SBC News David Clifton - Licensing Expert - Ever increasing regulatory requirements & the need for local assessments

David Clifton – Licensing Expert – Ever increasing regulatory requirements & the need for local assessments

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David Clifton

When I first started advising the UK betting industry in the 1980s, it lived in a very different regulatory world than it lives in today. It was a land-based industry. Remote betting took place only by phone. The Gaming Board for Great Britain (the predecessor to the Gambling Commission) had no jurisdiction as far as the betting industry was concerned.

The high streets were dominated by “the Big Three” who would go to great lengths in the courts to use the old statutory demand test to prevent new entrants to the market from gaining their first foothold, although relative newcomers like Betfred and Paddy Power were soon finding ways to counter this.

Then the internet arrived and initially all that was required to set up a betting business online was a bookmaker’s permit. In the betting shops, FOBTs arrived and were controversial from the outset. However, their future was secured when a test-case was settled in November 2003, some four years before the Gambling Commission was empowered to exercise its regulatory powers over the betting industry for the first time.

Ever since 2007, the industry has been subjected to ever-greater control by regulators, culminating 15 months ago in all UK-facing bookmakers requiring an operating licence from the Gambling Commission. That pattern looks set to continue with an increasing focus on free bets and bonuses, introduction of remote and non-remote national self-exclusion schemes, the seemingly inevitable encompassing of betting operators within the ambit of the Money Laundering Regulations and more robust compliance requirements insofar as data protection is concerned.

Another recent additional regulatory requirement has been the need for larger operators to provide an annual assurance statement to the Gambling Commission. The Commission wrote to those operators who were required to participate in the initial pilot assurance statement exercise, pointing out that their statements should outline effective governance, regulatory risk management and compliance controls, demonstrating the focus and accountability boards, executives and management place on delivery of the licensing objectives. The deadline for submitting those statements is about to expire (on 14 February 2016) but, come what may, it can reasonably be expected that a similar statement will be required from all licensed operators, regardless of their size, before too long.

What must not be forgotten is that on 6 April 2016, LCCP social responsibility code provision 10.1.1 comes into force, meaning that all premises licence holders must:

  • conduct a local risk assessment for each of their current premises and
  • conduct or update a risk assessment when:
    • applying for a new premises licence,
    • applying for a variation to a premises licence, or
    • changes in the local environment or their own premises warrant a risk assessment to be conducted again.

This new requirement was announced in the Gambling Commission’s “Strengthening Social Responsibility” document published in February 2015. Whilst local licensing authorities are required, under Section 153 of the Gambling Act 2005, to aim to permit the use of premises for gambling, the Commission concluded that, as a means of assisting licensing authorities to determine whether the provision of gambling facilities at premises will be, and will remain, consistent with the licensing objectives, premises licence holders should have policies and procedures in place to mitigate the local risks to those objectives arising from the provision of gambling at their premises.

The need for such risk assessments looks likely to have major bearing on future contentious premises licence applications by betting operators. By way of example, the current edition of the Camden New Journal carries the front page headline “Battle over Bookmakers’ Mile”, reporting on Paddy Power’s intended appeal against the refusal of what would be the ninth betting premises licence on the Kilburn High Road. The local MP has made her position clear, saying that Camden’s high streets are increasingly being blighted by wall-to-wall betting shops, and as a community we must fight to prevent them becoming the place of despair so often associated with gambling and debt.” I foresee a local risk assessment playing a significant part in that case.

So what should local risk assessments cover? In this respect, the Commission expects that betting (and other gambling) operators holding premises licences to take into account relevant matters identified in their licensing authority’s statement of licensing policy. The policy in one local authority area can differ in quite material respects from the policy in another, so careful consideration needs to be given to the specific matters to be taken into account in each different location.

The Commission also expects each risk assessment to be structured in a manner that offers sufficient assurance that the premises has suitable controls and procedures in place that reflect the level of risk within the particular area in question. This necessarily means that careful consideration is also required as to the applicable local circumstances.

The risk assessment should, for example, take into account the risks presented by the local landscape, such as the premises’ exposure to particular vulnerable groups. As a result of this, an operator should expect its local licensing authority to challenge its risk assessment where it can be evidenced that there are local risks that the operator has failed to take into account.

The Gambling Commission says that “the aim of this requirement is to enable operators and LAs to engage in constructive dialogue at an early stage, reducing the likelihood of costly enforcement action at a later date”. 

Whilst there is no statutory requirement for premises licence holders to share their risk assessments with responsible authorities or interested parties, LCCP ordinary code provision 10.1.2 states that, as a matter best practice, licensees should share their local risk assessments with licensing authorities when making new licence or variation applications or “otherwise on request”. It would be advisable therefore for operators to hold copies of individual premises risks assessments on the premises in question. The Commission advises that doing this “can save considerable time and expense, as well as increasing the confidence of those agencies as to the operator’s awareness of their obligations”. 

Any readers affected by this new requirement should get their skates on as 6 April is fast approaching.

I’m going to finish on a brighter note for the land-based betting industry. I’m referring to the recent DCMS evaluation of the Gaming Machine (Circumstances of Use)(Amendment) Regulations 2015, which require those accessing higher stakes (over £50) on fixed odds betting terminals to use account-based play or load cash over the counter. I say “brighter note” because it does not signal any greater regulatory controls being imposed in the near future at least. You can read more about the evaluation at http://cliftondavies.com/fobt-evaluation-by-dcms/

__________________________

Article by David Clifton – Director of Clifton Davies Consultancy

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