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Gambling Act 2005 (Operating Licence Conditions) Regulations 2007

rose to move, That the draft regulations laid before the House on 11 June be approved. The noble Lord said: My Lords, these are three statutory instruments of several that the Government are publishing in preparation for the implementation of the Gambling Act 2005 from 1 September 2007. We are making good progress. The draft measures take us a step closer to establishing a comprehensive new regulatory regime for the gambling industry which, for the first time, places the protection of children and other vulnerable people at its heart, while ensuring that responsible operators have the flexibility to remain profitable. The instruments have been drafted with the licensing objectives of the Gambling Act 2005 in mind, and those are worth repeating here. They are to keep gambling crime-free, to ensure that gambling is conducted in a fair and open way, and to protect children and the vulnerable. The three provisions deal with gaming machines, lottery machines and operating licence conditions. All three have, over the past year, been the subject of consultation with the statutory regulator, the Gambling Commission, key stakeholders from industry and organisations with an interest in problem gambling. The Categories of Gaming Machine Regulations define four classes of gaming machine, to be known as categories A, B, C and D. As required by the Act, the regulations also subdivide category B machines into five subcategories and make it clear, where there is a reference to category B machines in the Act, to which of those subcategories it shall be treated as referring. The new categories are defined in the draft regulations primarily by the maximum stake and prize that they may offer. That approach has worked well in the past and is well understood in the industry, and the Government continue to believe that it forms a sound basis for future policy. The proposed stake and prize levels take their cue from the hierarchy of gaming machines suggested by the Act. The Act determines which type of premises may make the different categories of gaming machine available for use depending on the nature and degree of regulation of the premises, whether the premises are established primarily for gambling, and the age of potential visitors to the premises. Broadly speaking, the stake and prize limits proposed here replicate those which the Government proposed alongside the draft Gambling Bill in November 2004 and which have already been implemented over the past two years under existing legislation. The Government have committed to review the stake and prize levels proposed here in 2009. Category A machines, with unlimited stakes and prizes, will be allowed only in the one regional casino permitted by the Act. The machines are new to this country, and it is right to take a cautious approach to their introduction. The Government made a clear commitment that we would not consider allowing other casinos to offer the machines until a proper assessment of their impact on problem gambling, based on the experience in the regional casino, had been undertaken, and that remains our firm intention. Category B machines may be sited in a variety of premises, including casinos, betting offices, bingo halls and adult-only arcades, as well as members’ clubs and miners’ welfare institutes. Stake and prize limits will range from £2 stakes and £4,000 prize money in casinos, which are subject to the highest level of regulation, to £1 stakes and £250 prize money in snooker and other commercial clubs which are established for purposes other than gambling. Category B includes what have become known as fixed-odds betting terminals in bookmakers and are also permitted in casinos, which will have a maximum stake of £100 and a maximum prize of £500. Those machines are relatively new to the British market, and they will be regulated as gaming machines for the first time from 1 September. The Government will continue to keep the machines under close scrutiny and, if it becomes clear that they are becoming a particular source of problem gambling, we have powers in the Act to control them, which we will not hesitate to use. Category C machines, which will be permitted in pubs and in the adult-only areas of seaside arcades, will have a maximum stake of 50p and prize of £35. Category D machines will be the only machines which children will be permitted to play. They include crane grabs and penny falls, which it is generally accepted cause no harm to children, and the lowest stake and prize fruit machines, commonly found at seaside arcades and travelling fairs. It is because children are permitted to play those machines that we have proposed to reduce the maximum stake on all cash category D machines from 30p currently to 10p from 1 September. I understand the concern of noble Lords on all sides of the House about the potential impact of allowing children to play gaming machines of any kind, which was the subject of considerable debate during the passage of the Bill through Parliament. The Government made it clear during the passage of the Bill that they did not believe that there was sufficient evidence to justify a ban at this stage. However, we will watch things carefully after 1 September. The Government have a reserve power to make it an offence for a child or young person below a specified age to use a category D machine, and there will be no hesitation in using that power if the evidence justifies it. It is also important to note that the regulations are just one part of the range of measures that are being putting in place to ensure that players of gaming machines are properly protected. For the first time, it will be a specific criminal offence to permit a child to use gaming machines, other than category D machines. The Government have already prevented any further applications for gaming machines in takeaway food shops, taxi offices and other non-gambling premises. That will see the removal of such opportunities for ambient gambling in some 6,000 premises by 2009. Following extensive consultation with the industry and with problem gambling groups, the Government will shortly introduce regulations under Section 240, which will control key aspects of how gaming machines are used. They will include new requirements for machines to display information about where customers can get help and support for gambling problems and limits on how much money may be deposited in a machine. The regulations will be complemented by the Gambling Commission’s technical standards for manufacture, which will limit speed of play and ensure that machines offered in this country will meet the strictest international standards. The Gambling Commission will also ensure that all gambling operators have in place procedures and policies to ensure proper supervision of machines, and to identify and support problem gamblers. Taken together, this will mean that we have in place one of the most robust systems of regulation for gaming machines anywhere in the world. On the second instrument, the definition of a gaming machine included in the Act is deliberately wide. One exemption from the definition is made for machines that dispense a lottery ticket or otherwise allow a person to enter a lottery. The order specifies the minimum amount of time that must lapse between the purchase of a lottery ticket from a machine and the announcement of the result by the machine, if it is to be exempted. If no minimum time lag were imposed, there is a risk that operators would develop machines that enabled customers to enter a virtual lottery which, to the player, would be all but indistinguishable from a gaming machine. That is exactly what has happened under the existing legislation. Manufacturers have developed lottery machines for members’ clubs which bear all the characteristics of gaming machines, with none of the protections, and which have been able to offer prizes as large as £2,000. Only gaming machines in casinos are permitted to offer prizes at that level. This is an abuse, and a one-hour interval will ensure that this cannot happen again in the future, while allowing charities and other good causes for the first time to raise more funds by selling tickets by machine. Finally, while there should be no apology for forcing the removal of lottery machines from clubs, the Government recognise that the machines have offered an important source of revenue for working men’s clubs and miners’ welfare institutes. To assist clubs in that position, we have proposed to introduce, with their support, the new category B3A gaming machine included in the Categories of Gaming Machine Regulations. The Gambling Act 2005 (Operating Licence Conditions) Regulations 2007 impose mandatory operating licence conditions on casinos and bingo halls. In the case of casinos, the regulations deal with another form of equipment exempted from the gaming machine definition: wholly automated gaming tables. The regulations require that a minimum of four player positions be offered for each wholly automated gaming table. Wholly automated roulette is typical of this sort of game. A real roulette wheel spins automatically at regular intervals and is connected to electronic terminals on which customers place their bets. Wholly automated gaming tables were granted an exemption from the general gaming machine definition included in the Act, because the Government accepted that this equipment, which may be provided only in casinos—I emphasise that—merely provided an automated means of playing a real casino game. These games will be regulated along broadly similar lines to the real version of the game: they will not be subject to any statutory stake and prize limits, the equipment must comply with strict technical specifications which the Gambling Commission will set, and operators must have in place strict monitoring policies and procedures to ensure that customers are protected. The proposal to require a minimum number of player positions is needed to prevent the development of wholly automated casino games for one or very few people, which would be indistinguishable from unlimited stake and prize gaming machines. This would risk undermining the justification for exempting this equipment from the gaming machine definition in the first place. The regulations would impose monetary limits on any prize gaming that bingo halls wished to offer, unless it was prize bingo. Prize bingo is not subject to these controls because bingo halls will be able to offer all types of bingo under the new Act without monetary limits. Therefore, these regulations concern only prize games of other sorts played on bingo premises. Prize gaming is one of the less known and less used permissions under the Gambling Act 2005. Prize gaming was originally permitted in bingo halls as a low-stake form of amusement between what is known in the industry as main game bingo. The Government are determined that this form of gaming should remain at a low level. The strict monetary limits in the current legislation have worked well in terms of controlling any potential harmful effects, and the new limits that we propose will ensure that these safeguards are maintained. During consultations, the Government listened carefully to representations from the Bingo Association that some differential treatment may be possible for adult-only premises offering prize gaming, without prejudicing the intention that prize gaming must remain at a low level. We have therefore decided to allow bingo halls, but strictly only those which do not allow under-18s to enter the premises, to offer a maximum cash prize of £50, which is double the present level. Separate regulations will impose limits on prize gaming in arcades and other venues permitted to offer this form of gaming. I commend all three statutory instruments to the House. I beg to move. Moved, That the draft regulations laid before the House on 11 June be approved. 20th Report from the Statutory Instruments Committee.—(Lord Davies of Oldham.)