Author: Woods Whur

I was asked to advise this week on the potential for service of a S161 Closure Notice under the Licensing Act 2003. The officer was somewhat shocked when I advised that the power no longer existed and had been repealed by the Anti-Social Behaviour, Crime and Policing Act 2014. This prompted me to remind myself of the powers that now exist and they are worthy of closer attention as they are now starting to be used more frequently and have quite serious consequences.

When you analyse the text of the new powers they are much wider and potentially damaging to licensed premises and the old legislation. The old S161 Closure Notices for “spontaneous disorder” were very useful but we always advised a voluntary closure rather than having to go down a full S161 due to the fact that there would need to be a hearing in front of the Magistrates Court and a review for every S161 Closure Order. Clearly it would often be in the interests of the operator to voluntarily close the premises rather than have to face a Magistrates Court and Local Authority Review Hearing.

Here is the new procedure.

S76 Power to issue closure notices

A police officer of at least the rank of inspector, or the local authority, may issue a closure notice if satisfied on reasonable grounds:

• that the use of particular premises has resulted, or (if the notice is not issued) is likely soon to result, in nuisance to members of the public, or
• that there has been, or (if the notice is not issued) is likely soon to be, disorder near those premises associated with the use of those premises and;
• that the notice is necessary to prevent the nuisance or disorder from continuing, recurring or occurring.

A closure notice is a notice prohibiting access to the premises for a period specified in the notice.

For the maximum period, see section 77.

A closure notice may prohibit access:

• by all persons except those specified, or by all persons except those of a specified description;
• at all times, or at all times except those specified;
• in all circumstances, or in all circumstances except those specified.

A closure notice may not prohibit access by:

• people who habitually live on the premises, or
• the owner of the premises, and accordingly they must be specified under subsection (3)(a).

A closure notice must:

• identify the premises;
• explain the effect of the notice;
• state that failure to comply with the notice is an offence;
• state that an application will be made under section 80 for a closure order;
• specify when and where the application will be heard;
• explain the effect of a closure order;
• give information about the names of, and means of contacting, persons and organisations in the area that provide advice about housing and legal matters.

A closure notice may be issued only if reasonable efforts have been made to inform:

• people who live on the premises (whether habitually or not), and
• any person who has control of or responsibility for the premises or who has an interest in them, that the notice is going to be issued.

Before issuing a closure notice the police officer or local authority must ensure that any body or individual the officer or authority thinks appropriate has been consulted.

The Secretary of State may by regulations specify premises or descriptions of premises in relation to which a closure notice may not be issued.

S77 Duration of closure notices

The maximum period that may be specified in a closure notice is 24 hours unless subsection (2) applies.

The maximum period is 48 hours:

• if, in the case of a notice issued by a police officer, the officer is of at least the rank of superintendent, or
• if, in the case of a notice issued by a local authority, the notice is signed by the chief executive officer of the authority or a person designated by him or her for the purposes of this subsection.

In calculating when the period of 48 hours ends, Christmas Day is to be disregarded.

The period specified in a closure notice to which subsection (2) does not apply may be extended by up to 24 hours:

• if, in the case of a notice issued by a police officer, an extension notice is issued by an officer of at least the rank of superintendent, or
• if, in the case of a notice issued by a local authority, the authority issues an extension notice signed by the chief executive officer of the authority or a person designated by the chief executive officer for the purposes of this subsection.

An extension notice is a notice which:

• identifies the closure notice to which it relates, and
• specifies the period of the extension.

In this section “chief executive officer”, in relation to a local authority, means the head of the paid service of the authority designated under section 4 of the Local Government and Housing Act 1989.

S78 Cancellation or variation of closure notices

This section applies where a closure notice is in force and the relevant officer or authority is no longer satisfied as mentioned in section 76(1), either:

• as regards the premises as a whole, or
• as regards a particular part of the premises.

In a case within subsection (1)(a) the relevant officer or authority must issue a cancellation notice. A cancellation notice is a notice cancelling the closure notice.

In a case within subsection (1)(b) the relevant officer or authority must issue a variation notice. A variation notice is a notice varying the closure notice so that it does not apply to the part of the premises referred to in subsection (1)(b).

A cancellation notice or a variation notice that relates to a closure notice which was:

• issued by a local authority, and
• signed as mentioned in section 77(2)(b), must be signed by the person who signed the closure notice (or, if that person is not available, by another person who could have signed as mentioned in section 77(2)(b)).

A cancellation notice or a variation notice that relates to a closure notice which was:

• issued by a local authority, and
• extended under section 77(4)(b), must be signed by the person who signed the extension notice (or, if that person is not available, by another person who could have signed the extension notice).

In this section “the relevant officer or authority” means:

• in the case of a closure notice issued by a police officer and not extended under section 77(4)(a), that officer (or, if that officer is not available, another officer of the same or higher rank);
• in the case of a closure notice issued by a police officer and extended under section 77(4)(a), the officer who issued the extension notice (or, if that officer is not available, another officer of the same or higher rank);
• in the case of a closure notice issued by a local authority, that authority.

Some of the key issues that we need to concentrate on are as follows:

• An inspector may issue a Closure Notice (where it is a Superintendent for a Summary Review)
• A Closure Notice can prohibit access to the premises for a period specified in the notice not exceeding a maximum of 48 hours. This is more impactful than the old S161 Closure Notice which only forced the operator to cease Licensable Activities
• The Local Authority can also issue the Closure Notice.

Once the notice has been served then S80 of the legislation gives the power of the Magistrates Court to make a Closure Order.

S80 Power of court to make closure orders

Whenever a Closure Notice is issued an application must be made to a Magistrates Court for a Closure Order (unless the notice has been cancelled under S78).

An application for a Closure Order must be made –

• By a constable, if the Closure Notice was issued by a police offer;
• By the authority that issued the Closure Notice, if the notice was issued by a Local Authority.

The application must be heard by the Magistrates Court not later than 48 hours after service of the Closure Notice.

In calculating when the period of 48 hours ends, Christmas Day is to be disregarded.

The court may make a Closure Notice if it is satisfied –

• That a person has engaged, or (if the order is not made) is likely to engage, in disorderly, offensive or criminal behaviour on the premises, or
• That the use of the premises has resulted, or (if the order is not made) is likely to result, in serious nuisance to members of the public, or
• That there has been, or (if the order is not made) is likely to be, disorder near those premises associated with the use of those premises, and that the order is necessary to prevent the behaviour, nuisance or disorder from continuing, recurring or occurring.

A Closure Order is an order prohibiting access to the premises for a period specified in the order. The period may not exceed 3 months.

A Closure Order may prohibit access:

• By all persons, or by all persons except those specified, or by all persons except those of a specified description;
• At all times, or at all times except those specified;
• In all circumstances, or in all circumstances except those specified.

A Closure Order:

• May be made in respect of the whole or any part of the premises;
• May include provision about access to a part of the building or structure of which the premises form part.

The Court must notify the relevant Licensing Authority if it makes a Closure Order in relation to premises in respect of which a premises licence is in force.

We are aware that these powers are being used, particularly by the Metropolitan Police Service in London.

These are interactive powers which can really lead to huge potential loss at licensed premises.

They are a useful tool for police and the Local Authority to take out repeat troublesome venues. However, we would always still expect to see a graduated response to premises that are causing nuisance/disorder and we would hope in the circumstances that operators would be given the opportunity to improve their trading style to ensure that the public disorder subject to the police or Local Authority attention could be removed before the need for serving Closure Notices/Orders under the Anti-Social Behaviour Crime and Policing Act 2014.

The Local Government Association has responded to the Institute of Alcohol Studies report on the Licensing Act. One area which the LGA comment on is the issue of fees for licensing applications, “The LGA has long argued that locally set licensing fees will enable councils to recover the cost of applications better and it is encouraging that the report recognises this issue must be resolved”. Followers of the licensing legislation will know that locally set fees were being mooted up until the late night levy started to be promoted by the Home Office. However, with the late night levy stuttering around the country there is now some growing pressure to look at locally set licensing fees again. This could well be a bespoke solution to some localised issues. We will obviously keep an eye on this and see what future developments take place.

Councillor Tony Page, Licensing Spokesman at the Local Government Association, went on to say “While councillors do not shrink from fighting legal appeals, there is no doubt that there is sometimes an imbalance in the resources available to councils and the trade when approaching legal hearings. This is not helped by the fact that councillors are already subsidising licences to trade because current fee levels, set way back in 2005, are too low compared with the costs of running the system”.

This is clearly an interesting feature and there is sure to be greater pressure to increase these fees if the LGA feel that the cost of running the system is disproportionate to the revenue created by the fee structure.

He went on to say “This report also follows calls by councils for greater powers to limit the opening of late night premises where there are concerns about the impact of alcohol on public health. Nine out of ten directors of public health say adding a public health objective to the Licensing Act would help them do their jobs more effectively by helping curb the saturation of communities with pubs, clubs and off licences selling alcohol”.

This again brings the issue of a fifth licensing objective back in to the debate. We had the introduction of the Local Health Board as a responsible authority, but not the introduction of the promotion of health as a licensing objective, which has always, in my experience, made it very difficult for the health body to put in a relevant representation without the “hook” of a licensing objective to hang their representation on. Tony Page went on to say “Public health funding issues make it even more important for government to ensure local authorities have the same powers as those in Scotland which have been able to consider health implications – such as hospital admissions and local addiction levels – in relation to licensing applications since 2005. Giving councils new powers to refuse licence applications on health grounds where there are grounds to do so will also save money from the public purse by reducing NHS costs dealing with alcohol related issues”.

We will continue to monitor all developments and potential changes to the licensing landscape.

The full Institute of Alcohol Studies document “The Licensing Act (2003): uses and abuses ten years on can be found at the below link.

http://www.ias.org.uk/uploads/pdf/IAS%20reports/rp22032016.pdf

Andy Woods launches the Woods Whur Gambling Newsletter with a reminder to all about the challenging times faced by the industry.

I would be surprised if anyone would disagree with my view that the last twelve months may well have signalled the start of a new era for the gambling industry, in particular in terms of compliance and regulation. We have seen a public statement issued in September 2015 relating to failures in the areas of anti-money laundering and social responsibility by a major operator, a further public statement in December 2015 relating to failures in anti-money laundering by another major operator and in February 2016 a public statement relating to a major betting office operator and its failures in anti-money laundering controls. These public statements relate to three major, well-respected operators and are the result of detailed investigations by the Gambling Commission. There will of course have been other investigations, some of which may still be ongoing and some of which may have resulted in the Gambling Commission taking other forms of action, but all of this represents a significant step-up by the Gambling Commission in their investigatory role.

We have also seen the decision in the Greene King case involving the Gambling Commission, in which Judge Levenson set out that in his view the Commission has “an integral role as the national body with oversight over gambling policy and regulation…. It acts as a gatekeeper by issuing operating and personal licences, it provides guidance to Local Authorities and advice to government and its first duty is to have regard to the Licensing Objectives”. Judge Levenson continued: “The Commission has the function of setting policy at a national level and where innovative applications are made. It cannot be unlawful for the national regulator to express a view as to the wider issues of principle.”

Gambling Premises have to have in place individual Risk Assessments from next month and there have been other recent changes to the Licence Conditions and Codes of Practice binding the industry.

The last twelve months have seen more action in terms of regulatory investigations than any year since the Gambling Act became effective on the 1 September 2007, together with the decision in a leading Upper Tribunal case. There has previously been criticism from many quarters aimed at the Gambling Commission for its failure to investigate and take action: that criticism no longer applies. Every single operator in the UK in 2016 now has to closely look at its procedures and policies and assess whether there is full compliance with the Special and Ordinary Codes of Practice, Gambling Commission guidance and anti-money laundering and other regulations. It is no longer simply enough for operators to have policies in place which purport to deal with all of the aforementioned matters. The policies must be reviewed and updated regularly and staff need to be made aware of these policies through regular, documented, training sessions. UK land-based gambling in 2016 in terms of compliance and regulation is significantly different from the position in 2007, and this is a particularly challenging time for operators.

It is for the above reasons that Paddy, Anna and myself decided to launch a specific Gambling Newsletter which will be aimed at the trade and which will come out every month. We are also holding a Seminar at the Hippodrome Casino on the 6^th June 2016, at which all are welcome. We hope that the seminar will give practical advice and assistance to operators, will report on recent cases and will give an up-to-date report on gambling in the UK in June 2016. There is no charge for attending the seminar and we hope that as many people as possible attend so that we can all benefit. If you would like to attend the seminar please email tanya@www.woodswhur.co.uk so that we can reserve you a space, and please feel free to invite other colleagues or contacts who may not receive this newsletter.

The Gambling Commission’s consultation on proposed changes to its Testing Strategy for compliance with remote gambling and software technical standards closed last month. This is the first full review of the Strategy since its initial publication in August 2007, and a number of significant changes are proposed. Some of these aim to streamline the testing requirements but others, if implemented, will result in new obligations which remote operators need to be aware of.

This review has been inspired by the growth in remote gambling over the last few years and particularly by the increased availability of new channels via which consumers can participate, such as mobile devices. It also reflects the Commission’s increased remit in the remote sphere following the implementation of the Gambling (Licensing and Advertising) Act last year, which has resulted in it assuming regulatory responsibility for some 150 additional operators.

The Commission also intends to review its Remote Technical Standards to reflect these developments, and will consult on this at some point later this year. Here though, we focus on the proposals for changes to the Strategy, which the Commission envisages will come into force this July.

Perhaps one of the most important suggested changes that will ease the regulatory burden on operators will be a new distinction between minor and major updates to games and software. It is proposed that external testing will only be required in the case of a major update, that is to say one which is capable of affecting the fairness of a game. In practice, the Commission is already adopting this approach on an informal basis, pending the outcome of the consultation process.

The consultation paper includes a table of high-level, principles-based definitions of what the Commission will consider minor and major updates, and it is proposing to include this table in the Testing Strategy, going forward. Any update that does not fall within the “major” definition will be considered “minor”. The draft table gives some examples of each.

Any change to RNG functionality will be classified as “major”, for example, whereas adding enhanced RNG logging for debugging purposes, which does not alter how the RNG functions for its primary purpose, will be defined as “minor”. Changing the sound format of a game so that it plays on the latest iOS will be a minor variation, whereas fixing the win calculation within a game to deal with a rarely encountered scenario will have arisen as a result of a previous incorrect implementation of the stated game rules, and this will therefore constitute a major update, requiring external testing.

The Commission is at pains to point out that the proposed changes will not affect the requirement for operators to have all new games and major updates to existing games tested and to submit to it the test reports prior to release. Further, it recognises that the need to distinguish between minor and major updates will lead to an increased risk of inadequate fairness testing. Accordingly, it intends to require operators’ decisions as to what is and is not a major update to be checked as part of a new annual audit process, which we turn to below. The table of minor and major updates in the consultation paper does not pretend to be exhaustive, so whether placing the responsibility for distinguishing between them upon operators will cause more difficulties than it solves remains to be seen.

Another area where the Commission plans to give responsibility to operators for decision-making is in the selection of a sample of games to be re-tested in the event of an update to a remote gaming system or RNG that has the potential to affect a large number of games. The Commission plans to require that only a representative sample of those games, rather than all of them, be re-tested, but does not propose to define, in the revised strategy, what a representative sample is. Instead, this will be left for operators, in collaboration with their testing houses, to decide, on a case-by-case basis. The Commission will expect samples to be sufficiently wide and, again, it will be interesting to see the extent to which disagreement will arise over this.

The Commission is proposing to include, within the revised Strategy, a new section on rolling out existing games on new channels. It is clear that this will continue to require external testing, although when a version of a game is designed to work across a variety of devices and browsers, testing should be of the most commonly used. Again, it appears that this will be for the operator to decide.

The consultation also proposes cracking down on games whose prize table and symbol distribution are stored in a database, rather than being hard-coded in the game code itself. The Commission is concerned by the risk to fairness caused by the ease with which such databases can be altered. Again, it proposes that the configuration of, and updates to, these databases be assessed as part of an annual audit. It also suggests that the fairness of live dealer operations be covered by the annual audit, rather than merely by a fairness assurance at the licensing stage, as is currently the case. However, where such operators are licensed in other jurisdictions where annual audits are required, the Commission says that it will accept those, provided the standards in those jurisdictions are similar to its own. It appears likely, therefore, that audits performed to meet the requirements of jurisdictions such as Alderney and the Isle of Man will be accepted.

The Commission is keen to tighten up the current rules concerning the return to player ratio, or RTP. Currently, the Testing Strategy focusses on the pre-release and update testing of the fairness of gambling products to players, and this is coupled with the ongoing, more general responsibility on operators to ensure that their products are fair and open. The Commission is concerned that some operators are not currently monitoring underpayments to players adequately, and that deviations between advertised and actual RTPs are not being picked up quickly enough. Accordingly, it plans to introduce into the revised Strategy a requirement to conduct ongoing RTP monitoring of every channel of a game. The consultation paper makes it clear that the Commission will require that monitoring will not be aggregated with the result that errors are hidden. In addition, it will not be sufficient to put all games on the same monitoring schedule – the frequency should, instead, take into account the actual volume of play for each game, that is to say, its popularity and turnover.

The Commission is proposing various other changes to the requirements surrounding RTP. Where there is more than one party involved in supplying a game to consumers, such as the game developer, platform provider and B2C operator, the Commission will expect the commercial agreements between them to specify where the responsibility for monitoring RTP will lie. In addition, the Commission is considering requiring actual game RTP to be displayed, as some operators currently voluntarily elect to do, and introducing new specific obligations on how to handle customer complaints and disputes concerning RTP.

The current Strategy contains best-practice requirements for in-house testing. Again, the Commission intends to enhance these by introducing new indicators relating, for example, to the legibility and accountability of source code and the documenting and transparency of new releases of, and changes to, games and RNG.

As mentioned above, the Commission proposes to introduce into its Strategy a new requirement for certain operators to undergo an annual audit by one of its approved testing houses. This requirement will apply to all gambling software, remote bingo, casino and virtual betting licences, save for those operators who hold a gambling software licence alone, who will not be subjected to an annual audit, but who will continue to require independent testing in line with the usual game release process. The audit will, among other things, focus on checking a randomly selected sample of minor updates to ensure that none of them should have been subject to external testing, verifying that operators have complied with the best practice requirements for internal testing, and assessing whether they are monitoring RTP effectively.

Operators will be grouped into four “submission pools” in a way that will spread submissions out over the year so that they are manageable. On the assumption that the changes proposed in the consultation paper will be implemented this July, the first submissions will fall due in September, covering the period September 2015 – August 2016. Those operators that are likely to be affected would do well to start preparing now for that eventuality, to ensure that their processes will meet the updated good practice requirements that the Commission appears, judging by the contents of the consultation paper, very likely to bring forward.

Whilst the proposals contained in this consultation paper are certainly designed to simplify the testing requirements in several significant ways, there is much here that will increase the obligations on operators, particularly in relation to RTP monitoring, best practice surrounding internal testing and annual independent auditing.

We will update you further when the Commission publishes its response to the consultation later this spring, and will provide an analysis of the forthcoming consultation on the Remote Technical Standards when it comes out.

We are pleased to announce that Woods Whur is teaming up with The Alzheimer’s Society to offer training for the gambling sector on social responsibility issues surrounding dementia.

Operators are of course already acutely aware of their obligations under the gambling legislation and the Gambling Commission’s Licence Conditions and Codes of Practice relating to social responsibility generally. However, a number of conferences that I have attended in recent months have featured contributions from The Alzheimer’s Society and it is clear to me that the Gambling Commission is increasingly concerned to ensure that operators have the appropriate policies and procedures in place surrounding dementia and that their staff are adequately trained and supported so that they can identify, and appropriately handle the particular needs of, customers who might be vulnerable by reason of dementia.

In February 2015 the Prime Minister, David Cameron, said that dementia is “one of the greatest challenges of our lifetime”. According to The Alzheimer’s Society:

• There are currently 850,000 people living with dementia in the UK, with this number set to rise to 1.1 million in six years;
• 225,000 people develop dementia in the UK very year;
• Over 40,000 younger people (under the age of 65) currently live with the condition; and
• Dementia costs the UK economy £26.3 billion a year.

We are proposing to run half-day courses, at a location to suit operators, covering:

• Information on the disease and its prevalence;
• Pointers that might indicate that a customer is a sufferer;
• Tools for dealing with these customers in a range of scenarios, including face-to-face and online; and
• How to document and record action taken as part of establishing due diligence in dealing with social responsibility obligations.

The course will also improve awareness of the other ways in which dementia might affect gambling businesses in terms of costs and benefits – the purchasing power of households living with dementia and the cost to business of early retirement of those diagnosed, for example.

I believe that this issue is one that will attract ever-increasing attention from the Gambling Commission going forward and attendance at this training will be an excellent means of demonstrating proactive compliance with social responsibility obligations, particularly in the event of an inspection.

Please contact me on anna@www.woodswhur.co.uk if you might be interested in sending members of your organisation on this training.

We are pleased to announce that Woods Whur is teaming up with The Alzheimer’s Society to offer training for the gambling sector on social responsibility issues surrounding dementia.

Operators are of course already acutely aware of their obligations under the gambling legislation and the Gambling Commission’s Licence Conditions and Codes of Practice relating to social responsibility generally. However, a number of conferences that I have attended in recent months have featured contributions from The Alzheimer’s Society and it is clear to me that the Gambling Commission is increasingly concerned to ensure that operators have the appropriate policies and procedures in place surrounding dementia and that their staff are adequately trained and supported so that they can identify, and appropriately handle the particular needs of, customers who might be vulnerable by reason of dementia.

In February 2015 the Prime Minister, David Cameron, said that dementia is “one of the greatest challenges of our lifetime”. According to The Alzheimer’s Society:

• There are currently 850,000 people living with dementia in the UK, with this number set to rise to 1.1 million in six years;
• 225,000 people develop dementia in the UK very year;
• Over 40,000 younger people (under the age of 65) currently live with the condition; and
• Dementia costs the UK economy £26.3 billion a year.

We are proposing to run half-day courses, at a location to suit operators, covering:

• Information on the disease and its prevalence;
• Pointers that might indicate that a customer is a sufferer;
• Tools for dealing with these customers in a range of scenarios, including face-to-face and online; and
• How to document and record action taken as part of establishing due diligence in dealing with social responsibility obligations.
• The course will also improve awareness of the other ways in which dementia might affect gambling businesses in terms of costs and benefits. A Centre for Economics and Business

Research Report in April 2014 found the following:

• Households living with dementia spend £10.7bn per year;
• 1 in 3 businesses (36%) surveyed do consider the over-65 demographic to be important to the customer-facing part of their business;
• The early retirement of those diagnosed with dementia costs English businesses £627m per year;
• In 2014, a total of 547,000 individuals were ‘dementia carers’ in England;
• 21% of dementia carers under the age of 70 have either had to reduce their work commitments or have left employment altogether;
• A total of 12% of dementia carers  (66,000 individuals in 2014) have reduced their employment hours, taken on fewer responsibilities at work or are doing some form of flexible working;
• This group of individuals spend 28 hours per week caring for those with dementia. Given that the typical paid worker reporting no impact on employment cares for 18 hours per week, the average cost to the business is 10 hours per week. Across the whole economy this costs businesses £424m per year;
• A total of 9% of dementia carers withdraw from work altogether (50,000 individuals in 2014). Across the whole economy this costs businesses £1.2bn per year;
• In total English businesses lose out on £1.6bn based on the value of these workers’ wages;
• Based on age-based employment rates sourced from the Office for National Statistics’ UK Labour Force Survey, it is estimated that 5% of those diagnosed with dementia are in work. Of the 33,000 individuals working and diagnosed with dementia, 10,000 of those in work are under the age of 65;
• The average job tenure of someone diagnosed with dementia is at least nine years and 70% of workers with dementia have been working for their current employer for ten years or more. This suggests that current employers are losing valuable experience due to forced retirements caused by dementia; and
• In aggregate, the forced retirement of 33,000 individuals results in a loss of £627m per year for English businesses, valued at workers’ wages.

I believe that this issue is one that will attract ever-increasing attention from the Gambling Commission going forward and attendance at this training will be an excellent means of demonstrating proactive compliance with social responsibility obligations, particularly in the event of an inspection.

Please contact me on anna@www.woodswhur.co.uk if you might be interested in sending members of your organisation on this training.

In this article, Andy Woods reports on the recent Public Statement issued by the Gambling Commission in respect of Paddy Power.

In February 2016 the Gambling Commission issued a Public Statement, having identified a number of serious failings on the part of Paddy Power in relation to keeping crime out of gambling and protecting vulnerable people from being harmed or exploited.

The Gambling Commission Statement in particular centred upon the way in which Paddy Power dealt with two customers in their shops and one of their online customers who was later convicted of serious criminal offences. The Gambling Commission accepted that Paddy Power had social responsibility and anti-money laundering policies and procedures in place and had delivered training to staff and also that it had systems for monitoring internal compliance. The Gambling Commission identified that those procedures were not fully in line with its guidance, not all staff fully understood their own policies and the internal compliance monitoring had failed to identify the issues relating to the customer. The Gambling Commission noted there had been full cooperation from Paddy Power.

The Public Statement confirms that Paddy Power acknowledged the following:

1. A failure to have and apply a customer interaction policy which complied with social responsibility code provision 3.4.1(1)(c). The policy did not include “circumstances in which consideration should be given to refusing service to customers and/or barring them from the operator’s gambling premises”.
2. The duty to be socially responsible should have extended to refusing service as apposed to being limited to monitoring and interacting with customers.
3. Paddy Power had asked a customer, despite displaying signs of having a serious gambling problem, to continue to visit and to spend. This was described as being “grossly at odds with the licensing objective of preventing vulnerable people from being exploited by gambling”.
4. The anti-money laundering policy was inadequate. It did not include a reference to the spending of the proceeds of crime and failed to take into account published advice and guidance.
5. Paddy Power failed to respond to suspicions of money laundering.
6. Paddy Power failed to take reasonable steps to establish sources of funds.

The Public Statement then sets out the following case studies.

Customer A

Customer A was a regular user of fixed odds betting terminals and regional staff decided that they needed to look at the source of Customer A’s money. It would appear that Paddy Power accepted the customer’s own account and their own staff’s belief relating to the source of money, although staff noted that they needed to obtain further information. Some interactions were recorded although staff became aware that Customer A had five jobs to fund his gambling and that he had no money. The manager of the shop informed a more senior member of staff whose response was to try and increase Customer A’s visits and time spent in the premises. The manager recorded some discomfort about how to reconcile commercial and social responsibility considerations and staff subsequently recorded further interactions with the customer who kept on indicating that he was comfortable with his gambling. It was noted that Customer A looked unwell.

The first recorded instance of trying to help Customer A was when a staff member bumped into him off the premises and was informed that he had lost all his jobs, was homeless and had lost access to his children. It seems to me that this raises an issue which the gambling industry may well need to look at across the board in greater detail and address the issue as to whether staff can actually understand and implement policies, even if the policies are sufficient. Managers and senior shop staff must be able to have full support from senior management and record and deal with concerns as they deem appropriate, without any concerns about commercial influences or pressure from above.

Customer B

This is another case of a shop manager having some suspicions and in this case the shop manager suspected that Customer B was laundering Scottish bank notes and placing them into the machines and then requesting a pay out on a debit card. Over six months this concern was escalated to more senior members of management on at least four occasions and on every occasion the shop manager was told that as the notes were British currency it was unlikely that the money was being laundered. Suspicions were repeatedly overruled by middle management.

It was only on the 12 January 2015, when Paddy Power became aware that police had concerns about Scottish notes that enhanced due diligence checks were undertaken, and when it was not ultimately possible to validate the customer’s ownership of a business that she claimed to run, that the customer on the 21 of April 2015 was barred from the business and the matter reported to the National Crime Agency.

Customer C

The Gambling Commission became aware in September 2015 that Customer C had pleaded guilty to fraud offences relating to the theft of over £250,000 from six customers at two banks where he worked, and that he had been sentenced to 28 months’ imprisonment. The police confirmed that Paddy Power had provided them with information indicating that Customer C had spent a significant amount on its remote gambling facilities during the same period. It was confirmed that Customer C opened an account with them on the 21 of April 2014 and that his level of spending triggered a need to undertake enhanced due diligence. The due diligence confirmed that there was no negative open source media coverage relating to Customer C, that he’d recently bought a house valued at £125,000 and that he was not listed on any sanctions registers. No enquiry was made with the customer about the source of funds he was gambling with, and Customer C was deemed to be a medium risk.

Paddy Power acknowledged that it had clearly failed to follow policies and procedures it had in place for undertaking due diligence checks on customers of its online business.

The Gambling Commission accepted a voluntary settlement from Paddy Power, which included the payment of £280,000 to an agreed socially responsible cause and £27,250 towards the Gambling Commission’s costs. Paddy Power also agreed to commission a review into its anti-money laundering and social responsibility controls across its estate, which was to be undertaken by a third party at its expense and an agreement was further reached to issue a Public Statement and to share learning from the above cases.

The Paddy Power situation is similar to a few other situations that we have come across recently, which highlight the need in 2016 for the following:

1. Effective systems in place for staff at all levels to ensure that commercial considerations do not outweigh the need to comply with the licensing objectives.
2. The need for policies and procedures to fully meet the requirements set out in the Licence Conditions and Codes of Practice (LCCP), including social responsibility Code 3.4.1.
3. The need for staff to be very clear on the indicators of problem gambling and to consider refusing service.
4. The need for policies and procedures relating to anti-money laundering to adequately meet ordinary code provision 2.1.
5. It is a must that all relevant members of staff undertake their duties in relation to the licensing objective of keeping crime out of gambling and have sufficient up to date knowledge.
6. The requirement to be able to undertake full checks to obtain information about customers’ sources of funds.

There have been other similar investigations, there are still further ongoing investigations, and operators need to watch out.

Regular readers of my articles will know that I have a major issue with Summary Reviews and interim steps.

The process of Summary Review was introduced into the Licensing Act 2003 by way of the Violent Crime Reduction Act and was not part of the primary legislation when it became effective in 2005.

Issues still exist with the standard review of a premises licence, in that the sanctions of a review are not immediate. This being the case, you can understand why there was a need to bring in a fast track review process to deal with problem premises.

One of my issues has always been the overuse of Summary Reviews when they are being commenced in situations where a minor variation, with a proactive operator, could achieve the same ends.

My other issue is that there is a difficulty in that the legislation is clumsily drafted. I have complained for years that the Home Office, and DCMS before it, have not included guidance on the process in the Section 182 Statutory Guidance document.

The only document that exists is an attempt to assist the police in bringing about a Summary Review, and the Licensing Authority in dealing with the process is:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/418114/182-Guidance2015.pdf

This is a wholly useless document. It was criticised by the High Court in the case of Sharanjeet Lalli v The Commissioner of Police for the Metropolis (1) The Council of the London Borough of Newham (2) [2015] EWHC 14 (Admin) as being inaccurate. It wasn’t written by a lawyer, but instead by a seconded police officer at the Home Office and it beggars belief that nine years on from the introduction of Summary Reviews we still do not have statutory guidance to deal with interim steps and the process of Summary Review.

It is the only major area that is not covered in the statutory guidance document and yet it can be the most impactful in relation to the immediate removal of an authorisation to sell alcohol and can lead to the loss of a premises licence.

My concerns were raised again this week when I was involved in a Summary Review in Leeds. I can’t say too much in this article about that case as it looks like there will have to be an appeal to rectify the final decision.

One of the issues which may need to be addressed is that we lodged a representation against interim steps which was heard immediately before the review.

At the interim steps hearing, the authority overturned the initial suspension of the premises licence with a suspension for one month to deal with a number of structural and operational changes to the premises.

However when we got to the final review position the authority imposed a two month suspension rather than the month that was imposed 15 minutes earlier in the representation against the interim steps hearing!

As this is an ongoing case I will say no more but watch this space.

Interestingly we are finally going through a process of consultation on Summary Reviews and interim steps.

At the end of that I hope, for all concerned, that the Home Office is finally prepared to offer some statutory guidance in the Section 182 document.

As soon as I have anything further to add I will of course bring that to everyone’s attention.

A case I’ve been involved n recently has served to demonstrate quite how hard it can be to turn the tide if you’re unlucky enough to lose your licence as a result of a review under the Licensing Act.

The premises – a convenience store in a residential area – had its licence reviewed at the instigation of the Police just over a year ago. Police said it was a focus for antisocial behaviour. Youths were hanging around outside, drinking, smoking cannabis, fighting and intimidating passers-by. A large number of local residents had complained to the authorities, and to the owner, who had declared himself unable to do anything to address the problem. The Safer Neighbourhood Team had become involved, and had placed dealing with these issues on its Action Plan. In addition, the premises had made an underage sale to a 15 year old girl and a police officer visiting the premises alleged that he had witnessed a sale being made to an intoxicated individual.

Police asked the Licensing Committee to revoke the licence outright, on the basis that other steps taken to resolve these matters amicably had failed. They had no confidence that other measures, such as imposing conditions on the licence, would work. In the alternative, they suggested a large number of licence conditions as a last resort.

We became involved when we were instructed to apply to get the licence reinstated. The proposed Designated Premises Supervisor was different to previously, a certain amount of work had been done to improve security at the premises, such as the CCTV system, and, largely due to the efforts of the police, there was no longer a problem of antisocial behaviour in the area. The operator had waited a full year before reapplying and was proposing implementing further improvement measures, such as installing additional lighting on the shop front and removing posters and other obstructions from the window, were the licence to be granted.

We recommended that the application include a large number of conditions – all of those sought by the police previously as an alternative to revocation, together with some new ones, and that the applicant try to get as much support from the local community as possible. Sadly, whilst more than 150 local residents did sign a petition in support of the application, several local residents did object to it, and a substantial number signed a petition against.

The Police and Licensing Authority put in strenuous representations against the application. Their take on the situation was that the antisocial behaviour problem had abated, and the only thing that had changed in the area was the removal of this premises’ alcohol licence. It followed, they said, that if the licence were reinstated, the problems would return.

The Licensing Committee considered that they should rely on the Police as the best source of advice on crime and disorder and, whilst they took on board the various things that the applicant said he would do differently in the future, they were not prepared to grant the licence at this stage.

The one positive thing to arise from the hearing process, though, was that it gave a chance for meaningful dialogue between the applicant and the Police. As a result it is now clear that, if the applicant engages with the Police and local community, for example getting the Police to visit to see the various improvements to the premises as he carries them out, attends local community meetings and liaises with the Safer Neighbourhood Team, there is a real chance that a future licence application will go through unopposed.

As a result, the operator is in a far better position in terms of laying the ground for getting his licence back and I am optimistic that he is well on the way to restoring the confidence of both the authorities and his neighbours.

Another thing to bear in mind is that representations about licence applications do not necessarily have to be negative! If you have support for your application in the local community, you should harness that by asking people to make representations in support during the 28 day consultation period. Individual and personal letters are best, but even signatures on a petition or a pro-forma letter will carry some weight.

In this article Andy Woods looks in more detail at the recent decision of the Upper Tier Tribunal which found in favour of the Gambling Commission in its appeal in the Greene King case against the decision of the First tier Tribunal.

The much-awaited decision of the Upper Tier Tribunal in the Greene King/Gambling Commission case was handed down on the 29^th of January 2016 by Judge Levenson. I know that many people have been waiting eagerly for this decision and I have regularly had representatives from both Local Authorities and Operators asking me when the decision would be released and who I thought would win!! The background to the case is that Greene King which operates over a thousand premises with alcohol licenses had applied to the Gambling Commission for an operating licence to provide bingo and ancillary gaming machines in a limited number of premises. The application was made to the Gambling Commission on the 24^th of May 2012 and was refused at a regulatory panel meeting on the 26^th of February 2014. Greene King appealed to the First tier Tribunal and the decision of Judge Warren on the 8^th of December 2014 was to allow the appeal and quash the decision of the Gambling Commission. Judge Warren stated in paragraph 31 of his decision: “…here in my judgment they (GC) were trespassing on territory which the Act assigns to Licensing Authorities…the Commission’s purpose in refusing the applications and indeed the only justification for doing so is to prevent Greene King from applying for a premises licence”.

The Gambling Commission appealed to the Upper Tier Tribunal and, as most of you who read the industry press will know, were successful. The Gambling Commission’s own website has in its latest news section the article “Gambling Commission wins Greene King appeal”.

I have no doubt however that many of you who were waiting for this decision will be disappointed that the decision does not look at the specifics of the actual Greene King application as the decision deals with simply whether or not the Gambling Commission acted within its powers. The debate amongst most people is whether Greene King’s application under the Gambling Act 2005 should be granted or not. Should a pub operator with over a thousand alcohol premises licences be granted an operating licence for bingo and ancillary gaming matters for a limited number of its pubs if it complies with the Gambling Act 2005? This could also be phrased in the following way: why shouldn’t Greene King get a licence to put bingo in certain areas of a limited number of pubs if it complies with the legislation and regulations? One point of view is that the Gambling Commission were trespassing on the actual legislation and trying to create their own legislation rather than merely enforcing what the Gambling Act 2005 stipulates whereas another school of thought argued that the Gambling Commission was perfectly entitled to refuse an application of this nature if it felt it was against the “spirit” of the legislation and did not promote the Licensing Objectives .

The Gambling Commission in various publications since the First Tier Tribunal’s decision has argued and is consulting on the fact that there should be a “graduated regulatory framework” (paragraph 2.10 Gambling Commission consultation document November 2015 “controlling where gaming machines may be played”). In paragraph 2.10 the Gambling Commission continues, “at the lowest tier are unlicensed family entertainment centres and pubs. They are subject to minimal regulation (a simple permit from or notification to the Licensing Authority) but offer very limited facilities for gambling. Bingo, adult gaming centres and betting premises in turn offer gambling activity of increasing “hardness” and are consequently subject to increasing levels of regulation.” If you are a pub and customers think they are entering a pub then you should not have a bingo operating licence, argues the Gambling Commission. Greene King on the other hand would argue that they will comply fully with all codes of practice, regulations and legislation and therefore should be granted the licence.

The Upper Tier Tribunal was not asked to and therefore did not determine the actual application by Greene King. The Upper Tier Tribunal was asked to rule on whether the First Tier decision was legally flawed in two ways:

1. The First Tier Tribunal erred in law in finding that the Commission had taken into account matters which were exclusively for the Licensing Authorities on a premises licence application. This finding was contrary to the statutory scheme of the Act and the functions of the Commission as the national regulator:
2. The First Tier Tribunal erred in law in requiring the Commission to issue an operating licence it had found to be inconsistent with licensing objectives in circumstances in which no factual finding had been made by the First Tier Tribunal which overturned that conclusion.

The Upper Tier Tribunal allowed the appeal on point one above and therefore did not consider point two. The Gambling Commission decision of the 26^th of February 2014 had not taken into account matters which it should not have done by law but there is no ruling on whether the decision was factually correct based on the evidence before it.

It is necessary in order to fully understand the Upper Tier Tribunal decision to look at what the Gambling Commission said in its substantive decision in February 2014. The following is a summary of paragraph 66-69:

66 – GC is concerned about the development of commercial bingo in pub premises and whether this has a potential impact on the licensing objectives. The GC approach is a precautionary approach.

67 – GC must aim to pursue and wherever appropriate have regard to the licensing objectives and must permit gambling in so far as it thinks such permission is reasonably consistent with those objectives.

68 – The regulatory panel did not consider that granting these applications would be reasonably consistent with the pursuit of the licensing objectives. Putting high stake bingo and category B gaming machines in a pub environment could potentially jeopardise the second and third objective.

69 – The intention of the Act is to create a graduated regulatory regime and there are different expectations of those frequenting pub or bingo premises as to their primary purpose and taking a precautionary approach the application was refused.

Judge Levenson in the Upper Tier Tribunal also made the following comments:

• GC has an integral role with oversight over gambling policy and regulation and issues statements of principles of codes of practice and “acts as a gatekeeper”.
• Although Local Authorities consider individual premises licence applications this does not mean that the Commission has no power to consider matters relating to the operating environment.
• The functions between the Gambling Commission and Local Authorities overlap to some extent.
• The Commission has the function of setting policies at a national level.
• It would be contrary to the GC’s statutory duties to grant an operating licence if the Commission was of the view that an operational model cannot be delivered consistently with the licensing objectives.

It will be interesting now to see what Greene King decide to do. As the Upper Tier Tribunal has ruled that there was no error in law in the Gambling Commission’s original decision and whilst everybody will tell you that each application is taken on its merits and a differently constituted panel will sit and decide the Greene King application it would be reasonable to guess that the Gambling Commission regulatory panel which will now have to look at the substantive application again will make the same decision as the original panel. It will refuse the application.

I have made several applications for new operating licences for bingo clients in the last two or three years and well in excess of 50 applications for bingo premises licences and the decision of the Upper Tier Tribunal supports the clear message that my clients have been given by the Gambling Commission. If you want to be a bingo operator with a bingo operating licence and a premises licence then your premises must be bingo premises, appear to be bingo premises and must not look as if they are something else. I have represented clients who have converted snooker clubs to bingo premises and we have never had an application refused but my clients have always made sure that the conversion of the premises is not a sham and that the converted premises are clearly bingo premises to the outside world whether or not they offer alcohol, food and snooker tables as well. There is nothing wrong with Bingo Premises offering a range of activities as long as the Premises appear to be Bingo Premises. The practical issue that the Gambling Commission and the Upper Tier Tribunal appear to have with Greene King is that whilst Greene King may comply with all the regulations in a certain part of a limited number of pubs the fact is that the premises will still be pubs, will look like pubs and will be a pub environment in all areas other than an area set aside for the playing of bingo. Greene King will continue to argue that their applications comply fully with the Gambling Act 2005 which “aims to permit” applications to be granted and they will be compliant with all codes of practice and regulations then their applications should be granted.

We will now wait further developments in this case but I have to say that I agree with the Upper Tier Tribunal’s comments that the Gambling Commission has to look at the way that premises will actually operate when considering an operating licence application and that cannot solely be a matter for the Licensing Authority. It would make no sense to me for the Gambling Commission to grant operating licences knowing full well that they themselves will then object to every single premises licence application on the basis that in their opinion the premises would not be suitable.