DGB 110
Alison Mara
Committee Office Scrutiny Unit
For the attention of John Greenway MP
Chairman
Joint Committee on the Draft Gambling
Bill
House of Commons
London SW1P 3JW 2nd
February 2004
Dear Chairman
Pre-Legislative Scrutiny - Gambling Bill
1. Thank you for allowing the Lotteries
Council the opportunity to submit further written evidence building
on our letter to you of 10th December 2003. In our previous letter
the Council made certain bullet points which I would like to amplify
in this letter, and to raise one or two more.
2. Protection from pay-to-enter
commercial lotteries operating behind a thin veil of skill
(a) Lotteries are a well established
and respected route for raising money for good causes. Charities
are experiencing increasing financial pressure and any diminution
in their proceeds will mean less money for good causes and could
result in eg the closing of hospices and cancer screening clinics
which would put more pressure on the Treasury. It is essential
for the protection of lotteries for good causes that they are
permitted whereas commercial lotteries are not. Commercial schemes
that are essentially lotteries masquerading as prize competitions
behind a thin veneer of skill are a particular problem as the
present law is ambiguous
(b) No doubt protection is intended
to be provided by clause 206. However its provisions do not go
far enough, as simple skill questions may prevent a few people
from entering the scheme and therefore the scheme would not be
a lottery and not subject to lottery regulation, although the
skill element may be almost non existent. This test is no more
helpful than the present law, and will result without doubt in
these commercial pseudo competitions flourishing, to the detriment
of lotteries for good causes unless proper provision is made elsewhere
to regulate pay-to-enter competitions. Alternatively these pseudo
competitions should be as regulated as lotteries.
(c) The Council would prefer to
see a more stringent regime for prize competitions in the future
to ensure that only competitions genuinely relying wholly or mainly
on the skill or expertise of the participants in order to win
a prize are permitted. The Lotteries Council believes that a
much better test would be to require that success in pay-to-enter
competitions should depend predominantly on substantial skill.
This test would shut out pseudo competitions and would also be
much easier to regulate properly.
(d) There are also other possibilities
for improving the present law. These include defining skill in
terms of requiring a specified percentage of participants to be
eliminated by the skill test. Another possibility (to be taken
either as a "stand alone" test or as an additional limb
to the above suggestions) would be to provide that the scheme
as a whole should not depend to a substantial degree on
the exercise of chance and should end with an exercise
of skill.
(e) There are further difficulties
in that the definition of a prize in clause 206(3) does not include
a "chance" eg. a chance to appear on a TV show, to exhibit
a painting, or indeed any other rights. Therefore commercial schemes
offering such prizes would be outside the definition of a lottery
and the regulation of the Act.
(f) The Council would welcome the
opportunity to explore the relative merits of these solutions.
In our view, any of them would be a significant improvement on
the existing law and much clearer than the way the Bill, through
clause 206(4), seeks to address the issue.
3. Payment for a Lottery
(a) We welcome the further clarity
given about what is a payment to enter a lottery and that normal
rate telephone calls are not included (paragraph 5(2)(a) schedule
7). However, some might consider that there is a normal rate for
premium rate services and it would be prudent therefore for the
Bill specifically to exclude premium rate telephone calls.
(b) The Guidance Notes to the Bill
suggest that a requirement to pay to "take possession of
a prize" or "to find out if you have won" would
be considered to be payment. However schedule 7 paragraph 6 does
not make that clear and paragraph 6 should specify expressly that
a payment to discover what a participant has won or if he has
won is also a payment to enter a lottery.
4. The ability to operate
in a manner which maximises the donation to the good cause
(a) The Council fully recognises
the need for proper regulation but requests that it be kept to
the essential minimum. Those areas, such as lotteries, that have
not caused problems in the past should not need heavy regulation
in the future.
(b) The ambit of the proposed investigations
for lotteries is extremely wide. Very often tickets for non-commercial
societies are sold by volunteers. The Council is concerned that
the regulation and scope of the investigations should not go so
far as to deter these invaluable helpers, but should be limited
to those in control of the society or the running of the lottery.
We question, for example, whether there is a need for an enhanced
criminal record check to be provided.
(c) Lotteries will increasingly
be on-line or by electronic means as well as paper lotteries and
it is overly onerous to expect a society raising money for good
causes to obtain an operating licence, a personal licence for
certain individuals and a remote gambling licence.
(d) The Council suggests that one
operating licence granted to the society enabling the society
to operate either paper lotteries or electronic lotteries is sufficient
regulation and that only in limited circumstances (eg the maximum
size lottery) should there be a necessity for a personal licence
for a named individual as well. The Council would welcome this
being made clear in the Bill.
(e) Some of the provisions for conditions
on an operating licence would not be necessary in the case of
a lottery: for example clause 67 limiting the numbers of premises
or the number of people. The size of the lottery will limit the
numbers and there seems no need for any limit on the numbers of
premises.
(f) The Bill provides for the Commission
to have the ability to vary an operating licence. The Council
would welcome a very streamlined procedure for non-commercial
societies operating lotteries so that this may be done as quickly
and inexpensively as possible.
5. Tickets
(a) Clause 77 does not require there
to be a ticket, and does mention a "right" in respect
of membership of the class among whom prizes are to be allocated.
At present, tickets or "chances" may be distributed
in a lottery, but any tickets must contain certain information.
Retaining the word "chance" (as in the present legislation)
would broaden the scope of the legislation concerning lotteries
and we see no reason for it not to be included.
(b) Clause 77(7)(a) requires that
a ticket in a lottery must be a document. It would be helpful
if the Act could specify a definition of "document"
that included tape recordings, computer files and databases, and
microfilms, and other non paper means.
6. Continuation of the
right to operate more than one lottery closing on the same date
and the right to operate draws at public events
(a) At present, non-commercial societies
may operate different types of lottery on the same day, for example
at a football match. It is important that the societies are able
to sell the tickets up to the moment (or shortly before) when
the lottery is to be drawn. At a football match the supporters
present are happy to buy a ticket in a non-commercial lottery
in aid of the supporters club, and they look forward to the Draw
that same day. Under the Bill this would not be possible. All
the tickets would have to be sold on a Friday for a draw on a
Saturday match day. This is unrealistic.
(b) The Council understands the
wish of the government to limit repetitive lotteries, but this
can be achieved by limiting the number of lotteries per day.
Even specifying that the last ticket must be sold no later than,
say, 30 minutes before the draw of the lottery would catch "Golden
Goal" ticket lotteries where the interval could in theory
be 30 seconds or less. The present proposal in clause 77(2) places
unreasonable restriction on the work of non-commercial lotteries.
(c) A public event often provides
publicity for the good cause for which the lottery is fundraising
and that publicity must be exploited to maximise the funds for
the good cause. It is therefore essential that non-commercial
societies should continue to be allowed to operate lotteries,
i.e. to sell tickets and have draws, at public events.
7. The ability to charge
for entry into a lottery whatever the public are willing to pay.
(a) No ticket price is specified
in clause 77(8) and the Council welcomes this provision. There
are limits on the overall size and prizes for these lotteries
which will limit the attractiveness of the lotteries and provide
a clear demarcation between these lotteries and for example the
National Lottery. There is no reason why, in addition, the public
should not be asked to pay what the public are prepared to pay
for entry, and the Council would welcome a provision in the Bill
making it clear that no condition may be attached to an operating
licence to limit the ticket price, nor may it be limited in any
other way.
(b) In principle, the Council would
also favour the abolition of any statutory limit on the size of
a society lottery. It considers that fears that such lotteries
might, unless limited in size, constitute a threat to the National
Lottery are unrealistic. If, however, it should be decided that
such limits should be retained, it is important (see also paragraph
13) that the limits should be capable of variation in the light
of experience and with reasonable speed. This could be done either
by Statutory Instrument or preferably by the Commission in consultation
with the Secretary of State. Clause 77 would not at present permit
such a procedure, and primary legislation would be required if
it were desired to vary any of the limits mentioned in clause
77.
8. The ability to feature
prizes which retain their attraction in relation to inflation
It is very important for non-commercial
lotteries that they should be able to keep pace with inflation
and to compete with other demands on the leisure pound. The Council
would welcome the Commission having the opportunity to increase
prize levels, if necessary in consultation with the Secretary
of State, which would enable changes to be made when necessary,
with sensible despatch.
9. Relief from necessity
to have a personal licence.
(a) In the case of non-commercial
societies operating lotteries for good causes, there does not
seem to be any need to have a personal licence in addition to
an operating licence when the society, which in practice means
the officers of the society, will already have to have satisfied
the Commission on the fit and proper test. Those officers and
others involved with the lotteries will be subject to the normal
criminal law on fraud and theft in any event.
(b) We note that clause 102(1) provides
that no personal licence condition may be attached to an operating
licence for a small operator, and welcome that. However, as there
is no definition given of what a "small scale operator"
may be, the Council does not know how many of the non-commercial
societies will be exempt. In the circumstances, we believe that
it would be appropriate for the Bill to exempt all such societies
operating lotteries for good causes, or all of them below a certain
size.
10. Relief from the overuse
of criminal sanctions for minor errors in lottery operation
(a) The Council feels it is entirely
appropriate that non-commercial societies doing their best to
raise money for good causes should be penalised for breaches of
the conditions of their licences by the Commission exercising
its power to review and revoke the operating licence, rather than
by any criminal sanction.
(b) Under clause 85, it is an offence
to fail to produce an operating licence, although the Commission
have to maintain a register of operating licences which must be
made available for inspection by members of the public (which
would include a police constable). It seems unnecessary to make
non-production a criminal offence particularly as the fact that
the licence has been lost, stolen or damaged is not a reasonable
excuse for failing to produce it.
11. Rollovers
(a) The ability for non-commercial
lotteries to have a rollover is welcome. However the Commission
may prevent or restrict the use of a rollover under section 76(6)
by conditions on the operating licence. As there is a limit on
the maximum prize imposed by clause 77(6) which includes any rollover,
there is no need for rollovers to be limited or indeed prevented
in any other way.
(b) Clause 211 does not appear to
allow for subscription lotteries in e.g. clubs where the participants
are the same week after week and there are draws each week. We
would consider these to be separate draws and therefore separate
lotteries but the provisions of clause 211 would appear to prevent
there being any rollover between these different draws. We would
welcome clarification of this section to allow for rollovers to
be available for such successive lotteries.
(c) Private lotteries are not permitted
to have rollovers under paragraph 17 of Schedule 8. There seems
to be no good reason for such restriction.
12. Definition of Society:
Clause 236(1): definition of non-commercial society: Section
212
(a) Little guidance is given as
to the definition of a Society. The present law provides a more
helpful definition and we suggest that it be adopted.
(b) Under clause 212 of the Bill,
a society is non-commercial if it is "established and conducted"
for charitable etc., purposes. Under the present law (Section
5(1) of the Lotteries & Amusements Act 1976) a Society must
be established and conducted "wholly or mainly" for
one or more of the stated purposes. These extra words allow a
society to be looked at as a whole over the year but still ensure
that lottery fundraising is only a secondary purpose of the Society.
eg. outside the football season, fundraising may be the main activity
for a football supporters club; although over the year it is not.
(c) Although the Bill specifies
that the operating licence must be issued to a
non-commercial
society or an external lottery manager, the Bill also envisages
that an operating licence will be granted to a "person".
Most societies are unincorporated associations and as such a society
is not a "person" in law.
13. Non-commercial provision
of goods or services
Under the present law it is well-established
that purposes are not for private gain overall even if an individual
supplying goods or services to a non-commercial Society may be
paid a commercial rate for them. Section 212(3) is ambiguous about
that and should be clarified. Non-commercial purposes other than
of private gain should also be added to this sub-section.
14. The Gambling Commission
The Commission has power to fine
the holders of operating licences for breaches of conditions.
No limit is put on the fines. In the case of a non-commercial
society whose purposes must be that of supporting good causes,
any fine would merely be taking money away from these good causes.
Sufficient sanction is provided by the Commission's ability to
review or revoke the operating licence and therefore in clause
95, the Commission's Financial Penalties should not apply to non-commercial
lotteries.
15. Annual Levy Section
96
The Council recognises
the need for provision to be made to support the prevention and
cure of problem gamblers, and supports the licensing objectives.
Indeed it is possible that some such causes may receive assistance
from non-commercial societies raising funds by way of lotteries.
However, any annual levy will merely amount to a reduction in
the sums available to be given to good causes. The Regulatory
Impact Assessment quantifies the levy at 2.6% of monies currently
being raised for beneficiaries. This seems an unnecessarily large
amount in the case of lotteries raising money for good causes;
lotteries having no history of problem gambling. The Council
would ask that the levy be waived in the case of non-commercial
societies licensed to raise funds by these means.
16. Gaming Machine Definition
section 192
Machines selling lottery tickets
are not gaming machines provided no draw has already taken place.
However with scratch cards, the winning tickets have already been
printed so technically the draw has already taken place. The Council
would like to see section 192(2)(e) amended to include such pre-drawn
lotteries
17. Transition arrangements
The Council sincerely hopes that
grandfather rights will be given under transitional provisions
to Societies currently operating Society lotteries.
Yours faithfully,
Alan J Austin
Chairman
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