Section 43: Chain-gift schemes

166.     This section makes provision for the prohibition of chain-gift schemes. The offence extends to Northern Ireland, as well as England, Scotland and Wales.

167.     A chain-gift scheme is an arrangement in which, in order to join, people must pay a joining fee to one or more of the other participants in the scheme. People who take part in the scheme are required or invited to encourage other people to join. A person who participates in the arrangement does so having been encouraged to believe that he will receive back more than his initial joining fee, from the fees paid by other participants. The joining fee must be a payment of money or money's worth, but it does not include goods or services.

168.     Subsection (1) makes it an offence to invite another person to join such a scheme. It is also an offence to knowingly participate in the promotion of the scheme. It will not, however, be an offence for a person merely to join the scheme. People who participate unwittingly in the promotion of a chain gift scheme, such as the host of an internet discussion forum upon which a posting promoting a chain-gift scheme has been made, will not commit an offence, provided they are unaware that the posting promotes a chain-gift scheme. People who knowingly participate in the administration or management of the scheme will also commit an offence.

169.     Subsection (3)(b) provides that the offence is committed irrespective of whether the joining fees are paid directly between the participants in the scheme or through a person responsible for managing or administering the scheme. The penalty is a maximum term or imprisonment of 51 weeks in England and Wales (or 6 months in Scotland and Northern Ireland), and/or a fine up to level 5 on the standard scale.

Section 44: Provision of unlawful facilities abroad

170.     This section gives the Secretary of State power to specify countries or places as prohibited territories, with the result that it will be an offence for a person to invite or enable a person in a prohibited territory to participate in remote gambling, where the person making the invitation or enabling the activity does anything in Great Britain or uses any remote gambling equipment in Great Britain so to do.

171.     The Secretary of State's decision whether or not to exercise this power could depend on matters such as: the development of the global gambling market; the laws which other countries establish to permit, constrain or prohibit the use of remote gambling; the practical measures employed by those countries to secure compliance with such laws; and the extent to which it is possible to reach international agreements about the cross-border use of the internet for gambling.

172.     In the event that the Secretary of State makes an order designating countries or places as prohibited territories the order must also prescribe the mode of trial and maximum penalty for the offence.

PART FOUR: PROTECTION OF CHILDREN AND YOUNG PERSONS

173.     Part 4 of the Act creates a number of offences that establish the extent to which children and young people may become involved in gambling, whether in terms of participation in the gambling, entry into gambling premises, or employment in relation to the provision of such facilities.

Section 45: Meaning of child and young person

174.     Under the Act, any person aged less than sixteen years is defined as a child. Any person aged sixteen years or more, but who is not yet eighteen, is defined as a young person.

Sections 46 & 48: Inviting children and young persons to gamble; participation by young persons in gambling

175.     In broad terms, people aged under eighteen are not to be permitted to gamble. Therefore, it is an offence for a person to invite, cause or permit a person under eighteen to gamble. It is also to be an offence for the young person to gamble (those aged sixteen and seventeen). However, children (those not yet aged sixteen) do not commit an offence if they gamble.

176.     There are some exceptions to the general prohibition on gambling by children and young people. Children and young persons may participate in all forms of private or non-commercial gaming and betting. Young persons may participate in lotteries and pool betting on association football. Children and young persons may use the category of gaming machine with the lowest stakes and prizes (Category D). They may also take part in equal chance prize gaming at certain premises, as provided under Part 13 of the Act.

177.     The offence of inviting a child or young person to gamble is to include advertising and other actions that bring attention to the facilities available for gambling. A person may be liable to commit the offence where his or her name or contact details are included in the information provided to the child or young person, and that person is someone to whom payment may be made or from whom information about the gambling may be obtained. However, in such a case, the person has a defence if he can prove that the information was provided without his consent or authority. A further defence is also available in a case where information is brought to a child's attention (as opposed to being sent to the child). In those circumstances, the person whose contact details appear in the information will have a defence if he can demonstrate that it was brought to the child's attention incidentally to it being brought to the attention of adults.

Sections 47 & 49: Invitation to enter premises; young persons entering premises

178.     Children and young persons may not enter a casino, a betting shop or an adult gaming centre at any time when facilities for gambling are being provided on the premises in reliance on the relevant premises licence. This is subject to the exception that children and young persons may enter the non-gambling area of a regional casino, but they may not enter the gambling area.

179.     Under Part 8, a betting premises licence for a track is subject to the condition that children and young persons are excluded from any area where a Category C gaming machine is available for use or any area where facilities for betting are provided. However, the latter restriction does not apply in the case of a dog-race track or a horse-race course on any day on which racing takes place (see section 182).

180.     Children are equally not permitted to enter areas of family entertainment centres where Category C gaming machines are available for use.

181.     Any person who invites a child or young person to enter these premises, or the parts of the premises described above, commits an offence. Where a young person enters these areas, he too commits an offence.

182.     As a consequence of these provisions, a person of any age may enter bingo premises, the betting areas of a horse racecourse or a greyhound track on days on which races are being run, or the non-gambling area of a regional casino. A person of any age may also enter any area of a family entertainment centre where no Category C gaming machines are provided at that place. This does not mean that they can necessarily partake in any gambling on the premises, see sections 46 and 48.

Section 50: Provision of facilities for gambling

183.     A young person commits an offence if he provides facilities for gambling, except in connection with private or non-commercial gaming and betting, lotteries, football pools and prize gaming at a travelling fair.

Sections 51 to 55: Employment offences

184.     It is an offence to employ children and young persons to provide facilities for gambling, except in the case of private or non-commercial gaming and betting and in relation to prize gaming at a travelling fair. There is a further exception in the case of lotteries and football pool betting. In those cases, the offence only extends to the employment of children and not young persons. The National Lottery is excluded from this provision. Regulations made under the National Lottery etc. Act 1993 already prohibit the sale of National Lottery tickets to those under 16.

185.     Restrictions are imposed on the ways in which children and young people can be employed to work on premises where facilities for gambling are provided, even if they are not engaged to perform any gambling activities themselves. This is to ensure that children and young people are not afforded undesirable exposure to gambling.

186.     It is an offence to employ children to work in premises at any time when facilities for the playing of bingo are being provided on the premises. It is also an offence to employ children at a club or institute at any time when facilities for gambling are being provided pursuant to a permit (section 53).

187.     In relation to any premises where gaming machines of any category are situated, then any child or young person employed may not perform any function that involves the gaming machine. Therefore, for example, a child may be employed in a family entertainment centre to undertake non-gambling activities, although he may not operate or handle the machine or pay customers prizes in the event that the machine has insufficient money in it (and he may not enter the area where the Category C machines are located) (section 54).

188.     Generally children and young persons are not allowed to be employed in any capacity in casinos, betting premises and adult gaming centres. This is subject to an exception in the case of regional casinos where children and young persons can be employed in non-gambling areas. It is possible, however, for children and young persons to be employed in adult only gambling premises (small and large casinos, the gambling area of regional casinos, betting offices and adult gaming centres) when no facilities for gambling are being provided. Therefore, for example, a sixteen-year-old apprentice joiner may undertake improvement works on the structure of a bar in a casino when it is closed (section 55).

189.     There is also an effective prohibition on children and young persons being employed in the betting areas of certain tracks and the adult-only areas of family entertainment centres. This follows the provisions referred to above which generally prohibit children and young persons from being able to enter such areas (sections 47 and 49).

Section 56: Invitation to participate in lottery

190.     This section makes it an offence to invite, cause or permit a child to take part in a lottery, for example, by selling him a ticket. However, this offence does not apply to two types of lottery allowed under the Act, that is, private lotteries and incidental non-commercial lotteries (see Schedule 11, Parts 1 and 2). This means that the section does not, for example, prevent the sale to children of tickets in events such as the tombola at a school or church fete. The National Lottery is also excluded from this provision.

191.     The Act does not criminalise the purchase by a child of a ticket in any form of lottery.

Section 57: Invitation to participate in football pools

192.     Young people are to be permitted to participate in football pools, and it is, therefore, permissible for the operators of football pools to provide information to young persons, or to direct advertisements to young persons. However, children may not participate in football pools and this section makes it an offence to invite, cause or permit a child to do so.

Section 58: Return of stake

193.     Under Part 5, all operating licences for gambling are subject to a condition requiring licence holders to return any money paid to them by children or young persons, where the person concerned is not permitted to participate in the gambling activity (section 83). It also requires the licence holder to withhold any winnings that would otherwise be payable. This section makes it an offence for a licence holder to fail to do so.

Section 59: Age limit for category D machines

194.     The Act does not set a minimum age limit for the use of Category D gaming machines. This section gives the Secretary of State power by order to establish one, by creating an offence of inviting, causing or permitting a child or young person below a specified age to use a Category D gaming machine.

195.     Before making such an order, the Secretary of State is required to consult the Commission, people who appear to the Secretary of State to represent the interests of gambling businesses and people who have knowledge about problem gambling. An order need not apply to all types of Category D machine, which means that an age limit can be imposed on particular types of Category D machine. Therefore, if the evidence dictates that only certain types of machine require an age limit (as a result of harm), the section ensures that only those machines will be covered by the limit.

Section 60: Temporary use notice

196.     Temporary use notices issued under Part 9 may authorise gambling at premises that do not have a premises licence. The same applies in the case of premises subject to an occasional use notice. For the purposes of this Part, the relevant areas of such premises are to be regarded as being subject to the equivalent premises licence. Therefore, where a temporary use notice authorises gaming in one part of a hotel, a young person working in the hotel may not enter that area during the time that the notice has effect.

Section 61: Meaning of employment

197.     For the purposes of this Part, employment is to be regarded as having a wide meaning. For example, as well as direct employees of the licence holder, people engaged temporarily through an employment agency are equally to be regarded as employees of the licence holder.

198.     Any offence committed under this Part will be treated as a continuing offence which means that a new offence will be committed on each day that the employment continues. This increases the level of penalty that will be available in sentencing.

Section 62: Penalty

199.     Offences under this Part are to be punishable on conviction by a maximum term of imprisonment of up to 51 weeks in England and Wales (or 6 months in Scotland), or a fine not exceeding level 5 on the standard scale, or both. Where it is young person who is convicted, imprisonment is not to be available and any fine imposed may not exceed level 3 on the standard scale.

Section 63: Reasonable belief about a person's age

200.     Where a person is charged with an offence under this Part of doing anything in relation to a child or young person it is to be a defence for the person to prove that he took all reasonable steps to determine the relevant person's age and he reasonably believed that the person was not a child or a young person.

Section 64: Use of children in enforcement operations

201.     This section will enable children and young persons to be used in test purchasing operations for the purpose of assessing whether the provisions in this Part, prohibiting under-age gambling, are being complied with. For example, a constable, enforcement officer or authorised person will not commit an offence under section 46 if, in the course of their duty, they invite a child or young person to gamble. Equally, a young person will not commit an offence under section 48 if he gambles at the request of a constable, enforcement officer or authorised officer who is acting in the course of his functions.

PART 5: OPERATING LICENCES

202.     Operating licences are one of the principal forms of authorisation under the Act for the lawful provision of facilities for gambling. A person holding an operating licence, and providing facilities within the terms and conditions of that licence, will not commit the offence of unlawful provision of facilities for gambling under Part 3.

203.     The sections in this Part describe the licensing regime to be administered by the Commission for granting operating licences. Matters covered include the principles to be applied by the Commission in considering applications for operating licences, powers for conditions to be attached to licences, and the review procedures once licences have been granted.

204.     There are different kinds of operating licences for the various forms of gambling facilities e.g. to operate a casino, to provide facilities for betting, or to act as a betting intermediary. An operating licence for each kind of activity can authorise the provision of facilities on premises generally ("non-remote provision") or for the provision of those facilities by means of remote communication ("remote provision"). However, it is not possible to combine a licence for both remote and non-remote provision (but one person can be granted both a remote licence for betting and a non-remote licence for betting).

205.     An operating licence for non-remote provision gives a general authorisation for the operator to provide gambling facilities on premises. However, before being able to use any particular premises, the holder of an operating licence will also need an authorisation under the Act to use such premises for gambling. The principal form of such permission is a premises licence granted under Part 8 of the Act, although there are other forms of permission e.g. an occasional use notice (section 39) or a temporary use notice (Part 9).

206.     In addition to authorising the provision of facilities for gambling, operating licences can be obtained to authorise:

• the manufacture, supply, installation, adaptation, maintenance and repair of gaming machines; and

• the manufacture, supply, installation and adaptation of gambling computer software.

207.     Part 1 of the Act defines "betting", "gaming" and "lottery", and a number of related concepts. Part 18 of the Act contains further interpretation provisions relevant to Part 5.

Section 65: Nature of licence

208.     There are ten different kinds of operating licence:

a)     a casino operating licence;

b)     a bingo operating licence;

c)     a general betting operating licence;

d)     a pool betting operating licence;

e)     a betting intermediary operating licence;

f)     a gaming machine general operating licence for an adult gaming centre;

g)     a gaming machine general operating licence for a family entertainment centre;

h)     a gaming machine technical licence;

i)     a gambling software operating licence; and

j)     a lottery operating licence.

209.     Subsection (1) empowers the Commission to issue these operating licences. Subsection (4) allows the Secretary of State, through secondary legislation, to amend this list so as to add, vary or delete a class of operating licence.

Section 66: Form of licence

210.     A licence must specify the person to whom it is issued; how long it has effect; and any condition attached to the licence by the Commission (subsection (1)). The Secretary of State may set out in regulations further details of what information a licence must contain, and the form in which it is to be issued (subsection (2)).

Section 67: Remote gambling

211.     Facilities for gambling can be provided remotely (i.e. by technology which means the player is not in the same place as the person offering the facilities), or non-remotely (i.e. face to face on premises). This section defines a "remote operating licence" as an operating licence which authorises someone to provide remote gambling, and requires all licences to state whether they are a remote operating licence or a non-remote operating licence. An operating licence cannot be both.

212.     The effect of this section is that for each of the ten kinds of operating licence listed in section 65, there are two basic types: a remote operating licence which authorises, for example, the provision of particular facilities by means of the internet; and a non-remote licence, which authorises the same facilities to be provided from premises. It will not be possible for one operating licence to combine authorisations for providing both remote and non-remote facilities for gambling. One person can hold both types of licence, but he will need to be granted each separately.

213.     Further provisions on the conditions which can be attached to a remote licence allow the Commission to limit the particular forms of remote communication by which gambling is offered under a remote licence. Therefore, a remote licence does not automatically confer an entitlement to use all forms of remote communication e.g. television, radio and the internet. Instead, conditions can limit provision to one, or any combination of the different forms of remote communication defined in Part 1.

Section 68: Combined licence

214.     While there is a distinction between remote and non-remote operating licences, meaning that they cannot be combined in one licence, the Commission can issue operating licences which cover more than one of the ten kinds of licence, provided they are all either remote, or non-remote.

215.     The starting point, in subsection (1), is that one operating licence can authorise a combination of the different kinds of activities that make up the ten kinds of operating licence. However, this is subject to certain rules and limitations.

216.     Under subsection (3) a casino operating licence also authorises the provision of facilities for betting on the outcome of a virtual game, race, competition or other event or process (to the extent that this is not restricted or excluded by a condition imposed by the Commission), and the provision of equal chance gaming, other than bingo. This means that a casino operator does not need to obtain a betting operating licence if he wishes to offer this form of betting, and can automatically offer equal chance gaming, other than bingo. If he does wish to offer bingo, he will need to obtain a bingo operating licence as well. Under rules in Part 8 of the Act, a small non-remote casino cannot offer bingo from its premises.

217.     Under subsection (4), a betting operating licence authorises the provision of facilities for betting on the outcome of a virtual game, race, competition or other event or process (other than a game of chance), but only to the extent that this is not restricted or excluded by a condition imposed by the Commission. This gives the Commission power to regulate virtual betting if the need arises.

218.     Neither subsections (3) or (4) are authorisations for virtual gambling by machine. Machine gambling is regulated by Parts 8 and 10 of the Act. These subsections concern over-the-counter, person to person, betting on virtual events, or remote gambling where no gaming machine is involved.

219.     There are two types of operating licence specifically designed for authorising the provision of gaming machines: the gaming machine general operating licence for adult gaming centres and the gaming machine general operating licence for family entertainment centres. These specifically authorise the licence holder to make gaming machines available for use. However, under subsection (5) certain other types of operating licence also bring with them a general entitlement to make gaming machines available for use:

• a non-remote casino operating licence;

• a non-remote bingo operating licence;

• a non-remote general betting operating licence; and

• a non-remote pool betting operating licence.

220.     Apart from these four types of operating licence (and the two general gaming machine operating licences) no other operating licences may authorise the making available of gaming machines. Therefore, no remote operating licence confers a right to make gaming machines available for use.

221.     Moreover, the fact that certain operating licences provide this authorisation, does not entitle the holder of the licence to use any number or category of gaming machines, on any particular premises. The purpose of subsection (5) is to provide a generic authority for the operator to make gaming machines available for use, in the same way as a casino operating licence gives authority to provide facilities to operate a casino (in the general sense). The provisions of Parts 8 (premises licences) and 10 (gaming machines) control the precise locations where gaming machines may be used, and an operator must comply with the requirements of these Parts to make a gaming machine available for use lawfully.

Section 69: Application

222.     This section sets out who may apply for an operating licence and the type of information that must accompany an application. Applications are to be made to the Commission and such other people as the Secretary of State directs. The application, in particular, must contain details of the gambling activities that the operator wishes to provide (e.g. which of the ten types of licence he wishes to obtain, and whether remotely or non-remotely), and state whether the applicant has been convicted of a relevant offence (as defined in the interpretation section for this Part).

223.     An application fee is payable, which may vary for different types of licence (i.e. different kinds of gambling activity) or different circumstances (subsections (2)(g) and (5)). Such fees will be prescribed by the Secretary of State in regulations. It is anticipated that fees will vary across sectors to reflect the Commission's differing costs of regulation.

Section 70: Consideration of applications: general principles

224.     This section sets out the general principles which the Commission will apply in determining applications, and particular matters which they may take into account. The detail of how the Commission will consider applications, and, for example, what evidence it will seek, will be set out in the statement of licensing policy that the Commission is required to produce under Part 2 of the Act.

225.     The purpose of this section is to outline the principles which will govern the Commission's decision-making in relation to the consideration of applications. The two main matters are: to have regard to the licensing objectives, and to have regard to the applicant's suitability, including his integrity, competence, and financial circumstances. The assessment may also cover the suitability of equipment to be used in connection with the proposed activities.

226.     The Commission's assessment may cover not just the applicant, but also people who are connected to the applicant because they are likely to exercise a function in connection with, or have an interest in, the gambling activities.

227.     Subsection (3) makes specific provision for those cases where the application is for a non-remote casino operating licence. In such cases, the Commission must have regard to the applicant's commitment to protecting vulnerable people from being harmed or exploited by gambling, and to making assistance available to people who may be affected by problem gambling. This requirement reflects the particular risks presented by casinos in relation to problem gambling.

228.     There may be circumstances where the Commission will wish to assume that a class of applicant will automatically fulfil the requirement of integrity for the purpose of assessing suitability. In these circumstances the Commission's statement may make a determination to this effect. For example, the Commission could decide that local authorities, seeking a lottery operating licence, do not need to supply evidence of integrity as part of the application process.

229.     The Commission can also deem particular equipment or gaming machines to be suitable, in accordance with standards or tests that it has established, or asked others to establish for it. This is designed to aid both the Commission and applicants in making the application process as efficient as possible.