Changing the goalposts again for ‘primary gambling activity’, says leading QC

Recent proposals issued by the Gambling Commission to amend the Licence Conditions and Codes of Practice (LCCP) would reverse a recent Court decision and impose stricter conditions in which betting shops are entitled to make gaming machines available, an expert has warned.

Gerald Gouriet QC told a gambling industry event run by Pinsent Masons, the law firm behind, that over time the Commission had moved the goalposts in order to tighten the definition of ‘primary gambling activity’, a requirement which must be satisfied before fixed odds betting terminals (FOBTs) may be provided in high street betting shops. FOBTs are high stakes rapid play gaming machines.

Gambling operators wishing to open a betting shop need to obtain both an operating licence from the Gambling Commission and a premises licence from the relevant local authority. The Commission issues non-remote operating licences to bookmakers who wish to take bets over-the-counter, and remote operating licences for those who offer online services (remote betting), e.g. on a computer or through self-service betting terminals situated in a high-street betting shop.

One of the general conditions for any non-remote betting licence is that the operator can install up to four gaming machines in its shop only if the ‘primary gambling activity’ is betting. The change in the Commission’s stance is that when the ‘primary gambling activity’ requirement was introduced the Commission said in terms that it related to the provision, merely, of betting facilities: now the Commission appears to be suggesting that it refers to the use made of those facilities by ‘punters’.

Gouriet told representatives from William Hill, Ladbrokes, Paddy Power, Gala Coral, Aspers and spread betting business London Capital Group, amongst others, that as a result of the changing advice being given by the Commission betting operators were not being provided with clear rules to follow in relation to primary gambling activity. Licensing authorities, in particular, have interpreted ‘primary gambling activity’ differently from the apparent interpretation(s) given by the Commission itself.

Gouriet, of Francis Taylor Building, said that the Gambling Commission’s LCCP and guidance on the issue of primary gambling activity were inconsistent and, as the Commission itself admitted in its current consultation, “a source of confusion”. Two rulings in recent cases in which he appeared had gone some way to clarifying matters, but he said that the Gambling Commission’s proposed amendments to the LCCP regime were in danger of resurrecting previous uncertainties.

Under the Gambling Commission’s proposals betting operators would be permitted to make gaming machines available for use in their licensed premises “only at times when there are available sufficient facilities for non-remote betting”. Under the current LCCP regime, however, the rules on ‘sufficient facilities’ are not limited to ‘non-remote’ betting, but instead refer only to ‘betting’, which by statutory definition includes both remote and non-remote betting.

Gouriet said that the current wording had helped Trafalgar Leisure to persuade a High Court judge that the Gambling Commission had been wrong to revoke its operating licence.

Trafalgar had run a shop in which there were no over-the-counter facilities for betting. Instead the company put in place five remote self-service betting terminals (SSBTs) and four FOBT gaming machines. The judge rejected the Commission’s argument that only over-the-counter betting counted for the purposes of assessing whether the primary gambling activity was betting, and agreed with Trafalgar that its provision of remote betting through the SSBTs entitled Trafalgar to make the four FOBT gaming machines available. Gouriet, who advised Trafalgar on the case, said “The Gambling Commission has been unwilling to accept the fact that the current LCCP specifically envisage the legitimacy of providing only remote betting (by means of machines) under a remote operating licence, together with FOBTs under the authority of a non-remote betting licence which is utilised for no other purpose. The last paragraph of condition 16 states in terms that in those circumstances the number of betting machines provided must be greater than the number of gambling machines. The paragraph is neither “technically redundant” (Draft Indicators of Betting as Primary Gambling Activity) nor “a source of confusion” (current Consultation on Primary Gambling Activity): it is a perfectly clear statement of a position once held by the Gambling Commission, from which it now appears to be retreating.”

The Commission said it would issue separate guidance soon to update its existing guidance on what it considers indicators of betting as primary gambling activity.

Gambling law expert Susan Biddle of Pinsent Masons said that she hoped that any future guidance from the Commission would be clear, consistent with the LCCP, and represent a settled position so that operators can rely on it when investing in their high street operations.

In a separate case ruled on by Thames Magistrates’ Court in June this year a judge made clear that the assessment of licensed betting operators’ primary gambling activity was the responsibility of the Gambling Commission. The judge said that it was “outside the remit” of local authorities to take operators’ primary gambling activity into account when assessing whether or not to grant or revoke a premises licence.

The judge upheld an appeal by Paddy Power against Newham Council’s decision not to grant it a premises licence to open a betting shop in the local area. He rejected the local authority’s arguments that its efforts to prevent crime and disorder would be undermined by the granting of the licence after Paddy Power sought to install four FOBT gaming machines in one of its shops in the area. The position, though, may be subject to further debate and review after Newham Council applied for judicial review after taking issue with the judge’s findings.

However, following that ruling the Gambling Commission sought to clarify its views on the ‘primary gambling activity’ point. In advice issued to local authorities, the Commission said it did not agree with the judge and pointed to provisions of the Gambling Act as showing that local authorities must have regard to the Commission’s codes of practice and guidance, including the relevant parts referring to primary gambling activity, when deciding whether to issue a premises licence. Gouriet, who acted for Paddy Power in the case, said that whilst he agreed that a licensing authority is required to have regard to Gambling Commission Guidance and Codes of Practice, and that each of those publications refers to ‘primary gambling activity, the ‘regard’ which must be had to them is near-meaningless without certainty as to what ‘primary gambling activity’ means. In any event, he said, the Commission’s proposed LCCP amendments did not address the jurisdictional point raised in the Paddy Power case.

He urged clearer guidance and consistency, and also suggested that the judicial review of the Paddy Power decision had implications for the industry as a whole. He said – “Whilst it cannot be doubted that the Gambling Commission has made its position clear with regard to the nature of betting that must (in its view) be provided in a betting shop before the holder of a non-remote general betting operating licence is entitled to make gaming machines also available, the phrase “primary gambling activity” is to be regretted – if it is the case, as the Commission initially said it was, that the requirement is merely that there should be a prescribed minimum provision of facilities . If the current, and in my view unhelpful, language is retained it seems likely that there will be no resolution of the widespread confusion in this area of gaming law until we get a decision from the High Court in the Newham judicial review.”