House of Lords House of Commons Joint Committee on the Draft Gambling Bill Draft Gambling Bill Session 2003–04 Volume I HL Paper 63-I HC 139-I House of Lords House of Commons Joint Committee on the Draft Gambling Bill Draft Gambling Bill Session 2003-04 Volume I Report, together with formal minutes and annexes Ordered by The House of Commons to be printed Thursday 25 March 2004 Ordered by The House of Lords to be printed Thursday 25 March 2004 HL Paper 63-I HC 139-I Published on Wednesday 7 April 2004 by authority of the House of Lords and the House of Commons London: The Stationery Office Limited £0.00 4 The Joint Committee on the Draft Gambling Bill The Joint Committee on the Draft Gambling Bill was appointed by the House of Commons and the House of Lords on 9 September 2003 “to consider and report on any clauses of the draft Gambling Bill presented to both Houses by a Minister of the Crown” and to report by 8 April 2004. Membership Mr John Greenway MP (Conservative, Ryedale) (Chairman) Janet Anderson (Labour, Rossendale & Darwen) Mr Tony Banks (Labour, West Ham) Jeff Ennis (Labour, Barnsley East & Mexborough) Mr Alan Meale (Labour, Mansfield) Mr Richard Page (Conservative, South West Hertfordshire) Dr John Pugh (Liberal Democrat, Southport) Mr Anthony D. Wright (Labour, Great Yarmouth) The Rt Hon Lord Brooke of Sutton Mandeville (Conservative) Lord Donoughue (Labour) Viscount Falkland (Liberal Democrat) Lord Faulkner of Worcester (Labour) Baroness Golding (Labour) Lord Mancroft (Conservative) Lord Wade of Chorlton (Conservative) Lord Walpole (Cross Bencher) Powers The Committee has the power to require the submission of written evidence and documents, to examine witnesses, to meet away from Westminster, to meet at any time (except when Parliament is prorogued or dissolved), to appoint specialist advisers, and to make Reports to the two Houses. Publication The Report and evidence of the Joint Committee are published by The Stationery Office by Order of the two Houses. All publications of the Joint Committee (including press notices) are on the Internet at www.parliament.uk/parliamentary_committees/jcdgb.cfm Committee staff The staff of the Joint Committee were drawn from both Houses and comprised Sarah Davies (Commons Clerk) Audrey Nelson (Lords Clerk until December 2003) Jake Vaughan (Lords Clerk from January 2004) Jago Russell (Legal Specialist) Abigail Plenty (Economic Specialist) Alison Mara (Committee Assistant) Francene Graham (Committee Assistant) Lisette Pelletier (Secretary) and George Fleck (Office Support Assistant) Contacts All correspondence should be addressed to the Clerks of the Joint Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 8388; the Joint Committee’s email address is [email protected] 1 Contents Report Page Summary 7 1 Introduction 9 The Committee’s inquiry 9 The publication of the draft Bill 11 The Committee’s approach to pre-legislative scrutiny 12 Key issues 14 2 The regulatory framework 15 Introduction 15 The objectives of the draft Bill 15 Detail to be issued by the Gambling Commission 16 Delegated powers 17 Regulation, taxation and planning: three legs of a stool? 19 3 The regulatory system 20 The Gambling Commission 20 Transition from the Gaming Board to the Gambling Commission 20 Day to day Gambling Commission resources 23 The powers of the Gambling Commission 24 The remit of the Gambling Commission 27 Should the Gambling Commission regulate spread betting? 27 4 The National Lottery 30 Regulation of the National Lottery 30 Proposed changes to the licensing process 30 The multi-licence approach 31 Should the Gambling Commission regulate the National Lottery? 33 5 Licensing 37 Introduction 37 Operating licences 37 Duration and renewal of operating licences 38 Licence conditions 39 Licence fees 40 Personal licences 41 Extent of personal licensing requirements 41 Small-scale operators 42 Sanctions 43 General 43 Unlimited fines 44 Appeals against the Gambling Commission’s decisions 44 Premises licences 45 2 Restricted discretion 47 Duration of premises licences 48 Resources 49 Relationship with planning 50 “Need” and cumulative impact 52 Provisional statements 53 Appeals 54 Transition 54 6 Social implications of the draft Bill 57 Problem gambling 57 Impact of the draft Bill 59 Prevalence study and other research 59 Potential impact of the draft Bill on problem gambling 60 Safeguards in the draft Bill 61 The industry-funded trust 63 Relationship with industry 64 Relationship with service providers 66 Level of funding 66 Contributions in proportion to risk 67 Method of funding 69 Government responsibility 70 The young 71 A uniform age limit of 18 71 Employment of young persons in gambling premises 73 Children and gaming machines 73 Ambient gambling 79 Destination gambling 79 Children 80 Problem gambling: additional recommendations 81 The National Lottery and spread betting 81 Advertising, inducements and credit 81 Casinos 82 Bingo 82 Gaming machines 82 Remote gambling 82 7 Advertising, Inducements and Credit 82 Advertising 82 Unlawful advertising 83 Other restrictions on advertising 84 Regulator 85 Inducements 88 Loyalty cards 89 Credit 90 8 Casinos 91 Unresolved issues 92 3 The Government’s proposals 93 Evidence received 955 Size categories 95 The cliff-edge 96 Alternative size formulas 96 The 3:1 ratio 97 Definition of ‘gaming machine’ 98 Three size categories 98 Small casinos 98 Large casinos 99 Resort casinos 102 Regeneration: general issues 103 Regional regeneration: Free market v. locational controls 106 Planning for resort casinos 108 Planning and licensing 110 Planning Use Class 110 Planning at the local level 113 Interaction between planning bodies 114 Miscellaneous Issues 114 Linking Machines 114 Available for use 116 Membership of casinos 117 Employment in casinos 117 Smoking in casinos 117 Alcohol in casinos 118 9 Bingo 120 Provisions in the draft Bill 120 Bingo in casinos 120 Soft v. hard gambling 121 The social aspect 121 Bingo in pubs and clubs 122 10 Gaming Machines 122 Categories of machines 123 Category A machines 123 Category D machines 124 Returns to customers 125 Machine numbers in licensed premises 125 Pubs and clubs 125 Tenpin bowling centres 126 Machine testing 127 Linking of machines 127 Fixed Odds Betting Terminals (FOBTs) 128 Categorisation 129 FOBTs and problem gambling 130 4 11 Betting and bookmakers 130 Betting Exchanges 132 The fiscal and regulatory regime 133 Non-recreational layers 139 Regulation 140 Sporting levy 140 Voiding of bets and cheating 141 12 Remote gambling 142 Regulation 143 Principles of regulation 145 Licensing requirements 146 Social responsibility 147 Safeguards 147 Controlling access 149 Other jurisdictions 150 Prohibited territories offence 151 Advertising by offshore operators 151 13 Lotteries (except the National Lottery) 152 Enforcement 153 Definition of “lottery” 154 Payment to Enter 154 Skills Test 157 Statutory definition of “lottery” and the National Lottery 160 Rapid-draw lotteries 160 Statutory limits 161 Customer Lotteries 163 14 Economic impact 163 Economic research 164 Economic regeneration 165 Displacement 165 Cannibalisation 166 Winners and losers 166 Overall net benefit 167 Taxation 167 Changes to the taxation regime 167 Inward investment 168 Conclusions and recommendations 170 Annex 1: Schedule of detailed comments on the draft Bill 192 Annex 2: Programme of visits undertaken by the Joint Committee on the draft Gambling Bill during the course of its enquiry 265 Annex 3: List of acronyms 268 5 Formal minutes 270 Witnesses 294 List of written evidence 297 7 Summary This Report comments in detail on the draft Gambling Bill, the bulk of which was published in November 2003. It has been unanimously agreed. We make 139 recommendations suggesting modifications to either the clauses themselves, or the underlying policy, based on the evidence we received. Although many of the changes we recommend are aimed at ensuring that the Government proceeds more cautiously than was recommended by the Budd review and as envisaged in the subsequent White Paper, A Safe Bet for Success, we think that the overall framework of the draft Bill is about right. In particular, we agree with the objectives of the Gambling Commission set out in Clause 1 of the draft Bill: preventing gambling being a source of crime and disorder, being associated with crime or being used to support crime, ensuring that gambling is conducted in a fair and open way, and protecting children and other vulnerable persons from being harmed or exploited by gambling. For these objectives fully to be realised the Government must ensure that access to high value gaming machines is more restricted than was first envisaged. Our other concerns relate to specific policy issues and the drafting of certain clauses. Almost all the witnesses we heard from stressed the need for legislating quickly – including GamCare, the charity looking after people with gambling problems, and the Gaming Board, which currently regulates parts of the industry. We agree. This legislation is necessary and urgent. If the legislation were delayed we anticipate that there will be a sharp increase in gambling of doubtful legality. We see no reason why our comments could not be incorporated and the Bill introduced before the end of this session of Parliament, for carry over to the 2004-05 Session. This will ensure that the potential social and economic benefits of the provisions are not lost. Some of the areas we were scrutinising have been subject to considerable media comment in recent times, in particular the use of betting exchanges. We commend the exchanges for their co-operation with us and the sporting regulators, their shrewd business model and the audit trail they can produce. But we do suggest that those who are effectively using the exchanges to lay bets professionally (i.e. above a certain frequency and value threshold) should be regulated in some way, though this should be neither onerous nor costly.