Clause 77: Credit and inducements

223.     This clause concerns restrictions on the offering of credit and inducements by operating licence holders. Subsection (1) provides that a condition may be attached by the Commission to an operating licence relating to:

• the giving of credit in relation to the licensed gambling activities;

• making offers or inducements designed to induce participation in the licensed gambling activities; or

• being party to arrangements for inducing, permitting or assisting person to gamble.

224.     In addition to this general condition-making power, subsections (2) and (3) provide that holders of non-remote casino or bingo licences may not themselves give credit to people using their facilities. However, credit may be provided by third parties, for use by people on the casino or bingo premises, provided that the licensed operator and the credit provider operate at arm's length, and the operator neither makes, nor receives, any payment to or from the credit provider.

225.     Subsection 4 defines "credit" to include any form of financial accommodation and the acceptance of payment of a fee, charge, or stake in anything other than cash, cheque or debit card payment is considered credit.

Clause 78: Compliance with code of practice

226.     This clause makes it a condition of all operating licences that the holder must comply with any code of practice relating to social responsibility which is relevant to them. Codes of practice issued by the Commission under Part 2 are not of themselves automatically binding on operators, but are part of the overall scheme of regulation. However, this clause provides that social responsibility provisions in any code are incorporated as conditions to an operating licence.

Clause 79: Return of stakes to children

227.     The Bill contains a range of provisions designed to prevent children and young people from gambling. Under this clause a condition is imposed on all operating licences which requires operators to take certain steps in the event that they become aware that a child or young person has used their facilities to gamble. A child is a person under 16, and a young person a person under 18.

228.     If an operator becomes aware that a child or young person has used his facilities, then the operator must return any money paid by the child or young person as soon as practicable, and must not pay out any winnings (although if winnings have been paid out before the operator is aware of the claimant's age, he may not demand repayment).

229.     This clause does not apply to the use of the lowest stake gaming machine, and only applies to children (and not a young person) when the gambling activity concerned is football pools or a lottery. The condition imposed by this clause cannot be overridden by any contract or other agreement.

Clause 80: Premises

230.     It is the role of licensing authorities to licence specific premises upon which facilities for gambling may be provided in Great Britain. These matters are regulated by Part 8 of the Bill. Therefore, an operating licence cannot be subject to a condition which specifies or identifies particular premises upon which gambling activities can be carried on. However, conditions may be attached to operating licences which deal with the number of premises on which the licensed activities may be carried on (e.g. a maximum of 100 betting shops) or the number of persons for whom facilities may be provided on any premises where the licensed activities are carried on (e.g. a maximum of 500 player positions in a bingo hall).

Clause 81: Equipment

231.     In issuing an operating licence, the Commission may attach a condition about equipment to be used in the licensed gambling activities. Such equipment may include computers or devices for playing casino games, but does not include a gaming machine. This ties in with the powers of the Commission to consider the suitability of equipment when considering an application for a licence.

Clause 82: Gaming machines

232.     While certain operating licences confer general permissions to use gaming machines, the permission to use gaming machines on particular premises is contained in Parts 8 and 10 of the Bill. This means that the Commission should not be attaching conditions to operating licences concerning numbers or types of gaming machines and authority to make them available for use on premises. This clause prevents operating licences having conditions attached to them about:

• the number or categories of gaming machine that may be made available for use in accordance with an operating licence; or

• anything that contradicts regulations concerning the use of gaming machines, made by the Secretary of State under Part 10.

Clause 83: Membership

233.     Under the Gaming Act 1968 it is a requirement that gaming licences under Part II of that Act can only be held by casinos or bingo halls that operate as a members' club. That rule is abolished by this Bill, and as a result, this clause provides that neither the Commission nor the Secretary of State can impose a condition on a operating licence requiring facilities to be provided on the basis of a club or on any other membership basis. However, nothing in this clause or the rest of the Bill prevents organisations from operating as a members' club if they so wish.

Clause 84: Remote operating licence

234.     This clause sets out particular rules applying to a remote operating licence.

235.     It is a condition of a remote operating licence that remote gambling equipment used by the operator in providing facilities for gambling must be located in Great Britain. Part 3 contains the definition of remote gambling equipment.

236.     Without prejudice to other condition-making powers, the Commission may establish, or authorise others to establish on its behalf, standards in respect of systems and processes used for remote gambling. It may then enforce those standards through licence conditions, including the testing of the operator's systems, on application and from time to time.

Clause 85: Casino operating licence

237.     Part 1 provides a definition of casino, and gives the Secretary of State powers to define categories of casino. Under subsection (2) the Commission or the Secretary of State can impose conditions on any casino operating licence which restricts the class of casino game that can be made available. Under the Gaming Act 1968 these restrictions were imposed by secondary legislation, but under the Bill the Commission will also have the power to achieve this by licence condition.

238.     Subsection (3) provides that the Commission may specify rules for casino games or any equal chance game played in a casino. Again, this power replaces the position under the Gaming Act where these matters were prescribed in secondary legislation.

Clause 86: Bingo operating licence

239.     The Secretary of State may use her regulation making power under this clause to attach conditions to all bingo operating licences limiting the amount, value or nature of stakes, participation fees, or prizes; or requiring a specified proportion of stakes to be paid out by way or prizes, or imposing requirements specific to bingo games that are played on more than one set of premises. However, subject to any regulations that the Secretary of State may make, no other types of conditions can be attached to bingo operating licences on these matters. Therefore, the Commission has no residual power on these specified matters when attaching conditions to bingo operating licences.

240.     The Secretary of State's power to impose requirements that are specific to games played on more than one set of premises replaces the statutory provisions relating to linked and multiple bingo that are being repealed by this Bill.

Clause 87: General betting operating licence

241.     A general betting operating licence will be required by anyone wishing to accept or make bets by way of business. If someone wishes to provide facilities merely for other people to accept and make bets, then the relevant operating licence will be a betting intermediary operating licence, not a general betting operating licence, as the latter is relevant only for people who are themselves making or accepting bets in the course of a business.

242.     Subsection (1) sets out who is empowered to accept bets under the terms of a general betting operating licence: this will be the licence holder, an employee of the licence holder and any other holder of a general betting operating licence. No other person may accept or make bets under the authorisation of a general betting operating licence.

243.     Since a separate regime is established under the Bill for the licensing of premises, operating licences should not be subject to conditions relating to specific places. Therefore, subsection (2) prevents conditions being attached to a general betting operating licence which might restrict or compel the operator to provide facilities at a particular location. However, this does not affect the imposition of a mandatory condition on all premises licences in respect of a track, which requires the areas of the track to which children cannot be permitted access to be defined.

244.     Subsection (3) makes it clear that a general betting operating licence contains an implied term permitting the making of bets via postal services. This prevents any question of the need for a remote licence arising in relation to bets made by post.

Clause 88: Pool betting operating licence

245.     Where an operator is making or accepting pool bets (as defined in Part 1), then the appropriate operating licence will be a pool betting operating licence. This type of licence may cover any form of pool betting, but conditions may limit the particular pool betting activities an operator may provide. For example, a pool betting operating licence may specify that the operator may only operate pool betting in relation to football pools, or may operate pool betting on everything except horseracing in Great Britain.

246.     As with the general betting operating licence there are restrictions on who is permitted to accept pool bets under the licence. The restrictions are the same as those for the general betting operating licence, except that pool betting operators will also be allowed to authorise agents to accept bets on their behalf in certain circumstances. Those circumstances are:

• where the agent is on a track in reliance on an occasional use notice and is accepting bets in relation to a horse-race or a dog race on that track. In these circumstances the agent must be an adult and be authorised in writing to accept bets on behalf of the licensee (subsection (2)); or

• where the pool betting operating licence permits the operator to provide football pools and the operator has given written authority to an adult or young person to receive entries or payments on football pools on his behalf (subsections (3) to (5)). In these circumstances the authorised person may provide coupons, receive entries and payments, and pay winnings, pursuant to the operating licence.

247.     Under subsection (9) the Secretary of State may change by order the types of event on a track for which an agent may be authorised to take pool bets under subsection (2), and may add sports to the matters for which agents can be authorised under subsection (3), in addition to football pools.

248.     Subsection (7) makes it clear that a pool betting operating licence contains an implied term permitting the making of pool bets via postal services. This prevents any question of the need for a remote licence

Clause 89: Horse-race pool betting operating licence

249.     Where a pool betting licence authorises the provision of horserace pool betting, then the operating licence may specify that this clause has effect. The intention is that this clause will be needed in circumstances where only one licence for horserace pool betting has effect in Great Britain.

250.     Under subsection (2), the holder of a pool betting licence, who is licensed to conduct horserace pool betting, may authorise in writing any person to provide facilities for horserace pool betting, and this authorisation may include terms as to payment. This means that, for example, such an authority may be used by a person to accept pool bets on horse races on premises with a betting premises licence, or pursuant to an occasional use notice.

251.     The Secretary of State has the power to repeal this clause if circumstances dictate that it is no longer needed i.e. if there are no longer exclusive arrangements for horserace pool betting in Great Britain. In such circumstances, the pool betting operating licence would become the only kind of licence relevant to pool betting in Great Britain.

Clause 90: Gaming machine technical operating licence

252.     Without prejudice to other condition-making powers, the Commission may establish, or authorise others to establish on its behalf, standards in respect of systems and processes used for the manufacture, supply, installation, adaptation, maintenance or repair of a gaming machine (subsection (1)). These standards must be consistent with the rules concerning gaming machines contained in Part 10 (subsection (2)).

253.      The Commission can enforce those standards through licence conditions, including the testing of the operator's systems on application and from time to time.

Clause 91: Lottery operating licences

254.     This clause provides for the Commission to issue licences for the operation of lotteries. Lotteries which form part of the National Lottery (which are not covered by this Bill), or that are classed as "exempt" lotteries under Schedule 9, will not require a licence under these provisions.

255.     A lottery operating licence is only available to operators falling within three categories:

• non-commercial societies;

• local authorities; and

• external lottery managers.

256.     Part 1 of the Bill contains a definition of "non-commercial society". A non-commercial society, which wishes to hold lotteries, will only require an operating licence under this clause if the proceeds of the lotteries they promote exceed the thresholds set out in Schedule 9 to the Bill. Below these thresholds, the lottery will be classified as a "small society lottery", and will be exempt from the requirement to obtain a licence (although they will require registration with a local authority).

257.     The types of local authority which may promote a lottery are broadly defined, and include parish councils in England, and community councils in Wales (subsection (7)).

258.     Subsection (2) allows the Commission flexibility in terms of the scope of operating licences. A licence may authorise promotion generally, or specific promotion activities. It may authorise promotion of lotteries generally, or only in connection with lotteries of certain types or in certain circumstances.

259.     A licence may authorise a person to act as an external lottery manager, to provide lottery management services on behalf of local authorities, and for non-commercial societies, whether licensed or exempt. Where a non-commercial society or local authority delegate all its lottery promotion to a lottery manager, the Commission will have the power to attach a condition to the licence to the effect that the arrangements for the lottery are to be made by a lottery manager. If the Commission does this, it will not be required to form an opinion on the suitability of the local authority or non-commercial society in terms of integrity, competence or financial and other circumstances, when considering their application for a licence. The assessment will be of the lottery manager only. However, the Commission, can, under other provisions of this Part, assume integrity for particular classes of applicant, and could do so for local authorities for example, if they are making the application.

260.     Subsections (4) and (5) ensure that it will not be possible to prohibit the delivery of lottery tickets by post in relation to these lotteries, either by regulations made by the Secretary of State, or by conditions made by the Commission. Subsection (6) specifically empowers the Commission to attach conditions to the licence concerning rollovers, that is the carry over of prizes from one draw into to another, as defined in Part 11.

Clause 92: Mandatory conditions of lottery operating licence

261.     This clause specifies a number of requirements about which the Commission must attach conditions to each lottery operating licence held by a non-commercial society or local authority. The Commission will not be restricted to these conditions, and may attach conditions which are similar, but more onerous, than those specified here.

262.     Various conditions are required which set money or percentage limits in relation to proceeds and prizes. At least 20% of the proceeds of any lottery promoted under the licence must go to good causes, i.e. the purpose for which, in the case of a non-commercial society, it is conducted, or in the case of a local authority, for which it has the power to incur expenditure. Under any lottery operating licence, the proceeds of any single lottery must be limited to £2 million, and the proceeds of all lotteries in that year are restricted to an upper limit of £10 million. There is an upper limit on the size of a prize in a licensed lottery of £25,000, or 10% of the proceeds if this figure is greater (subsections (2) to (4)).

263.     Conditions must be attached to the licence prescribing certain requirements in relation to tickets. This includes the requirement that no additional payment apart from the ticket price may be required for entry into the lottery (subsections (5), (6) and (7)).

264.     The Secretary of State has power to vary, by order, the money amounts and percentages set out in this clause (subsection (10)),

Clause 93: Annual fee

265.     The holder of an operating licence must pay a fee to the Commission for the licence to have effect ("the first annual fee"), and, thereafter must pay an annual fee before each anniversary of the issue of the licence. These annual fees acts as renewal fees in the sense that failure to pay them can lead to revocation of the licence. These fees are different to the application fee required when making an application for a licence. The Secretary of State will use regulations to set the fees and the period within which the first annual fee must be paid. Different fees may be set for different kinds of operating licences and different circumstances.

Clause 94: Change of circumstance

266.     If an operator has a change of circumstance after an operating licence is issued he may be required, by regulations (under this clause) or by conditions attached to his licence, to inform the Commission of the change of circumstance. The Commission must then amend the licence as appropriate to reflect the change in circumstances.

267.     This clause sets out the regulation making power of the Secretary of State, and provides that a licence holder commits an offence if he fails, without reasonable excuse, to comply with a requirement to inform the Commission of a change of circumstance. The maximum penalty for the offence is a fine not exceeding level 2 on the standard scale (currently £500). The Commission may also suspend or revoke an operating licence if the holder fails to comply with regulations under this clause.

Clauses 95 & 96: Change of corporate control

268.     If the holder of an operating licence is a company limited by shares, a mechanism is needed to allow the Commission to approve a change of control of that company (i.e. following sale, transfer, allotment or issue of shares). These clauses provide that mechanism.

269.     This mechanism applies to any kind of operating licence, but the Secretary of State may make regulations exempting specified kinds of operating licence from these requirements.

270.     This clause uses the definitions set out in the Financial Services and Markets Act 2000. It provides that if a person becomes a "controller" of a company which holds an operating licence ("the company"), then the company must surrender the licence to the Commission, or apply to the Commission for approval for the licence to continue to have effect.

271.     If the company wishes to apply for approval for the licence to continue to have effect (which will attract a fee to be set by the Secretary of State), then the Commission may require information about the change of control and the new controller. The Commission may give approval if it is satisfied that that it would have granted the operating licence at the time of the original application, had the new controller been the controller of the company at the time. If it is not so satisfied, then the Commission must revoke the operating licence. A company has five weeks from the date when the new controller takes over in which to surrender its licence, or apply for a continuation, otherwise the Commission will revoke the licence (unless the Commission chooses to extend this period, which it may do, even after the 5 weeks has expired).

272.     In requiring information in relation to a change of control, the Commission is required to have regard to normal commercial practices concerning confidentiality.

273.     This clause applies to the merger or division of companies, but where this is the cause of a change of controller, the Secretary of State may set reduced fees for applications in these circumstances.

Clause 97: Application to vary licence

274.     Holders of operating licences may, for their own commercial reasons, wish to vary the gambling facilities that they provide, whether that is to cease carrying out an activity, or to start a new activity. Equally, they may wish to vary an individual condition that has been attached to their licence. In such circumstances, the holder of an operating licence will need to apply to the Commission to vary the terms of the licence.

275.     This clause permits holders to apply for a variation of an operating licence, and applies the provisions of Part 5, modified, as appropriate, to the variation process. Regulations by the Secretary of State will provide the relevant procedures.

276.     An application for variation cannot be used to transfer an operating licence to another person. Operating licences are non-transferable.

Clause 98: Amendment

277.     This clause provides that the Commission may require the holder of an operating licence to submit the licence to the Commission for amendment in a number of circumstances where it requires changes to be made to it.

278.     A licence holder has 14 days to comply with a requirement to send his licence to the Commission in response to a request, and commits an offence if he fails to do so without reasonable excuse. The maximum penalty is a fine not exceeding level 2 on the standard scale (currently (£500). The Commission also has power to suspend or revoke a licence if the holder fails to comply with the requirements set out here.

Clause 99: Register of operating licences

279.     In order that the public can find out whether a person providing gambling facilities is the holder of the necessary permission, licence or permit, the Bill contains a series of requirements for various registers to be maintained. This clause requires the Commission to maintain a register of operating licences and to make it available to the public. A fee may be payable but the fee must not exceed the reasonable cost of providing the service.

Clauses 100 & 101: Copy of licence and Production of licence

280.     These clauses allow the Commission:

• to issue to a licence holder a copy of the licence in the event that it has been lost, stolen or damage; and

• (together with the police) to require the holder of an operating licence to produce it within a specified period. The licensee will be committing an offence if he fails without reasonable excuse to comply with this requirement. The maximum penalty is a fine not exceeding level 2 on the standard scale (currently £500).

Clause 102: Conviction

281.     One of the licensing objectives in the Bill is to prevent gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime. This clause requires holders of operating licences to take certain steps in the event that they are convicted of a criminal offence in Great Britain or abroad.

282.     Where the holder of an operating licence is convicted of an offence in Great Britain, or of a relevant offence by a court outside Great Britain, he must inform the Commission as soon as reasonably practical. This ensures that the Commission has the necessary information it needs to regulate licence holders, and could, if it wished, commence a review of the licence.

283.     If the holder of an operating licence is convicted of a relevant offence before a court in Great Britain he must inform the court immediately that he holds an operating licence. This is so that the court can consider whether it should exercise its powers to order forfeiture of the operating licence as part of the sentence it imposes for the offence.

284.     A list of offences which are "relevant offences" is set out at Schedule 6. These are offences in Great Britain. An offence under the law of another country is a relevant offence if it is similar in nature to an offence listed in Schedule 6. This ensures that a person's suitability to hold a licence is considered in relation to any criminal conviction for a serious offence, not just those in Great Britain (see the interpretation clause for this Part for the definition of "relevant offence").