On 3 December, the Gambling Commission (“GC”) launched its consultation on proposed changes to its Testing Strategy for compliance with its Remote Gambling and Software Technical Standards. The paper proposes significant and wide-ranging reform which many in the remote gambling sector will welcome. This follows hard on the heels of the GC’s announcement that it has signed up to an international pilot to streamline testing standards.

Both of these developments highlight the need for change. The number of operators who have to comply with the Technical Standards has increased significantly of late, with the requirement from 1 November last year for all operators transacting with, or advertising to, customers in Great Britain to have a licence issued by the GC. This has caught an additional 150 operators, bringing the total number of licensed operators in the remote sector to almost 700. Furthermore, 31 March this year saw the coming into force of Licence Condition 2.2.1, which means that operators licensed by the GC must only use software supplied by a provider that is itself licensed by the GC.

Licence condition 2.3 of the GC’s Licence Conditions and Codes of Practice (“LCCP”) requires compliance with the Remote Gambling and Software Technical Standards, and the Testing Strategy sets out the timing and processes that provide operators with the means to comply. The aim is to promote the licensing objective of ensuring that gambling is conducted in a fair and open manner and the proposed changes seek to simplify and streamline the testing requirements, while at the same time enhancing consumer protection and ensuring that the Strategy is clear, transparent and efficient and that it represents an effective regulatory tool that is fit for purpose.

The first proposal is to simplify the existing “traffic light” system, which classifies the various testing requirements and associated risks linked to various elements of game development as red, amber or green, each of which corresponds to a different level of required scrutiny. The GC is suggesting abolishing the amber category, which will provide greater clarity – those aspects that require independent external testing, and those that can be tested in-house.

Secondly, and in a move that I am sure will be broadly welcomed by the industry, the GC proposes bringing in definitions, and worked-through examples, of software amendments that will be classified as “major” and “minor”. Currently, any amendment to a previously-tested product that affects game fairness, critical files or digital signatures must be re-tested externally. However, it is possible for there to be a modification to critical files or digital signatures, such as, for example, a change to the sound functionality of a game that has no effect on the game’s logic or mathematics, which has no bearing whatsoever on the game’s fairness. The GC proposes classifying such changes as “minor” and these will not need to be externally tested. The only changes to previously-tested games that will need independent external testing are those that do affect the fairness of the game.

It should be noted that this change will not remove the requirement for the pre-release testing of new games. However the GC proposes to simplify the process of submitting the test results for these, and for amendments affecting game fairness, by allowing it to be done via an eService system.

Another proposed change is to cases where a modification to the gambling platform or random number generator (“RNG”) affects multiple games. Currently each and every game would need to be externally tested. The GC is proposing replacing this requirement with one to test a representative sample of the games affected – and it suggests leaving it up to the operator to determine what an appropriate sample is.

In contrast, where a game is rolled out across multiple channels, such as where, for example, a game originally released as a flashgame is redeveloped as HTML 5, the GC is continuing to insist that each channel is separately tested. This is because some bugs are often limited to a particular channel, with resulting impacts on customer fairness.

Currently, there is of course a requirement on operators to ensure that gambling is conducted in a fair and open way. However the GC is not convinced that operators are sufficiently monitoring, recording and reporting their return to player, or RTP, ratio in such a way that both overpayments and underpayments to customers are picked up. It proposes introducing a specific requirement that operators must monitor the ongoing performance of games and that the RTP for each channel for a game must be independently scrutinised.

Because many of the proposed changes envisage leaving more responsibility for testing, monitoring and compliance in the hands of the individual operator, the GC is suggesting introducing a requirement that operators undergo an annual audit by one of its approved test houses, in order to reassure the GC that games are being appropriately tested and deployed in the live environment.

The GC proposes that these changes will not come into force before July 2016, which means that the first annual audits, covering the period from September 2015 to August 2016, would be due in September 2016.

You can have your say on the issues raised by the consultation until 11 February 2016, by email to consultation@gamblingcommission.gov.uk. In the meantime, the GC has announced that it has signed up, together with the regulators in Alderney, the Isle of Man and Denmark, to a pilot looking into instigating a multi-jurisdictional testing framework (“MJTF”). The MJTF would mean that operators licensed across multiple jurisdictions could use one set of testing for all. Although the pilot is currently limited to these 4 jurisdictions and for now is confined to fairness testing for RNGs used in remote gambling, the GC hopes that its scope will be widened in further phases to include game fairness testing, field product certification and information security.

In this article Andy Woods looks at the latest Gambling Commission Consultation, dated November 2015, on controlling where gaming machines may be played. Any responses to the consultation must be submitted by 22 February 2016.

We end 2015 with an article not too dissimilar to others articles we have written since 1 September 2007, when the Gambling Act 2005 came into effect. The Gambling Commission has issued a further consultation document which in practice relates specifically to the granting and operation of premises licences for betting, bingo, casino and adult gaming centre premises and in particular the ancillary permissions for gaming machines in such gambling premises.

The document runs to nineteen pages and contains a number of very strong hints that the Gambling Commission is trying to interpret legislation in a way in which it should not, and is also trying potentially to create new legislation. The concluding sentence to paragraph 18.25 of the consultation is a very good example. It states “Furthermore the function of the premises should ensure the sum of the gambling activity is not ancillary to some other non gambling purpose”.  This is not what the legislation says, is not what case law says and in my opinion is very dangerous advice to be sending out to local authorities.  There is no definition of “the sum of gambling activity” and nowhere in the legislation does it say that the gambling activity cannot be ancillary to a non-gambling purpose.

I have obtained a number of bingo premises licences throughout England (in excess of fifty) for premises which also offer snooker and pool. The premises are fully compliant with the Gambling Act 2005 and many of the premises will call themselves “Bingo and pool clubs”.  There is a notice displayed  clearly telling customers that they are entering bingo premises and at all times these premises comply with the Commission’s  Licence Conditions and Codes of Practice (“LCCP”) and the legislation.

With the exception of one application in London which related to a converted sports bar, the Gambling Commission has neither objected to any of these applications nor sought to review any of the licences once the premises have opened. The premises comply.  It may well be the case (and I haven’t seen any figures on this) that more people play snooker and pool than play bingo there.  It may be the case that more money is spent on snooker and pool than on bingo, and yet the premises are fully compliant with the legislation and are bingo premises.  The final sentence of paragraph 18.25 is in my opinion wholly incorrect and completely without foundation and should not appear in the consultation document.  The Gambling Commission appears to be saying that if more people go to a premises to play pool/snooker than to play bingo then it naturally follows that the premises are not compliant, which is quite clearly wrong.

This document is obviously a response by the Gambling Commission to the Greene King case. Greene King (a pub operator) applied for an operating licence to the Gambling Commission to allow it to apply for bingo premises licences for some of its pubs.  The Gambling Commission refused the application principally on the basis that the premises which would be the subject of applications for bingo premises licences were “pubs” and this was not therefore within the “graduated regulatory framework” (a Gambling Commission term).  This decision was overturned on appeal and the Gambling Commission was told to grant the operating licence, although it is right to say that there is a further appeal pending and we await that decision.

The Gambling Commission also refers in the consultation document to the decision in the Luxury Leisure Limited case (GA/2013/0001), in which Luxury Leisure were subject to an operating licence review on the grounds that they were not adhering to condition 16 of the LCCP, otherwise known as “the primary activity condition”. Were Luxury Leisure providing sufficient facilities for betting as opposed to just machines?  The Gambling Commission upheld the review and issued a written warning but this decision was overturned by the first tier tribunal.  Judge Warren rejected the Gambling Commission’s argument, saying that “the Gambling Commission interpretation inserts into the condition without justification words which are simply not there”.  He then noted that there is a difference between existence of facilities and dominance of facilities:  “I conclude that Condition 16 does not require a contest between betting and the fixed odds betting terminals as to which is or could be the primary activity at any given time”.

This court found that there was no contest between the activity named on the premises licence and the machines and yet at paragraphs 2.21 and 2.22 of the consultation document there is a very selective spin placed on this decision by the Gambling Commission.

The Gambling Commission then goes on, at paragraph 3.2 of the consultation document, to say: “in order to draw a definitive line under all previous related consultations etc” that it is proposing to remove a list of provisions and guidance documents from its website and to no longer rely on them,  or even make them available.  Many previous guidance notes and documents are now irrelevant.  There is then a debate at paragraph 3.10 on how the Gambling Commission considers it more appropriate to make additions to the Codes of Practice issued under Section 24 of the Act, instead of introducing new licence conditions.

I should like to make it clear that the consultation process used by the Gambling Commission can be a useful tool in assisting it in drawing up its guidance and codes of practice. I should also like to stress that my articles are not always anti the Gambling Commission. For example, I was understanding of the recent changes requiring betting shops to undertake full risk assessments when making applications for premises licences.  What I do not agree with is the way in which it would appear that the Gambling Commission tries to introduce new tests which are not set out in the legislation and, in my view, are not supported by the Gambling Act 2005.  The proposition that the function of premises should ensure that the sum of gambling activity is not ancillary to some other non-gambling purpose is wholly without foundation and introduces a completely new concept and argument for gambling operators to deal with.

I know Paddy has done a general report on our last twelve months which have been amazing for the business in terms of what has been achieved for all clients. I would just like to wish everybody a happy Christmas and successful New Year.

We are delighted that our relationship with Innpacked is going from strength to strength. Our clients are benefiting from our hook up with them and many are already taking advantage of the direct link into their training packages. We have also had some real success with bespoke packages being tailored to our clients needs.

Innpacked is one of the most successful training companies in the UK hospitality industry. Their client base ranges from large multinationals to individual clients who are just beginning their career. The reason for our hook up with them is their ability to provide training that suits our client’s individual needs. They deliver mandatory courses that vary from the Level 2 Award for Personal Licence Holders, which is required to gain a personal alcohol licence, to the Level 4  Award in Food Safety in Catering. They also design bespoke courses which are written and delivered to our client’s exact requirements, such as employee and management induction courses. Their  main goal is to not only deliver quality training, but training that is relevant and adds value to your business or career.

Please either click on the following link to see their APLH courses:

http://www.innpacked.com/course/aplh/

or for the whole suit of courses on:

http://www.innpacked.com/courses/

or email us direct on:

woodswhur@innpacked.com

 

 

 

Andy and I would like to wish everyone a Happy Christmas and a prosperous New Year. It was fabulous to see so many faces yesterday at the ALMR lunch at Old Billingsgate Market. The feeling was pretty buoyant from the trade with hopes of a strong year next year. Let’s hope so…it is always so much more enjoyable preparing for, and delivering, a new application than dealing with enforcement issues when things go wrong.

2015 has been our busiest year to date as we have had an unprecedented level of contested matters to deal with across all aspects of alcohol and entertainment licensing. We have had some resounding successes, making applications against cumulative impact policies, dealt with some pretty heavy reviews and summary reviews and have just won the Fabric appeal which has topped the year off in style.

Our representation of the London Borough of Newham in licensing matters has been fruitful this year. We have undertaken a large number of appeals and were successful in the High Court for them in the challenge to a summary review decision. Working in the East End with some fabulously committed licensing officers is some of the most enjoyable work we do.

The gambling sector has been equally busy across all channels, Andy has had significant successes with casino licensing in London and the online sector has also produced some interesting worldwide projects this year. I would have liked to have visited some of the countries we had to deal with remotely…I couldn’t persuade the client that visits were essential to the project.

We are excited about next year when Woods Whur will celebrate it’s 5^th Birthday as we continue to grow. 2016 looks like it is going to start as busy as 2015 is finishing. Already in the pipeline are some really interesting gambling projects, the licensing of the Olympic Stadium in Stratford and a landmark development of Bretton Hall into a 5 star resort, spa and conference centre.

We are also very excited about our hook-up with Innpacked. We are going to be offering some innovative training and consultancy packages in the New Year.

From the whole team at Woods Whur, thank you for your comments on our newsletter articles, please keep them coming in. Have a great Christmas and all the best for 2016.

Paddy and Andy

 

After a year of preparation and three days in court we have been successful in our Appeal against Islington Council for Fabric, the iconic London club.

By the time the case came to appeal the only live issues were the imposition of two conditions. The first required Fabric to employ drugs detection dogs at the premises for 50% of the time the club was open. The second required the use of ID Scan machines, and for all customers to be “vetted” by the machine. These conditions had been stayed pending the appeal but we had carried out trials of both.

We instructed Gerald Gouriet QC, the leading Licensing Silk, and called evidence from, amongst others, Professor Fiona Measham (the country’s leading academic on the social impact of drug use) and Robert Humpreys OBE (Chairman of PASS).

District Judge Allison allowed our appeal in full. In relation to the drugs dog she said, on the evidence she had heard, Islington were wrong to impose the condition as it would not promote the licensing objectives. The Judge went further and found that the use of a drugs dog could undermine the licensing objectives in a number of unintended ways, including causing drugs to remain in circulation that would otherwise have been confiscated under Fabric’s thorough search procedures.

With regard to ID Scan, the Judge said that there was no evidence that the premises had issues with underage entry/sales; that to deploy it at Fabric would adversely affect the length of the queue, with possible public order consequences; and that it would create problems for the significant number of non-UK customers who would not necessarily carry photo ID. She said that Fabric had no issues with violent crime and disorder, which made ID Scan a more understandable control measure at other premises. She also noted that the ID Scan system Fabric had trialled for 7 weeks had not been interrogated once by the police, and that in 16 years of operation there had only been one incident at the premises where ID Scan might have been of some use in the prevention of crime – although she added that, on the facts, she doubted it would. Again she found that Islington were wrong to impose this disproportionate condition.

Gerald and I have spent the last year wrestling with the issues surrounding this case, and in particular the fact that young people have lost their lives after taking drugs on the way to, or in the venue. After hearing Gerald’s submissions the Judge found that the operator was a beacon of best practice, and she urged Fabric to continue its diligence in what is a difficult environment for all who work in the Night time Economy – where so many young people seem prepared, regrettably, to put their lives at risk by taking unlawful drugs.

As always, it was fabulous having Gerald to lead the team; and I would like to pass on a huge thank you to all at Woods Whur, as putting a case like this together takes a fully dedicated team to achieve a smooth delivery.

We only received the decision yesterday. Gerald and I will write a more detailed article for a future newsletter.

Paddy Whur.

I have been involved in a number of cases recently in which the issue of “shadow licences” has been raised.  The term “shadow licence” has come into existence after the implementation of the Licensing Act 2003 and is not defined in the legislation.  It is a simple way of describing a licence which has been obtained by one party in respect of premises in relation to which another licence has already been granted to someone else.  The most common scenario for a shadow licence to exist, and this is particularly true in Westminster, is where a landlord has let premises to a tenant who has a premises licence in their name (i.e. the tenant’s name) and where the landlord then applies for an identical licence in its name, to “sit behind” the licence held by the tenant.  The usual reason for this would be to protect the landlord in case the tenant surrenders the licence without giving the landlord any notice or if review proceedings are brought against the licence and the licence is revoked and the landlord has no knowledge of this.  (It is of course open to the landlord at all times to serve a notification of interest under Section 178 of the Licensing Act 2003, which requires the local authority to notify the landlord of any relevant developments including applications made in connection with the licence).

The leading case in respect of shadow licences involved Extreme Oyster/Star Oyster Limited and Guilford Borough Council. The High Court decision in the matter was given by Mr Justice Turner on 22 July 2013.  The Judge concluded that the applications by the landlord for “shadow licences” were compliant with the Licensing Act 2003 and must be allowed to proceed to substantive consideration and determination in the usual way.  A number of issues were looked at during the case.

The High Court considered whether a landlord qualified under one or more of the criteria set out in Section 16 of the 2003 Act as determining “who may apply” for a licence, and it was concluded that it was possible for a landlord to carry on a licensable activity at premises, notwithstanding that the premises had been let and notwithstanding the existence of the landlord/tenant relationship.

It is also interesting to note that Guilford Borough Council took issue with the use of the term “shadow” licence and challenged the assertion that such arrangements are and were commonplace.  The judge was of the view that as long as the term is treated as being “no more than a convenient label” and “not one to be accorded any special legal status” then there was no harm in the term being used.

The Council also argued that the existence of multiple licences would make enforcement difficult and that unrestricted numbers of licence applications placed an undue burden on licensing authorities.  The judge acknowledged the difficulty in enforcing multiple licences but concluded that that argument was not sufficient to preclude a broad interpretation of Section 16.  The Judge specifically referred to the comments by Mrs Justice Black, in the leading licensing case of Daniel Thwaites, that “the Licensing Act 2003 was intended to provide a more efficient, more responsive and flexible system of licensing which did not interfere unnecessarily.  It aimed to give business greater freedom and flexibility to meet the expectations of customers and to provide greater choice for consumers, while protecting local residents from disturbance and anti-social behaviour”.

It was also noted by Mr Justice Turner in the Extreme Oyster case that if Parliament had wished to preclude the making of a second or subsequent licence application, then this would have been made clear either in the legislation or the guidance.

In my experience shadow licences are not uncommon, especially in Westminster.  The shadow licence can provide some protection to the landlord, without affecting the tenant’s premises licence.  If there is a situation where there is more than one premises licence in existence, then it is clear that it is the person who has the right to occupy the premises who can trade their own premises licence.  If the tenant has a ten year lease and enshrined in the lease is the right to occupy and trade the premises, the fact that the landlord applies for a shadow licence has no impact on either the tenant’s right to occupy, or on their right to trade the premises.  It merely gives protection to the landlord, should unforeseeable circumstances arise.

 

 

Wow….it’s been a heavy month. summary reviews, reviews and the mess from the MOBO Awards after-party to deal with. Some really serious issues in such a short period of time.

• An entire premises erupting, with glass and bottles being used as weapons
• Kicking, punching and stamping on victims, with the Police having to use pepper spray to clear the fight
• Glassing of a female customer
• Multiple stabbing of customers

Each one of these incidents was significant, each was in premises with no track record of enforcement issues and each was dealt with differently by the Police.

The most enlightened approach was taken by the West Yorkshire Police, who jumped all over the premises when the after-party for the MOBO Awards erupted into some of the worst violence I have seen on CCTV in a very long time. We changed the DPS immediately, arranged a meeting with the Police and gave immediate assurances that the promoted event which led to the problems would not be offered again. Because of the immediate reaction by the operator, the previous good track record of the premises and offer to have changes made immediately by a minor variation, the Police did not bring even a standard Review, let alone a Summary Review. Immediate changes, with huge cost savings to the Police and Licensing Authority.

Other cases were dealt with by way of formal proceedings, which had differing outcomes. In one case the Police were keen to pull back the hours of operation of the premises and therefore called a summary review and put pressure on from the outset. The operator didn’t challenge the interim steps application for suspension, as it wanted to have a week to meet with the Police and try and agree a way forward. This was fruitful as conditions were agreed with the Police which were jointly presented to the Authority, meaning the premises were able to open again in the run up to the full Review.

In one of the other cases which went to a summary review, the Police were only wanting additional conditions to be added to the licence—which could have been achieved much more quickly and cheaply if the West Yorkshire Police model had been adapted. Instead, there was a need for three hearings and a month to pass by to get the same outcome, one which could have been achieved by way of a minor variation.

Summary reviews are a very useful tool, but can also be a sledgehammer to crack a nut. Police should not lose sight that the whole process is about the promotion of the licensing objectives. If you have an operator who is keen to work with the Police to eradicate the problems then–unless a revocation or an interaction which will not be agreed to by the operator is wanted—the cat could be skinned much more easily with a little thought at the beginning of the process.

We are not helped by the lack of content in the S182 Guidance on Summary Reviews. I have long said that the Home Office should give clear advice in this statutory guidance document. It is probably the area which has the most potential impact on premises licences and the Guidance is silent. Instead we have the non statutory guidance, which can be found at the following link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/98118/s53a-licensing-act.pdf

The High Court has commented that this document is not really fit for purpose—drafted by a seconded Police Sergeant rather than a lawyer. We really need more certainty by way of formal guidance in the statutory document.

 

 

 

After a year of delay, the Government has finally announced that the relaxation of the rules relating to various forms of exempt lotteries will come into force on 6 April next year.

The Legislative Reform (Exempt Lotteries) Order 2016 was laid before Parliament in November and will become law after the expiry of a period of 40 days, without the need for parliament to vote further on the matter, in accordance with the affirmative resolution procedure.

Schedule 11 to the Gambling Act 2005 provides for various forms of exempt lotteries. The legislation intends to permit raffles to be run on a small scale, without the need for a licence from the Gambling Commission or registration with a local authority. Examples include raffles between inhabitants of a single residential premises (so-called residents’ lotteries) and those between visitors to a commercial premises (customer lotteries), which are not run for profit.

The forthcoming changes have long been called for by many in the lotteries and charity sectors. Essentially, they remove various restrictions on raising money for good causes via raffles in the workplace and resolve an area of ambiguity concerning incidental non-commercial lotteries.

A lottery held at a single-site workplace is exempt if it is promoted by a person working at the premises and if tickets are only sold to co-workers. It may not be advertised elsewhere than on the premises. However, crucially, at  present, these lotteries are only exempt from the need for a licence or registration if they make no profit at all. This applies even to schemes whereby the proceeds go to a good cause. This has obviously prevented charities from raising money in this way and they have questioned the need for regulation of what is essentially a lucrative potential revenue stream which presents little regulatory risk.

The lotteries regulator, the Gambling Commission, agrees that such schemes should be able to be conducted on a small scale without regulation, and thus from 6 April, workplace lotteries will be able to be held for the benefit of a good cause without the need for a licence or registration. I recently advised a charity client who was raising money via raffles in workplaces, in the mistaken belief that they were exempt, so  the change will come as a welcome relief to that organisation! It should however be noted that the exemption will not apply to multi-site workplace lotteries, that is to say to companies who employ workers at more than one location, although each individual site will be able to run its own exempt lottery.

The other area to be relaxed by the new rules is the law on incidental non-commercial lotteries and here, a current ambiguity is set to be resolved. Currently, such lotteries are only exempt if they are run at, and tickets for them sold only to those attending, an event which is itself non-commercial, in the sense that none of the proceeds of the event are applied for private gain.

In another case I advised on recently, a football club was running raffles for good causes at charitable events where all of the proceeds of the events themselves went direct to the charity. Those raffles were properly and legitimately to be considered as exempt from regulation. However, the club was also holding raffles at business lunches and dinners and at match-day hospitality events. Although the proceeds of those raffles themselves were going to good causes, the proceeds of the events otherwise went into the general coffers of the football club and therefore arguably be applied for private gain. Thus in order to be safe, those raffles should have been authorised by a licence or registration.

Under the new rules, raffles promoted for good causes in a way that is incidental to an event will not be regulated, even if the event itself is not non-commercial. Again, this opens up fundraising possibilities for charities in a way that presents little or no regulatory risk. Although the requirement to sell tickets only at and during the event will remain, the need to announce the result at the event will be scrapped.

In this last respect, the Gambling Commission has been instrumental in explaining to the Minister the need for an amendment. By way of example, it quoted balloon races, whereby participants affix a tag with their name and contact details to balloons, which are then  released at an event. The balloon that travels the furthest wins the prize, but for obvious reasons, the result cannot be announced at and during the event itself, coming to light some time thereafter.

These changes are to be welcomed for widening fundraising opportunities in a common sense way, at a time when charities are increasingly competing for revenue and feeling the pinch in terms of criticism of their methods. If you are in any doubt as to what will and will not be permitted after 6 April next year, please do not hesitate to contact me, or any of the team.

I have been fortunate enough in the last three months to have been involved in a considerable number of hearings before licensing sub-committees all over England. In the majority of those hearings I have been representing the trade but I have also represented local authorities on appeal and been the legal advisor to a licensing sub-committee on behalf of the local authority. It is clear that there is an ever-increasing understanding of what is required at these hearings, although there are still several examples of things happening during a hearing which should not be permitted.

It is incumbent upon any lawyers present, whether appearing on behalf of an applicant or somebody making representations, or advising the licensing committee, to ensure that the proceedings are dealt with correctly and that reasons given for the decision are full and clear. Licensing sub-committees are often berated for not providing full reasons, but if the submissions made on behalf of the applicant or those making representations are not clear, then the licensing sub-committee can often be in difficulty in giving full reasons.

I know it is difficult for those making representations to concentrate on the four licensing objectives and the potential impact of any application on those, but councillors and legal advisors should try and assist people by pointing out which matters are relevant and which matters are not.

Experience and case law has now led to the majority of licensing sub-committees referring in their reasons to consideration having been given to the Licensing Act 2003, the Section 182 Guidance, their own local authority Statement of Licensing Policy and the evidence before the licensing sub-committee. It is imperative however that we do not just pay lip service to those matters and that we do properly apply the Section 182 Guidance and the Licensing Act 2003 at any hearing before a licensing sub-committee. The same is true of the Licensing Act 2003 (Hearings) Regulations 2005. These should be adhered to at all times, and written evidence should not be allowed to be submitted during the course of the hearing if all parties do not agree to this.

If there are specific parts of the local authority licensing policy that are to be referred to, then attention should be drawn to those during submissions made by applicants or those making representations. I think that there are still too many parties to hearings who do not read local authority policies and who do not consider Section 182 Guidance, instead simply throwing at the licensing sub-committee an argument that it is hoped will work. Local authority policies are different. Some local authority policies refer to specific matters, whereas others do not. If the local authority policy refers to stricter controls being set for licensed premises if they are in a residential area, then the licensing sub-committee should be referred to this.

The same is also true of the way in which licensing sub-committees conduct the procedure at licensing hearings. Whilst there may be a general approach adopted broadly speaking throughout England and Wales, each local authority issues a specific procedure document which sets out how the parties should conduct themselves at hearings and what is permitted during them. The procedure document may, for example, say that the hearing will be discussion-led and that evidence will be given through a ten minute submission on behalf of a party. If that is the case then the sub-committee cannot be expected to take into account other matters which have not been referred to during the submission and it is essential that the relevant evidence relating to the licensing objectives, the Guidance and the Local Authority’s policy is put forward. This will enable the sub-committee fully to understand the arguments and to formulate proper reasons for its decision, which will be beneficial to all.

It still surprises me to come across, on a regular basis, people making submissions which are not relevant, do not pick up on the specific wording of a local authority policy and completely ignore both the Hearings Regulations and the procedures set down by the licensing authority.

The Government published its response to the Culture, Media and Sport Committee’s Fifth Report of Session on society lotteries in September, indicating that it would accept or explore further all of the Committee’s main recommendations for reform of the sector. It has asked the Gambling Commission (“GC”) for advice and input in a number of areas, a piece of work that the GC has said should be complete by the end of this month. Here, we look at some of the changes that may be afoot.

The current review has been inspired, at least in part, by the development in recent times of so-called “super-lotteries”, umbrella lottery schemes such as the Health Lottery and People’s Postcode Lottery whereby multiple draws are promoted under a single brand. The Government is contemplating where these sit within the lotteries landscape overall, and how best to regulate them, in order to maximise contributions to good causes whilst ensuring player protection.

The Government supports the Report’s conclusion that lotteries, being the preserve of good causes, are separate and distinct from other gambling products and that their regulation should be as “light-touch” as possible. However, it is concerned that public trust and confidence in charitable lotteries, and the good causes they support, should be maintained and not tainted by any perception that they are being run primarily as devices to further commercial interests. It is also conscious of the need to ensure that The National Lottery continues to be in a position to donate the very large sums that it currently does to good causes, although it acknowledges the Report’s conclusion that there is currently no evidence that society lotteries are posing any threat to it.

The Government says that it will consider the Report’s recommendation that a sliding scale of minimum percentage donations from proceeds be introduced, to alleviate the burden on smaller lotteries, whilst increasing obligations as lotteries become larger. It has asked the GC to review the current monetary caps on proceeds and prizes for small and large lotteries and to advise on whether these should be raised, and if so, to what levels, bearing in mind the need to protect the position of The National Lottery. However, the Government has rejected the Committee’s recommendation that the caps be reviewed every three years as a matter of course, preferring to continue to rely on the GC to keep a watching brief and to tell it when a review is necessary.

In its response, the Government echoes the Committee’s concerns about umbrella lottery schemes operating as devices to circumvent those monetary limits and has asked the GC for advice on this issue, and on introducing a new class of umbrella lotteries, with its own limits on individual draws, annual proceeds and prizes. However, Government recognises that this is a complex area that will need to be handled carefully to avoid any detrimental impact by diminishing the overall return to good causes. It also acknowledges that any change in this area will require amendments to primary legislation, and has promised to consult with the sector before acting.

One of the Committee’s recommendations is that an amendment to the Gambling Act 2005 be brought forward to enable lottery start-up costs to be spread over a period of, perhaps, three years. This would have the consequence that the obligation to donate at least 20% of proceeds to the cause would disappear initially, and would be replaced by an obligation instead to use best endeavours to donate that amount, coupled with an onus being placed on the GC to weed out, through the licensing process, rogue, would-be “phoenix schemes”, designed to make commercial gain and then fold before the three years are up. The Government is concerned, though, about the way in which such a change would apply to small society lotteries, regulated as they are by Local Authorities, and wants to conduct further analysis to see if this proposed solution would be workable and whether it would add unduly to the regulatory burden. For now, it has asked the GC for its view on the subject, and to advise on two other methods advanced to the Committee of giving organisations increased flexibility to develop new lottery products, namely extending the minimum 20% donation to good causes obligation across a year, and enabling entities simultaneously to hold both large and small society lottery licences.

The Committee stressed the importance of transparency in lotteries and recommended that information about the proportions of ticket monies spent on expenses, devoted to prizes and donated to the good cause be included on lottery tickets. The Government agrees that transparency is key and has asked the GC to look at the options for improving the information provided to consumers, and how it should be made available.

The Government also agrees with the Committee that it is not appropriate for the larger, well-established lotteries to donate only the statutory minimum 20% of lottery proceeds to the good cause. The Committee rejected the option of raising this minimum figure, but the Government wishes to explore that possibility further. This is because it fears that the Committee’s alternative recommendation, that a cap on expenses for the largest lotteries be set at 35% of proceeds, might have unintended consequences in that it might encourage operators to divide into smaller entities in order to circumvent the rules, and discourage them from seeking efficiencies below 35%, thereby creating “a race to the top”. The Government therefore proposes to explore both these possibilities, as well as the Committee’s alternative solution that 12% lottery duty be introduced for any scheme that does not donate at least 32% of proceeds to the good cause.

The Government has also taken up the Committee’s recommendation that the licence application process and regulatory framework generally, insofar as it applies to the lotteries sector, be reviewed to ensure that it is not unduly burdensome. It has asked for the GC’s guidance in this regard. It is also pursuing with the GC the possibility that commercial entities be allowed to run lotteries for good causes. Here, the language of the response is unclear, as of course External Lottery Managers are already permitted to do so if they are appropriately licensed. It can only be assumed that something other than this is envisaged, such as non-specialist companies running lotteries as part of their corporate social responsibility activities. The Government has asked the GC to explore this recommendation further, but has cautioned that such schemes may not be capable of being dealt with by way of “light-touch” regulation, particularly at the outset of a venture.

It was suggested to the Committee that the regulatory regime should be more flexible, allowing any society licensed to run a lottery to do so on behalf of other good causes, as long as transparency to players is maintained surrounding who the beneficiary of the lottery is. The Committee endorsed that suggestion and the Government has promised to consider this further, for cases where there is a clear benefit in this happening.

Both Camelot and the GC brought their concerns before the Committee surrounding the blurring of the distinctions between lotteries and betting, as a result of the evolution of online gambling. The Government agrees that transparency and reducing consumer confusion are important, and has asked the GC to evaluate the three possible solutions suggested by Camelot, namely banning all betting on UK licensed lotteries, improving the clarity of marketing materials to distinguish better between betting and lottery products, and redefining all bets on lotteries as lotteries.
It is clear that there is a great deal of work for the GC to do, within a relatively tight timescale. Where the Government takes matters once it has received the GC’s input remains to be seen, but it is likely that some significant changes to the regulation of lotteries are likely to result from this process. We will continue to monitory developments and will report further once the GC’s advice and guidance to Government is made public.