House of Commons - Explanatory Note
Gambling Bill - continued          House of Commons

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Clause 310: Foreign gambling

686.     This clause makes it an offence to advertise non-EEA (or "foreign") gambling. Foreign gambling is gambling which either physically takes place in a non-EEA state (e.g. a casino in Australia), or gambling by remote means which is not regulated by the gambling law of any EEA state (the interpretation clause in Part 18 defines "EEA state"). The offence covers advertising of gambling whether it takes place by remote or non-remote means, and subsequent clauses in this Part make specific provision about this.

687.     It will be open to the Secretary of State, however, to make regulations specifying countries which are to be treated as though they were EEA states for the purposes of this clause. The effect of this will be to take any advertising of gambling taking place in that country outside the scope of the offence.

688.     The maximum penalty upon conviction for an offence under this clause is a term of imprisonment of 51 weeks in England and Wales, or 6 months in Scotland, together with a fine up to level 5 on the standard scale (£5,000 currently).

Clause 311: Territorial application: non-remote advertising

689.     This clause clarifies the application of Part 16 where the advertising is by non-remote means, for example a poster on a hoarding.

690.     Where the advertising is by non-remote means:

  • regulations controlling the form, content, timing and location of advertising of gambling under this Part;

  • the offence of advertising unlawful gambling under this Part; and

  • the offence of advertising foreign gambling under this Part,

will only apply where the advertising takes place in Great Britain.

Clause 312: Territorial application: remote advertising

691.     This clause clarifies the application of these provisions where the advertising is by remote means, for example by email.

692.     For remote advertising of gambling to fall within the scope of Part 16 it has to satisfy three tests. In the case of clause 310 and the remote advertising of foreign gambling it is only the first of the three tests which has to be satisfied.

693.     The first test is broadly that the advertising must be targeted at persons in Great Britain. In particular the advertising must involve:

  • providing information intended to come to the attention of persons in Great Britain;

  • sending a communication intended to come to the attention of one or more persons in Great Britain;

  • or making data available with a view to its being accessed by persons in Great Britain or in circumstances where that is likely to happen

694.     The second test applies in the case of advertising that is either broadcast by television or constitutes an information society service within the meaning of Directive 98/34/EC (on electronic commerce). Information society service means "any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing .. and storage of data, and at the individual request of a recipient of a service".

695.     Where the advertising is broadcast by television the provisions of Part 16 will only apply if the broadcaster is either under the jurisdiction of the United Kingdom for the purposes of Directive 89/552/EEC (Television Without Frontiers) or is not under the jurisdiction of an EEA state for the purposes of that Directive. The purpose of this particular test is to ensure that the provisions do not apply to advertising where the broadcaster is properly regulated by another EEA State.

696.     Where the advertising constitutes an information society service, the provisions of Part 16 only apply where the service provider:

  • is established in the United Kingdom for the purposes of Directive 2000/31/EC,

  • is established in a non-EEA state for those purposes, or

  • has been notified that the conditions for derogation in Article 3(2) of that Directive have been satisfied in relation to the service provider.

697.     Directive 2000/31/EC is concerned with contributing to the proper functioning of Internal Market by ensuring the free movement of information society services between Member States. In broad terms the Directive establishes that a provider of information society services is to be regulated by the State in which it is established. Therefore, in general, where advertising constitutes an information society service, the provisions of Part 16 only apply where the provider is either established in the United Kingdom or outside the EEA. Article 3(4) of the Directive enables Member States to derogate from this general rule where the provider of an information society service not established in its country presents a serious and grave risk in respect of public policy matters such as the protection of consumers. The possibility to derogate under Article 3(4) of the Directive is also reflected in the clause

698.     The third test is that the gambling itself takes place in Great Britain where it is non-remote gambling; or, where it is remote gambling, that at least one piece of remote gambling equipment is situated in Great Britain.

PART 17: LEGALITY AND ENFORCEMENT OF GAMBLING CONTRACTS

699.     This Part deals with the legality and enforcement of gambling contracts. Under the provisions of the Bill, contracts made for gambling purposes are to be treated similarly to other contracts. In particular, any debts that might arise from gambling will be capable of enforcement in the same way as any other personal or business debts. Provisions in the present law that prevent such contracts from being enforced will be repealed, but the Commission will have power to void gambling contracts in certain circumstances. These powers are linked to the licensing objective (under Part 1) and enable the Commission to take specific action if satisfied that a bet was substantially unfair.

Clause 313: Repeal of provisions preventing enforcement

700.     This clause provides for the repeal of the current statutory provisions which provide that gambling contracts are unenforceable. The repeals will not apply retrospectively, so any gambling contract made, or right arising from an agreement made, before this clause comes into force will not be enforceable.

Clause 314: Enforceability of gambling contracts

701.     This clause expressly provides that a contract will be capable of being enforced irrespective of the fact that it is a contract relating to gambling. This does not, however, override any other rule of law that prevents enforcement on the grounds of unlawfulness, so gambling contracts may be void on the same basis as any other contract (for example, on the basis of lack of intention, mistake or illegality).

Clause 315: Power of Gambling Commission to void bet

702.     This clause provides the Commission with the power to make an order that a bet accepted by, or through, the holder of a general betting operating licence, a pool betting operating licence, or a betting intermediary operating licence, will be made void.

703.     Where the Commission exercises this power, any contract or other arrangement relating to the bet will be void, and any money paid in relation to the bet must be returned to the person who paid it. So, for example, a person who places a stake on a bet, that the Commission orders should be made void, must have their stake returned to them. Equally, any winnings must be repaid to the person who accepted the bet. Such repayments will be enforceable as a debt.

704.     The Commission may only make an order under this clause where it is satisfied that the bet was substantially unfair. In considering whether a bet was substantially unfair, the Commission must have regard to any of the factors listed in subsection (4) that apply. These factors are:

  • that one or both of the parties to the bet (whether they made or accepted the bet) supplied information that was insufficient, false or misleading;

  • that one or both of the parties to the bet believed, or ought to have believed, that the race or event about which the bet was made was, or would be, conducted in contravention of the industry rules that apply to the event. This might apply where, for example, one party to a bet believed that players in a youth football match were in fact over the legal age for participation, but nonetheless offered a bet on the match;

  • The fact that one or both of the parties to the bet believed, or ought to have believed, that the offence of cheating (as set out in Part 3 of the Bill) had been, or was likely to be, committed in relation to the bet. This could apply where, for example, a person connected to a racehorse owner became aware that a horse had been deliberately injured prior to a race in which it was to run and, on the basis of that knowledge, made a bet on that horse through a betting intermediary;

  • The fact that one or both parties to the bet have been convicted of the offence of cheating as set out in Part 3 of the Bill.

705.     The effect of this is that the Commission will not automatically void a bet where one of the factors listed in subsection (4) applies, it will only cancel a bet where it is satisfied that it was substantially unfair. This will allow for the situation where both parties to the bet knew about the cheating, for example.

706.     The power to void a bet will be available to the Commission for a period of six months from the day on which the result of the bet is determined, except where there has been a conviction for cheating, in which case there is no time limit. Provision is made later in this Part for rights of appeal in relation to orders made by the Commission under this clause.

Clause 316: Interim Moratorium

707.     The Commission will also have the power to make an order freezing any obligation to pay money in relation to a bet, where it suspects that it may wish to make that bet void. Whilst this interim moratorium is in place, a betting operator need not pay a customer any winnings; and the customer will not be required to pay any stake or commission.

708.     The effect of the interim moratorium is to protect any payments that would otherwise have been made in relation to a bet, but which might be difficult to recover if the Commission later decides that the bet should be made void. The Commission need not be certain that a voiding order will be made before imposing the interim moratorium.

709.     An interim moratorium will last for a period of 14 days, beginning on the day that it is made. It will be possible for the Commission to extend an interim moratorium by a further period of up to 14 days. There is no limit to the number of interim moratoriums that the Commission may impose in relation to any bet, although the time limit of 6 months for making an order to void a bet will continue to apply during any period when an interim moratorium is in place.

710.     The Commission may cancel an order for an interim moratorium before it expires; and must cancel one if it ceases to think that it might want to make an order to void the bet.

711.     Where the Commission decides to impose an interim moratorium, but then decides not to void the bet, the Commission will not be liable to make any payment (such as interest on the payments that have been frozen) by virtue only of the fact that it has taken such action.

Clause 317: Supplementary

712.     Subsection (1) of this clause provides for a right of appeal to the Gambling Appeals Tribunal where the Commission makes an order to void a bet. Either party to the bet, and any other person who was a party to a contract or arrangement relating to the bet, will be able to appeal. This means that, for example, betting intermediaries who may lose money as a result of a bet being made void, but who are not a party to the actual bet, are provided with a right of appeal. Further provision is made as to the Gambling Appeals Tribunal in Part 7.

713.     Subsections (2) and (3) give the Commission power to void any part of a betting transaction, and to determine the consequences for any bets connected with a bet or betting transaction that is made void. Such a determination might, for example, require all the successive bets in an "accumulator" bet to be made void.

714.     When investigating whether to order that a bet should be made void, the Commission may require any person by or through whom the bet is made or accepted (such as a party to the bet or a betting intermediary), to provide information or documents in relation to the bet. A person who does not comply with this requirement commits an offence, unless they have a reasonable excuse. The penalty for the offence will be a maximum fine of £500 (level 2 on the standard scale). In conducting its investigation, the Commission may also take into account any other information that it receives from any other person.

PART 18: MISCELLANEOUS AND GENERAL

715.     Part 18 contains a number of miscellaneous provisions. It provides powers for transitional arrangements to be made for implementation of the various new licensing and permit regimes established by the Bill. It covers matters such as application of the Bill to the Crown, and the prosecution powers of licensing authorities. It sets out a comprehensive interpretation clause, and it provides for repeals and consequential amendments, and the general extent of the Bill.

Clause 318: Prize competitions

716.     Participating in competitions in which there is a prize is not to be regarded as gambling as long as the activities involved in the competition do not amount to betting, gaming or a lottery as defined in the Bill.

Clause 319: Foreign Betting

717.     This clause repeals sections 9 to 9B of the Betting and Gaming Duties Act 1981 (c.63), which imposes prohibitions on certain activities relating to overseas betting, for the protection of the revenue. The provisions of Part 16 will provide a complete regime for the regulation of advertising, and as a result, these sections of the 1981 Act are no longer required.

Clause 320: Offence committed by body

718.     If a body (such as a company) commits an offence under the Bill, persons of authority in the body (known as officers) may be prosecuted if the offence resulted from their consent, connivance or their negligence. The body may be prosecuted also. Officers can include directors, managers, secretaries and members of a body. Where a body is a partnership then each partner is individually responsible for offences arising in these circumstances. Unincorporated bodies and their officers may also be prosecuted in the same way.

719.     Subsection (7) allows the Secretary of State to make regulations dealing with the application of this clause to bodies formed outside the United Kingdom.

Clause 321: False information

720.     Any person giving false or misleading information to the Commission or to a licensing authority, without a reasonable excuse, commits an offence. If convicted, the person may be imprisoned for up to 51 weeks in England and Wales, or 6 months in Scotland, and may also be fined an amount up to level 5 on the standard scale (currently £5,000). If the Commission or a licensing authority have taken a decision on the basis of false information they may do whatever in their judgement is necessary to alter or remedy the effects of that decision.

Clause 322: Value of Prize

721.     This clause allows the Secretary of State to make regulations which determine how the value of a prize is to be calculated. A number of provisions in the Bill give powers to prescribe the maximum value of a prize that may be won at gambling. Such prizes may be non-money prizes, and these regulations may set down rules on how to determine the value of such a prize.

Clause 323: Participation Fees

722.     This clause provides a definition of "participation fee" for the purposes of the Bill. Under other Parts of the Bill, powers are taken to prescribe maximum participation fees for gambling (e.g. under Parts 5 and 12), or participation fees are prohibited in relation to certain forms of gambling (e.g. private gaming under Part 14). This clause describes what matters may and may not count as a participation fee, and gives the Secretary of State power to:

  • Provide that a membership subscription is to be treated as a participation fee, as an exception to the general rule set out in subsection (1); and

  • Provide for the apportionment of participation fees where the fee covers gambling and non-gambling matters.

Clause 324: Forfeiture

723.     Courts may order the forfeiture of items, like gaming machines, which are involved in the committal of offences under the Bill. Items will be surrendered to the police. Persons who have not been convicted may make representations about any items that are the subject of a forfeiture order, where they believe they have an interest in the article, and the court may order that the article be given to that person.

724.     It will be an offence to fail to co-operate with a forfeiture order, the maximum penalty upon conviction being a maximum term of imprisonment of 51 weeks in England and Wales, or 6 months in Scotland, and/or a fine up to level 5 (£5,000 currently).

Clause 325: Prosecution by licensing authority

725.     Local authorities have general powers to prosecute or defend legal proceedings, but this clause provides power for them to institute proceedings with respect to specified offences under the Bill. The clause identifies those matters for which licensing authorities have express power to prosecute. This clause does not apply to Scotland.

Clause 326: Excluded Premises

726.     The Bill generally applies to gambling on any premises in Great Britain, including vessels and vehicles. However, this clause provides an exception to this general provision by excluding from the Bill premises which are subject to a national security certificate, issued by the Secretary of State or the Attorney General, or premises which are otherwise of a kind specified by the Secretary of State by order.

Clause 327: Three-year licensing policy

727.     Licensing authorities perform a number of different functions under the Bill. They issue premises licences under Part 8, temporary use notices under Part 9, and a range of permits, under Parts 10, 12 and 13 and Schedules 8, 10 and 11. To assist them in this task, and to provide transparency for those wishing to apply to a licensing authority for a permission under the Bill, all authorities are required to prepare a licensing policy, covering all their functions.

728.     This clause sets out the procedures authorities must follow in preparing such a policy. Following widespread consultation licensing authorities will publish a licensing policy statement describing the principles they intend to apply in exercising their various functions. The policy will have effect for three years, but the authority may review and alter the policy during that period. Regulations may be made by the Secretary of State (or Scottish Ministers in relation to Scotland) about the form of statements, the procedure to be followed in relation to them and their publication, and the first day of the initial three year period will also be set in this way.

Clauses 328: Exchange of information

729.     Part 2 contains provisions which enable the Commission to exchange information with the bodies listed in Schedule 5. This clause allows the bodies listed in Part 1 of that Schedule to exchange information amongst themselves for use in the exercise of a function under the Bill. It also allows those bodies, and the Commission, to provide information obtained in the course of functions under the Bill to Her Majesty's Customs and Excise. The provision of information under this clause may be made subject to conditions.

Clause 329: Power to amend Schedule 5

730.     This clause confers power on the Secretary of State by order to amend the lists of bodies in Schedule 5. In particular, it allows entries to be added to or removed from a list, and for entries to be moved from one list to another.

Clause 330: Interpretation

731.     This clause provides the general definitions and meanings of expressions for the Bill. Particular definitions of substance, in subsection (1), are provided for:

  • Football pools;

  • Premises;

  • Stake;

  • Track;

  • Vehicle; and

  • Vessel.

732.     Subsection (3) provides a definition of what is meant by "virtual game, race or other event or process", and subsection (4) covers what is meant by giving notice under the Bill.

Clause 331: Crown Application

733.     The Bill applies to the Crown, which includes government departments and crown servants. However, the Bill has no effect in relation to anything done on premises occupied by the armed forces.

Clause 332: Regulations, orders and rules

734.     This clause contains the mechanics for the Secretary of State to make regulations, rules or orders, where she is provided with a relevant power under the Bill. Similar powers are provided for Scottish Ministers to make regulations.

735.     Most regulations made under the Bill are to be made by statutory instrument, pursuant to the negative resolution procedure. However, subsection (4) lists particular regulation-making powers which must be made pursuant to the affirmative resolution procedure (in England and Wales) or be approved by resolution of the Scottish Parliament (for Scotland). Orders (with the exception of those listed in subsection 7) are to be made by statutory instrument subject to the affirmative resolution procedure.

Clause 333: Amendments and repeals

736.     As a result of the substantive provisions in the Bill, there need to be consequential amendments made to provisions in other legislation and repeal of other Acts, in part or in their entirety. This clause lists the major enactments repealed by the Bill.

737.     Schedule 13 contains the minor and consequential amendments necessitated by provisions in the Bill. Schedule 14 lists provisions repealed by this Bill, and the extent of their repeal.

Clause 334: Money

738.     This clause makes provision for expenditure and receipt of income by a Minister of the Crown under the Bill.

Clause 335: Commencement and Schedule 15

739.     This clause empowers the Secretary of State to bring the provisions of the Bill into effect. It is the Government's intention that the Act be brought into effect in stages. This clause therefore make possible secondary legislation that brings different parts of the Bill into being at different times and in relation to different classes of activity under the Bill.

740.     Subsection 2(e), in particular, provides for the Commission to come into being in relation to preparatory work, prior to the repeal of the existing licensing regimes. Subsection 2(f) makes it possible for persons who wish to provide facilities for gambling under the Bill to make advance applications to the Commission and to licensing authorities for operating, personal and premises licences, and other permits or permission under the Bill.

741.     This clause, and in particular Schedule 15, provide powers to effect transition to the new regulatory regime and also what have become known as "grandfather rights", which are provisions that require relevant authorities to grant new permissions to persons making applications if they held equivalent permissions under the previous law.

742.     Part 1 of Schedule 15 deals with the transitional continuation of old licences and permissions. In particular, paragraph 3 allows particular provision to be made for casinos which are below the minimum licensable size, as defined by regulations pursuant to Part 1 of the Bill. This will allow such casinos to continue to operate, with controls, but without requiring them to meet the minimum requirements as to size. It will also allow them to retain their present entitlements to gaming machines.

743.     Part 2 of this Schedule deals with advance and interim applications, and the need for licences to be converted from old licences to new licences in certain circumstances. The Government intend that these powers will be used primarily in relation to applications for premises licences under Part 8, lottery operating licences under Part 5 and in relation to the gaming activities of clubs and pubs under Part 12.

Clause 336: Extent

The Gambling Bill applies to Scotland, England and Wales, but not generally to Northern Ireland. There are two exceptions to this. The offence of chain gifting in Part 3 applies to Northern Ireland, as does the repeal of sections 9 to 9B of the Betting and Gaming Duties Act 1981, contained in this Part.

FINANCIAL EFFECTS AND EFFECTS ON PUBLIC SERVICE MANPOWER OF BILL

744.     A regulatory impact assessment is published alongside these notes. This gives information about the impact of the Bill on the gambling industry as a whole, and for individual sectors. In broad terms, the overall impact of the Bill will be to increase regulatory costs per annum by approximately £10 to £15 million. These increased costs arise from the more intensive arrangements for licensing and regulation produced by the Bill. The Government judges that these increased costs are appropriate and proportionate to the aims of the regulation, described in clause 1 of the Bill.

745.     Copies of the regulatory impact assessment can be obtained from the following website: www.culture.gov.uk/gambling_and_racing/gambling_bill.htm.

746.     The regulatory impact assessment describes the effects of the Bill on public sector financial costs and public sector manpower. It is intended that the costs of the Commission and licensing authorities, in exercising their regulatory functions under the Bill, will be funded through fees paid by applicants and licensees. Appellants will meet the costs of the Gambling Appeals Tribunal established under Part 7 of the Bill. The Commission will also receive monies voted by Parliament to pay for its transitional costs and its non-licensing functions.

747.     It is envisaged that the Commission will require, when fully operational, around 200 staff. This is approximately three times the number of staff currently employed by the Gaming Board. Local authorities may also require additional staff as a consequence of the measures in the Bill, the costs of which will be met through fees for permits and licences.

 
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Prepared: 19 October 2004