mr Elliot Grant, Head of Gambling and National Lottery Licensing Division, Department for Culture, Media and Sport.

Ordered, That the Committee be adjourned to Thursday 8 January at 10.00 a.m.

277

Die Jovis 8º Januarii 2004

Present:

Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Lord Mancroft Lord Wade of Chorlton Lord Walpole

Jeff Ennis Mr Richard Page



The proceedings of Thursday 18 December are read.




Professor Mark Griffiths, Dr Emanuel Moran and Professor Jim Orford; followed by the Evangelical Alliance, the Methodist Church, Quaker Action on Alcohol and Drugs and the Salvation Army.

Ordered, That the Committee be adjourned to Tuesday 13 January at 10.00 a.m.

Die Martis 13º Januarii 2004

Present:


Jeff Ennis Mr Alan Meale Mr Richard Page Dr John Pugh



The proceedings of Thursday 8 January are read.


278


Professor Leighton Vaughan Williams, Nottingham Trent University, Brigid Simmonds, Business in Sport and Leisure, Ian Wilkie, Ernst and Young, John Kelly, Cross-Industry Group on Gaming Deregulation and Jim Twomey, Pion Economics; followed by John Healey MP, Economic Secretary to the Treasury.



Present:


Janet Anderson Jeff Ennis Mr Richard Page Mr Anthony D Wright



The proceedings of Tuesday 13 January are read.

Ordered, That future examinations of witnesses be audio webcast.



Vicountess Penelope Cobham, Chairman, British Casino Association, Mr Roy Ramm, Chairman, Technical Committee, British Casino Association. Mr Andrew Love, Chairman, Mr Brian Lemon, General Secretary, Casino Operators’ Association of the United Kingdom; followed by Mr Andrew Tottenham, UK Representative of Caesar’s Entertainment (formerly Park Place Entertainment), Mr Tobin Prior, Chief Executive Officer, UK Gaming, Kerzner International, Mr Marc Etches, Managing Director, Leisure Parcs, Mr Lloyd Nathan, Managing Director, Europe MGM Mirage Development and Mr Peter Byrne, Executive Director, Sun International.

Ordered, That the Committee be adjourned to this day at 2.00 p.m.

279


Present:

Lord Brooke of Sutton Mandeville Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Walpole

Janet Anderson Jeff Ennis Mr Richard Page Dr John Pugh Mr Anthony D Wright






Bingo Association and the Committee of Registered Clubs’ Associations (CORCA).



Present:


Janet Anderson Mr Tony Banks Mr Alan Meale Mr Anthony D Wright



The proceedings of Thursday 15 January at 2.00 p.m are read.



280

Association of British Bookmakers, National Joint Pitch Council and National Association of Bookmakers; followed by the British Horseracing Board, Jockey Club, National Trainers Federation and Racefax.



Present:


Mr Tony Banks Mr Alan Meale Dr John Pugh Mr Anthony D Wright






Mr Andrew Tottenham, Chairman, Interactive Gambling, Gaming and Betting Association (iGGBA), Mr Richard Flint, BSkyB, iGGBA, Mr Bill Haygarth, Mr John O’Reilly, Association of British Bookmakers and Mr Paul James, Mobile Broadband Group, Mr Clive Hawkswood, a member of the Bill Team, Department for Culture, Media and Sport; followed by Betfair, Betdaq and Sporting Options.


281


Present:


Janet Anderson Jeff Ennis Mr Richard Page Dr John Pugh Mr Anthony D Wright






Mr Tim Batstone, President, Mr Phil Jarrold, Chief Executive, Mr Ray Stone, British Amusement Catering Trades Association (BACTA), Mr John Wimsett and Mr Frank Fahrenkopf Jr, Casino Machine Manufacturers Group; followed by BALPPA, BBPA and Operators of Adult Gaming Machines.



Present:


Janet Anderson Jeff Ennis Mr Richard Page Mr Anthony D Wright


282


The proceedings of Tuesday 27 January at 9.30 am are read.



Lord Lipsey, Chairman, Mr Clarke Osbourne, Gaming International and Committee Member of the British Greyhound Racing Board, and Mr Richard Hayler, Policy Officer, British Greyhound Racing Board.

Ordered, That the Committee be adjourned to Thursday 29 January at 9.30 p.m.


Present:


Jeff Ennis Mr Richard Page Dr John Pugh







Councillor Richard Grant, Chair, Community Safety Panel, Councillor Caroline Seymour, Deputy Chair, Public Protection Executive and Councillor Graham Brown, Deputy Chair, Public Protection Executive, Local Government Association; followed by Mr Nick Gerrard, Northwest Development Agency, Mr Reg Haslam, Head of Planning and Transportation, Blackpool Borough Council and Mr Anthony Jennens, Planning Consultant.

Ordered, That the Committee be adjourned to Tuesday 3 February at 9.30 a.m.

283

Die Martis 3º Februarii 2004

Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Wade of Chorlton Lord Walpole




The proceedings of Thursday 29 January at 9.30 am are read.



Ms Moira Black CBE, Chairman, Mr Mark Harris, Chief Executive, National Lottery Commission; followed by Mr Michael Grade, Chairman, Ms Dianne Thompson, Chief Executive, and Mr Phil Smith, Commercial Director, Camelot.



Present:


Janet Anderson Jeff Ennis Mr Alan Meale Dr John Pugh



284

The proceedings of Tuesday 3 February are read.



The Responsibility in Gambling Trust (formerly the Gambling Industry Charitable Trust), followed by GamCare and the Gordon House Association.

Ordered, That the Committee be adjourned to Thursday 5 February at 9.30 a.m.

Die Jovis 5º Februarii 2004

Present:


Mr Alan Meale Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 3 February are read.


Ordered, That the Committee be adjourned to Tuesday 24 February at 9.30 a.m.

285


Present:


Jeff Ennis Mr Alan Meale Mr Richard Page




The proceedings of Thursday 5 February are read.



Mr Nick Bunn, Assistant Pit Boss, Mr Tony Kelly, Media Representative, Transport and General Workers Union and Mr Peter Matthews, Australian Liquor, Hospitality and Miscellaneous Workers Union.

Ordered, That the Committee be adjourned to Tuesday 24 February at 2.00 p.m.


Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Mancroft

Mr Tony Banks Jeff Ennis Mr Richard Page Dr John Pugh


286


The proceedings of Tuesday 24 February at 9.30 am are read.


Ordered, That the Committee be adjourned to Thursday 26 February at 9.00 a.m.

Die Jovis 26º Februarii 2004

Present:


Mr Tony Banks Jeff Ennis Mr Richard Page Mr Anthony D Wright



The proceedings of Tuesday 24 February at 9.30 am are read.


Ordered, That the Committee be adjourned to Monday 1 March at 2.15 p.m.

Die Lunae 1º Martii 2004

Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Mancroft Lord Walpole

Janet Anderson Mr Tony Banks Jeff Ennis Mr Richard Page Dr John Pugh Mr Anthony D Wright


287


The proceedings of Thursday 26 February are read.



The Rt Hon Tessa Jowell MP, Secretary of State for Culture, Media and Sport, and the Rt Hon Lord McIntosh of Harringey, and Elliot Grant, Department for Culture, Media and Sport.

Ordered, That the Committee be adjourned to Tuesday 2 March at 9.30 a.m.

Die Martis 2º Martii 2004

Present:


Mr Tony Banks Jeff Ennis Mr Alan Meale Mr Richard Page Mr Anthony D Wright



The proceedings of Monday 1 March are read.



Yvette Cooper MP, Parliamentary Under-Secretary of State for Culture, Office of the Deputy Prime Minister, and Victoria Thomson from the Office of the Deputy Prime Minister.



288


Present:


Mr Tony Banks Jeff Ennis Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Monday 1 March are read.


Ordered, That the Committee be adjourned to Thursday 11 March at 9.30 a.m.

Die Jovis 11º Martii 2004

Present:


Jeff Ennis Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 9 March are read.



289

Die Lunae 15º Martii 2004

Present:


Mr Tony Banks Mr Richard Page Mr Anthony D Wright



The proceedings of Thursday 11 March are read.




Present:


Mr Tony Banks Mr Richard Page Mr Anthony D Wright



The proceedings of Tuesday 15 March are read.


Ordered, That the Committee be adjourned to Tuesday 23 March at 2.30 p.m.

290

Die Lunae 23 Martii 2004

Present:


Janet Anderson Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 23 March at 9.30 am are read.


Ordered, That the Committee be adjourned to Thursday 25 March at 9.30 p.m.

Die Jovis 25 Martii 2004

Present:


Janet Anderson Mr Tony Banks Jeff Ennis Mr Alan Meale Mr Richard Page Dr John Pugh Mr Anthony D Wright



The proceedings of Tuesday 23 March at 2.30 pm are read.


Ordered, That the Committee be adjourned to Thursday 25 March at 4.00 p.m.

291

Die Jovis 25 Martii 2004

Present:

Lord Brooke of Sutton Mandeville Lord Donoughue Viscount Falkland Lord Faulkner of Worcester Baroness Golding Lord Mancroft Lord Walpole

Mr Tony Banks Jeff Ennis Mr Alan Meale Mr Richard Page Mr Anthony D Wright



The proceedings of Thursday 25 March at 9.00 am are read.


It is moved that the draft Report before the Committee be read.

The same is agreed to.

Paragraphs 1 to 657 are agreed to .

The summary is agreed to.

Resolved, That the draft Report be the Report of the Committee to both Houses.

Ordered, That the following papers be appended to the Report:

1. Schedule of detailed points made about the draft bill by witnesses, together with comments from the Department for Culture, Media and Sport

2. List of visits

3. List of acronyms

Ordered, That the memoranda received by the Committee be appended to the Minutes of Evidence.

Ordered, That the provisions of Commons Standing Order No. 134 (Select committees (reports)) be applied to the Report.

Ordered, That the Chairman do make the Report to the House of Commons and the Viscount Falkland do make the Report to the House of Lords.

292

Appendix: Extract from the Minutes of Proceedings of the Committee,

16 September, 21 October, and 11 December 2003, 8 and 29 January 2004 and 24 February 2004

Members disclosed their interests relating to the draft Bill, pursuant to the resolutions of the House of Commons 13th July 1992 and the House of Lords 2nd July 2001:

The Rt Hon Lord Brooke of Sutton Mandeville declared an interest as a small shareholder in London Clubs International; and as a telephone account holder with Ladbrokes plc.

Lord Donoughue of Ashton declared an interest as the part owner of a race horse; the beneficiary of hospitality by Cheltenham racecourse, Ladbrokes plc, Ascot racecourse, Plumpton racecourse, the Tote, William Hill, Trading Sports, Corals bookmaker and the Association of British Bookmakers; the chairman of the racing industry’s Commission on Stable Staff (unpaid); an occasional holder of shares in gambling industry plcs (currently Stanley Leisure); the holder of a badge of the Race Course Association for 2003; a former president of Gamcare; the Chairman of the Starting Price Executive (a remunerated post); and as secretary of the All Party Betting Group.

Lord Falkland declared an interest as the part owner of a race horse; the recipient of hospitality at Newmarket races in 2003 under the auspices of the All Party Racing and Bloodstock Industries Group; and as the recipient of hospitality at Plumpton and Kempton Park racecourses.

Lord Faulkner of Worcester declared an interest as a former adviser to Littlewoods Leisure Ltd; and a Trustee of the Foundation for Sport and the Arts.

Baroness Golding declared an interest as treasurer of the All Party Racing and Bloodstock Group from which she received a badge by the Race Course Association for 2003; as the recipient of hospitality at Plumpton racecourse; and as secretary of the All Party Betting Group.

Lord Mancroft declared an interest as Chairman and 16% shareholder of Inter Lotto (UK) Ltd.; a member of the Executive Committee of the Lotteries Council; Non-executive Deputy Chairman of the ROK Corporation Ltd (which designs and supplies content for mobile telephone operators, including games and a variety of lottery and gambling products – none of which are currently available in the UK); as the registered Promoter of lotteries held by the Addiction Recovery Foundation and the Drug and Alcohol Foundation; and the recipient of hospitality from Ladbrokes plc.

Lord Wade of Chorlton declared an interest as a shareholder in Arena Leisure and Sportec; chairman of a small company, Country Pubs Limited; and that his son-in-law ran a consultancy advising several companies in the gambling sector.

Lord Walpole declared an interest as the promoter of National Lottery (Funding of Endowments) Bill; and a Justice of the Peace.

Tony Banks MP declared as an interest an Industry and Parliament Trust Fellowship at Ladbrokes plc.

Jeff Ennis MP declared an interest as Joint Chair of the All Party Racing and Bloodstock Group from which he received a badge by the Race Course Association for 2003; part owner of a race horse; and the recipient of hospitality at various racecourses.

John Greenway MP declared an interest as adviser to College Hill (a financial PR company not engaged in political lobbying, whose clients include the Tote); adviser to the Institute of Sales Promotion; the beneficiary of hospitality at various events by York Race Committee, the Tote, Ladbrokes plc, Betfair.com, Yorkshire television, Plumpton racecourse and the Association of British Bookmakers; and

293

as a former Chair of the All Party Racing and Bloodstock Group, from which he received a badge by the Race Course Association for 2003.

Alan Meale MP declared an interest as an adviser to College Hill (a financial PR company not engaged in political lobbying, whose clients include the Tote); as a part owner of a race horse; and as Chairman (unpaid) of a registered charity, the Stags Community Trust, a body connected with football which occasionally receives funds from organisations that may be in receipt of football pools’ monies eg the Football League.

Richard Page MP declared an interest as Joint Chair of the All Party Racing and Bloodstock Group, from which he received a badge by the Race Course Association for 2003; as the owner of racehorses; the holder of a Betfair account; and as the recipient of hospitality at Plumpton and Sandown Park racecourses.

Anthony D. Wright MP declared an interest as part owner of a race horse; as a member of a casino; and as the recipient of hospitality at Sandown Park racecourse.

294

Witnesses

Tuesday 16 December 2003 Page

Rt Hon the Lord McIntosh of Haringey, Parliamentary Under-Secretary of State (Media and Heritage), Mr Chris Bone, Head of Casino and Lotteries team, Ms Elizabeth Hambley, Legal Adviser and Mr Greig Chalmers, Bill team manager, Department for Culture, Media and Sport Ev 4

Thursday 18 December 2003

Mr Peter Dean CBE, Chairman, Mr Tom Kavanagh CBE, Secretary, Ms Geraldine Meneaud-Lissenburg, Transition Manager, The Gaming Board for Great Britain and Mr Elliot Grant, Head of Gambling and National Lottery Licensing Division, Department for Culture, Media and Sport Ev 28

Thursday 8 January 2004

Professor Mark Griffiths, Nottingham Trent University, Dr Emanuel Moran, Royal College of Psychiatrists, Professor Jim Orford, University of Birmingham Ev 53

Ms Helena Chambers, Quaker Action on Alcohol and Drugs, Mrs Jennifer Hogg, Evangelical Alliance and Guildford Churches, Ms Rachel Lampard, Methodist Church and Mr Jonathan Lomax, Salvation Army Ev 86

Tuesday 13 January 2004

Professor Leighton Vaughan Williams, Nottingham Trent University, Ms Brigid Simmonds, Business in Sport and Leisure, Mr Iain Wilkie, Ernst & Young, Mr John Kelly, Cross-Industry Group on Gaming Deregulation and Mr Jim Twomey, Pion Economics Ev 98

Mr John Healey MP, Economic Secretary to the Treasury Ev 130


Vicountess Penelope Cobham, Chairman, British Casino Association, Mr Roy Ramm, Chairman, Technical Committee, British Casino Association. Mr Andrew Love, Chairman, Mr Brian Lemon, General Secretary, Casino Operators’ Association of the United Kingdom Ev 146

Mr Andrew Tottenham, UK Representative of Caesar’s Entertainment (formerly Park Place Entertainment), Mr Tobin Prior, Chief Executive Officer, UK Gaming, Kerzner International, Mr Marc Etches, Managing Director, Leisure Parcs, Mr Lloyd Nathan, Managing Director, Europe MGM Mirage Development and Mr Peter Byrne, Executive Director, Sun International Ev 172

295

Tuesday 20 January 2004

Mr Warwick Bartlett, Chairman, Mr Christopher Bell, Vice-Chairman, Mr Tom Kelly, Chief Executive, Association of British Bookmakers, Mr Tom Clarke, Chairman, National Joint Pitch Council and Mr John Stevenson, National Association of Bookmakers Ev 212

Mr Peter Savill, Chairman, British Horseracing Board, Mr Christopher Foster, Executive Director, The Jockey Club, Mr Rupert Arnold, Chief Executive, The National Trainers Federation and Mr Clive Reams, Managing Director, Racefax Ev 241


Mr Andrew Tottenham, Chairman, Interactive Gambling, Gaming and Betting Association (iGGBA), Mr Richard Flint, BSkyB, iGGBA, Mr Bill Haygarth, Mr John O’Reilly, Association of British Bookmakers and Mr Paul James, Mobile Broadband Group, Mr Clive Hawkswood, a member of the Bill Team, Department for Culture, Media and Sport Ev 264

Mr Mark Davies, Director of Communications, Mr David Williams, Head of Regulatory Affairs and Mr Andrew Silverman, Director of Public Affairs, Betfair, Mr Rob Hartnett, Managing Director, Betdaq UK and Mr Kevin Griffiths, Managing Director, Sporting Options Ev 280

Tuesday 27 January 2004 (morning)

Mr Tim Batstone, President, Mr Phil Jarrold, Chief Executive, Mr Ray Stone, British Amusement Catering Trades Association (BACTA), Mr John Wimsett and Mr Frank Fahrenkopf Jr, Casino Machine Manufacturers Group Ev 328

Mr Nick Harding, Adult Gaming Centres, Mr Anthony Brenner, Chairman, British Association of Leisure Parks, Piers & Attractions Limited, and Dr Martin Rawlings, British Beer and Pub Association

Ev 361

Tuesday 27 January 2004 (afternoon)

Lord Lipsey, Chairman, Mr Clarke Osbourne, Gaming International and Committee Member of the British Greyhound Racing Board, and Mr Richard Hayler, Policy Officer, British Greyhound Racing Board Ev 376


Councillor Richard Grant, Chair, Community Safety Panel, Councillor Caroline Seymour, Deputy Chair, Public Protection Executive and Councillor Graham Brown, Deputy Chair, Public Protection Executive, Local Government Association Ev 389

Mr Nick Gerrard, Northwest Development Agency, Mr Reg Haslam, Head of Planning and Transportation, Blackpool Borough Council and Mr Anthony Jennens, Planning Consultant Ev 410

296

Tuesday 3 February 2004 (morning)

Ms Moira Black CBE, Chairman, Mr Mark Harris, Chief Executive, National Lottery Commission Ev 434

Mr Michael Grade, Chairman, Ms Dianne Thompson, Chief Executive, and Mr Phil Smith, Commercial Director, Camelot Ev 450

Tuesday 3 February 2004 (afternoon)

Sir David Durie, Chairman, Professor Jonathan Wolff, Trustee, Responsibility in Gambling Trust Ev 465

Mr Peter Cox, Managing Director, Mr Adrian Scarfe, Clinical Practice Manager, Mr Anthony Jennens, Trustee, GamCare and Ms Faith Freestone, Project Director, Gordon House Ev 479

Tuesday 24 February 2004 (morning)

Mr Nick Bunn, Assistant Pit Boss, Mr Tony Kelly, Media Representative, Transport and General Workers Union and Mr Peter Matthews, Australian Liquor, Hospitality and Miscellaneous Workers Union Ev 493

Mr Andrew Brown, Director General, Mr Jim Rothwell, UK Public Affairs and Press Officer, Advertising Association, Mr Christopher Graham, Director General, Advertising Standards Authority and Mr Roger Wisbey, Director, Committee of Advertising Practice, Advertising Standards Authority Ev 509

Tuesday 24 February (afternoon)

Mr Philip Circus, Fellow of the Institute of Sales Promotion and Ms Susanna FitzGerald QC Ev 528

Mr Alan Austin, Chairman, Mr Michael Head, Executive Committee Member The Lotteries Council and Mr Richard Boardley, The Pools Promoters Association Ev 540

Monday 1 March 2004

The Rt Hon Tessa Jowell MP, Secretary of State for Culture, Media and Sport, The Rt Hon the Lord McIntosh of Haringey, Parliamentary Under-Secretary of State (Media and Heritage), and Mr Elliot Grant, Department for Culture, Media and Sport Ev 551

Tuesday 2 March 2004

Yvette Cooper MP, Parliamentary Under-Secretary of State, Mrs Victoria Thomson, Office of the Deputy Prime Minister and Mr Elliot Grant, Department for Culture, Media and Sport Ev 572

297

List of written evidence

(Volume II)

1 Department for Culture Media and Sport (DGB 88) Ev 1

2 Gaming Board for Great Britain (DGB 5) (DGB 100) Ev 22, Ev 43

3 Royal College of Psychiatrists (DGB 12)(DGB 106) (DGB 128) Ev 45, Ev 64, Ev 66.

4 Professor Jim Orford (DGB 35) Ev 47

5 Quaker Action on Alcohol and Drugs (DGB 30) Ev 30

6 Evangelical Alliance (DGB 9) Ev 72

7 Methodist Church (DGB 13) Ev 77

8 Salvation Army (DGB 45) Ev 83

9 Business in Sport and Leisure (DGB 37) (DGB 116) (DGB 152) Ev 95, Ev 111, Ev 112

10 Cross Industry Group on Gaming Regulation/Pion Economics

(DGB 125) (DGB 140) Ev 125, Ev 118

11 Economic Secretary to the Treasury (DGB 95) Ev 127

12 British Casino Association (DGB 57) (DGB 138) (DGB 173) Ev 139, Ev 158, Ev 159

13 Caesars Entertainment (formerly known as Park Place Entertainment) (DGB 131) Ev 181

14 Kerzner (DGB 34) (DGB 133) Ev 161, Ev 181

15 Leisure Parcs (DGB 79) Ev 164,

16 MGM Mirage Development Limited (DGB 56) (DGB 132) Ev 166, Ev 185

17 Sun International (DGB 36) (DGB 141) Ev 169, Ev 187

18 Casino Operators Association of the United Kingdom

(DGB 26) (DGB 104) Ev 140, Ev 161

19 The Bingo Association (DGB 49) (DGB 109) (DGB 148) Ev 189, Ev 204, Ev 205

20 Committee of Registered Clubs Associations (DGB 20) Ev 192

21 Association of British Bookmakers (DGB 33) (DGB 96)

(DGB 145) Ev 206, Ev 222, Ev 230

22 National Joint Pitch Council (DGB 4) Ev 211

23 British Horseracing Board (DGB 89) (DGB 163) Ev 232, Ev 248

24 Jockey Club (DGB 50) Ev 236

25 National Trainers Federation (DGB 47) Ev 238

26 Interactive Gaming, Gambling and Betting Association

(DGB 86) (DGB 154) Ev 255, Ev 274

27 BSkyB (DGB 58) Ev 257

28 Mobile Broadband Group (DGB 66) Ev 262

29 Betfair (DGB 71) (DGB 111) (DGB 112) Ev 275, Ev 292, Ev 294

30 British Amusement Catering Trades Association (BACTA)

(DGB 54) (DGB 134) Ev 295, Ev 342

31 Casino Machine Manufacturers Group (CMMG)

(DGB 22) (DGB 158) Ev 323, Ev 349

32 Adult Gaming Centres (DGB 82) Ev 350

33 British Association of Leisure Parks, Piers and Attractions

(BALPPA) (DGB 72) Ev 353

298

34 British Beer and Pub Association (DGB 76) (DGB 143) Ev 355, Ev 369

35 British Greyhound Racing Board (DGB 40) (DGB 171) Ev 373, Ev 386

36 Local Government Association (DGB 17) (DGB 103)

(DGB 176) Ev 389, Ev 401, Ev 405

37 Northwest Development Agency (DGB 94) Ev 406

38 Blackpool Borough Council (DGB 80) (DGB 177) Ev 409, Ev 419

39 Mr Anthony Jennens (DGB 117) Ev 418

40 National Lottery Commission (DGB 64) Ev 424

41 Camelot (DGB 55) (DGB 118) (DGB 139) Ev 447, Ev 459, Ev 461

42 Responsibility in Gambling Trust (formally known as Gambling

Industry Charitable Trust) (DGB 41) (DGB 136) (DGB 167) Ev 462, Ev 475, Ev 475

43 Gamcare (DGB 62) Ev 476

44 Gordon House Association (DGB 91) Ev 477

45 Transport and General Workers Union (DGB 10) (DGB 165) Ev 491, Ev 501

46 Advertising Association (DGB 52) (DGB 120)(DGB 164) Ev 501, Ev 521, Ev 524

47 Advertising Standards Authority (DGB 8) (DGB 155) Ev 505, Ev 525

48 Institute of Sales Promotion (DGB 85) Ev 527

49 The Lotteries Council (DGB 43) (DGB 110) Ev 538, Ev 547

50 The Pools Promoters Association (DGB 68) Ev 539

51 Department for Culture, Media and Sport (DGB 169) Ev 566

52 Office of the Deputy Prime Minister (DGB 121) Ev 571

Volume III

Park Baptist Church (DGB 1) Ev 591

The Scottish Licensed Trade Association (DGB 2) Ev 592

Churches Together in Britain and England (DGB 3) Ev 593

Professor Neville Topham/ Pardign Services (DGB 6) Ev 593

Rank Group Gaming Division (DGB 7) Ev 594

Gala Group (DGB 11) Ev 598

Leisure Link Group (DGB 14) Ev 600

Ministry of Justice and Ecclesiastical Affairs (DGB 15) Ev 605

Newspaper Society (DGB 16) Ev 606

Alderney Gambling Control Commission (DGB 18) Ev 607

299

Castle Leisure and Carlton Clubs (DGB 19) Ev 609

BCAGE (Blackpool Coalition against Gambling Expansion) (DGB 21) Ev 621

The Association of Licensed Multiple Retailers (DGB 23) Ev 613

Sporting Index (DGB 24) Ev 621

Park Place Entertainment (now Caesar’s Entertainment) (DGB 25) Ev 623

London Clubs International (DGB 27) Ev 627

Bell-Fruit Games (DGB 28) Ev 628

Cambos Enterprises Limited (DGB 29) Ev 629

Addiction Recovery Foundation (DGB 31) Ev 630

St Saviours Church (DGB 32) Ev 631

Ministry of Finance (DGB 38) Ev 634

Earls Court & Olympia Group (DGB 39) Ev 635

Hilton Group Plc (DGB 42) Ev 638

Minister of Taxation (DGB 44) Ev 638

Royal Ministry of Culture and Church Affairs (DGB 46) Ev 639

Barcrest Group (DGB 53) Ev 641

Stanley Leisure Plc (DGB 59) Ev 645

Cryptologic (DGB 60) Ev 646

William Hill (DGB 61) Ev 648

Gamingking Plc (DGB 63) Ev 651

Gamestec Leisure Limited (DGB 65) Ev 652

Mayor of London (DGB 67) Ev 653

Littlewoods Gaming Limited (DGB 69) Ev 655

Ladbrokes Ltd (DGB 70) Ev 657

ITV Network Limited (DGB 73) Ev 658

300

League Against Cruel Sports (DGB 74) Ev 658

The Licensing Committee, Magistrates Association (DGB 75) Ev 659

TST Technical Systems Testing North America Ltd (DGB 77) Ev 661

Ministry of the Interior Police Department (DGB 78) Ev 661

News International Limited (DGB 83) Ev 662

The Drug and Alcohol Foundation (DAF) (DGB 84) Ev 664

Inter Lotto (UK) Ltd (DGB 87) Ev 666

Asian Racing Federation (DGB 90) Ev 670

Mr R J Fear (DGB 97) Ev 670

Accor Casinos (DGB 98) Ev 671

Sportingbet Plc (DGB 99) Ev 677

Stanley Casinos Limited (DGB 101) Ev 679

European Lotteries (DGB 102) Ev 679

Financial Services Authority (DGB 107) Ev 680

Mr David Morgan (DGB 108) Ev 683

Accor Casinos (DGB 114) Ev 684

BCAGE (Blackpool Coalition against Gambling Expansion) (DGB 119*) Ev 685

London First Centre (DGB 122) Ev 687

Tenpin Bowling Proprietors Association of Great Britain (DGB 123) Ev 689

Network of Buddhist Organisations (DGB 124) Ev 689

Granada (DGB 126) Ev 690

Leisure Link Group (DGB 127*) Ev 691

Professor Neville Topham (DGB 129*) Ev 693

Australian National University, Centre for Gambling research (DGB 130) Ev 694

Ameristar Casinos Inc (DGB 135) Ev 701

301

Leo Leisure (DGB 137) Ev 706

London Clubs International (DGB 142*) Ev 706

Sportingbet Plc (DGB 144*) Ev 706

Office of Fair Trading (DGB 146) Ev 707

Councillor Audrey Lewis, Westminster Council (DGB 147) Ev 708

CIBC World Markets (DGB 150) Ev 710

Accor Casinos (DGB 151*) Ev 711

The League Against Cruel Sports (DGB 153*) Ev 713

American Gaming Association’s (DGB 156) Ev 714

Littlewoods Gaming Ltd (DGB 157) Ev 718

London Clubs International (DGB 159*) Ev 719

House of Lords Select Committee on Delegated Powers and

Regulatory Reform (DGB 160) Ev 721

Mr Anthony Clare (DGB 161) Ev 721

Mr John Wainwright (DGB 162) Ev 722

Rileys Limited (DGB 166) Ev 723

The Licensing Committee, Magistrates Association (DGB 168*) Ev 726

Rank Group Gaming Division (DGB 170*) Ev 727

Mothers Union (DGB 172) Ev 729

Mr R W Masefield (DGB 174*) Ev 729

Mr Singh (DGB 175) Ev 730

The Football Association (DGB 178) Ev 732

Premier Bowl (DGB 179) Ev 733

Betfair (DGB 180*) Ev 734

National Association of Bookmakers Ltd (DGB 181) Ev 735

302

Rt Hon Lord McIntosh (DGB 182*) Ev 736

Department of Culture Media and Sport (DGB 183*) Ev 736

Castle Leisure (DGB 184) Ev 737.

Kossway Automatics (DGB 185) Ev 738

Professor Leighton Vaughan-Williams (DGB 186) Ev 739

Mr Dallas Willcox (DGB 187) Ev 743

Draft Gambling BillCommission. Two areas are excluded from its remit: spread betting and the...

Documents

Transcript of Draft Gambling BillCommission. Two areas are excluded from its remit: spread betting and the...