Memorandum from the Gaming Board (DGB
5)
1. The Gaming Board was established by the
1968 Gaming Act and is the regulatory body for casinos, bingo
clubs, gaming machines and the larger society and all local authority
lotteries. The Board does not regulate bookmakers or Licensed
Betting Offices.
2. The draft Gambling Bill provides that
the Gambling Commission will take over the functions of the Gaming
Board and that its Chairman and Board members will become the
Chairman and Commissioners of the Gambling Commission.
3. The Board has been pressing for some
time for gambling legislation to be overhauled. It has become
out of date, partly because of changes in attitude and partly
as a result of developments in technology unforeseen 40 years
ago.
4. We strongly welcome the thrust of the
Government's proposals, but have concerns in three areas. This
memorandum first discusses these concerns and then goes on to
deal with some of the other themes on which the Committee has
said it intends to concentrate.
Prize competitions
5. The Government announced on 19 June its
conclusions on the law on prize competitions and lotteries. The
statement said that a scheme "in which a degree of skill
or knowledge is needed in order to secure a prize will not be
capable of being a lottery". We were concerned that there
was no test of whether the degree of skill was genuine. That would
leave the Gambling Commission with no authority to apply a test
to a growing number of pseudo-lotteries in which minimal skill
is used to avoid the legislative controls. This concern was shared
by the charity lottery sector, many of whom we felt would convert
to raising money through such pseudo-lotteries rather than pay
to be regulated.
6. Clause 206 is intended to give effect
to the Government's policy. It defines a lottery as an arrangement
in which "the system for determining the allocation of prizes
relies wholly on chance". Sub-clause (4) deals with the degree
of skill point. We do not think that it offers a satisfactory
solution. A condition that the skill required must be such that
it is likely to "prevent persons who want to enter the lottery
from doing so" seems too slight a hurdle to give effect to
the Government's policy that lotteries must be the preserve of
good causes. The clause does not allow for an objective test and
does not provide the clarity in the law that the Gambling Commission
will need.
7. We would rather see a provision along
the lines that to obtain exemption from classification as a lottery,
a competition must either be free or require a significant degree
of skill to succeed in qualifying for entry (ie to reach the stage
at which the winner is selected by chance). That would provide
the Gambling Commission with the legal authority to issue guidance
on what constitutes a "significant degree of skill".
Casino proliferation
8. Attached at annex A is the Board's response
to the joint DCMS/ODPM consultation paper on casino proliferation
issued on 6 August. Since submitting that paper, the Board has
had further discussions with DCMS. These have gone some way to
meeting our concerns about the difficulties which will arise from
having to identify the number of tables available for play, and
about grandfather rights for existing casinos that fall under
the new minimum size. These discussions are continuing. It remains
our view, however, that the ratio of three machines to each table
may be too low to satisfy customer demand.
Gaming machines
9. The Gambling Review Body recommended
(paragraph 23.12) that gaming machines should not be permitted
in premises such as cafes, fish and chip shops, and taxicab offices
(collectively referred to as "single sites"). That was
in line with a proposal made by the Gaming Board in its evidence
to the Review Body and we welcomed the recommendation. However,
it was rejected by the Government in the light of representations
that such a ban would be damaging to small businesses. The decision
also reflected the lack of evidence that the use of such machines
by children was harmful.
10. The Government has proposed that category
D machines may be placed in single sites, as well as in family
entertainment centres and other areas in which children may be
present. These machines will have a maximum stake of 10p and maximum
prize of £5. The Board remains sympathetic to the Review
Body's argument that gaming machines, of whatever category, should
be largely confined to adult premises in which gambling is one
of the principal activities. We are content that category D machines
should be available in Family Entertainment Centres, but remain
uncomfortable about children having casual access to gambling
in other miscellaneous premises.
11. The Board also has regulatory concerns
in that the number and variety of outlets make enforcement difficult.
We know of instances where machines have been sited without the
necessary permission and/or of the wrong type for such premises
(eg Jackpot machines). The draft Bill, as does the present Act,
allows local authorities to introduce a blanket ban in their areas.
But where they do not, we believe proper monitoring and enforcement
is unlikely. It remains our view that a complete ban would be
more effective to prevent both illegal gaming and unsupervised
gambling by children.
AREAS OF
INTEREST HIGHLIGHTED
BY THE
COMMITTEE
Functions, duties and powers of the Gambling Commission
12. The Board and DCMS are committed to
ensuring that there is a seamless transition from the Board to
the Commission. This will be essential to continuing orderly regulation.
13. DCMS has provided additional money to
the Board to fund planning for transition. That has enabled us
to appoint a transition manager and to engage consultants to carry
out a scoping study relating to the establishment of the Gambling
Commission. The Executive Summary of the consultant's report is
attached at Annex B. This suggests that the Gambling Commission
will require some 200 staff and that its running costs will be
in the region of 9 million to £11 million.
14. We are currently discussing with DCMS
what the timetable for transition might be. In addition to the
work that the Commission will need to do, this will need to take
account of the workload that will fall to local authorities in
relation to the licensing of premises. For the Board's part, we
are keen to aim for a launch date for the Gambling Commission
soon after Royal Assent, but whether such a date would be achievable
would depend on a number of factors. Principal amongst these would
be our ability to incur expenditure in advance of Royal Assent
and, in some respects, in advance of Second Reading.
15. Our consultants are currently doing
some further work to identify the likely workload of the Commission
during the transition period. We have taken this to include the
period during which the Commission has to re-licence all those
operators currently regulated by the Board; licence new operators
in the sectors currently regulated by the Board; and issue licences
to operators in the newly regulated sectors. Our preliminary assessment
is that this work may be achievable within the forecast resources
of the Commission without recruiting additional staff on a temporary
basis. The Gambling Commission could do this, for example, by
using staff for licensing work who will later concentrate on monitoring
compliance. In consultation with DCMS, the Commission might also
have the option of delaying some of the personal licensing work
to allow staff to concentrate on operators in the first instance.
Codes of practice
16. As the forerunner to the Commission,
the Board intends to begin work on the codes of practice within
the next few months. Over a number of years the Board has been
involved in the development of several industry codes on a variety
of subjects. We have made it clear in informal discussions that,
where they remain relevant, we would expect the Commission to
build on existing codes. Of course, the Commission's codes will
need to have regard to the Bill and to the secondary legislation
made under it, and while anxious to make progress we are mindful
that we should not pre-empt the Parliamentary process. The industry
is naturally concerned to know what will be in the codes and we
have been happy to give assurances that the Commissioners will
not be springing any surprises. But there will be a marked change,
in that the new Codes will be owned by the Commission and will
be enforceable, and it may be that in some respects they go further
than the voluntary codes to which sectors of the industry have
hitherto been willing to sign up.
Should the Gambling Commission regulate the National
Lottery or Spread Betting?
17. The Board has no particular view on
whether the Gambling Commission should regulate the National Lottery.
The draft Bill requires the Gambling Commission and the National
Lottery Commission (NLC) to work together on areas of common interest
and we see no difficulty in building on the good working relationship
we currently have with the NLC.
18. The Gambling Review Body suggested that
spread betting should continue to be regulated by the FSA, but
that this should be reviewed when the Gambling Commission was
well established. The Board was comfortable with that approach,
but recently we have become aware of the likely activity of spread
betting companies in the new casinos and this has caused us to
think again. For example, we understand that some casinos may
be considering offering dedicated links to place spread bets on
events being shown on large screens in casinos. Such links need
not be confined to casinos: they could appear in betting shops,
or in outlets dedicated to the purpose.
19. Spread betting is excluded from the
definition of betting in clause 7. There is currently no express
provision for the Secretary of State to include it at a later
date and we understand that this is something that may be remedied
in the clauses that have yet to be published. As the Bill stands,
spread betting is not included in the definition of gambling,
and therefore there seem to be no restrictions on where it may
be carried out.
20. The Board is not suggesting that spread
betting should be prohibited in licensed premises, but if were
to be permitted, we would be uncomfortable about a position in
which the Gambling Commission regulated every gambling activity
within particular premises except for spread betting. Operators
might also blanch at the prospect of being licensed by the Gambling
Commission and the FSA. A solution would be for the FSA to continue
to regulate companies involved in financial spread bets and for
the Gambling Commission to regulate other spread bets, which are
arguably analogous to fixed odds betting. The Gambling Review
Body rejected such a compromise on the grounds that it would be
"messy", but the developments we have described above
suggest that it would be worth re-examining the proposal.
Protection of children and vulnerable persons
21. The Board welcomes the licensing objective
relating to the protection of children and other vulnerable persons:
no such statutory remit is given to the Board under current legislation.
This objective will be pursued through the adoption and enforcement
of codes. In preparing the Commission's position, we would want
to give due attention to the progress already achieved in the
codes that have been agreed between the industry and GamCare.
22. The Board recognises that the number
of problem gamblers may increase as a result of the Bill. We support
the Government's view that this must be tackled head-on, without
restricting the opportunities available to the majority of people
who will gamble and experience no problems as a result. We are
anxious to make progress in this area: doing nothing is not an
option as there are already issues that need addressing in relation,
for example, to remote gambling.
23. The Board (in its annual report) commended
the industry for the progress it has made in establishing the
Gambling Industry Charitable Trust and raising some £2 million
towards education, prevention and treatment. We hope that the
Trust will build on this good start. One of the questions to be
addressed by the Gambling Commission is how it will carry out
its responsibilities in much the same areas, and what the inter-face
with the Trust should be.
Licensing
24. As mentioned earlier, we are currently
working with consultants to assess the likely number of licences
that will need to be processed, both by the Commission and by
local authorities. This is very much work in progress.
25. The Board currently has no formal relationship
with local authorities. That is something we are keen to redress
and we hope to establish regular meetings with local authority
representatives early in the new year.
Remote Gambling
26. The Board has long recognised that existing
gambling law is ill-equipped to deal with remote gambling. It
is perhaps in this area that we are most impatient for change.
Opinions vary on whether there will be a large number of remote
gambling operators competing for the new market opening in the
UK as a result of the Bill. We certainly welcome the Government's
proposals and are confident that the Gambling Commission will
be able to regulate effectively the operators that it licenses.
The inability of others to advertise here will reduce exposure
to the unregulated sector, but it will not eliminate it. Ultimately,
consumers will make a choice and it will be the Commission's job
to ensure that they know the benefits of choosing to gamble on
regulated sites.
27. For example, the Commission will be
looking for reassurance that there are robust systems to verify
age and will have a range of other requirements to minimise harm
to problem gamblers. These might include: warning notices about
the risks of gambling and links to problem gambling organisations;
so-called reality checks such as clocks, timers and enforced breaks;
the facility for players to self-limit for losses; self-exclusion
systems; and access by players to their playing history.
28. We will want to have regard to the international
position. It is interesting to note that the Gaming Regulators
European Forum (GREF) takes the line that remote gambling "should
be restricted to the residents of the jurisdiction concerned and
residents of such other jurisdictions with whom there are co-operative
or reciprocal arrangements". This is in contrast to the Government's
position in the Bill and the position of some other jurisdictions
such as Alderney and the Isle of Man which already regulate on-line
gambling operations. There is a similar division in the International
Association of Gaming Regulators (IAGR), in which the regulators
in some jurisdictions (mainly the US), which outlaw remote gambling,
are unable to subscribe to proposals contemplating how a system
of regulation might work.
29. The Committee will be aware that the
industry has sought to introduce an element of self-regulation.
For example, the Interactive Gambling, Gaming and Betting Association
(IGGBA) has developed a 14-point code of conduct to which all
its members must adhere. As with the Gambling Commission's other
codes, the Commission will want to study these initiatives carefully
and build on them where appropriate.
Conclusion
30. This paper has not sought to address
all the issues identified by the Committee as being of particular
interest. It concentrates on those on which the Gaming Board has
particular expertise or experience. We would be happy to submit
further written evidence, if there are issues on which the Committee
would like us to say more.
December 2003
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