Section 25: Guidance to local authorities

107.     Under the Act, licensing authorities (local authorities in England and Wales, licensing boards in Scotland, and, where applicable, the Sub-Treasurer of the Inner Temple and the Under-Treasurer of the Middle Temple) are required to undertake various regulatory functions in relation to a number of gambling activities. They are responsible for:

• licensing of premises for gambling activities (Parts 8 and 9);

• regulating members' clubs and miners' welfare institutes which wish to undertake certain gaming activities (Part 12 and Schedule 12);

• regulating gaming and gaming machines in premises licensed to supply alcohol under the Licensing Act 2003. This includes granting licensed premises gaming machine permits (Part 12 and Schedule 13);

• granting permits to family entertainment centres for the use of certain lower stake gaming machines (Part 10 and Schedule 10);

• granting permits for prize gaming (Part 13 and Schedule 14); and

• registering societies' lotteries which fall below certain prescribed thresholds (Schedule 11, Part 5).

108.     In order to assist licensing authorities to perform these various licensing and regulatory functions, this section requires the Commission to issue and publish guidance about how licensing authorities are to exercise their functions under the Act, including the principles to be applied in exercising those functions.

109.     Licensing authorities are under a duty to have regard to such guidance.

110.     Before issuing guidance to licensing authorities, subsection (4) requires the Commission to consult:

• The Secretary of State,

• The Scottish Ministers,

• Commissioners of Customs and Excise,

• Representatives of local authorities (as defined by this section),

• Representatives of gambling businesses, and

• People with knowledge of social problems that may be associated with gambling.

111.     Depending on the nature of the code, or any revision, subsection (5) also requires the Commission to consult if, and to the extent it thinks it appropriate to do so:

• Representatives of Chief Constables of police forces; and

• Members of the public (in such a manner as the Commission thinks fit).

Section 26: Duty to advise the Secretary of State

112.     One of the functions of the Commission is to provide advice to the Secretary of State on matters relating to gambling as described in this section. This section permits the Commission to give advice about gambling to the Secretary of State either in response to a request or on its own initiative. Copies of any such advice will be sent to the Scottish Ministers also.

Section 27: Compliance

113.     This section gives the Commission power to undertake activities for the purpose of assessing compliance with the provisions of the Act, or whether an offence has been committed under the Act. In particular, the Commission will be able to use children and young persons in test purchasing activities to assess whether the provisions for prevention of under-age gambling in Part 4 of the Act are being complied with. Section 64 exempts children, and people acting in the course of their duty, from committing an offence in these circumstances.

Section 28: Investigation and prosecution of offences

114.     The Commission has the power to investigate whether an offence has been committed under the Act, and to pursue criminal proceedings if this is the case. The Commission can do this on its own initiative or acting on other information. The power for the Commission itself to bring criminal proceedings does not apply in Scotland, due to the particular requirements of the criminal justice system in that jurisdiction.

Section 29: Licensing authority information

115.     Under the Act, Commission and licensing authorities must maintain registers containing appropriate details of licences that they have each issued. These registers will be open to the public. There will be circumstances where the Commission will need to obtain information directly from licensing authorities. For example, such information may be needed by the Commission to fulfil its duty under this Part to advise the Secretary of State. This section places an obligation on licensing authorities to comply with requests from the Commission for information contained in a register maintained by the authority, or for information in the authority's possession in consequence of their licensing and regulatory functions.

Section 30: Other exchange of information

116.     This section permits the Commission to pass on information received in the course of its functions to those people or organisations listed in Parts 1 and 2 of Schedule 6, for use in the course of their, or the Commission's, business. This section also provides a reciprocal power for the bodies listed in the Schedule to provide information to the Commission. Conditions may be imposed where information is provided under this section. The Commission may also provide information to the Comptroller and Auditor General for use in the exercise of his functions or to a person for use in a criminal investigation or criminal proceedings.

Section 31: Consultation with the National Lottery Commission

117.     The National Lottery will continue to be regulated by the National Lottery Commission (NLC). This section requires the Commission to consult the NLC about matters in which the NLC is likely to have an interest or where the Secretary of State directs them to do so.

118.     The sorts of issues which are likely to be of common concern between the NLC and the Commission are the way in which lotteries are conducted, and in particular those matters with respect to the conduct of lotteries that are liable to present risks to those taking part. There may be also a mutual interest in whether a particular activity is properly to be described as a lottery or a form of betting.

Section 32: Consultation with Commissioners of Customs and Excise

119.     This section requires the Gambling Commission to consult HM Commissioners of Customs and Excise on matters upon which HMCE are likely to have an opinion, or where it is directed to do so by the Secretary of State. This is in addition to the specific requirements for the Commission to consult HMCE concerning its policy statement, codes of practice, and guidance for local authorities.

Schedule 4: The Gambling Commission

120.     Schedule 4 provides for the constitution and membership of the Commission established under Part 2 of the Act.

121.     The Commission will consist of a chairman and other commissioners. The Secretary of State will appoint all of these. The precise number of Commissioners will be a matter for the discretion of the Secretary of State. The Secretary of State may not appoint a commissioner for a single period of office in excess of five years, or for periods exceeding ten years in total.

122.     The chief executive may also hold a position as a commissioner. However, the chief executive may not hold office as chairman. If a person ceases to be chief executive then that also brings to an end that person's appointment as a commissioner.

123.     The Commission may also appoint other staff. The terms and conditions of employment of the chief executive and other staff are subject to the consent of the Secretary of State.

124.     The Commission may determine its own proceedings, and must publish details of the arrangements it makes. In doing so, the Commission may delegate a function under the Act to: a commissioner, a commissioners' committee, or an employee of the Commission. Such delegation may include any discretionary function, a review function, or the exercise of a regulatory power.

125.     Paragraph 9 authorises the Commission, with the consent of the Secretary of State, to make payments by way of remuneration, allowances, expenses, pensions and gratuities, to commissioners and Commission staff. Paragraph 10 provides that the Secretary of State may make payments to the Commission to meet such costs as cannot be met out of fees paid to the Commission under the Act. Paragraph 11 allows the Commission to borrow money, with the approval of the Secretary of State. Paragraphs 12 to 15 describe the accounting requirements for the Commission, which include a requirement for the Commission's annual statement of accounts to be examined and reported on to Parliament, by the Comptroller and Auditor General.

126.     Paragraph 16 provides that after the end of each financial year the Commission must send a report of its activities to the Secretary of State. The Secretary of State must lay a copy before Parliament and may arrange for its publication.

Schedule 5: Transfer from Gaming Board to Gambling Commission: supplementary provision

127.     Paragraphs 1 to 5 of Schedule 5 make a number of technical provisions to achieve the legal transfer of the Gaming Board to the Commission pursuant to section 21. It allows the Commission to step into the shoes of the Board, without prejudicing any action, decision or pending proceedings of the Board. Upon commencement, references to the Board in any legislation or document will be construed as a reference to the Commission. To the extent that the Act has the effect of transferring staff contracts, it is not to affect the protections enjoyed by the staff of the Board under:

• the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) (SI 1981/1794); or

• any regulations made under section 38 of the Employment Relations Act 1999 (c.26) (which have the effect of replicating TUPE in circumstances where they would not otherwise apply).

128.     In accordance with the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector (January 2000), the Government intend to ensure that those who are currently working for the Gaming Board and who wish to transfer to the Commission are able to do so. To the extent that TUPE does not apply to the transfer of all such staff, provision will be made by regulations under section 38 of the Employment Relations Act 1999 to ensure that in practice its provisions are applied in all cases.

Schedule 6: Exchange of information: persons and bodies

129.     Schedule 6 lists the bodies with which the Commission can exchange information. Under Part 18 of the Act, those bodies listed in Part 1 of Schedule 6 can also pass information to each other.

130.     Paragraph 1 of Part 3 of Schedule 6 imposes restrictions on information exchanged between the Commission and a Schedule 6 body. In particular, where legislation restricts a Schedule 6 body in the way that it can use information provided to it, the exchange of information provisions in Parts 1 and 18 of the Act cannot override that restriction.

131.     Paragraph 2 of Part 3 is concerned with information provided to a Schedule 6 body by HM Customs and Excise (HMCE) under this Act. It requires the consent of HMCE to be obtained before that information is passed on to any other body.

PART 3: GENERAL OFFENCES

132.     Part 3 contains general offences concerning the provision of facilities for gambling and the use of premises for that purpose. It also contains specific gambling related offences, such as the offences concerned with cheating at gambling and chain gift schemes. In addition to the offences in this Part, the Act contains specific offences concerning particular forms of gambling e.g. making gaming machines available for use (Part 10) or promoting or facilitating a lottery (Part 11) and specific offences relating to gambling involving children and young people (Part 4).

133.     All offences under the Act are summary offences, with the exception of the offence of cheating in section 42.

Sections 33 to 35: Provision of facilities for gambling

134.     These sections establish the general principle that the provision of facilities for gambling (as defined in section 5) is unlawful unless it is either:

• authorised by an operating licence, or

• covered by a specific exception.

135.     The specific exceptions relate to activities which do not require an operating licence under the Act, but which either depend on the issue of a permit or other authorisation, or fall within a category of gambling which may be carried on under the Act without the need for a specific authorisation or permission.

136.     There are two further exceptions. The offence does not apply to the provision of facilities for a lottery; and the offence does not apply to making a gaming machine available for use. Specific offences concerning providing facilities in relation to these are contained at Parts 11 and 10 of the Act respectively.

137.     Subsections (4) and (5) of section 33 provides for the offence to be a summary offence, with a maximum penalty on conviction of imprisonment for 51 weeks for England and Wales (or six months in Scotland), a level 5 fine on the standard scale, or both.

Section 36: Territorial application

138.     This section makes provision with respect to the territorial application of the offence of providing facilities for gambling. It provides that, where a person is providing facilities for gambling, it is immaterial whether the facilities are provided wholly or partly by means of remote communication, or inside, outside or partly inside and partly outside the UK. However, where what is involved is remote gambling (defined in section 4 to mean gambling in which those participating do so by means of remote communication), the offence will only apply if at least one piece of remote gambling equipment used in providing the facilities is located in Great Britain.

139.     This means that, where gambling takes place remotely, the person providing the facilities for gambling will not fall within the scope of the offence if he does not have relevant equipment within Great Britain. This is so even if people within Great Britain can receive the gambling he is providing (e.g. over the internet). On the other hand, where at least one piece of remote gambling equipment is located in Great Britain, a person providing facilities for remote gambling will come within the scope of the offence. Therefore, a person commits the offence if any part of his remote equipment is located in Great Britain and he does not have the required authorisation or is not covered by one of the exceptions. This is so regardless of whether the gambling facilities are provided to people in Great Britain or outside.

140.     Subsection (4) defines "remote gambling equipment" for the purposes of the Act:

• Subsection (4)(a) captures equipment which stores information e.g. a computer database or server, about a person's participation in gambling. This includes the "game history" of a player, including the player's identity and records of their wins and losses. Equipment used for storage of information for general promotional purposes would not be caught by the definition, unless the information relates to someone's participation in gambling;

• Subsection (4)(b) captures equipment used for generating and presenting virtual gambling;

• Subsection 4(c) captures equipment used by the person providing the gambling (or on his behalf) for determining the result or the effect of the result of the particular transaction. This covers random number generators used in virtual gaming, or the equipment for calculating whether someone has won or lost a bet on a real event;

• Subsection 4(d) captures equipment used to store information relating to a result. This is different to equipment under subsection 4(c) which covers the act of generation of a result, not its subsequent retention.

141.     Subsection (5) excludes equipment used by a person who is participating in the remote gambling (i.e. the computer keyboard and screen), provided that the equipment has not been provided by the supplier of the remote gambling.

142.     This section does not restrict the Commission from attaching licence conditions to remote operating licences about the collection and retention of information generally by an operator (under its powers in Part 5). The purpose of this section is to establish whether a remote operator is within the jurisdiction for the purposes of the offence in section 33.

143.     In the case of non-remote gambling (i.e. where remote communication is not used by those participating in the gambling), then the offence will apply if anything done in the course of the provision of the facilities for gambling is done in Great Britain.

Sections 37 & 38: Use of premises

144.     This section makes it an offence to use premises, or cause or allow premises to be used, for the gambling activities set out in subsection (1) unless such use is:

• authorised by an appropriate licence or other permission obtained under the Act; or

• covered by an exception provided in the Act.

145.     The principal authorisations which prevent a person committing an offence under this section are:

• a premises licence under Part 8;

• a temporary use notice under Part 9;

• an occasional use notice under this Part;

• premises used in connection with the provision of facilities for football pools in accordance with an authorisation under this Part;

• a family entertainment centre gaming machine permit under Part 10;

• a club gaming or gaming machine permit, or licensed premises gaming machine permit under Part 12; or

• a prize gaming permit under Part 13.

146.     In addition, there are express exceptions which permit premises to be used for the provision of specified facilities for gambling without the need for a licence or permit, including the provision of gaming machines in premises with an alcohol licence and travelling fairs, and gaming at non-commercial events.

147.     Subsection (4) provides an exception for people who are accepting bets on a track, where that track is covered by a premises licence issued under Part 8. In these circumstances the person accepting bets does not himself have to hold a premises licence. This subsection accommodates on-course betting operations, preventing each on-course operator from requiring a separate premises licence, provided the track itself is subject to the appropriate premises licence.

148.     Subsection (5) ensures that casino operators can provide betting and (in the case of regional and large casinos) bingo under their casino premises licences without the need for a separate premises licence relating to those facilities.

149.     Subsection (6) ensures that no offence is committed where premises are used to provide the facilities listed in subsection (1), provided that those facilities are used only by people who are not on the premises. An example of this is where premises house a server used for the purposes of remote gambling. Subsection (6) also exempts premises which are used only by people acting in the course of business. For example, a telephone call centre set up by a betting operator to accept telephone bets.

150.     This is a summary offence with a maximum penalty on conviction of imprisonment for a term not exceeding 51 weeks for England and Wales (or 6 months in Scotland), a level 5 fine on the standard scale, or both.

151.     Section 38 confers power on the Secretary of State to vary, by order, the gambling activities to which the section 37 offence applies. This includes the power to add or remove a gambling activity to the list provided, or to vary the entry for a gambling activity. The purpose of this provision is, in particular, to ensure that it is possible to bring within the scope of the offence any gambling activities which may be invented in the future, but which are not covered by the list in subsection (1). Where a new gambling activity is added, the Secretary of State may make consequential amendments to Part 8, to provide for an appropriate premises licence, and matters such as machine entitlements.

152.     In particular, an order may have the effect of extending the offence to spread bets or other bets which are subject to regulation under the Financial Services and Markets Act 2000. Spread betting, which is regulated under the 2000 Act, is generally excluded from the scope of this Act (see section 10). The effect of section 38 is to allow the scope of this Act to be extended so that the use of premises to provide facilities for spread betting is also regulated under this Act. In these circumstances, amendments would also be required to Part 8 to enable premises licences to be granted under the Act, authorising premises to be used for the provision of facilities for spread betting.

Section 39: Exception: occasional use notice

153.     This section provides a means for tracks to be authorised for the provision of facilities for betting, where the use (for betting) will be for no more than 8 days a year: the occasional use notice. This notice, when in operation, excepts people on the track from committing the offence of using premises unlawfully for the provision of facilities for gambling. Tracks are defined in the interpretation section in section 353 as a racecourse, dog track or any other premises used or intended for races or other sporting events. The purpose of the section is to ensure that point-to-point racecourses which are used for only a few days a year, and tracks such as golf courses where betting facilities are provided for major competitions, but not otherwise, do not have to obtain a full premises licence in order to avoid the main offence in this Part.

154.     Subsections (2) to (6) specify the procedure for serving an occasional use notice. An occasional use notice must be served by an occupier of the track, or a person who is responsible for the administration of races or sporting events on the track. It must be sent to the licensing authority with a copy sent to the police force for the area, and must specify the day on which it is to have effect. An occasional use notice cannot be given for a day in a calendar year if eight occasional use notices have already been given for days in that year. Therefore, a track that is used more frequently for betting will need a premises licence, or temporary use notice, under Parts 8 or 9.

155.     Any person providing betting facilities pursuant to an occasional use notice will still require the appropriate authorisation to act as a betting operator: in general this will be a betting operating licence, or (in the case of pool betting) authorisation by the holder of a pool betting licence under Part 5.

Section 40: Exception: football pools

156.     Holders of a pool betting operating licence, under section 93, can authorise people who are not their employees to dispense coupons, collect entries and stakes, and pay winnings, on football pools competitions. Collectors can operate, for example, door to door, or from ordinary retail premises such as newsagents.

157.     This section provides an exception for such people from the premises offence in this Part. Collectors can therefore use premises to accept football pools entries, or pay out winnings without committing that offence. Subsection (2) gives the Secretary of State power to make regulations, to disapply this concession to particular types of premises.

Section 41: Gambling software

158.     The Act places controls on people who wish to provide facilities for gambling by means of remote communication. This section concerns computer software for gambling that is used in connection with such facilities, but not software designed for use in a gaming machine.

159.      It is an offence under subsection (1) to manufacture, supply, install or adapt, in the course of a business, computer software for remote gambling, unless an operating licence is held for such activity. The purpose of this offence is to ensure that people responsible for generating gambling software do so in a regulated environment, to ensure, in particular, fairness for players. While an operating licence for remote gambling covers someone offering gambling, for example by means of the internet, it does not, itself, cover someone who is manufacturing the gambling software that will be used in providing such facilities (i.e. the software supplier to a remote gambling operator). This section covers this latter situation.

160.     The maximum penalty for the offence is a maximum term or imprisonment of 51 weeks in England and Wales (or 6 months in Scotland), and/or a fine up to level 5 on the standard scale.

161.     Computer software for gambling for use in a gaming machine is expressly excluded from this offence (in subsection (2)(b)) because the definition of gaming machine in Part 10 already includes such computer software. Someone manufacturing computer software for a gaming machine would therefore be subject to the provisions (and the offences) contained in Part 10.

162.     Subsection (3) ensures that a communications service provider, who enables someone to download or send gambling software to another person, is not treated as himself supplying or installing that gambling software. This is an exception for "mere carriers" of the software.

Section 42: Cheating

163.     This section creates a criminal offence for cheating at gambling, and repeals the old offence of cheating in section 17 of the Gaming Act 1845 (c.109). The word "cheating" is not defined but has its normal, everyday meaning. The offence is committed by both cheating directly or by doing something for the purpose of assisting or enabling another person to cheat. A person who does something inadvertently which enables another person to cheat, will not, therefore, commit an offence.

164.     Subsection (2) provides that a person will commit the offence irrespective of whether he actually wins anything as a result of the cheating, or whether the cheating has the effect of improving the cheat's chances of winning. This means that an inept cheat, or one who cheats for another person's benefit, will still commit an offence. Subsection (3) provides that, in particular, cheating may include actions that involve actual or attempted deception or interference with the processes involved in the conduct of gambling, or with any other game, race or other event or process to which gambling relates. Events can be either real or virtual. Subsection (3) does not provide an exhaustive definition of cheating. It is made expressly without prejudice to the general meaning of cheating established in subsection (1).

165.     Subsections (4) and (5) provide for penalties that may be imposed upon conviction of the offence. Unlike other offences created under the Act, this offence is capable of being tried either summarily or on indictment. On summary conviction the penalty is a maximum term or imprisonment of 51 weeks (or 6 months in Scotland), and/or a fine up to level 5 on the standard scale. On conviction on indictment the maximum penalty is imprisonment for a term not exceeding two years, an unlimited fine, or both.