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Reduce centralised Gambling regulation, says Committee

24 July 2012

In a report published today, Tuesday 24 July 2012, the Commons Culture, Media and Sport Committee says that the Gambling Act 2005 resulted in numerous inconsistencies and is not sufficiently evidence based. The Committee says more power should be devolved to local authorities—which have the local knowledge to assess their impact—with central regulation existing to ensure high standards of protection for the vulnerable, particularly children.

High street betting shops and casinos alike are currently allowed a maximum of four B2 (FOBT) gaming machines, which allow stakes up to  £100 and a £500 prize. The Committee says that casinos, the most highly-regulated sector, should instead be permitted to operate up to twenty B2-type gaming machines. The Committee also found that limiting the number of B2 machines in betting shops has encouraged them to cluster in some high streets in order to satisfy customer demand. Local Authorities should have the power to allow betting shops to have more than the current maximum of four B2 machines per shop if they believe it will help to deal with the issue of clustering.

The Committee believes that the decision as to whether a casino would be of benefit to a local area should be made by local authorities rather than by way of "central diktat". It recommends that any local authority be able to make the decision as to whether or not they want a casino. As a step towards this, existing 1968 Act Casino licences should be made portable, allowing operators to relocate to any local authority provided that they have the consent of that local authority. The portability of these licences would be constrained by the existing 'triple lock' contained in the Gambling Act: that is, the need to obtain local authority approval, a premises licence and planning permission.

The failure of the Department for Culture, Media and Sport to work with the Treasury and set remote gambling taxation at a level at which online operators could remain within the UK and regulated by the Gambling Commission has led to almost every online gambling operator moving offshore whilst most are still able to advertise and operate into the UK. The Committee welcomes the move to regulation of the on-line industry on a point of consumption basis but says the Treasury still needs to work with industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market.
Particularly given the absence of a significant UK-regulated online sector or any Regional Casinos, the Gambling Commission remains an overly expensive, bureaucratic regulator. The Committee says the Commission has not gone far enough, in particular, in its efforts to reduce its operating costs.

The Committee recommends:

  • an independent review of Gambling Commission expenditure should be carried out as soon as possible after a new system for remote licensing is in place, with a view to reducing costs and the regulatory and fees burden imposed on the industry
  • Casinos which are highly regulated and have strictly restricted access—should be allowed to operate up to twenty B2-type gaming machines with a maximum stake of £100 (instead of the current four,  which is the same limit as for high street betting shops)
  • where there are clusters of betting shops because each of them is allowed only four of the B2 gaming machines, local authorities should also be able to increase the machine allowance if they think this will reduce or solve the "clustering" problem
  • any local authority should be able to make the decision as to whether or not they want a casino
  • the Gambling Commission should introduce a new licence fee structure which reduces the current anomaly where small, independent bookmakers pay much higher fees per shop than large chains. Small independent operators should certainly be paying less than they are now, and the Commission should also be looking to charge all operators less than they currently are
  • the Gambling Commission should provide the gambling industry with a clear and easily accessible summary of where the fees it charges are spent as a part of its Annual Report. This would improve the relationship between the Commission and the industry, as well as highlighting areas where value for money is not currently being achieved. This requirement should also help to reduce well intentioned mission creep by the Commission into areas such as sports integrity, which is—and should continue to be—the responsibility of the sports’ governing bodies
  • following the decision to regulate the online industry on a point-of-consumption basis, the Government should look to set the tax rate at a level which discourages the formation of a grey market and should look to encourage operators to  base themselves in the UK
  • the Department for Culture, Media and Sport should develop an information campaign on problem gambling, to be made available outside gambling premises, to encourage the relatives of problem gamblers to seek help
  • the hard evidence base for decisions and regulation needs to be improved: the Government must ensure that high-quality, independent research, comparable over time, is available to be able assess the scale of problem gambling and the impact—if any—of changes in regulation. The Committee is also keen that there should be specific research on problem gambling and children, and a greater emphasis on discovering the most effective ways of educating children about probability and the risks of gambling.

John Whittingdale MP, Chair of the Committee, said:

"Gambling is now widely accepted in the UK as a legitimate entertainment activity. We took a lot of evidence in this inquiry, from all sides, and while we recognise the need to be aware of the harm caused by problem gambling, we believe that there is considerable scope to reduce and simplify the current burden of regulation and to devolve decision-making to a more local level. However, given how emotive an issue gambling is in many quarters, there is a worrying lack of proper research to inform policy: this is something that needs to be addressed.

The 'reluctantly permissive' tone of gambling legislation over the last 50 years now looks outdated.  It is also inadequate to cope with the realities of the global market in online gambling, and even seems ill-equipped to cope with the realities on our high streets. Our general approach in this report has therefore been to support liberalisation of rules and delegation of decisions to those closest to the communities that will be affected."

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