Next Volley: British DCMS Responds to Scrutiny Committee

15 June 2004

Britain's Department of Culture, Media and Sport (DCMS) Secretary Tessa Jowell today published her department's response to the joint scrutiny committee's suggestions for the draft Gambling Bill. Overall the government has accepted 121 of the Committee's 139 recommendations and has welcomed and accepted every one of its conclusions pertaining to remote gaming. The DCMS did, however, reject the committee's proposed methods to regulate betting exchanges in a way that would have established a threshold of wagering, above which punters would have been identified as non-recreational and then regulated differently than the others. Instead the department recommended that all P2P punters register with the Gambling Commission.

The government has thanked the committee and stated that it intends to incorporate most of its suggestions into the new gambling legislation, which it hopes to complete and deliver to Parliament before the end of the year.

Secretary Jowell stated, "I was very pleased that the Scrutiny Committee accepted our view that new controls are urgently needed to keep up with changes in technology. Modernization is essential if we are to keep gambling fair, crime free, and protect children and vulnerable people from new and old temptations."

As a result of the committee's suggestions, the government will implement a more cautious, incremental approach to gambling reform with the protection of children and vulnerable people at the heart of the proposals.

Among some of the committee's most significant suggestions that the government has accepted are:

  • Banning fruit machines from unlicensed premises, such as minicab offices and takeaways, leading to the removal of machines from around 6,000 premises which children would otherwise be able to play;
  • creating a new third category of largest "regional" casinos on top of the existing categories of small and large;
  • capping Las Vegas-style unlimited prize slot machines at 1,250 in regional casinos; and
  • preventing small casinos from offering bingo.

The government also announced several other changes to the draft bill that were not suggested by the committee but would provide even tougher methods to prevent problem gambling. These include:

  • permitting Las Vegas-style slot machines only in the largest regional casinos;
  • capping the number of all machines in all casinos;
  • designating compulsory non-gambling areas, or "chill out rooms," in all casinos;
  • giving local authorities powers to prevent new casinos opening up in their area, thus giving local residents a democratic voice in these decisions;
  • requiring the Gambling Commission to produce codes of practice on social responsibility that every gambling operator will be required to comply with as a license condition; and
  • Commissioning gambling prevalence studies every three years to monitor problem gambling, which will form the basis for evidence-based regulation by the new Gambling Commission.

Although the DCMS rejected the committee's key proposals dealing with betting exchanges, it has proposed requiring all betting exchange users, not just professional users, to register with the Gambling Commission.

In April the committee reported: "We believe that the best way of achieving a balance is to ensure that those using betting exchanges to lay bets professionally are identified, regulated, made subject to the appropriate levy arrangements, and have their status checked."

But the DCMS proposes that all exchange users must register because "any attempt to define a threshold for non-recreational users would inevitably be arbitrary and could not provide any certainty about the point at which a user was undertaking betting transactions in the course of business.

So the government proposes that: "All exchange users, and not just a subset, should be properly identified and registered by exchanges (regardless of how much or how little they use the exchange, or the amount they win on it). This means that information about accounts or transactions can be reported to the Gambling Commission or particular individuals can be notified to the Commission if required. The Commission will in turn have the power to pass on this information, where appropriate, to sporting regulators and other responsible bodies with whom it will have information gateways under the Bill."

Betting exchange operators will, therefore, be required to implement customer registration schemes. The government agrees with the committee that those who use the exchanges in the course of business, rather than in personal use, should obtain an operating license from the Gambling Commission. The exchanges and the commission should then work together to identify parties who may be using exchanges to run a business.

It is also important to note that the DCMS "does not differentiate between backers and layers. . . . Any such distinction would, in the government's view, be arbitrary and introduce unnecessary and unwise regulatory loopholes."

The government agrees with the scrutiny committee in every point concerning online casino gambling. Aside from passing a licensing regime as soon as possible, other propositions are that Gambling Commission adequate resources and power to monitor licensees, and that the Gaming Board begin consultation with operators as soon as possible.

The government hopes to introduce the next draft of the bill into Parliament by the end of the year.

Click here to view a copy of the government response to the first report of the joint scrutiny committee on the Draft Gambling Bill (Cm6253).

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

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