Wednesday, 19 March 2014

FOBTs; ineffective legislation & ineffective powers. My meeting with the Gambling Commission

Last week I met with the Gambling Commission. They are a statutory body with statutory powers to amend regulations and guidance which covers gambling in the UK.

The Responsible Gambling Strategy Board (RGSB) chaired by Sir Chris Kelly, are a quasi responsible charity set up by the Gambling Commission to advise on gambling strategies.

The work of that Board is undertaken and paid for by the Responsible Gambling Trust. Essentially the gambling industry who make voluntary payments to fund resource the RGT/RGSB work.

Clearly there is a tail wagging dog question.

The RGT and the RSGB could not do their work without donations from gambling companies who sit on the RGT board. The RGT is chaired by Neil Goulden of Gala Coral Group as well as other gambling executives and CEO's.

The alternative to this voluntary funding arrangement a (agreed at £5million minimum) by gambling companies into gambling strategies, gambling aware research, help for problem gamblers is a national levy imposed by the Secretary of State which would detach the gambling industry and make the fund truly independent. The Gambling Commission insist there is no conflict of interest though that may be disputed or true today, that tied relationship still exists.

There are several pieces of research that are being undertaken which are relevant to FOBTs.

It is a dogs breakfast as each of the studies is independent of the others with some overlap but no strategic framework.
  1. Firstly the Triennial Review of stakes and prizes, which did not make any changes to FOBTs.
  2. Don Foster announced a review of FOBTs at the Liberal Democrat Party conference in 2012 which was then subsumed into the Triennial Review.
  3. Following the ending of the British Gambling Prevalence Survey, the Gambling Commission will be gathering its information on problem gambling rates from the Health Survey. Despite the changes, the Commission believes results are largely comparable, and while the overall problem gambling figures are lower than those in 2010, they are in line with the figures from previous prevalence surveys in 2007 and 1999.

    Further analysis of the findings from the Health Survey for England and the Scottish Health Survey are intended to be released in April/May. Here is a link to the page on the website that covers the collection of gambling prevalence data and explains the changes the Gambling Commission has made to the way we collect that data. The Commission stated that they disagreed with those who thought the new survey was incomparable, and also that they would urge caution to those in the gambling industry who argue that prevalence has gone down.
  4. There is also a review by the Commission of the Commission Licence Codes and Conditions of Practice regarding player protection.
  5. This will consider, amongst other things, aspects of The ABB code for responsible gambling (introduced on 1 March 2014) and the National Casino Industry Forum Playing Safe initiative. The Commission expects to hold a consultation on the proposals in the summer. There seems no publicly available evidential basis for the ABB code however it presumed the industry developed their code based on ABB studies. See below*.
  6. The Prime Minister announced a review of FOBTs at PMQs ahead of the deferred division on the Categories of Gaming Machine (amendment) Regulations 2014 – this is to be undertaken by DCMS. The Gambling Commission told us that they are unaware of what form this research will take and they have not been asked for advice.
  7. The Responsible Gambling Trust is undertaking a review which will the Gambling Commission believe will be “truly groundbreaking” and a “huge step forward”. It will contain 6bn lines of data from FOBT machines and casinos in order to try and pick out patterns in gambling behaviour. The Trust's gaming machine research programme can be found here. They acknowledged that it doesn’t give a fully rounded picture of problem gambling as some people may be able to afford it, or not do it regularly but still get subsumed into the data. It is supposed to come in Autumn 2014, but they are sceptical about that.
  8. Ongoing studies by universities. Notably Cambridge, Glasgow, Birmingham and Nottingham Trent.
Vote on the Draft Categories of Gaming Machine (Amendment) Regulations

The Regulation amended the maximum prize and stake for each of the categories of gaming machines, in each case raising the limit. However FOBTs (B2) games were not included in this regulation – Labour took the position that this was an unacceptable omission and forced a Commons vote on the Regulation.

The justification for the omission was that the Government had given the industry until March 2014 to make changes. However, it does simply appear that FOBTs are being treated differently and preferentially to other gaming machines as they could have waited until March to put in place the Regulation. All that has happened is that FOBTs were ‘out of the tent’ when stakes and prizes were looked at.

*The action by the industry has come in the form of the Association of British Bookmakers’ Code of Practice. The Government will do more on the basis of the RGT research if it is necessary. The Gambling Commission told us that they had not been shown the evidential basis of the ABB Code of Practice, and they could not endorse it on that basis. They also stated that there might be good reason for parts or the entire Code of Practice to be legally mandated.

What councils can do

The Government have made exaggerated claims over Local Authority powers. Particularly Article 4. These arguments wildly exaggerate what is possible in reality.

Licensing Authorities

The powers of LAs – Section 153 of the Gambling Act says:

A licensing authority shall aim to permit the use of premises in so far as the authority thinks it –
(a) In accordance with any relevant code of practice under S 24
(b) In accordance with any relevant guidance issued by the Gambling Commission under S25
(c) Reasonably consistent with the licensing objectives, etc.
It is clear from this that a licensing authority is required to consider whether the use of the premises will be in accordance with any relevant Code of Practice and any relevant guidance issued by the Gambling Commission.

Newham council have imposed licensing conditions on a William Hill betting shop. This includes: A minimum of two members of staff will be on duty throughout the whole day (this is believed to be the first time this has been accepted as a condition by a bookmaker); a full CCTV system, including 4 external cameras will be operated with a monitor installed so customers can clearly see they are being recorded; customers under 21 will have to provide ID; the premises will have an intruder alarm and panic button; William Hill must carry out an undercover underage test purchase at least once every six months to ensure minors are not gambling. The results will be sent to the council and police.

Article 4

The Government claim that Councils can use Article 4 direction, under the Town and Country Planning (General Permitted Development) Order 1995 to negate planning laws and consents which allow bookmakers to open shops without the need for a planning application. These directions remove those permitted development rights.

Without an Article 4 direction, betting shops which are included in the A2 planning class, for ‘financial and professional services’; the same category as banks, building societies, estate agents and employment agencies can take over such premises without requiring planning permission. Furthermore, changes from A3 (restaurants and cafes), A4 (pubs) or A5 (fast food takeaways) to A2 are also allowed without planning permission.

The government has gone further still, with new rules allowing betting shops to be opened in almost every other type of high street premise without requiring planning permission for two years.

But issuing an Article 4 direction is fraught with risk. A direction must be justified according to strict criteria, can be overturned by the Secretary of State for Communities and Local Government, and is likely to be subject to legal challenge. Councils may also be liable to pay compensation to those whose development rights are affected.

In order to successfully defend an Article 4 direction Council's must build up evidence, consult and implement and this all takes time. Time which allows bookmakers to move in ahead of and avoid the restrictions of an Article 4 direction rendering it ineffective.

The 12 month delayed A4 direction order has only been used on bookmakers by Barking and Dagenham Council.


Horizon issue of ‘Primary Gambling activity’

An issue that is growing in importance is the that of ‘primary gambling activity’, which is the requirement that betting, not FOBT gaming is the main purpose of a betting shop. This means a range of products, information for the customers, means of withdrawal and space for betting – not “a bunch of FOBTs and a copy of the racing post”.

The Gambling Commission told me that on the current trajectory, many betting shops will begin to fail the primary gambling activity test because they are principally making money from FOBTs. They did note that this is quite a hard thing to judge, but that they employ the duck test (if it walks like a betting shop...). They also stated that they constantly remind the betting shops to push the betting side of their business otherwise they will eventually damage their own business model.