UK: Gambling Law Reforms; a Safe Bet for Success or Promoters Charter?

Last Updated: 22 April 2002
Article by Aron Dindol

The publication of the white paper proposing a radical overhaul of the laws relating to gambling in the UK in March 2002 has created an enormous amount of interest in the media and the public at large. There have been suggestions that the new legislation will result in Las Vegas style casino resorts springing up in holiday towns like Blackpool, and there have been concerns raised that British people will turn into gambling addicts.

In unveiling the white paper, Secretary of State for the Department of Culture, Media and Sport, Tessa Jowell stated that "a safe bet for success" encapsulates the government’s key objectives in making its reform. "We want gambling to be safe, not only for those who take part in it, but also in the way that it impacts on wider society." she continues. This article looks at the proposals contained in the white paper and asks to what extent these appear to meet this objective.

There is little doubt that reform of gambling legislation has been long overdue. Most of the legislation governing gambling was enacted in the 1960’s, and responded to an environment that tolerated gambling reluctantly, reflecting the attitudes of the day. The Gaming Board for Great Britain undertook a detailed review of the legal position and its report forms a cornerstone of the new proposals. One of the main themes arising from the report was the inflexibility of the existing legislation, and the criticism that it has not enabled regulation to keep pace with technological advances, including internet gambling.

Following the publication of the report in July 2001 and the responses to the consultation, the government has endorsed the following principals as the key objectives of gambling law and regulation;

  • Gambling should be crime free, honest and conducted in accordance with regulation.
  • Players should know what to expect and be confident that they will get it and not be exploited.
  • There should be adequate protection for children and vulnerable persons.

The government proposes that in order to protect these principles all gambling legislation should be consolidated into a single act of parliament covering all categories of gambling activities. A gambling commission is proposed as the single statutory regulator, which will assume responsibility for all of the regulatory and licensing functions currently undertaken by the Gaming Board. It is proposed that the commission will operate controls on entry to the industry, issuing operator and personal licences on the basis of an assessment of honesty, competence and, in the case of operators, financial means.

As a general principle the government is in favour of local authorities having responsibility for local licensing matters. Thus, local authorities will be responsible for licensing all gambling premises including those currently licensed by magistrates.

Casinos

The government has stated that there should be a wide ranging deregulation of casinos, which are currently subject to a number of controls which discourage innovation and restrict customer choice. Under the new regime, casinos will be able to offer additional gambling products, including activities such as betting and bingo, and gaming machines in casinos will not be required to have limits on stakes. Prizes may be linked to enable the accumulation of very large jackpots. The statutory membership requirement will be abolished and the legal restrictions on the advertising of casinos will be removed. The white paper contains the reference to the possibility of establishing in Great Britain "Resort Casinos" of a type seen in Las Vegas or Atlantic City.

There have been suggestions that following these changes, casinos could one day be as popular as pubs and nightclubs in the UK. Certainly the 119 casinos in Britain at present will welcome the opportunity to advertise, serve music and alcohol at the tables and provide live entertainment, all of which are currently prohibited. Whether a multitude of further casinos will spring up as a result of these changes is something that remains to be seen. There is a school of thought that there is a large untapped market of future casino goers and by advertising effectively the "casino royale" image of white dinner jackets and berettas can be overhauled making casinos more accessible to the general public. However, it seems unlikely that casinos will replace pubs or clubs as the entertainment venue of choice for the vast majority of the population.

Bingo

Existing gambling legislation contains limits on maximum prizes for linked and multiple games and the amount of money that the clubs may add to a player’s stake. These are intended to be abolished, and it is proposed that rollovers should be allowed in cash bingo. These measures are intended to provide greater choice and enjoyment for players, and more options for the industry in designing bingo games and meeting the needs of customers. It is interesting to note that in 1997 bingo halls were allowed to begin advertising, and figures indicate there are currently 90 million admissions annually. This was a dramatic increase, however it is still far short of the sorts of numbers drawn to pubs and nightclubs.

Betting

The government proposes to abolish the demand test for licenced betting offices and remove current restrictions on the sale of certain types of food and non-alcoholic drinks.

Lotteries

The current legislation provides for 4 types of lottery, namely small lotteries, private lotteries, society lotteries and local authority lotteries. The government endorses this overall approach and supports the recommendation that commercial lotteries should not be permitted. The National Lottery is not subject to the same regulation as other lotteries, in view of the "good causes" that the National Lottery supports.

Online Gambling

This is a significant area on which the gambling review report focused, and has been the subject of much clamour for change. In recent years, a number of online "virtual casinos" have been created, and under present law no licence could be obtained by an operation who wished to offer such internet gaming in the UK and to set up such UK site would be illegal. The reason for this is that at the time of the enactment of existing legislation, no one could have anticipated the role of the internet in present times. The government supports the review body’s conclusion that the prohibition of online gambling by British consumers would be an entirely unrealistic objective, even if it was thought to be desirable.

The government proposes to move towards legalising the provision of the full range of online gambling services by operators located in the UK, including gaming. There is thought to be a vast international market for which gambling operators based in this country will be encouraged to compete, and there would be added value in operators trading on the world wide reputation of the UK for honesty and probity of its regulatory bodies. Suggestions include the establishment of an effective kite mark or other mechanism to ensure that prospective customers, wherever they are located, can distinguish between sites which have been licensed and regulated by the commission and those that have not been. This proposal is indeed to be welcomed, as currently a number of online casinos are required to host in territories outside the UK and US (which has expressly prohibited internet gambling). Britain, the white paper reports, can establish a reputation for itself as a world leader in the field of online gambling, and the government will be working with industry and other industry experts to develop proposals. The precise form of these will need to be detailed, and as yet no interim measures have been put in place.

A Gambling Promoter’s Charter

All of the above proposals are designed to establish a successful British gaming industry, able to respond rapidly and effectively to technology and customer lead developments in both the domestic and global market place. The government is aware of the issue that gambling must continue to be conducted fairly, remain free of criminal influence and infiltration and operate within a regulatory framework that offers protection for children and vulnerable adults. To address this, the gambling commission will have powers to access and share information with other enforcement agencies both at home and abroad, access criminal records, apply a fit and proper test for anyone seeking to take out an operating or personal licence and be able to bring proceedings in connection with illegal gambling activity. There will be measures put in place to prevent all forms of gambling from being used as a conduit for money laundering.

In terms of social responsibility, the government has taken the view that the law should no longer incorporate or reflect any assumption that gambling is an activity which is objectionable and which people should have no encouragement to pursue. The white paper recommends provision for players to bar themselves from gambling, will require operators to display the clear information about the probabilities of winning and losing and will provide information to customers about problem gambling and what people who think they might need help should do. There are also provisions dealing with the protection of children, specifying that the minimum age for take part in gambling should generally be 18 and there will be restricted access for children to gambling venues.

It this seems that the government is aware of its social responsibility, answering critics who warn that the proposals amount to a "gambling promoters charter". It is estimated that the number of problem gamblers is in the region of 275,000 and 370,000 at any one time. The proposals may provide a safety net for this minority, and formal codes of practice issued by the Gambling Commission should become part of the conditions of licence to operate.

The government has, therefore, taken a bold step in initiating the changes that most argue are long overdue. Statistical data suggests that annual expenditure on betting could increase from 7 billion pounds to 10 billion pounds and therefore the government has identified that these reforms are worth implementing. However, it is arguable that the implementation of these reforms will not receive top priority, especially in the wake of September 11th. The white paper does not indicate when the primary legislation will be implemented, but we can expect this to be at the earliest October or November 2002.

Another area where concern has been raised is the danger to smaller bingo clubs, which may not be able to compete should "resort casino complexes" begin to dominate. Smaller clubs offer relatively low prizes and may find themselves squeezed out of the market by the larger multiplexes.

Kingsford Stacey Blackwell has particular expertise in this area and is recommended in the Legal 500 in the field of licensing, gaming and betting. For further information on this topic, please contact Aron Dindol or Robert Edney.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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