Joint Committee on the Draft Gambling Bill Minutes of Evidence


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 It has become out of date, partly because of changes in attitude and partly as a result of developments in technology unforeseen 40 years ago.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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