Gambling

Written evidence submitted by the Law Society of Scotland (GA 49)

INTRODUCTION

The Licensing Law Sub-Committee of the Law Society of Scotland (the Sub-Committee) welcomes the opportunity to submit evidence to the Commons Select Committee in answer to the issues referred to in its call for written evidence with regard to the implementation and operation of the Gambling Act 2005. The Sub-Committee should like to respond to the issues referred to in the call for written evidence as follows:-

Q1. How effective has the Act been in its core objectives to:-

· ensure that gambling is maintained crime-free and conducted in an open and fair manner

· protect children and vulnerable people from the adverse effects of gambling

· update the legislative framework with regards to online gambling

1.1 The Gambling Act 2005 ("the 2005 Act") introduced a "high level" objective of preventing gambling from being a source of crime or disorder, or associated with same, but the gambling industry has always been regulated to prevent such criminality. Although putting this objective on a statutory footing is a positive, there is no demonstrable difference between the operation of the industry as a result of the introduction of the Gambling Act 2005 because the industry already strived to be crime free, and to be conducted in an open and fair manner and with relatively few exceptions had achieved that.

1.2 The Budd Report was clear that gambling operators in the UK were already crime free and the 2005 Act accordingly may not have had an impact on the high level of responsibility which operators show. For example, the Budd Report suggested that the industry should contribute £3 million to fund research, education and treatment but the operators actually contributed £5 million, which shows the seriousness with which they take this risk.

1.3 The Gambling Prevalence Studies undertaken by the Gambling Commission confirm that as a generality the numbers of problem and at risk gamblers having remained about the same since the introduction of the 2005 Act, despite the number of participants rising.

Q2. The financial impact of the Act on the UK gambling industry

2.1 The Sub-Committee notes that costs incurred by the industry have gone up significantly since the introduction of the Gambling Act, with the cost of compliance having increased from some £5.5 million in 2004 to more than £13 million in 2009-10 and that operators have endured significant difficulties since the introduction of the 2005 Act as a result of increasing licensing costs, the smoking ban, and the general economic downturn. The bingo and arcade sectors in particular are struggling to compete with betting premises now able to offer Category B machines (traditionally known as FOBT or Fixed Odds Betting Terminals) which many customers find attractive.

2.2 The Sub-Committee is also concerned with the delays and errors in the issue of licences by licensing authorities in Scotland and consequential financial impact upon operators.

The Sub-Committee welcomes appropriate resources and training for licensing authorities and staff in order to avoid delays and errors in future.

Q3. The effectiveness of the Gambling Commission since its establishment, and whether it represents good value for money

3.1 The Sub-Committee notes that only until very recently has The Gambling Commission has made efforts to acquaint itself with the separate Scottish licensing regime and legal jurisdiction. It was not until the 3rd edition of the Gambling Commissions guidance to licensing authorities that the Scottish position was reflected to any respectable extent. The early adverse experiences of dealing with the Commission are on the whole now in the past but our view is that there is still appears to be work to be done from the Scottish perspective.

3.2 One of the key principles of the 2005 Act is that the Commission shall aim to permit gambling (s.22(b)). We believe that the Gambling Commission should do more to increase its presence in supporting the gambling industry and promoting the industry as a responsible and valuable part of the UK economy.

Q4. The impact of the proliferation of off-shore online gambling operators on the UK gambling sector and what effect the Act has had on this

4.1 The Sub-Committee has no comment to make.

Q5. Why the Act has not resulted in any new licences for casinos or "super" casinos

5.1 The Sub-Committee notes that the huge investment, financial risk and ancillary investment requirements for establishing a super casino are such that they are simply too great in the current and foreseeable financial climate.

5.2 The Sub-Committee is concerned that the Gambling Commission’s position on location of super casinos appears to be based, not on market demand, but on the possible regeneration for that area, and this ignores the fundamental question of demand and the fact that any such project must be seen to be commercially viable.

5.3 The Sub-Committee believes that the geographical restriction of the existing permitted site at Wigtown in south west rural Scotland should be reviewed to allow possible entrants in other areas or at the very least the location of this permitted site should be moved to another local authority area which is commercially more attractive to operators as there has been no interest in developing a casino there.

Q6. The effectiveness of the classification and regulation of gaming machines under the Act

6.1 The Sub-Committee notes that the implementation of the 2005 Act with regard to gaming machines has been mostly negative as far as operators, other than those with Betting Premises Licences, are concerned and in some cases it has directly resulted in business failing in relevant sectors such as amusement arcades bingo halls. It seems to the operators whom our members act for that the Government simply do not understand the gaming machine industry.

6.2 The Sub-Committee also notes the practical difficulties which have arisen in Scotland as a result of the separate English and Scottish licensing systems. Recently this has led to emergency secondary legislation in order to revise regulations pertaining to alcohol licensed premises and member’s clubs, because in effect every single machine under a permit was illegal in Scotland as a result of adequate drafting. Regrettably this has occurred previously in that there were difficulties with machine registration under the Gaming Act 1968 as a result of drafting which did not account for the Scottish position. The Sub-Committee would, as always, be more than happy to assist the Government with any legal drafting to take account of the Scottish system.

Q7. What impact the Act has had on levels of problem gambling

7.1 The Sub-Committee has no comment to make.

General Comment from the Scottish perspective - Enforcement

The Sub-Committee would like to take the opportunity to alert the Select Committee to a specific difficulty with gambling in Scotland, and that is the enforcement of gambling premises. Currently, it is not untrue to suggest that there is no current enforcement of any gambling premises in Scotland whatsoever. There has not been a single premises licence review anywhere in Scotland since the 2005 Act came into effect on 1 September 2007; nor according to the Gambling Commission’s own statistics has there even been a single enforcement visit north of the border. This is because of two key factors:

1. The separation in enforcement between the Gambling Commission and local licensing authorities

The Gambling Commission is primarily responsible for enforcement in relation to operating licences and personal licences. It is the body which issues these licences and can revoke them through review proceedings and so on. It is not the job of the Gambling Commission to monitor premises licences however – that is clearly a matter for Licensing Boards in Scotland who have the necessary review powers. The Gambling Act 2005 came into force at a time when Scottish Licensing Boards were extremely busy trying to implement the new Scottish alcohol licensing regime under the Licensing (Scotland) Act 2005. This had the effect of putting gambling matters to the back of the agenda and it is fair to say that alcohol licensing took priority. The result of this is a deep and recognised knowledge gap across Scottish licensing boards and indeed many of their Clerks when it comes to gambling law.

2. The current drafting of the 2005 Act does not permit any Scottish licensing authority officer to conduct enforcement activities.

Section 304 of the 2005 Act defines who may carry out enforcement activities. However it has been drafted without regard to the separate Scottish licensing system and the net result is that no-one in Scotland can be appointed as an "authorised person". The Sub-Committee has alerted both the Scottish Government and the Gambling Commission to this difficulty. The Gambling Commission have written to the Sub-Committee conceding that this is the case. The only way to remedy this is to amend s.304. We therefore take the opportunity to request that consideration be given to amending s.304 in order to allow gambling enforcement activity to be undertaken in Scotland. The Sub-Committee is in a position to assist the Government with the amendments.

The general consensus as to who should be an "authorised person" for the purposes of s.304 of the 2005 Act is a Licensing Standards Officer (LSO), appointed under the separate alcohol licensing regime of the Licensing (Scotland) Act 2005. If LSOs are to be given the status of gambling authorised persons under an amended s.304, careful consideration must be given to also updating the legislation to reflect that new role which includes the essential mandatory training LSOs must undergo.

June 2011

Prepared 1st August 2011