2005 Chapter 19

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These notes refer to the Gambling Act 2005 (c.19), which received Royal Assent on 7 April 2005

GAMBLING ACT 2005

EXPLANATORY NOTES

INTRODUCTION

1.     These explanatory notes relate to the Gambling Act 2005 (c.19). They have been prepared by the Department for Culture, Media and Sport. They do not form part of the Act and have not been endorsed by Parliament.

2.     These notes should be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. Therefore, where a section or a part of a section does not seem to require any explanation or comment, none is given.

BACKGROUND

3.     The Gambling Act 2005 ("the Act") gives effect to the Government's proposals for reform of the law on gambling. The Act contains a new regulatory system to govern the provision of all gambling in Great Britain, other than the National Lottery and spread betting. The Act received royal assent on 7^th April 2005. A table of references to Hansard, reproducing the proceedings for the passage of the Gambling Act through Parliament, is set out at the end of these notes.

4.     A draft Bill was published in November 2003 (Cm 6014), and further draft clauses were published in February and March 2004. The Bill followed on from the publication of a Government White Paper "A Safe Bet for Success" (Cm 5397) published in March 2002. The White Paper was itself the Government's response to the report of the Gambling Review Body (Cm 5206) published in July 2001. The purpose of the publication of the draft Bill was to enable pre-legislative scrutiny to take place, by a Joint Committee of both Houses. The Joint Committee was convened on 16^th September 2003, and produced two reports on 7^th April 2004 (HL paper 63-1; HC 139-1) and 22^nd July 2004 (HL Paper 146-1; HC 843-1). The Government's responses to these reports were published on 14^th June 2004 (Cm 6253) and 22^nd September 2004 (Cm 6330).

SUMMARY OF THE ACT

5.     The Act repeals the Betting, Gaming and Lotteries Act 1963 (c.2), the Gaming Act 1968 (c.65) and the Lotteries and Amusements Act 1976 (c. 32).

6.     Gambling will be unlawful in Great Britain, unless permitted by:

• the measures contained in this Act; or

• measures contained in the National Lottery etc. Act 1993 (c.39), or pursuant to the Financial Services and Markets Act 2000 (c.8).

7.     Two comprehensive offences are established: providing facilities for gambling or using premises for gambling, in either case without the appropriate permission. Such permission may come from a licence, permit, or registration granted pursuant to the Act or from an exemption given by the Act. Where authority to provide facilities for gambling is obtained under the Act, it will be subject to varying degrees of regulation, depending on the type of gambling, the means by which it is conducted, and the people by whom and to whom it is offered.

8.     The Act introduces a unified regulator for gambling in Great Britain, the Gambling Commission ("the Commission"), and a new licensing regime for commercial gambling (to be conducted by the Commission or by licensing authorities, depending on the matter to be licensed). The Act removes from licensing justices all responsibility for granting gaming and betting permissions, which they exercised previously. Instead, the Commission and licensing authorities will share between them responsibility for all those matters previously regulated by licensing justices.

9.     The Commission will not regulate spread betting, which is currently the preserve of the Financial Services Authority (at least for the time being), or the National Lottery, which is regulated by the National Lottery Commission. Those aside, the Commission will regulate all commercial gambling in Great Britain.

10.     The Commission will take over from the Gaming Board for Great Britain. In addition to assuming responsibility for the Board's current remit of regulating gaming and certain lotteries, the Commission will take on responsibility for regulating betting. The Commission will be responsible for granting operating and personal licences for commercial gambling operators and personnel working in the industry. It will also regulate certain lottery managers and promoters. The Act sets out different types of operating licence that cover the full spectrum of commercial gambling activities conducted in Great Britain. It also makes provision for the Commission to have powers of entry and inspection to regulate gambling, with safeguards for those subject to the powers.

11.     The Act establishes a Gambling Appeals Tribunal to hear appeals from decisions made by the Commission.

12.     Licensing authorities will have new powers to license gambling premises within their area, as well as undertaking functions in relation to lower stake gaming machines and clubs and miners' welfare institutes. In England and Wales local authorities are given these responsibilities; in Scotland they are given to licensing boards. There will be a new system of temporary use notices. These will authorise premises that are not licensed generally for gambling purposes to be used for certain types of gambling, for limited periods.

13.     The Act contains three licensing objectives which underpin the functions that the Commission and licensing authorities will perform. These objectives are central to the new regulatory regime created by the Act. They are:

• Protecting children and other vulnerable people from being harmed or exploited by gambling;

• Preventing gambling from being a source of crime or disorder, being associated with crime or disorder, or being used to support crime; and

• Ensuring that gambling is conducted in a fair and open way.

14.     Regulation of gambling in Great Britain will be achieved through a variety of measures established under the Act. These include:

• Secondary Legislation;

• Conditions on Licences;

• Codes of Practice; and

• Guidance.

15.     The Act recognises and accommodates the significant technological changes that have taken place in the last 40 years. The Act requires regulation of gambling where the player is not present on the operator's premises. For example, operators based in Great Britain must obtain an operating licence to authorise the provision of gambling via remote communication e.g. via interactive television or the internet. Moreover, the new licensing system has been designed to keep pace with technological developments, so that, subject to appropriate Parliamentary approval, gambling delivered by new, unforeseen, methods can be regulated in the future.

16.     The Act revises the law of gambling. For example commercial bingo premises and casinos will no longer have to operate as clubs with a 24 hour membership rule (making them places to which the public will now have access); and a new class of betting intermediary operating licence has been introduced, to cater for the development of betting exchanges. The Act also repeals legislation that has prevented contracts relating to gambling from being enforceable through the courts.

17.     The Act makes significant changes to the regime for casinos. It removes certain regulatory controls which existed under the Gaming Act 1968 (for example, "permitted" areas and the demand test). Three categories of casino are introduced (regional, large and small). These are defined according to a casino's size. A casino's category affects what forms of gambling can be provided at the casino. For example, a casino's gaming machine entitlement depends upon which category it falls into. There will be a minimum size limit for new casinos established under the Act.

18.     The Act imposes an initial limit of 1 regional casino, and 8 small and 8 large casinos, to be licensed under the Act. There are powers to amend these limits or remove them entirely, subject to appropriate Parliamentary approval. Casinos which are in operation, or which can lawfully be operated, immediately before the casino provisions of the Act come into force will be allowed to continue to operate. This will be provided for by means of transitional provisions. A power is provided for licensing authorities to pass resolutions not to licence any new casinos premises in their area.

19.     The Act introduces a new regime for gaming machines. A new definition of gaming machine is provided, together with power to prescribe categories. The Act provides certain entitlements for commercial operators to use specified numbers and categories of machines in consequence of their licences. It also establishes permit procedures for authorising use of the lower stake gaming machines in specific locations.

20.     The Act provides protection for children and vulnerable adults from the effects of harmful gambling. It does this through a number of specific offences that will prevent children and young people from being given access to inappropriate or harmful gambling opportunities. In particular, it will be an offence to invite or permit a child or a young person to gamble contrary to the provisions of the Act. The Commission is required to promote socially responsible gambling through licence conditions and codes of practice directed at those providing facilities for gambling. The Act also provides powers for the Commission to void bets that are unfair, for example due to cheating.

21.     A revised regime for the law of lotteries is contained in the Act, building upon that contained in the Lotteries and Amusements Act 1976, which the Act repeals. The Act regulates lotteries in two ways: either as exempt lotteries, or as licensable lotteries.

22.     The Act makes provision for the advertising of gambling, creating new offences relating to the advertising of unlawful gambling and providing powers for the Secretary of State to make regulations controlling the content of gambling advertisements.

23.     The Act establishes a series of authorisations for private and non-commercial gambling in Great Britain. This includes authorisations for domestic gaming and betting, and provisions for gaming and lotteries at non-commercial events.

STRUCTURE OF THE ACT

24.     The Act is set out as follows:

• Part 1, and Schedules 1 and 2 introduce the fundamental concepts used in the Act, including definitions for "gambling", "betting", "gaming", "lottery" "casino", "remote gambling" and "licensing authorities". Part 1 also makes provision for situations where activities may fall into more than one category of gambling, and ensures that the forms of gambling regulated by the Act do not generally include entering a lottery forming part of the National Lottery. Schedule 3 makes amendments to the National Lottery etc. Act 1993.

• Part 2, and Schedules 4 and 5 establish the Gambling Commission, define its powers and give effect to the transfer from the Gaming Board of Great Britain. The core powers and duties of the Commission are set out, including its consultation obligations.

• Part 3 sets out the general offences, including two key offences: the unlawful provision of facilities for gambling and the unlawful use of premises for gambling. Part 3 also makes provision for the prohibition of "chain gifting schemes", a revised offence of cheating, and provisions on the manufacture of gambling software.

• Part 4 establishes a number of specific offences that involve the participation of children and young people in gambling, their employment in relation to gambling and their entry to premises licensed to provide gambling.

• Part 5 and Schedule 7 concern operating licences issued by the Commission. This Part establishes:

•      The different types of licence and the rules relating to them;

•      The conditions which may be attached to them;

•      The required procedure for applying for them;

•      The requirements as to their duration and validity; and

•      A review procedure, including powers to revoke licenses and impose financial penalties.

• Part 5 also provides powers for the raising of a levy on operating licence holders.

• Part 6 concerns personal licences issued by the Commission. It defines the circumstances in which the Commission can impose requirements upon a person to hold a personal licence, and the procedures and rules relating to personal licences.

• Part 7 and Schedule 8 create a tribunal to hear appeals from decisions taken by the Commission and provide the relevant powers and procedures for bringing an appeal. It includes powers to be exercised by the Lord Chancellor.

• Part 8 concerns premises licences issued by licensing authorities. This Part describes the functions of licensing authorities, the various types of premises licence and the procedures for application. It sets out powers for licensing authorities and the Secretary of State or Scottish Ministers to attach conditions to licences. There are provisions on the duration, transfer and review of licences, and the mechanisms by which appeals can be made.

• Part 8 also contains provisions for determining limits on the number of casino premises licences which may be granted under the Act. Schedule 9 makes provision for dealing with applications where such limits are in place.

• Part 9 provides a procedure for authorising the temporary use of non-gambling premises for gambling. Licensing authorities are responsible for these authorisations, which are time limited.

• Part 10 and Schedule 10 provide a new framework of regulation for gaming machines. There is power for the Secretary of State to prescribe categories of machine, by reference to the levels of charge and prize, the nature of the prize or the gambling, and the premises where the machine is to be located. Manufacture and supply of a gaming machine will require an operating licence from the Commission, and making a gaming machine available for use without the necessary permission is an offence.

• Part 11 and Schedule 11 establish a new regime for lotteries, which is based upon, but revises the regime set out in the Lotteries and Amusements Act 1976. Part 5 also contains provisions for licensing lotteries. A new category of lawful lottery, the customer lottery, is created in Schedule 11. There are a number of new rules concerning the operation and promotion of lotteries.

• Part 12 and Schedule 12 establish a new regime for gambling in clubs and miners' welfare institutes, developed from the regime in the Gaming Act 1968. It makes provision for the grant of permits by licensing authorities where gaming exceeds certain levels or where it involves the provision of gaming machines. There is also a requirement for bingo operating licences to be obtained, where the size of the bingo games played exceeds a specified threshold.

• Part 12 and Schedule 13 make provision for gaming and gaming machines in premises holding an alcohol licence. Part 12 is also concerned with the use of gaming machines at travelling fairs.

• Part 13 and Schedule 14 make provision for prize gaming which is to be permitted in certain locations, subject to specific rules.

• Part 14 and Schedule 15 make provision for private and non-commercial gambling, which the Act authorises without any requirement for further permission.

• Part 15 deals with the inspection rights and powers that are needed by the police, Commission enforcement officers, and local authority officers so that they can carry out their functions under the Act. Safeguards are afforded to those who may be the subject of inspection.

• Part 16 provides a new regime for the advertising of gambling, replacing a number of provisions spread across different pieces of legislation, which the Act repeals. It creates new offences relating to the advertising of unlawful and foreign gambling, and provides powers for the Secretary of State to make regulations controlling the advertising of gambling.

• Part 17 makes new provision for contracts relating to gambling. It repeals a number of statutes, dating from the eighteenth and nineteenth centuries, which prevented gambling contracts from being enforceable at law. It also makes provision for contracts relating to bets to be made void in circumstances where the Commission believes the bet was unfair, in particular as a result of misuse of information or cheating.

• Part 18 provides an interpretation section and a number of general provisions applicable to the Act as a whole. Part 18 and Schedule 6 also provide powers for the Commission to exchange information with other bodies in the exercise of their functions.

• Part 18 and Schedule 18 give the Secretary of State power to make regulations to provide for the transition from the old regime for gambling regulation to the new regime established by the Act.

• Schedules 16 and 17 provide for consequential amendments to other legislation and for repeals as a result of the Act.

TERRITORIAL EXTENT

25.     The Act generally extends to England and Wales, and to Scotland with the exception of sections 148 (legal assistance scheme), 221 (fees) and 346 (prosecution by licensing authority). Sections 43 (chain gift schemes), 331 (foreign gambling) and 340 (foreign betting) apply to Northern Ireland.

Territorial application: Wales

26.      The Act's effect in Wales is the same as in England. The Act contains no provisions that relate exclusively to Wales, or affect the National Assembly for Wales.

Territorial application: Scotland

27.     The Act's effect in Scotland is the same as in England, with the exception of the following sections:

• sections 148 (legal assistance scheme), 212 (fees) and 346 (prosecution by licensing authority) are not applicable in Scotland;

• sections 151 (form of licence), 159 (making of application), 160 (notice of application), 161 (representation), 164 and 165 (grant and rejection of application), 167 (mandatory conditions), 168 (default conditions), 184 (annual fee), 190 (copy of licence), 197 and 200 (review), 219 (giving notice), 349 (three-year licensing policy), and paragraphs (5)(d) of Schedule 10 (FEC permits) and 6(e) and 21(2) of Schedule 14 (prize gaming permits) provide Scottish Ministers with the power to make their own regulations in respect of premises licence and permit matters in Scotland;

• section 285 (clubs, pubs etc.: special provision for Scotland) enables Scottish Ministers, with the consent of the Secretary of State, to make provision by regulations in respect of club gaming and machine permits in place of that in Schedule 12; and in respect of licensed premises gaming machine permits in place of that in Schedule 13; and

• sections 33 (provision of facilities for gambling), 37 (use of premises), 41 (gambling software), 42 (cheating), 43 (chain gift schemes), 62 (penalty), 139 (breach of personal licence condition), 246 (penalty), 263 (penalty), 301 (misusing profits of non-commercial prize gaming), 328 (regulations), 330 (unlawful gambling), 331 (foreign gambling), 342 (false information) and 345 (forfeiture) make provision for a term of imprisonment on summary conviction not to exceed 51 weeks. The application of these sections to Scotland differs in that the maximum term of imprisonment is 6 months.

• Section 155 (delegation of functions under Part 8: Scotland) contains particular provisions regarding the delegation arrangements within licensing boards for functions conferred under the Act.

Territorial limits - vessels and aircraft

28.     Sections 359 and 360 contain provisions for determining the territorial extent of the Act in relation to vessels and aircraft.

PART 1: INTERPRETATION OF KEY CONCEPTS

29.     Part 1 sets out definitions for the most important expressions and concepts that run through the Act. Part 18 also contains an interpretation section.

Section 1: The licensing objectives

30.     The Act sets out licensing functions to be exercised by the Commission in relation to operating and personal licences, and by licensing authorities in relation to the licensing of premises and the grant of certain permits. In exercising these functions, the Commission and licensing authorities must be guided by the licensing objectives, which underpin the new regulatory regime. The licensing objectives for the Act are:

• Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime;

• Ensuring that gambling is conducted in a fair and open way; and

• Protecting children and other vulnerable people from being harmed or exploited by gambling.

Section 2: Licensing authorities

31.     This section defines the term "licensing authority" and therefore determines who is to discharge the licensing authority's functions under the Act. These functions include the licensing of gambling premises under Parts 8 and 9; the issue of permits authorising gaming and gaming machines in other premises under Parts 10, 12 and 13; and the registration of certain lotteries under Part 11. In England and Wales, local authorities are to act as the licensing authority for the purposes of the Act. In Scotland, licensing authorities are to be licensing boards constituted under section 1 of the Licensing (Scotland) Act 1976 (c.66).

32.     The definition of "licensing authority" mirrors that in the Licensing Act 2003 (c.17), omitting (except in relation to the provisions of Part 12 governing gaming and gaming machines in alcohol-licensed premises) certain bodies who should have functions only in relation to the subject matter of that Act. This will allow licensing authorities in England and Wales to coordinate their functions in relation to alcohol licensing and the licensing of gambling premises, as is already possible in Scotland. Part 8 makes further provision to achieve this.

33.     Although there is no specific reference to a "metropolitan council" or a "unitary council" in the list of licensing authorities, these councils are types of district or county council and are therefore already covered in the list.

Section 3: Gambling

34.     This section defines "gambling" as meaning betting, gaming and participating in a lottery (within the meaning of those expressions as defined in subsequent provisions of Part 1). This is the first time that legislation has provided a generic concept of gambling, of which gaming, betting and lotteries are specific kinds. The Act adopts the approach recommended by the Gambling Review Body that there should be a single regulatory system for gambling, with different and distinctive provision for any of its specific forms, as appropriate. Accordingly, a definition of "gambling" is provided which defines the forms of gambling which are to be brought within the system of regulation set out in the Act, and distinguishes them from activities which, although they combine expenditure and the influence of chance, should not be treated as gambling for the purposes of regulation.

Section 4: Remote gambling

35.     The Act contains specific provisions concerned with the regulation of the various technological means by which gambling activities can now be conducted. The Act adopts the concept of "remote gambling" to cover gambling where the participants are not face to face on the same premises.

36.     This section defines "remote gambling" to mean gambling where people are participating by means of "remote communication". The types of remote communication by which people may participate in remote gambling are:

• the internet;

• telephone;

• television;

• radio; or

• any other kind of electronic or other technology for facilitating communication.

37.     This list encompasses modern means of communication such as interactive television and mobile telephony, and is able, by virtue of subsection (2)(e), to ensure that the definition keeps pace with future developments in this field. However, in order to ensure clarity as well as flexibility for the regulation of gambling, the Secretary of State may specify in regulations that a specified system or method of communication is, or is not, to be treated as a form of remote communication for the purpose of the definition.

Section 5: Facilities for gambling

38.     The fundamental concept in the Act is the provision of facilities for gambling. It underpins the offences in Parts 3 and 4, and the requirements for licensing in Parts 5, 6 and 8. There are many ways in which individuals and organisations can provide gambling activities, or take part in them, whether through remote communication or in more traditional ways. This section defines the activities which are subject to regulation under the Act.

39.     Subsection (1) sets out the circumstances in which a person is to be treated as providing facilities for gambling.

40.     The list in paragraphs (a) to (c) of subsection (1) is aimed at different levels and aspects of the operation of gambling. Paragraph (a) is aimed at people and companies who are in the business of providing gambling. Any person who offers the opportunity for people to gamble, whether at a casino or licensed betting premises or through a website, will expressly or by implication be inviting people to gamble in accordance with arrangements made by them.

41.     In paragraph (b), the reference to providing arrangements for gambling carries a general flavour of causing facilities to be available. The reference to operating arrangements for gambling is apt for mechanical arrangements such as a roulette wheel. Administering arrangements for gambling is a wide concept carrying a general flavour of control.

42.     Paragraph (c) is concerned with those people who are directly involved in the gambling operation itself. People who participate in the operation of gambling by others will include those who actually play a part in the gambling transaction. An example might be a croupier at a gaming table. People who participate in the administration of gambling will include those who, whilst they do not actually operate the gambling, nevertheless provide direct administrative back-up to the gambling transaction. An example would be a person who hands out betting slips for the completion of a betting transaction.

43.     Subsection (2) restricts the scope of subsection (1) by providing for certain exceptions. The exceptions cover:

• the supply of goods (other than a gaming machine) to a person who intends to use them to provide facilities for gambling (paragraph (a)), e.g. the supplier of gaming chips to a casino;

• the supply of goods to a person who may use them for gambling (but not where the supply is in the course of any of the activities referred to in subsection (1)(b) or (c)) (paragraph (b)), e.g. a retailer supplying a pack of playing cards to a person for domestic use; and

• electronic communications providers who do nothing more than act as a carrier of information for people providing facilities for gambling or consumers partaking in gambling (paragraph (c)), e.g. an internet service provider or mobile telephone operator.

44.     Subsection (3) sets out the circumstances in which, despite the exception in subsection (2)(c), making available a means of remote communication will be providing facilities for gambling under the Act. This will be so where, because of the way in which the facilities have been adapted or presented, either they cannot reasonably be expected to be used for purposes other than gambling, or they are intended to be used wholly or mainly for gambling. This might include, for example, where an internet connected personal computer is adapted so that it has a home page menu dedicated to providing links to gambling websites. It would also cover the situation where an internet connected personal computer was surrounded by signs indicating that it was available for use for gambling, and giving details of specific web pages where gambling was available.

45.     Subsection (4) adds to the provision in subsection (3). It confers an order making power on the Secretary of State to clarify those cases where facilities for remote communication can or cannot reasonably be expected to be used for purposes other than gambling; or where facilities are to be taken as being intended, or not intended, to be used wholly or mainly for gambling.