GAMING BOARD
WRITTEN EVIDENCE TO JOINT COMMITTEE ON
THE DRAFT GAMBLING BILL
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 It has become out of
date, partly because of changes in attitude and partly as a result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 (i.e. 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 (para
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
(e.g. 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 9m to £11m.
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 £2m 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.
Gaming Board
December 2003
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