gambling regulation in europe: a view from the british isles gambling regulation in europe a view...

Gambling Regulation in Europe: A View from the British Isles

GAMBLING REGULATION IN EUROPE

A View from the British Isles

Prof. dr. David Miers

Cardiff University, School of Law

Leuven, 10 November 2009


Introduction

• the salience of commercial gambling in GB

• the regulatory structure created by the 2005 Act

• the Gambling Commission’s approach to regulation.

• the three licensing objectives: gaming by means of machine.


British Gambling Prevalence Survey 2007

Of 32 million adults (68% of the adult population)• 57% had participated in the National Lottery Draw• 20% had bought Lottery scratchcards• Horserace betting (17%)• Gaming machines (14%) • Problem gambling: about 0.6% (234,000) of the

adult population. • Spend: B£84 in 2006/07


The Industry

• Sector Premises Income (£M) Profit (£M)

• Betting 8,862 10,817 (turnover)1,717

• Bingo 641 1,703 (gross gaming sales)

• Casinos 145 4,438 (drop) 656 (ggy)

• Arcades 937 490 (gross profit)

• Remote 328 (licences)• Lotteries 542 (licences: all non-commercial) 93


The basic position 1: unlawful unless authorised or an exception (Part 3)

• An offence to provide ‘facilities for gambling’ as defined in section 5, unless that provision is authorised by the Act or is covered by a specific exception within the Act (s 33).

• This does not apply to a lottery or to making a gaming machine available for use, which have their own regimes under Parts 11 and 10 of the Act respectively (ss 34 and 35).


The basic position 2

• Premises cannot be used to operate a casino, provide facilities for bingo, make a gaming machine available for use or provide facilities for other forms of gaming or for betting unless the licensing authority has issued a premises licence in respect of them. (s 37)

• Section 33 deals with the provision of any gambling facilities, the prohibition in section 37 is limited to premises used for the provision of non-remote gambling facilities.


The licensing triumvirate

• Operating, personal and premises licences comprise the centrepiece of the Gambling Act’s regulatory structure. In these respects the 2005 Act is comprehensive of the commercial gambling market. In addition to the regulation of casinos, bingo, lotteries and gaming machines that existed prior to its enactment, the new regime covers, for the first time, betting, remote gambling and arcades.


Operating licences: Part 3s 65: non remote gambling

• a casino operating licence;

• a bingo operating licence;

• a general betting operating licence;

• a pool betting operating licence;

• a betting intermediary operating licence;

• a gaming machine general operating licence for an AGC;

• a gaming machine general operating licence for an FEC

• a gaming machine technical licence;

• a gambling software operating licence; and

• a lottery operating licence.

• PLUS a remote licence if required (s 67)


Applications for operating licences (s 70)the licensing objectives (s 1)

• preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime;

• ensuring that gambling is conducted in a fair an open way; and

• protecting children and other vulnerable persons from being harmed or exploited by gambling

• Applicant’s suitability

• Suitability of any gaming machine


Operating licences: licence conditions

• Attached by Commission (general and individual)• Attached by SoS• Commission (s 24): Licence Conditions and Code

of Practice (LCCP 2008, as amended• Social responsibility code provisions: are

conditions of the licence (ss 24(2) and 82): breach is a criminal offence, in addition to regulatory sanctions


Personal licences (s 80 and Part 6)

• The Act requires as a condition of an operating licence that there be at least one person who holds a personal licence in respect of a ‘specified management office’ (a personal management licence (PML)).

• It also permits the Commission to require those who perform ‘operational functions’ to hold a personal licence (a personal functional licence (PFL)).


Premises licences (Part 8, s 150)

• the operation of a casino• the provision of facilities for he playing of bingo• making category B gaming machines available for use• making category C gaming machines available for use, • the provision of facilities for betting

• Granted by local licensing authorities: statement of principles (s 349)

• Must (s 153) take account of Commission’s Guidance (revised May 2009)


Premises licences: the Act’s permissive function

• Commercial gambling is a leisure good for which operators, persons and premises may be licensed where the provision of gambling facilities is ‘reasonably consistent with pursuit of the licensing objectives.’

• A statutory duty upon both the Commission and the licensing authority (ss 22 and 153)

• Neither may take account of the existence or otherwise of any demand for the facilities to be provided (ss 72 and 153)

• Nor any membership requirement (ss 87 and 170)


The Gambling Commission (Part 2): core duty: to promote the licensing objectives

• The Commission shall aim (s 22)• to pursue and, wherever appropriate to have regard to the

licensing objectives, and• to permit gambling, in so far as the Commission thinks it

reasonably consistent with pursuit of the licensing objectives

• The ‘better regulation agenda’ • Hampton and Macrory principles


Statements of Principles (s 23) (September 2009)

• Statement of principles for licensing and regulation

• Licensing, compliance and enforcement policy statement

• Statement of principles for determining financial penalties

• www.gamblingcommission.gov.uk


A hierarchy of control

1. The Act: primary legislation 2. Regulations made by DCMS3. Licence conditions made by DCMS4. General and individual licence conditions made by the Commission 5. Code of practice social responsibility provisions made by the

Commission 6. Conditions applied by a licensing authority to the issue of a premises

licence7. Code of practice ordinary provisions made by the Commission8. Advice: made by the Commission

• Regulatory sanctions for breach of 1-7 (from a warning to licence revolcation)

• Criminal sanctions for breach of 1-6


A risk-based approach to

regulation, compliance and enforcement

• From setting licensing policy to cost effective and proportionate

regulation

• Risk assessment: Risks to the licensing objectives are assessed by

reference to three ‘regulatory risk groups’: the operator, the facilities,

and the manner of their provision.

• Risk profiling: low to high

• ‘Earned autonomy’ The more effort an operator makes and the more

compliant they are the less rigorous and frequent regulatory

compliance attention they will experience

• Engaging the industry


Gaming Machines (Part 10)

• Section 235(1): A gaming machine means ‘a machine which is designed or adapted for use by individuals to gamble (whether or not it can be used for other purposes’).

• Longstanding issues about children’s access and problem gambling

• Lucrative, particularly for bingo and off course betting: Gross profit for betting in 2008/09 from bets was M£1,717; gross profit from machines was M£1,138; gross gaming sales for the bingo industry in 2008/09 was M£1,717; gross profit from machines was M£214

• Not always possible to define with legal precision the difference between ‘gaming’ and ‘betting’ for the purpose of regulatory control. (FOBTs). (But now the comprehensive definition of ‘gamble’).


Regulatory regime

• An offence to ‘make a gaming machine available for use’ unless an operating licence or an exception (s 242)

• No statutory definition of ‘available for use’; Commission: where a person can play it.

• non-remote casino, bingo, general and pool betting operating licences authorise the holder to make gaming machines available for use: but need a premises licence

• ‘family entertainment’ (FEC) and ‘adult gaming’ (AGC) centres need an operating licence

• Gaming machine technical operating licences: needed for manufacture, supply, etc of machines or gambling software


The categorical structure

• Regulatory leverage is exerted by defining machines according to their levels of stakes and prizes and allocating them to one of four categories (A-D) (s 236)

• which define the premises in which they may be made available for use, and in what numbers (ss 172-175)

• the number of machines in any permissible category for a given set of premises varies not only by reference in the case of regional, large and small casinos to the number of gaming tables used but also to the number of permissible lower-category machines that are installed


The Categories of Machines 1

• A: unlimited: only in a ‘regional’ casino: none• B1: £2 stake and £4,000 cash prize: casinos only• B2: £100 stake £500 cash prize: FOBTs: only in casinos

and premises licensed for betting • B3 and B3A: £1 stake and £500 cash prize: B3A lottery

machines in clubs only; B3 in bingo (8) and AGCs (4)• B4: £1 stake and £250 cash prize: Any Category B

premises• C: £1 stake and £70 cash prize: any Category B premises

and FECs


Categories of Machines 2: Category D

• The lowest limits: 10p; if the prize is entirely non-cash the stake is 30p. A cash prize must not exceed £5 and a non-cash prize cannot exceed £8 in total.

• Longstanding controversy (‘ambient gambling’): can be used by children (16 and under). Category D machines now only located in premises licensed under the Act

• The ‘amusement’ industry: recession. Two new sub categories introduced in 2009 with higher limits to support seaside arcades: ‘Pusher’ machines (10p stake and a £15 non-cash or £8 cash prize); ‘crane grab’ machines have a £1 and a non-cash £50 prize)


Application of the licensing objectives to gaming machine issues 1

• Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime

• Money laundering: integration of proceeds of crime; Third Directive; Proceeds of Crime Act 2002: Guidance

• Illegal machines (also an issue for LO2): Combating illegal gambling also benefits licensed operators, as the provision of illegal unregulated gambling has both a reputational and economic impact on the gambling industry as a whole’


Application of the licensing objectives to gaming machine issues 2

• Ensuring that gambling is conducted in a fair an open way

• The Commission expects that not only is gambling fair in the way it is played, but that the rules are transparent to players and they know what to expect.’

• Machine standards; display of information; speed of play; game links; levels of stakes and prizes

• The presentation of the game:

– ‘Skills with prizes’ (SWP) machines – Mechanised cash bingo (MCB)


Application of the licensing objectives to gaming machine issues 3.1

• Protecting children and other vulnerable persons from being harmed or exploited by gambling

• Part 4: minimum age at which persons may participate in gambling by any means is 18; young persons of the ages 16 and 17 may participate in lotteries and football pool betting, while any person, including a child may gamble on a Category D machine.

• Vulnerable persons: no statutory definition; Commission: include persons who gamble more they want to, beyond their means, or who may not be able to make informed decisions


Application of the licensing objectives to gaming machines: issues 3.2

• the licensee of a horse-race track shall ensure that children and young persons are excluded from any area where a gaming machine other than a Category D machine is situated (section 182)

• The Commission’s s 176 code of practice ‘about access to casino premises by children and young persons’ imposes on the operator a duty to engage physical checks or barriers to entry, including the deployment of staff as ‘door supervisors’, and to check persons’ identity where they appear to be underage.

• Evidence based regulation: increases in stakes and prizes with increased controls: speed of play


The Responsible Gambling Strategy Board

• To advise on a national responsible gambling strategy • To develop a strategic framework and priorities for the

distribution of funding for research, education/prevention and treatment

• To advise on the funding needed to deliver them

• Research, education and treatment:An initial strategy and priorities (October 2009)

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