Reforming gambling

The Gambling Act received Royal Assent on 7 April 2005. It contains a new regulatory system for gambling in Great Britain, with the exception of the National Lottery and spread betting, and reunites gambling regulation into a single enactment; repealing the Betting, Gaming and Lotteries Act 1963, the Gaming Act 1968 and the Lotteries and Amusements Act 1976.

The Act contains 362 sections and 18 schedules, is accompanied by a 138-page regulatory impact assessment and a similarly lengthy set of explanatory notes. With more than 40 statutory instruments, and a similar number of consultation exercises, it makes the Licensing Act 2003 appear quite straightforward.

Defining gambling

Gambling is for the first time defined and three licensing objectives, relating to crime, fairness and protection of the vulnerable are laid out. A new system of 'operating', 'personal' and 'premises' licences is introduced and Magistrates' Courts lose their licensing responsibility to newly defined licensing authorities (generally local authorities).

Remote (online) gambling from UK-based websites is permitted for the first time, betting is brought within the ambit of the statutory regulator and a number of restrictions on commercial gambling are relaxed. Limits for gaming machines are increased and a four-fold classification introduced; while three new types of casino, enjoying a wider range of activities, are created. The new casinos '“ regional, large and small '“ are in addition to existing casinos which will continue to operate. There are measures in the Act designed to provide protection for children and the vulnerable.

Of interest to contract lawyers is the repeal, by s 334, of the provisions that sought to prevent enforcement of gaming and wagering contracts. The fact that a contract relates to gambling will not, by s 335, prevent its enforcement (but see also s 336).

Of central importance is the fundamental shift in policy from restricted entry to free-market liberalisation. The Gambling Commission must exercise its functions with a view to pursuing the licensing objectives and to 'permit gambling, in so far as the Commission thinks it reasonably consistent with pursuit of the licensing objectives (s 22); and licensing authorities 'shall aim to permit the use of premises for gambling' provided this is consistent with the gambling objectives (s 153). An application that is consistent with the licensing objectives should be granted.

Operating and personal licences

A person providing facilities for gambling will need an operating licence from the Commission which is also responsible for licensing personnel working in the gambling industry. Ten categories of operating licence are specified under the Act (casino, bingo, betting other than pool betting, pool betting, betting intermediary, gaming machine for use in adult gaming centre, gaming machine for use in a family entertainment centre, gaming machine technical operation, gambling software and lottery). An operator may apply for one or more of these. As well as the 'standard' operating licence, for each type of gambling activity, there is a 'remote operating licence' which is required where the participants are not face-to-face on the same premises, and must be applied for separately from a 'standard' operating licence.

The Commission must consider the licensing objectives when determining applications. A licence cannot be granted to those with 'relevant convictions' and the Commission will consider the applicant's suitability to carry on the licensable activity as well as the suitability of any gaming machine or other equipment used for the activity. The Commission has wide powers to attach conditions to the licence.

In respect of each operating licence at least one person must occupy 'a specified management office' in relation to the operating licence holder or licensed activity and must be a personal licence holder (although there is an exception for 'small-scale operators' under s 129). In addition, those with a management role (for example, managing director/chief executive, finance director, area manager, casino club manager) and those with an 'operational function' (for example, casino dealers and cashiers) in the provision of the gambling activity must hold a personal licence.

The start date for applications to the Commission for both personal and operators licences was 1 January 2007.

Premises licences

Responsibility for the grant of premises licences, permits for gaming machines in public houses and clubs, temporary use notices; and registering small-scale lotteries lies with local authorities in England and Wales and licensing boards in Scotland.

The authority must consider any relevant code of practice, the guidance issued by the Commission, the authority's own licensing statement and the licensing objectives. The Act allows for delegation of some functions to the licensing committees established under the Licensing Act 2003 and to an officer.

An applicant must hold or have applied for an operating licence for the activity to be provided at the premises and an application cannot be determined until the relevant operating licence has been issued. Responsible authorities and interested parties, as defined in the Act, may make representations to the local authority concerning an application; but the operator's suitability is no longer relevant, premises' suitability is largely governed by planning and building regulations and the demand criterion has been abolished.

Ministers have made some concessions on fees for both existing and new premises permissions in that licensing authorities will be able to offer a discounted fee for premises that open on a seasonal basis and, to encourage timely applications, payment of the first annual fee will be linked with the date on which the licence takes affect rather than the date of issue. The start date for applications to licensing authorities for premises licences and other permissions is 21 May 2007.

Other forms of authorisation

In some cases the provision of facilities for gambling does not require an operating licence or a premises certificate but does require a permit. These include club gaming and club machine permits for members' clubs or miners' welfare institutes and licensed premises gaming machine permits where two or more gaming machines are made available in alcohol licensed premises. It should be noted that machines in other non-gambling premises (such as takeaway food outlets and taxi offices) currently permitted under s 34 of the Gaming Act 1968 will not be permitted under the 2005 Act.

Transitional provisions

Parts of the Act are already in force. Most significantly, on 1 October 2005 the Gambling Commission was established as the new unified regulatory body for gambling. The Act comes fully into force on 1 September 2007, when gambling will begin to be regulated under the new law. The transitional arrangements are less than straightforward and there has been slippage in some of the dates. The latest statutory instrument is the Gambling Act 2005 (Commencement and Transitional Provisions) (Amendment) Order 2007, which came into force on 29 April 2007.

Continuation and grandfather rights

Operators, both new and existing, must apply for an operators' licence and a premises licence in order to provide facilities for gambling activities after 1 September 2007. The transitional arrangements under the Act provide for 'continuation rights' which attach to operating, personal and premises licences and 'grandfather rights' which apply only to premises licences. Continuation rights will allow operators to continue their business uninterrupted even if their operating, personal or premises licence has yet to be determined by the Commission or licensing authority by 1 September 2007. They will be deemed to hold 'an interim operating licence,' which will be subject to any relevant operating conditions and codes of practice or 'an interim premises licence' which will be subject to the relevant mandatory and default conditions.

Grandfather rights will allow applications for premises-based permissions under existing legislation to be converted into equivalent permissions, by way of a premises licence under the 2005 Act.

Transitional dates

To secure continuation rights, existing casino, betting, bingo, family entertainment and adult gaming centre operators needed to lodge their application for an operators licence by 27 April 2007. New operators, who intend to commence the provision of facilities for gambling before 1 September 2007, needed to make application under the old law before the 27 April deadline in order to be eligible for continuation rights. (The DCMS reports that 2357 licence applications were received in the final week before the deadline date.) New operators will also need to make advance applications under the 2005 Act in the same way as existing operators and will qualify for continuation rights if their application under the old law is resolved before 1 September 2007 and they notify the Gambling Commission within 14 days of the application under the old law being granted.

Both existing and new operators also will need to obtain a premises licence from the relevant licensing authority. Advanced applications for premises licences can be made from 21 May 2007. In order to secure continuation rights operators will have to lodge their application by 31 July 2007. If this date is missed they have until 31 August 2007 to lodge a premises licence application, but their business will not be able to trade until the authority has issued the premises licence.

Existing and new operators will also need to ensure that personal licences appropriate to their business have been secured by 1 September 2007. Applications for personal licences have been received by the Gambling Commission since 1 January 2007 and must be lodged by 29 June 2007 in order to secure continuation rights.

Public houses and other alcohol licensed premises holding gaming machine permits under s 34 of the Gaming Act 1968 which expire before 31 August 2007, apply as before to the licensing authority and if successful will be issued with a permit for three years; all such permits will cease to have effect on 31 August 2010. For permits which expire after 1 September 2007, on their expiry they will be replaced by licensed premises gaming machines permits. Continuation and grandfather rights will apply.

Club premises are subject to similar provisions and there are transitional arrangements for lotteries, external lottery managers, gaming machine supply or repair, prize gaming permits and remote gambling operators.

Complicated system

The new gambling regime is complex. The transitional provisions contain a variety of dates and procedures. Of primary concern to practitioners will be to ensure so far as they are able that operators can trade from 1 September 2007. If dates for continuation rights have been missed it is important to lodge applications as soon as possible to maximise the possibility that the Gambling Commission and licensing authorities will be able to issue the licences by 1 September. In the absence of continuation rights the fast-track application process for grandfathered premises licences is probably to be preferred to an application to exclude or vary a default condition.