Section 94: Horse-race pool betting operating licence

289.     Where a pool betting licence authorises the provision of horserace pool betting, then the operating licence may specify that this section has effect. The intention is that this section will be needed in circumstances where only one licence for horserace pool betting has effect in Great Britain.

290.     Under subsection (2), the holder of a pool betting licence, who is licensed to conduct horserace pool betting, may authorise in writing any person to provide facilities for horserace pool betting, and this authorisation may include terms as to payment. This means that, for example, such an authority may be used by a person to accept pool bets on horse races on premises with a betting premises licence, or pursuant to an occasional use notice. This authorisation may also be made the subject of specific conditions on the operating licence (subsection (5)). Subsection (6) makes it clear that a pool betting operating licence contains an implied term permitting the making of pool bets via postal services.

291.     The Secretary of State has the power to repeal this section if circumstances dictate that it is no longer needed i.e. if there are no longer exclusive arrangements for horserace pool betting in Great Britain. In such circumstances, the pool betting operating licence would become the only kind of licence relevant to pool betting in Great Britain, and would also cover horserace pool betting. Section 358(4) to (6) makes specific provision concerning commencement of this Act, and transitional powers relating to the Horserace Betting Olympic Lottery Act 2004 (c.25).

Section 95: Betting on the National Lottery

292.     This section replaces provisions in the Betting, Gaming and Lotteries Act 1963 which caused a bookmaker to lose his licence if he took bets on the outcome of the National Lottery (Schedule 1, paragraph 18A). Under this section, all types of operating licences permitting betting are subject to a mandatory condition that no betting takes place on the outcome of the National Lottery.

Section 96: Gaming machine technical operating licence

293.     Without prejudice to other condition-making powers, the Commission may establish, or authorise others to establish on its behalf, standards in respect of systems and processes used for the manufacture, supply, installation, adaptation, maintenance or repair of a gaming machine, or software for use in a gaming machine (subsection (1)). These standards must be consistent with the rules concerning gaming machines contained in Part 10 (subsection (2)).

294.     These standards may cover technical matters about the functioning of the machines. Under subsection (3) they may also cover matters such as the nature of the gambling involved, the way in which the results are presented or determined, and the nature of the information displayed on the machine. This is intended to be used, in particular, to provide standards which discourage repetitive play and protect children.

295.      The Commission can enforce these standards through licence conditions, including the testing of the operator's systems on application, and from time to time.

Section 97: Gambling software: operating licence: standards

296.     This section permits the Commission to set standards for gambling software supply and manufacture for use in remote gambling. Similar powers are set out in sections 89 and 96 for remote gambling and gaming machines respectively. The section describes the powers the Commission has, including authorising individuals to test software, or a random sample of software and requiring licensees to make software available for testing.

Section 98: Lottery operating licences

297.     This section provides for the Commission to issue licences for the operation of lotteries. Lotteries which form part of the National Lottery (which are not covered by this Act), or that are classed as "exempt" lotteries under Schedule 11, will not require a licence under these provisions.

298.     A lottery operating licence may only be issued to the following:

• non-commercial societies;

• local authorities; and

• external lottery managers.

299.     Section 18 of the Act contains a definition of "non-commercial society". A non-commercial society, which wishes to hold lotteries, will only require an operating licence under this section if the proceeds of the lotteries they promote exceed the thresholds set out in Part 4 of Schedule 11 to the Act. Below these thresholds, the lottery will be classified as a "small society lottery", and will be exempt from the requirement to obtain a licence (although they will require registration with a local authority).

300.     The types of local authority which may promote a lottery are broadly defined, and include parish councils in England, and community councils in Wales (subsection (7)).

301.     Subsection (2) allows the Commission flexibility in terms of the scope of operating licences. A licence may authorise promotion generally, or specific promotion activities. It may authorise promotion of lotteries generally, or only in connection with lotteries of certain types or in certain circumstances.

302.     A licence may authorise a person to act as an external lottery manager, to provide lottery management services on behalf of local authorities, and on behalf of non-commercial societies, whether licensed or exempt. The Commission has the power to include a condition on a lottery operating licence that all of the arrangements for the lottery are to be made by an external lottery manager. If the Commission does so, it will not be required to form an opinion about the suitability of the local authority or non-commercial society in terms of integrity, competence or financial and other circumstances (under section 70(2)), when considering their application for a licence. Their assessment will be of the lottery manager only. The Commission may similarly assume the integrity of particular classes of applicant, and, for example, could do so where a local authority is making the application (see section 70(7)).

303.     Subsections (4) and (5) ensure that it will not be possible to prohibit the delivery of lottery tickets by post in relation to these lotteries, either by regulations made by the Secretary of State, or by conditions made by the Commission. Subsection (6) specifically empowers the Commission to attach conditions to the licence concerning rollovers, that is the carry over of prizes from one lottery to another, as defined in Part 11.

Section 99: Mandatory conditions of lottery operating licence

304.     This section provides that the Commission must attach certain conditions to lottery operating licences issued to non-commercial societies and local authorities, for the purpose of achieving the requirements set out in the section. The Commission is not restricted to these conditions, and may attach conditions which are similar, but more onerous, than those specified here.

305.     Various conditions must be attached to licences which set money or percentage limits in relation to proceeds and prizes. At least 20% of the proceeds of any lottery promoted under the licence must go to good causes. In the case of a non-commercial society, this means that a minimum of 20% of the proceeds must be used for the purposes for which the society is conducted. In the case of a local authority, 20% of the proceeds must be put towards a purpose for which it has the power to incur expenditure. Under all lottery operating licences, the proceeds of any single lottery must be limited, and the proceeds of all lotteries in one year are restricted to an overall upper limit. There is also an upper limit on the size of a prize in a licensed lottery. These limits are set out in subsections (2) to (4).

306.     Conditions must be attached to the licence prescribing certain requirements in relation to tickets. In particular, the information specified in subsections (5) and (6) must be included on the ticket. One ticket may provide entry to a number of lotteries, provided the information contained on it is sufficient that the dates of the draws in those lotteries are able to be determined. A ticket need not be a paper document, but if it is in electronic form, it must be capable of being printed out or electronically stored (subsection (7)). This will permit, for example, entry to a lottery over the internet. No additional payment apart from the ticket price may be required for entry into the lottery (subsection (8)).

307.     The Secretary of State has power to vary, by order, the money amounts and percentages set out in this section (subsection (10)).

Section 100: Annual fee

308.     The holder of an operating licence must pay a fee to the Commission for the licence to have effect ("the first annual fee"), and, thereafter must pay an annual fee before each anniversary of the issue of the licence. These annual fees acts as renewal fees in the sense that failure to pay them can lead to revocation of the licence. These fees are different to the application fee required when making an application for a licence. The Secretary of State will use regulations to set the fees and the period within which the first annual fee must be paid. Different fees may be set for different kinds of operating licences and different circumstances.

Section 101: Change of circumstance

309.     If an operator has a change of circumstance after an operating licence is issued he may be required, by regulations (under this section) or by conditions attached to his licence, to inform the Commission of the change of circumstance. There is a fee to be paid by for the operator. The Commission must then amend the licence as appropriate to reflect the change in circumstances.

310.     This section sets out the regulation making power of the Secretary of State, and provides that a licence holder commits an offence if he fails, without reasonable excuse, to comply with a requirement to inform the Commission of a change of circumstance. The maximum penalty for the offence is a fine not exceeding level 2 on the standard scale. The Commission may also suspend or revoke an operating licence if the holder fails to comply with regulations under this section.

Sections 102 & 103: Change of corporate control

311.     If the holder of an operating licence is a company limited by shares, a mechanism is needed to allow the Commission to approve a change of control of that company (i.e. following sale, transfer, allotment or issue of shares). These sections provide that mechanism.

312.     This mechanism applies to any kind of operating licence, but the Secretary of State may make regulations exempting specified kinds of operating licence from these requirements.

313.     This section uses the definitions set out in the Financial Services and Markets Act 2000. It provides that if a person becomes a "controller" of a company which holds an operating licence ("the company"), then the company must surrender the licence to the Commission, or apply to the Commission for approval for the licence to continue to have effect.

314.     If the company wishes to apply for approval for the licence to continue to have effect (which will attract a fee to be set by the Secretary of State), then the Commission may require information about the change of control and the new controller. The Commission may give approval if it is satisfied that that it would have granted the operating licence at the time of the original application, had the new controller been the controller of the company at the time. If it is not so satisfied, then the Commission must revoke the operating licence. A company has five weeks from the date when the new controller takes over in which to surrender its licence, or apply for a continuation, otherwise the Commission will revoke the licence (unless the Commission chooses to extend this period, which it may do, even after the 5 weeks has expired, provide the licence has not already been revoked).

315.     In requiring information in relation to a change of control, the Commission is required to have regard to normal commercial practices concerning confidentiality.

316.     These sections apply to the merger or division of companies, but where this is the cause of a change of controller, the Secretary of State may set reduced fees for applications in these circumstances.

Section 104: Application to vary licence

317.     Holders of operating licences may, for their own commercial reasons, wish to vary the gambling facilities that they provide, whether that is to cease carrying out an activity, or to start a new activity. Equally, they may wish to vary an individual condition that has been attached to their licence. In such circumstances, the holder of an operating licence will need to apply to the Commission to vary the terms of the licence.

318.     This section permits holders to apply for a variation of an operating licence, and applies the provisions of Part 5, modified as appropriate, to the variation process. Regulations by the Secretary of State will provide the relevant procedures.

319.     An application for variation cannot be used to transfer an operating licence to another person. Operating licences are non-transferable.

Section 105: Amendment

320.     This section provides that the Commission may require the holder of an operating licence to submit the licence to the Commission for amendment in a number of circumstances where it requires changes to be made to it.

321.     A licence holder has 14 days to comply with a requirement to send his licence to the Commission in response to a request, and commits an offence if he fails to do so without reasonable excuse. The maximum penalty is a fine not exceeding level 2 on the standard scale. The Commission also has power to suspend or revoke a licence if the holder fails to comply with the requirements set out here.

Section 106: Register of operating licences

322.     To allow the public to find out whether a person providing gambling facilities holds the necessary permission, licence or permit, the Act contains a series of requirements for various registers to be maintained. This section requires the Commission to maintain a register of operating licences and to make it available to the public. A fee may be payable to gain access to the register, but the fee must not exceed the reasonable cost of providing the service.

Sections 107 & 108: Copy of licence and production of licence

323.     These sections allow the Commission:

• to issue to a licence holder a copy of the licence in the event that it has been lost, stolen or damaged; and

• (together with the police) to require the holder of an operating licence to produce it within a specified period. The licensee will be committing an offence if he fails without reasonable excuse to comply with this requirement. The maximum penalty is a fine not exceeding level 2 on the standard scale.

Section 109: Conviction

324.     One of the licensing objectives in the Act is to prevent gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime. This section requires holders of operating licences to take certain steps in the event that they are convicted of a criminal offence in Great Britain or abroad.

325.     Where the holder of an operating licence is convicted of an offence in Great Britain, or of a relevant offence by a court outside Great Britain, he must inform the Commission as soon as reasonably practical. This ensures that the Commission has the necessary information it needs to regulate licence holders, and could, if it wished, commence a review of the licence.

326.     If the holder of an operating licence is convicted of a relevant offence before a court in Great Britain he must inform the court immediately that he holds an operating licence. This is so that the court can consider whether it should exercise its powers to order forfeiture of the operating licence as part of the sentence it imposes for the offence.

327.     A list of offences which are "relevant offences" is set out at Schedule 7. These are offences under British law (the jurisdictions of England and Wales, and Scotland). An offence under the law of another country is a relevant offence if it is similar in nature to an offence listed in Schedule 7. This ensures that a person's suitability to hold a licence is considered in relation to any criminal conviction for a serious offence, not just those in Great Britain (see section 126 for the definition of "relevant offence").

Sections 110 & 111: Duration

328.     As a general rule, operating licences will be of indefinite duration, subject to rules about lapse, forfeiture and the Commission's regulatory powers. However, the Commission has power to determine that operating licences, or a particular class of operating licence, should be given a particular duration. Such a determination will be made and promulgated as part of the Commission's licensing policy statement under Part 2.

329.     Where the Commission determines a particular duration under section 111, this will apply to existing and future licences. However, for existing licences the duration will begin from the date of publication of the determination rather than the date the licence was granted.

Section 112: Renewal of licence

330.     This section provides that where the Commission has decided that operating licences are to have a fixed duration under section 111, procedures for the renewal of licences can be put in place.

Sections 113 & 114: Surrender and Lapse

331.     A licence ceases to have effect if it is surrendered to the Commission. This provides a voluntary procedure for a licence holder to give up his licence if he so wishes.

332.     A licence will lapse, and is not transferable, if the licence holder:

• Dies;

• In the opinion of the Commission becomes incapable of carrying out the licensed activities (from which there is a right of appeal); or

• Becomes bankrupt or goes into liquidation.

Section 115: Forfeiture

333.     This section provides courts with the power to order forfeiture of an operating licence where it is sentencing the holder of a licence on conviction for a relevant offence, as defined in section 126. This allows the courts to take appropriate steps to bring a licence to an end, without the Commission needing to take separate regulatory action.

Section 116: Review

334.     Section 110 provides that operating licences are granted for an indefinite period. However, the Commission has power to introduce time limits for licences if it believes there is a regulatory need to do so. Therefore, the general position is that licences will not need to be renewed at any point. Section 116 gives the Commission the power to review, over time, the performance of licence holders and the operation of licence conditions.

335.     First, under subsection (1) the Commission may review matters relating to a class of operating licence i.e. not an individual licence, but a type of licence. For example, the Commission could review the operation of all gaming machine general operating licences. The purpose will be to review the manner in which licensees, as a whole, carry on licensed activities, and particularly, how licensees comply with the conditions attached to the class of operating licence. The purpose of this type of review could be to consider whether any changes to general conditions on licences are needed.

336.     Secondly, under subsection (2), the Commission has power to review any matter relating to an individual operating licence on any of three grounds:

• If the Commission suspects that conditions of an operating licence are being breached;

• If the Commission believes that the licence holder or any person connected with the gambling activities, has been convicted of a relevant offence in Great Britain or abroad; or

• If the Commission for any reason:

•      suspects that the licence holder may be unsuitable to perform the licensed activities; or

•      thinks that a review would be appropriate.

337.     The section makes it clear that a review can be carried out even if there is no suspicion or belief about the licence holder's activities. This ensures that a licence could be reviewed solely on the grounds, for example, that it had been held for a long period of time, and that the Commission considered a review prudent.

338.     In the event that the Commission decides to carry out a review of an individual licence there are procedural requirements to ensure that the licence holder can take part in the review (subsections (4) and (5)).

Sections 117 to 121: Regulatory powers

339.     The Commission has a range of powers available to it, exercisable after a review, or in circumstances where a licence holder has failed to comply with other requirements specified in Part 5 of the Act (e.g. to pay the annual fee). These sections outline these powers, and the procedural steps the Commission must take before exercising them.

340.     The Commission can:

• give the licensee a warning;

• add, remove or vary a condition to the licence;

• make, amend or remove an exclusion;

• suspend or revoke the licence; or

• impose a financial penalty.

341.     Suspension powers are available to the Commission at the outset of, and during, a review. Therefore, if the Commission considers a matter sufficiently serious, it can require the operator to suspend all or part of his activities pending the outcome of the review. The Commission also has powers to suspend a licence following a review.

342.     Where the Commission concludes that a licence holder has breached the conditions of his licence, it may impose a financial penalty on the licence holder. The Commission must take a number of procedural steps before it can impose such a penalty, which include providing the licence holder with reasons for the proposed penalty, and time in which to make representations to the Commission. The Commission is subject to a time limit for imposing a penalty of two years following the date of the breach, or the date the Commission becomes aware of the breach, whichever is later.

343.     To ensure that licence holders are aware of the way in which the Commission intends to use its power to impose financial penalties, the Commission must prepare and publish a statement of the principles it will apply in exercising these powers. In particular, the Commission must, in considering the imposition of a penalty, have regard for the seriousness of the breach of condition, whether the licensee knew or ought to have known of the breach and the nature of the licensee (including his financial resources). Before preparing or revising such a statement the Commission must consult the Secretary of State, the Lord Chancellor and other people as the Commission thinks appropriate.

344.     All the regulatory powers available to the Commission under these sections are subject to full rights of appeal for those affected by them, under Part 7, to the Gambling Appeals Tribunal.

Section 122: Information

345.     To assist the Commission to carry out its functions, this section sets out obligations on licence holders to comply with requests for information. These cannot be "fishing exercises" by the Commission, but must concern questions of whether the licence holder has breached his licence conditions, or is unsuitable to carry on gambling activities. Non-compliance without reasonable excuse is an offence that will attract a fine not exceeding level 2 on the standard scale.

Section 123: Levy

346.     This section provides the Secretary of State with reserve powers to impose an annual financial levy on the holders of all operating licences. The power cannot be exercised in relation to particular classes of operating licence. If introduced, the levy will apply to all classes of operating licence. The levy would be paid to the Commission, and treated as if it were part of the annual fee. This means that a licence would be revocable if the levy was not paid.

347.     The money raised by a levy would be used for alleviating problem gambling. Thus, the Commission could spend it on purposes or projects related to gambling addiction or other forms of harm or exploitation associated with gambling. The Treasury and the Secretary of State must consent to the Commission's expenditure of the levy. Such projects need not be undertaken by the Commission itself, but the Commission could fund others (including other public sector bodies) who are undertaking projects connected with problem gambling.

348.      The section sets out the matters relating to the levy which must be set out in the regulations. A number of alternative methods for calculating the levy are listed, but none are mandatory. Depending on the method of calculation chosen, different levies could be charged to different operators. Before making these regulations imposing a levy, the Secretary of State must consult the Commission.

349.     Provision is made, under Schedule 3 to the Act, for the National Lottery to be made subject to levy requirements also. A levy in these circumstances could not be imposed until the powers under this section had been exercised.

Section 125: Relevant offence: disapplication of rehabilitation

350.     This section identifies certain circumstances when section 4 of the Rehabilitation of Offenders Act 1974 (c.53) will not apply. This means that the Commission will be able to look at spent convictions in some cases. Where a person has a conviction for a relevant offence (defined in section 126) then the Commission will be able to consider a spent conviction for the offence when a person applies for an operating licence.