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Issues of the Ariadne Capital Journal - Through the Maze
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Impact of Proposed New Gambling Laws on the Gaming Industry
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A new and controversial Gambling
Bill was recently introduced to the House of Commons. In addition
to having far reaching effects for the traditional gambling
industry, the potential impact on "Remote Gambling"
like internet casinos and gambling sites has serious ramifications
for the on-line gaming industry. This briefing note from UK,
law firm Wragge & Co.
demystifies the bill and draws conclusions on its likelihood
of becoming law.
The Gambling Bill
On 18 October, the Gambling Bill
was introduced into the House of Commons. The Bill has been
a long time in the making. The White Paper, 'A Safe Bet for
Success', was published in March 2002, and a long process
of pre-legislative scrutiny followed. The Bill was published
in draft form over a year ago and has since been the subject
of two Joint Committee reports.
The broad principles underlying
the proposed legislation should not come as a surprise. However,
the Bill is likely to attract intense scrutiny in its passage
through Parliament, and has already generated reams of media
comment. By introducing the Bill before the Queen's Speech,
the Government has signalled its intention to get it onto
the statute book before the general election. But that same
objective may require it to make compromises as it passes
through.
In this note, Wragge & Co
will briefly explore some of the key aspects of the proposed
legislation.
Gambling Commission
The Bill proposes the establishment
of a Gambling Commission. The Gambling Commission will replace,
and have far more powers than, the current Gaming Board. It
will regulate almost all commercial gambling in Great Britain
and will be responsible for granting operator licences. In
performing its functions, the Commission will have to comply
with the three licensing objectives:
preventing gambling from being
a source of, or support to, crime;
ensuring gambling is conducted
in a fair and open manner; and
protecting vulnerable persons
from being harmed or exploited by gambling.
Casinos
The most controversial parts of
the Bill relate to casinos. Regulation applying to casinos
will generally be liberalised. Market forces (and local authorities)
will now determine where casinos establish themselves, as
the current system of permitted areas will be abolished. The
24-hour 'cooling off' period, which currently requires that
gamblers must become members of a casino at least a day before
gambling there, will also be abolished. And advertising restrictions
on casinos (and other forms of gambling) will be relaxed.
Most significantly, casinos will
be classed in three size categories: small, large, and regional.
The class into which a casino
falls will be dependent on (among other things) its floor
area and number of gaming tables. The significance of the
distinction primarily relates to the number and type of gaming
machines that each class of casino is entitled to install.
Only regional casinos, which must be at least 5,000m2 in size,
will be allowed to install Category A machines (see below),
and this is where the biggest commercial opportunities under
the Bill can be found.
Gaming machines
A new, much wider, definition
of gaming machine is proposed. The definition is clearly designed
to capture so-called fixed odds betting terminals and other
new technologies that fall outside the current definition.
There will be four categories
of machine, distinguished by: (i) the amount paid to use the
machine, (ii) the value of the prize, (iii) the nature of
the prize, and (iv) the premises where the machine is used.
Category A machines (which have
no upper limit on the prizes that may be awarded) will be
allowed only in regional casinos. Other casinos, bingo halls,
licensed betting premises and premises licensed as adult gaming
centres will be allowed the other categories (B, C and D)
of machines, where prizes are capped at amounts fixed by the
Government. Premises licensed as family entertainment centres,
to which children have access, will be allowed only the lower
categories. Gaming machines may also be installed without
a licence at premises benefiting from an exemption. These
exemptions include one that allows pubs to install up to two
Category C or D machines (or more with the permission from
the local licensing authorities).
Protecting the vulnerable
Although an exemption does apply
to pubs, members' clubs and fairs, the Bill proposes much
less scope for premises without a gaming licence to offer
gaming
machines. Indeed if casinos are seen as the main benefactor
under the Bill, pubs and amusement arcades are perhaps the
biggest losers. The reasoning behind this disparity is the
Government's stated desire to protect the vulnerable (in particular
children) from being exposed to gambling opportunities. The
Bill would create an offence of encouraging a person under
18 to gamble or allowing such a person access to an area where
Category A, B or C gaming machines are available.
Remote gambling
The Government has also looked
to address the growing trend in what it has termed 'remote
gambling' - being gambling by means of remote communication
(for example, telephone betting or internet casinos). In particular
it is keen to regulate internet based gambling, the fastest
growing area of gambling in the UK. The Government's aim is
to encourage reputable remote gambling operations to establish
themselves in Great Britain, so that it can fully regulate
(and tax!) them. It hopes this will be to the commercial detriment
of less reputable operators, who are based in less stringent
jurisdictions, and which it cannot hope to regulate.
Conclusion
The Bill represents a massive
overhaul of the currently outdated and piecemeal gambling
legislation in Great Britain, and is intended to create a
comprehensive and joined-up approach to the regulation of
gambling. For this it must be commended.
The Bill would also create major
new commercial opportunities, which both national and international
investors, as well as local authorities seeking to promote
urban regeneration, are already hoping to take advantage of.
However, it gives rise to a number of issues of social concern,
and they will undoubtedly lead to the Bill being amended in
its passage through Parliament. Ultimately, there may need
to be some trade-off between the Government's objectives of
securing the expeditious passage of the Bill and ensuring
that it becomes law without any substantial amendment. The
two may not be mutually compatible.
For further information on the
issues covered in this briefing note and on the service we
offer to regulated industries, contact:
John Cooper, Partner
Tel: +44 (0)121 685 2891
john_cooper@wragge.com
Gus Wood, Solicitor
Tel: +44 (0)121 629 1954
gus_wood@wragge.com
This briefing note contains information
of general interest about current legal issues, but does not
give legal advice. T: +44 (0)870 903 1000 F: +44 (0)870 904
1099 mail@wragge.com
www.wragge.com Wragge & Co LLP is a Limited Liability
Partnership in association with Graf von Westphalen Bappert
& Modest www.westphalen-law.com
Re-printed with permission by
Wragge & Co http://www.wragge.com/files/TheGamblingBill_Oct04.pdf
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Ariadne Capital Journal - Through the Maze Volume
4, Edition 2
