House of Commons - Explanatory Note
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Schedule 3: The Gambling Commission

99.     Schedule 3 provides for the constitution and membership of the Commission established under Part 2 of the Bill.

100.     The Commission will consist of a chairman and other commissioners. The Secretary of State will appoint all of these. The precise number of Commissioners will be a matter for the discretion of the Secretary of State. The Secretary of State may not appoint a commissioner for a period of office in excess of five years, or for periods exceeding ten years in aggregate.

101.     The chief executive may also hold a position as a commissioner. However, the chief executive may not hold office as chairman. If a person ceases to be chief executive then that also brings to an end that person's appointment as a commissioner.

102.     The Commission may also appoint other staff. The terms and conditions of employment of the chief executive and other staff is subject to the consent of the Secretary of State.

103.     The Commission may determine its own proceedings, and must publish details of the arrangements it makes. In doing so, the Commission may delegate a function under the Bill to: a commissioner, a commissioners' committee, or an employee of the Commission. Such delegation may include any discretionary function, a review function, or the exercise of a regulatory power.

104.     Paragraph 9 authorises the Commission, with the consent of the Secretary of State, to make payments by way of remuneration, allowances, expenses pensions and gratuities, to commissioners and Commission staff. Paragraph 10 provides that the Secretary of State may make payments to the Commission to meet such costs as cannot be met out of fees paid to the Commission under the Bill. Paragraph 11 allows the Commission to borrow money, with the approval of the Secretary of State. Paragraphs 12 to 15 describe the accounting requirements for the Commission, which include a requirement for the Commission's annual statement of accounts to be examined and reported on to Parliament, by the Comptroller and Auditor General.

105.     This paragraph provides that after the end of each financial year the Commission must send a report of its activities to the Secretary of State. The Secretary of State must lay a copy before Parliament and may arrange for its publication.

Schedule 4: Transfer from Gaming Board to Gambling Commission: supplementary provision

106.     Paragraphs 1 to 5 of Schedule 4 make a number of technical provisions to achieve the legal transfer of the Gaming Board to the Commission pursuant to clause 20. It allows the Commission to step into the shoes of the Board, without prejudicing any action, decision or pending proceedings of the Board. Upon commencement, references to the Board in any legislation or document will be construed as a reference to the Commission. To the extent that the Bill has the effect of transferring staff contracts, it is not to affect the protections enjoyed by the staff of the Board under:

  • the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) (SI 1981/1794); or

  • any regulations made under section 38 of the Employment Relations Act 1999 (c.26) (which have the effect of replicating TUPE in circumstances where they would not otherwise apply).

107.     In accordance with the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector (January 2000), the Government intend to ensure that those who are currently working for the Gaming Board and who wish to transfer to the Commission are able to do so. To the extent that TUPE does not apply to the transfer of all such staff, provision will be made by regulations under section 38 of the Employment Relations Act 1999 to ensure that in practice its provisions are applied in all cases.

Schedule 5: Exchange of information: persons and bodies

108.     Under Part 1, the Commission can exchange information with specified bodies either for the purposes of the Commission's functions or for the purposes of the functions of those bodies. Schedule 5 lists the bodies with whom the Commission can exchange information. Under Part 18 of the Bill, those bodies listed in Part 1 of Schedule 5 can also pass information to each other

109.     Paragraph 1 of Part 3 of Schedule 5 imposes restrictions on information exchanged between the Commission and a Schedule 5 body. In particular, where legislation restricts a Schedule 5 body in the way that it can use information provided to it, the exchange of information provisions in Parts 1 and 18 of the Bill cannot override that restriction.

110.     Paragraph 2 of Part 3 is concerned with information provided to a Schedule 5 body by HM Customs and Excise (HMCE) under this Bill. It requires the consent of HMCE to be obtained before that information is passed on to any other body.

PART 3: GENERAL OFFENCES

111.     Part 3 contains general offences concerning the provision of facilities for gambling and the use of premises for that purpose. It also contains specific gambling related offences, such as the offences concerned with cheating at gambling and chain gift schemes. In addition to the offences in Part 3, the Bill contains specific offences concerning particular forms of gambling e.g. making gaming machines available for use (Part 10) or promoting of facilitating a lottery (Part 11) and specific offences relating to gambling involving children and young persons (Part 4).

112.     All offences under the Bill are summary offences, with the exception of the offence of cheating.

Clauses 30 to 32: Provision of facilities for gambling

113.     These clauses establish the general principle that the provision of facilities for gambling (as defined in Part 1) is unlawful unless it is either:

  • authorised by an operating licence, or

  • covered by a specific exception.

114.     The specific exceptions relate to activities which do not require an operating licence under the Bill, but which either depend on the issue of a permit or other authorisation, or fall within a category of gambling which may be carried on under the Bill without the need for a specific authorisation or permission.

115.     There are two further exceptions. The offence does not apply to the provision of facilities for a lottery; and the offence does not apply to making a gaming machine available for use. Specific offences concerning providing facilities in relation to these are contained at Parts 11 and 10 of the Bill respectively.

116.     Subsection (5) provides for the offence to be a summary offence, with a maximum penalty on conviction of imprisonment for 51 weeks (or six months in Scotland), a level 5 fine on the standard scale (currently £5,000), or both.

Clause 33: Territorial application

117.     This clause makes provision with respect to the territorial application of the offence of providing facilities for gambling. It provides that, where a person is providing facilities for gambling, it is immaterial whether the facilities are provided wholly or partly by means of remote communication, or inside, outside or partly inside and partly outside the UK. However, where what is involved is remote gambling (defined in Part 1 to mean gambling in which those participating do so by means of remote communication), the offence will only apply if at least one piece of remote gambling equipment used in providing the facilities for gambling is located in Great Britain.

118.     This means that, where gambling take place remotely, the person providing the facilities for the gambling will not be capable of falling within the scope of the offence if he does not have relevant equipment within Great Britain. This is so even if people within Great Britain can receive the gambling he is providing (e.g. over the internet). On the other hand, where at least one piece of remote gambling equipment is located in Great Britain, a person providing facilities for remote gambling will come within the scope of the offence. Therefore, a person commits the offence if his remote equipment is located in Great Britain and he does not have the required authorisation or is not covered by one of the exceptions. This is so regardless of whether the gambling facilities are provided within the United Kingdom, or outside.

119.     Subsection (4) defines "remote gambling equipment"; but this is subject to subsection (5), which excludes a computer used by a person who is participating in the remote gambling (i.e. the player), provided that the computer has not been provided by the supplier of the remote gambling.

120.     In the case of non-remote gambling (i.e. where remote communication is not used by those participating in the gambling), then the offence will apply only if anything done in the course of the provision of the facilities for gambling is done in Great Britain.

Clauses 34 & 35: Use of premises

121.     This clause makes it an offence to use premises, or cause or allow premises to be used, for the gambling activities set out in subsection (1) unless such use is:

  • authorised by an appropriate licence or other permission obtained under the Bill; or

  • covered by an exception provided in the Bill.

122.     The principal authorisations which prevent a person committing an offence under this clause are:

  • a premises licence under Part 8;

  • a temporary use notice under Part 9;

  • an occasional use notice under Part 3;

  • premises used in connection with the provision of facilities for football pools in accordance with an authorisation under Part 3;

  • a family entertainment centre gaming machine permit under Part 10;

  • a club gaming or machine permit under Part 12; or

  • a prize gaming permit under Part 13.

123.     In addition, there are express exceptions which permit premises to be used for the provision of specified facilities for gambling without the need for a licence or permit, including the provision of gaming machines in premises with an alcohol licence and travelling fairs, and gaming at non-commercial events.

124.     Subsection (4) provides an exception for people who are accepting bets on a track, where that track is covered by a premises licence issued under Part 8. In these circumstances the person accepting bets does not himself have to hold a premises licence. This subsection accommodates on-course betting operations, preventing each on-course operator from requiring a separate premises licence, provided the track itself is subject to the appropriate premises licence.

125.     Subsection (5) ensures that casino operators can provide betting and (in the case of regional and large casinos) bingo under their casino premises licences without the need for a separate premises licence relating to those facilities.

126.     Subsection (6) ensures that no offence is committed where premises are used to provide the facilities listed in subsection (1), but those facilities are only to be used by persons not on the premises. For example, the provider of facilities for remote gambling will not need a premises licence for locations where they site remote gambling equipment, provided no-one is accessing those facilities on the same premises.

127.     This is a summary offence with a maximum penalty on conviction of imprisonment for a term not exceeding 51 weeks (or 6 months in Scotland), a level 5 fine on the standard scale (currently £5,000), or both.

128.     Power is given to the Secretary of State to vary, by order, the gambling activities to which this offence applies. This includes the power to add or remove a gambling activity to the list provided, or to vary the entry for a gambling activity. The purpose of this provision is, in particular, to ensure that it is possible to bring within the scope of the offence any gambling activities which may be invented in the future, but which are not covered by the list in subsection (1). Where a new gambling activity is added, the Secretary of State may make consequential amendments to Part 8, to provide for an appropriate premises licence, and matters such as machine entitlements.

129.     In particular, an order may have the effect of extending the offence to spread bets or other bets which are subject to regulation under the Financial Services and Markets Act 2000. Activities such as spread bets, which are regulated under the 2000 Act are generally excluded from the scope of the Bill. The effect of this provision is to allow the scope of the Bill to be extended so that the use of premises to provide facilities for spread betting is also regulated under the Bill. In these circumstances, amendments would also be required to Part 8 to enable premises licences to be granted under the Bill, authorising premises to be used for the provision of facilities for spread betting.

Clause 36: Exception: occasional use notice

130.     This clause provides a means for tracks to be authorised for the provision of facilities for betting, where the use (for betting) will be for no more than 8 days a year: the occasional use notice. This notice, when in operation, excepts persons on the track from committing the offence of using premises unlawfully for the provision of facilities for gambling. Tracks are defined in the interpretation clause in Part 18 as a racecourse, dog track or any other premises used or intended for races or other sporting events. The purpose of the clause is to ensure that point-to-point racecourses which are used for only a few days a year, and tracks such as golf courses where betting facilities are provided for major competitions, but not otherwise, do not have to obtain a full premises licence in order to avoid the main offence in Part 3.

131.     Subsections (2) to (6) specify the procedure for serving an occasional use notice. An occasional use notice must be served by an occupier of the track, or a person who is responsible for the administration of races or sporting events on the track. It must be sent to the licensing authority with a copy sent to the police force for the area, and must specify the day on which it is to have effect. An occasional use notice cannot be given for a day in a calendar year if eight occasional use notices have already been given for days in that year. Therefore, any track that is used more frequently for betting will need a premises licence, or temporary use notice, under Parts 8 or 9.

132.     Any person providing betting facilities pursuant to an occasional use notice will still require the appropriate authorisation to act as a betting operator: in general this will be a betting operating licence, or (in the case of pool betting) authorisation by the holder of a pool betting licence under Part 5.

Clause 37: Exception: football pools

133.     Holders of a pool betting operating licence, under Part 5, can authorise persons who are not their employees to dispense coupons, collect entries and stakes, and pay winnings, on football pools competitions. Collectors can operate, for example, door to door, or from ordinary retail premises such as newsagents.

134.     This clause provides an exception for such persons from the premises offence in this Part. Collectors can therefore use premises to accept football pools entries, or pay out winnings without committing that offence. Subsection (2) gives the Secretary of State power to make regulations, which disapply this concession to particular types of premises.

Clause 38: Gambling software

135.     The Bill places controls on people who wish to provide facilities for gambling by means of remote communication (see Part 5). This clause concerns computer software for gambling that is used in connection with such facilities, but not software designed for use in a gaming machine.

136.      It is an offence under subsection (1) to manufacture, supply, install or adapt, in the course of a business, computer software for remote gambling, unless an operating licence is held for such activity. The purpose of this offence is to ensure that people responsible for generating gambling software do so in a regulated environment, to ensure, in particular, fairness for players. While an operating licence for remote gambling covers someone offering gambling, for example by means of the internet, it does not, itself, cover someone who is manufacturing the gambling software that will be used in providing such facilities (i.e. the software supplier to a remote gambling operator). This clause covers this latter situation.

137.     Computer software for gambling for use in a gaming machine is expressly excluded from this offence because the definition of gaming machine in Part 10 already includes such computer software. Someone manufacturing computer software for a gaming machine would therefore be subject to the provisions (and the offences) contained in Part 10.

Clause 39: Cheating

138.     This clause provides for a criminal offence of cheating at gambling, and repeals the old offence of cheating in section 17 of the Gaming Act 1845 (c.109). The word "cheating" is not defined but has its normal, everyday meaning. The offence is committed by both cheating directly, or by doing something for the purpose of assisting or enabling another person to cheat. A person who does something inadvertently which enables another person to cheat, will not, therefore, commit an offence.

139.     Subsection (2) provides that a person will commit the offence irrespective of whether he actually wins anything as a result of the cheating, or whether the cheating has the effect of improving the cheat's chances of winning. This means that an inept cheat, or one who cheats for another person's benefit, will still commit an offence. Subsection (3) provides that, in particular, cheating may include actions that involve actual or attempted deception or interference with the processes involved in the conduct of gambling, or with any other game, race or other event or process to which gambling relates. Events can be either real or virtual.

140.     Subsection (4) provides that the offence of cheating can be committed in relation to lotteries forming part of the National Lottery. The National Lottery is, for the most part, otherwise excluded from the system of regulation provided for in the Bill.

141.     Subsection (5) provides for penalties that may be imposed upon conviction of the offence. Unlike other offences created under the Bill, this offence is capable of being tried either summarily or on indictment. On summary conviction the penalty is a maximum term or imprisonment of 51 weeks (or 6 months in Scotland), and/or a fine up to level 5 on the standard scale (currently £5,000). On conviction on indictment the maximum penalty is imprisonment for a term not exceeding two years, an unlimited fine, or both.

Clause 40: Chain-gift schemes

142.     This clause makes provision for the prohibition of chain-gift schemes. A chain-gift scheme is an arrangement in which, in order to join, persons must pay a joining fee to one or more of the other participants in the scheme. Persons who take part in the scheme are required or invited to encourage other persons to join. A person who participates in the arrangement does so having been encouraged to believe that he will receive back more than his initial joining fee, from the fees paid by other participants. The joining fee must be a payment of money or money's worth, but it does not include goods or services.

143.     Subsection (1) makes it an offence to invite another person to join such a scheme. It is also an offence to knowingly participate in the promotion of the scheme. It will not, however, be an offence for a person merely to join the scheme. Persons who participate unwittingly in the promotion of the scheme, such as the host of an internet discussion forum upon which a posting promoting a chain-gift scheme has been made, will not commit an offence, provided they are unaware that the posting promotes a chain-gift scheme. Persons who knowingly participate in the administration or management of the scheme will also commit an offence.

144.     Subsection (3)(b) provides that the offence is committed irrespective of whether the joining fees are paid directly between the participants in the scheme or through a person responsible for managing or administering the scheme. The penalty is a maximum term or imprisonment of 51 weeks in England and Wales, and/or a fine up to level 5 on the standard scale (currently £5,000).

145.     This offence extends to Northern Ireland, as well as England, Scotland and Wales.

Clause 41: Provision of unlawful facilities abroad

146.     This clause gives the Secretary of State power to specify countries or places as prohibited territories, with the result that it will be an offence for a person to invite or enable a person in a prohibited territory to participate in remote gambling, where the person making the invitation or enabling the activity does anything in Great Britain or uses any remote gambling equipment in Great Britain so to do.

147.     The Secretary of State's decision whether or not to exercise this power could depend on matters such as: the development of the global gambling market; the laws which other countries establish to permit, constrain or prohibit the use of remote gambling; the practical measures employed by those countries to secure compliance with such laws; and the extent to which it is possible to reach international agreements about the cross-border use of the internet for gambling.

148.     In the event that the Secretary of State makes an order designating countries or places as prohibited territories the order must also prescribe the mode of trial and maximum penalty for the offence.

PART FOUR: PROTECTION OF CHILDREN AND YOUNG PERSONS

149.     Part 4 of the Bill creates a number of offences which have the effect of establishing the extent to which children and young people may become involved in gambling, whether in terms of participation in the gambling, entry into gambling premises, or employment in relation to the provision of such facilities.

Clause 42: Meaning of child and young person

150.     Under the Bill, any person aged less than sixteen years is defined as a child. Any person aged sixteen years or more, but who is not yet eighteen, is defined as a young person.

Clauses 43 & 45: Inviting children and young persons to gamble; participation by young persons in gambling

151.     In broad terms, persons aged less than eighteen years are not to be permitted to gamble. It is to be an offence for a person to invite, cause or permit a person under eighteen to gamble. It is also to be an offence for young persons (those aged sixteen and seventeen) to gamble. Children (those not yet aged sixteen) do not commit an offence if they gamble.

152.     There are some exceptions to the general prohibition on gambling for persons aged less than eighteen years. Children and young persons may participate in all forms of private and non-commercial gaming and betting. Young persons may participate in lotteries and pool betting on association football. Children and young persons may use the category of gaming machine with the lowest stakes and prizes (category D). They may also take part in equal chance gaming where authorised under a prize gaming permit or at a licensed family entertainment centre, and they may take part in prize gaming at a non-licensed family entertainment centre or at a travelling fair. Part 13 of the Bill makes provision for prize gaming which constitutes gaming where neither the nature nor the size of the prize played for is determined by the number of players, the amount staked, or any other matter relating to the outcome or progress of the game.

153.     The offence of inviting a child or young person to gamble is to include advertising and other actions that bring attention to the facilities available for gambling. A person may be liable to commit the offence where his or her name or contact details are included in the information provided to the child or young person, and that person is someone to whom payment may be made or from whom information about the gambling may be obtained. However, in such a case the person has a defence if he can prove that the information was provided without his consent or authority. A further defence is also available in a case where information is brought to a child's attention (as opposed to being sent to the child). In those circumstances, the person whose contact details appear in the information will have a defence if he can demonstrate that it was brought to the child's attention incidentally to it being brought to the attention of adults.

Clauses 44 & 46: Invitation to enter premises; young persons entering premises

154.     Children and young persons may not enter a casino, a betting shop or an adult gaming centre at any time when facilities for gambling are being provided on the premises in reliance on the premises licence granted to them. This is subject to the exception that children and young persons may enter the non-gambling area of a regional casino, but they may not enter the gambling area.

155.     Under Part 8, a betting premises licence for a track is subject to the condition that children and young persons are excluded from any area where a category C gaming machine is available for use or any area where facilities for betting are provided. However, the latter restriction does not apply in the case of a dog-race track or a horse-race course on any day on which racing takes place.

156.     Children are equally not permitted to enter areas of family entertainment centres where category C gaming machines are available for use.

157.     Any person who invites a child or young person to enter these premises, or the parts of the premises described above, commits an offence. Where a young person enters these areas, he too commits an offence.

158.     As a consequence of these provisions, a person of any age may enter bingo premises, the betting area of a horse racecourse or a greyhound track on days on which races are being run, or the non-gambling area of a regional casino. A person of any age may also enter any area of a family entertainment centre where no category C gaming machines are provided at that place.

 
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Prepared: 25 November 2004