Further supplementary written evidence submitted by the Association of British Bookmakers (GA 109)

I am writing to you following the evidence we provided to the select committee on the inquiry into the 2005 Gambling Act. We refer to our position on the effectiveness of the dual-licensing system. I would like to draw your attention to the Gambling Commission’s recent licensing authority statistics. They show that betting shops are highly compliant and responsible businesses. They also raise important questions about effectiveness of the current dual-licensing system and the justification for charging operators so much in licensing fees.

For the period 1 April 2010 to 31 March 2011, 212 licensing authorities made a total of 1649 pre-planned visits to betting shops, which equates to around 1 in every 5 betting shops. 152 licensing authorities did not visit a single betting shop and only 65 visits were made as the result of a complaint. In 87% of percent of cases, including the complaint visits, no return visit was considered necessary and no local authority reviewed or revoked a betting premises license.

Despite this, many local authorities charge the maximum permitted premise license fee of £600 per shop per annum, generating extra income rather than merely covering costs. And as far as the customer is concerned there is no noticeable benefit. The fees appear to be charged on the basis of probable costs involved for local authorities irrespective of whether annual compliance visits are carried out.

The number of visits made by the Gambling Commission to operators, which was obtained through a freedom of information request, paints a similar picture. For the period 1 April 2010 to 31 March 2011 the Commission made 1226 compliance visits to betting shops. Three quarters of those visits were made to the big five operators and, following those visits, no enforcement action was considered necessary.

The Gambling Commission’s fee structure is particularly onerous for smaller operators and discourages them from expanding their businesses. We recently visited an operator who runs 15 shops and pays an annual fee of £7,413 for an operator’s license. If the business opens just 1 more shop the fee jumps to £17,914. Before the introduction of the 2005 Gambling Act (the Act) the operator made a one-off payment of £125 for a new shop license and then £25 every three years to renew it-so just £8.33 per shop per annum.

The dual-licensing system, introduced by the Act, is largely responsible for the massive increase in license fees. It is also more bureaucratic and less efficient. Problems arise due to the fact that the high street betting industry is regulated both by local authorities and a national regulator. At an operational level it is often unclear where the local authorities remit ends and the Commission's remit begins, and vice versa. This leads to ‘overlapping’ and sometimes inconsistent enforcement activity.

The ABB would like the Government to consider the merits of one Primary Authority to deal with our industry’s licensing compliance issues. This would not affect decisions around the granting of licenses, it would simply ensure consistency of approach in compliance policy. At least two major operators already have a Primary Authority for health and safety regulation.

We would also like to see a risk based system of regulation, with licensing authorities taking an evidence based approach to compliance, rather than carrying out compliance visits as a ‘tick box exercise’.

The cost of betting licences, as outlined above, has become a major issue for operators. Many have seen their licensing fees increase a hundredfold since the Act. 3 in every 10 betting shops make less than £22,000 a year and, faced by a significant tax increase in the form of Machine Games Duty, 11,000 jobs and 2,600 shops are at risk. Just this week, after many years of trading, a small operator in Cornwall went out of business.

Our industry, which contributes over £1 billion in tax every year-about £400 million more than we make in profit-and supports 100,000 jobs, faces numerous barriers to growth. However, none are more onerous-in terms of cost and bureaucracy-than the dual-licensing system.

I would be grateful for any support you can give us to ensure that the dual-licensing system is reassessed and license fees reduced. Do please contact me if you would like any further information or to discuss my letter in more detail.

June 2012

Prepared 5th July 2012