Gambling deregulation: an update

The Government is committed to modernising and updating the UK's gambling law. When the existing laws were passed in the 1960s, gambling was seen as an activity that ought to be permitted only to the extent that it satisfied unstimulated demand. Today, almost three-quarters of the adult population participate in gambling of one kind or another, mostly in the form of participation in the National Lottery. There are over 8,000 betting shops, almost 700 bingo clubs and 126 casinos operating in the UK as well as a large number of horse and greyhound tracks.

The Government first published a draft Gambling Bill to overhaul the industry in July 2003. It can be difficult to follow the progress on the proposed changes as the Bill has gone through a number of iterations and the Government is, understandably, not keen to flag up where it has made a u-turn. The draft Gambling Bill was recently considered by a joint committee of both Houses of Parliament, following which the Government published a response paper in which it has appeared to backtrack on some of its bolder deregulation proposals.

The main deregulation of the gambling industry will take place with regard to casinos:

• the system under which casinos had to operate as members' clubs, with a 24-hour waiting system between joining and playing, will be abolished. Any person aged 18 or over will be able to enter a casino;
• the system of permitted areas, under which casinos could only be set up in one of 53 specified areas in England, Wales and Scotland will also go;
• so-called resort style casinos will be allowed to have up to 1,250 internally linked gaming machines with no limits on the stakes or prizes, offering potentially very large jackpots. The Government has decided not to allow smaller casinos to offer unlimited prize gaming machines.

One of the Government's key selling points for the Gambling Bill is that it will help regenerate rundown areas through the introduction of so-called resort style casinos. Notwithstanding the regeneration arguments, the Government has sensed that there is potential for rebellion from its backbenchers because deregulation will potentially increase the number of problem gamblers. Accordingly, in its response the Government has retreated from some of its more far-reaching deregulation proposals. In the response paper, the Government announced the following changes to the regulatory regime in the Gambling Bill:

• no casino should be permitted an unlimited number of gaming machines. The Government proposes to cap gaming machine numbers in all casinos as follows:
  • Small casinos (500-1,000 m2) will be permitted up to 2 gaming machines per table with a maximum number of 80 machines
  • large casinos (>1,000 m2) will be permitted up to 5 machines per table with a maximum of 150 machines; and
  • resort casinos (>3,500 m2) will be permitted up to 25 gaming machines per table with a maximum of 1,250 machines;

• the Government will limit the accessibility of unlimited prize gaming machines. Resort casinos will be permitted to install unlimited prize gaming machines. Small and large casinos will be permitted gaming machines with prizes of up to £500;
• bingo will be permitted in resort and large casinos, but would not be permitted in small casinos. All casinos will be able to offer betting;
• gaming machines will be removed from unlicensed premises such as fish and chip shops, minicab offices;
• the Government will give local communities and local authorities greater influence in deciding whether to have new (or more) casino premises in their area. Local authorities will therefore have the power to consider whether they wish to license any or further casino premises in their area.

The joint committee is due to be reconvened to consider further details of the Government's policy. The Government is also working to revise the Gambling Bill which it is committed to introducing as soon as parliamentary time permits. The Gambling Bill is likely to be an item in the 2004 Queen's Speech. Even if the Gambling Bill did get Royal Assent in the next session of Parliament, it is unlikely to come into force before 2006 because the Gambling Commission would need to be established to take over the functions currently undertaken by the Gaming Board.

Many foreign investors have been banking on changes in gambling regulation to support their expansion in the United Kingdom. The recent Government announcements limiting the degree of deregulation may curb some of the enthusiasm shown by foreign casino operators for the United Kingdom market.

For further information, please contact Charles Waddell at [email protected] or on +44 (0)20 7367 3602.