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Gambling and the law

06 June 2005
Gambling and the law

Following extensive review the Gambling Act finally received Royal Assent on 7 April 2005. It will have far reaching effect as it will regulate all gambling except for the National Lottery and Spread Betting.

The Act sets out three licensing objectives which are central to the new regime. These are:

• Protecting children and other vulnerable persons from being harmed or exploited by gambling;

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

• Ensuring that gambling is conducted in a fair and open way.

General Pubs and clubs will be required to seek an additional bingo licence if in any period of seven days stakes or prizes for bingo exceed £1,000. Limits will not be raised to £2,000.

The prohibition on the offering of credit by the operators of casino and bingo premises is maintained.

The Bill provides for a new criminal offence of cheating at gambling.

"Social responsibility" is at the heart of the new regime. Every operator will be required, as a condition of their licence, to comply with Gambling Commission codes of practice on social responsibility. Any operator failing to meet the conditions of their licence will risk its revocation.

Local Authorities will have a power to consider whether they wish to license any or further casino premises in their area.

Categories of Casinos

Small casinos Will require a minimum area exclusively for casino table games of 500m2. Small casinos will also require a minimum non-gambling area available to customers of 250m2. Small casinos will be permitted two gaming machines (of up to category B) for each gaming table available for play, up to a maximum of 80.

Large casinos Will require a minimum area exclusively for casino table games of 1,000m2. Large casinos will also require a minimum non-gambling area available to customers of 500m2. They will be permitted five gaming machines (of up to category B) for each gaming table available for play, up to a maximum of 150 machines.

Regional casinos Will require a minimum area exclusively for casino table games of 1,000m2, and a minimum additional gambling area of 2,500m2. Regional casinos will also require a minimum non-gambling area available to customers of 1,500m2. They will be permitted twenty five gaming machines (of up to category A) for each gaming table available for play, up to a maximum of 1,250.

Gaming Machines Gaming machines will be removed from unlicensed premises (fish and chip shops and mini-cab offices).

The maximum prize for gaming machines offering non-monetary prizes, which can be played by children will be reduced to £5.00.

The accessibility of unlimited prize gaming machines will be limited. Only the regional casino will be permitted to install unlimited prize gaming machines. Small and large casinos will be permitted gaming machines with limited prizes only.

Gaming machine numbers will be capped in all casinos. Small casinos will be permitted a maximum of 80 machines, large casinos - 150 machines, and regional casinos - 1250 machines.

The Gambling Commission The Act creates a single regulatory authority for gambling - the Gambling Commission (which will take over many of the functions and personnel of the current Gaming Board). The Commission will have three key objectives:

• To prevent gambling from being a source of crime and disorder;
• To ensure that gambling is conducted in a fair and open way; and
• To protect children and other vulnerable persons from being harmed or exploited by gambling.

The Commission is required to prepare, publish and keep reviewed a statement that sets out the principles which will govern the exercise of its functions and in particular explain how such principles will assist the Commission in its pursuit of the licensing objectives. It will include for example the practice and procedures which the Commission will apply in considering applications for operating and personal licences. The Commission is required to consult on the statement with a number of authorities/representatives (including representatives of gambling businesses).

The Commission is also required to publish codes of practice about the way in which facilities for gambling are provided (including a social responsibility code). It will be responsible for publishing guidance about how Licensing Authorities are to exercise their functions under the Act and the principles that they are to apply when exercising their functions.

The Gambling Commission will operate at arms-length from Government and will have an overall remit to regulate gambling. It will take over the licensing and regulatory responsibilities of the current Gaming Board for Great Britain (GBGB) in relation to casinos, bingo and certain types of lotteries.

It will also take over from the Gaming Board for Great Britain the responsibility for regulating the sale, supply and maintenance of gaming machines, and will have additional responsibilities in relation to their manufacture.

In addition, the Commission will assume responsibility for:

• Betting operators; and
• Pools promoters.

The Commission will also license and regulate gaming by means of remote technology. The Commission will issue licences for internet gambling and all other forms of remote gambling, including interactive television and mobile telephones.

Any operator considering a new business will be able to seek permission from the Gambling Commission for licences to provide facilities for the full range of commercial gambling activities. The Commission will also have the power to impose conditions on an individual operator and its activities where appropriate, e.g. limit on number of casinos that can be operated under the licence due to financial strength of the operator. Application fees and annual fees will vary according to the type of gambling conducted. Whilst the Operating Licence will be granted for an indefinite period, the Commission will have the power to review, over time, the performance of licence holders and the operation of licence conditions with the ability to impose various penalties.

Licence holders will be obliged to comply with requests for information from the Commission.

The Act allows for an annual levy (payable to the Commission) on operating licence holders.

Certain gambling activities, such as permits for lower stake gaming machines, will continue to be regulated by Local Authorities. Other activities, such as gaming or lotteries at a bazaar or fete, are considered to be of minimal risk to the public and therefore do not require a regulator.

There are two areas of gambling that will not be covered by the Commission.
• Spread betting; and
• The National Lottery

Licensing The new approach to licensing has three elements: Operating, Personal and Premises licences. The Gambling Commission will issue Operating and Personal licences. Local Authorities will license gambling premises in their area.

The Commission will determine its own policy and procedures for its licensing and regulatory functions.

The Commission will license gambling operators and certain types of gambling industry staff.

The Commission will be able to investigate applicants through interviews, by requiring the production of criminal records certificates and a number of other mechanisms. It will also be able to receive information from enhanced criminal records disclosures and exchange information, using statutory gateways, with law enforcement and regulatory bodies.

The Licensing Authority will be required to set three year licensing policies in respect of their functions.

Personal Licences The Commission will grant personal licences for an indefinite period.

The Licensees fall into two broad categories management and operation:

Management functions will include particular legally defined roles - such as directors and partners of a company. It will be for the Commission to decide which directors or partners need to be licensed. They will also include roles commonly filled by compliance officers and the managers or supervisors of persons handling significant flows of money.

An example of operational functions will be posts where the individual has the ability to influence the outcome of gambling.

Premises Licences
Premises Licences will be issued by the Local Authority Licensing Authority.

Applicants for Premises Licences will be required to hold a relevant Operating Licence before applying.

Premises Licences are transferable between occupiers (both holding Operating Licences).

A provisional statement may be obtained from a Licensing Authority in advance of a Premises Licence where premises are to be constructed or altered or where someone has yet to acquire the right to occupy premises. Only people with a right to occupy premises are eligible to apply for a Premises Licence.

When exercising their functions, the Licensing Authority must have regard to:

• Commission Codes of Practice and Guidance
• Consistencies with the licensing objectives
• Licensing Authorities three year licensing policy

Licensing Authorities have the power to decide to issue no further casino premises licences in their area.

Review of Premises Licence Premises Licence may be reviewed on application to the Licensing Authority by a responsible authority or an interested party or by Licensing Authorities' own initiative.

When determining what, if any, action to take on reviewing a licence, the Licensing Authority may impose certain penalties including suspension or revocation of licence, or amending, adding or excluding conditions on the licence.

Enforcement The Gambling Commission will be the public body with the primary responsibility to investigate and take action against illegal gambling. Its inspection staff (and those of local authorities) will have statutory powers of entry, search and seizure when exercising their enforcement functions.

There will also be provision under appeals against all decisions whether administrative or criminal.

Ed Farrelly is Head of Licensing at Eversheds Manchester Office. edfarrelly@eversheds.com.

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