Analysis of the recent DCMS consultation on land-based gambling

The Gambling Commission (GC) and the Department for Culture, Media & Sport (DCMS) recently released three significant consultations following on from the long-awaited White Paper. These cover:

1. DCMS: Land-based gambling sector regulation and possible changes to the sector
2. DCMS: Online maximum stake limit
3. GC: Proposed changes to Licence Conditions and Codes of Practice, Remote Gambling and Software Technical Standards

Our specialist betting and gaming solicitors have reviewed the first of these, being the land-based gambling sector regulation, and drafted this analysis on the most significant parts.

In the next couple of weeks, they will also release analysis on the other two consultations.

If you would like us to help you draft a response to any of the consultations, email licensing solicitor, Felix Faulkner who will be more than happy to help you.

• Section 1 – Casino Measures 
• Section 2 – Machine allowance for arcades and bingo halls
• Section 3 – Cashless payments on gaming machines 
• Section 4 – Introduction of an age limit on ‘cash-out’ Category D slot-style machines
• Section 5 – Review of licensing authority fees

1. Casino Measures 

One of the key tenets of this consultation is proposed changes to correct inconsistencies to the different types of casino licences operating in the market. Since the Gambling Act 2005 was introduced, Casinos have operated under two licence regimes, the previous 1968 Act (currently classed as ‘converted’ casinos) and the 2005 Act, with different requirements in terms of the types and number of gaming products that can be offered.

The current regime has differing restrictions dependent on the type of licence held, with limits on the maximum number of Category B machines permitted and different machine to table ratios.

The Government acknowledge that greater coherence is needed between both regimes and are looking at measures to enable 1968 Act casinos which meet the minimum gambling space requirements of Small casinos will be eligible for the same gaming machine allowance.

Gaming Machines

1968 Act casinos are currently permitted a maximum of 20 Category B gaming machines and the proposal is to increase this to up to 80 to provide a consistent approach for permissions, subject to meeting other requirements, such as a minimum total gambling gambling area, the provision of non-gambling areas and strict machine to table ratios.

1968 Act casinos that have a minimum gambling area smaller than 500m2 may be permitted a smaller increase in machine allocation on a sliding scale, which is proportionate to the overall size of the premises and non-gambling areas.

Proposed change offered to 1968 Act casinos would not be mandatory and premises will be offered the option to remain governed by the old legacy regime should they wish to offer less than 20 machines. 1968 Act venues that wish to increase their machine allocation under new proposals would be subject to the Small Casino licensing regime and the associated increase in Operating Licence annual fees.

Gaming machine to table ratios

Currently Small Casinos apply a machine to table ratio of 2:1 and large casinos benefit form a ratio of 5:1. The consultation proposes to offer a single ratio to all casinos of 5 machines to every 1 gaming table (except those 1968 Act casinos with gaming areas smaller than 280sqm or those choosing to remain with the old regime). Currently, there is no machine to table ratio for 1968 Act venues.

1968 Act Casino – size requirements governing gambling areas including table gaming and non-gambling

The consultation considers the following options:

1. Maximum gambling area of 1,500m2 like that of Small 2005 Act casinos.
2. Maximum gambling area of 1,500m2, but with an exemption for 1968 Act casinos that are currently open and have a gambling area of 1500m2 or more, as set out in their premises licence plan on the date that the consultation was published. The exemption could be conditional and cease to apply if, for example, the operator attempts to increase the size of its gambling area or if the casino moves premises.
3. No maximum gambling area.

The consultation is clear that alternative proposals will be considered.

For the purpose of the above size limits, the Government intends to keep the same requirements for calculating non-gambling areas for both 2005 Act and 1968 Act premises.

These proposals do not apply for Scotland as it is for Scottish Ministers to consider whether they want to amend the relevant Regulations to permit these changes.

Sportsbook betting

Sportsbook betting in Casinos is also under consideration and is only currently permitted in seven of the 122 operational casino venues in Great Britain. The consultation proposes to allow all casinos to operate Sportsbook betting.

Premises will be permitted up to 40 Self Service Betting Terminals dependent on their total gambling area, reducing on a sliding scale to 16.

If casinos wish to offer betting services, a non-remote betting operating licence would be required plus a remote betting operating licence for SSBTS.

Again, this will not be changed in Scotland until Scottish Ministers consider this independently.

2. Machine allowance for arcades and bingo halls

Adult Gaming Centres and licensed bingo premises are permitted to provide category D, C, B3 and B4 gaming machines within their venues.  

Current legislation provides that 80% of all gaming machines within these venues must be category C or D gaming machines. Premises licences granted before the 13^th July 2011 do benefit from a slight variation to the standard 80:20 rule, known as legacy rights, but those rights are not subject to change under current proposals, with operators being able to choose between legacy permissions and any revised entitlements that may be introduced. 

The Government’s White Paper considered developments in consumer demand, the declining relative value of stakes and prizes permitted on gaming machines and new player safety controls, which are now available in modern category B3 Gaming machines.  The White Paper determined to amend the 80:20 rule and replace it with a 50:50 machine ratio between category B machines and C and/or D. 

The current consultation proposes three implementation options: 

1. Introduce the 50:50 rule whilst maintaining all current requirements provided by Gambling Commission in relation to when gaming machine is ‘available for use’;
2. Introduce the 50:50 with an additional requirement that any gaming machine device types offered in individual premises (whether cabinets, tablets (fixed or hand-held) in in-fill) comprise a minimum of 50 percent category C and D machines. Also Category C and D gaming machine devices made available for use must be of similar size and scale to Category B.
3. Remove the 80:20 rule entirely, applying no requirements on set gaming ratios.

The industry will see the benefits in the proposed changes, but it should consider whether current and future machine operation and ratios can be effectively operated in a manner which is consistent with the Gambling Commission’s available for use requirements. With this in mind, serious consideration should be given to the potential impact of option (2) above and whether evidence can be supplied in any consultation responses that may drive a preferred outcome.    

3. Cashless payments on gaming machines

Current rules mean that the use of debit cards for direct payments to gaming machines (including contactless payments via any payment apps) and any use of a credit cards for gaming machines are strictly prohibited. The consultation makes it clear that there will not be any change to the prohibition on the use of credit cards as use of money that is not in fact the players, increases the risk of harm. 

 We are however becoming an increasingly cashless society, which has no doubt been expedited by the effects of Covid, and there is a recognition that there is a rationale for change in respect of debit card payments. The changes being considered are against the backdrop of ensuring that the protections for players are robust and effective.  

 The consultation on cashless payments has a focus on: 

• account verification measures, such as chip and pin or face ID on mobile payment systems;
• spend thresholds,
• maximum transaction and deposit limits
• minimum transactions times to slow the speed of the transaction itself
• player centric controls such as setting of voluntary time and spend limits and cooling off periods once a threshold has been reaches
• the provision of additional safer gambling messaging for cashless play; and
• a possible requirement for the display of session times and net player position.

It is clear that should cashless payments become permitted by way of amendments to secondary legislation, there will be a number of safeguards attached to the payment method in order to facilitate player protection. 

4. Introduction of an age limit on ‘cash-out’ Category D slot-style machines

Category D gaming machines are the only category of machine which can be played by under 18’s. They are low stakes and prize machines which are commonly seen in seaside arcades and family entertainment centres (both licensed and unlicensed) and tend to be machines such crane grabs, coin pushes and cash out slot style machines.

It is the ‘cash-out’ ‘slot- style’ category D machines that are being looked at under this consultation due to concerns that they are similar in style and presentation to higher stake machines that can only be played by over 18’s. Members of the Bacta trade association took voluntary action to ban under-18s from playing ‘cash-out’ slot-style machines in 2021.

The consultation looks to move this voluntary approach into legislation. This would make it an offence for a person to invite, cause or permit a child or young person to use ‘cash-out’ Category D slot-style games.

A point of interest is that there is no proposal for the ‘cash -out’ Category D slot-style machines to be required to be moved into an age-restricted area within premises, despite the fact under-18s will not be permitted to play them. This would however mean that operators will need to ensure that they have robust supervision, age verification and monitoring processes in place to ensure under 18’s do not use these types of machines. Careful consideration will also need to be given to where such machines are sited in venues where under 18s have access, such as near to a staffed cash or prize desk.

5. Review of licensing authority fees 

The final chapter in the Consultation relates to making changes to the fees local licensing authorities can charge operators who hold premises licences, both on application and through annual fees.

The fees charged are designed to cover the cost of administration of their gambling duties and gambling enforcement. This activity may include inspecting gambling premises to ensure that they are complying with their licence or dealing with complaints from residents or neighbours.
Currently, there are maximum fees that licensing authorities can charge dependent on the type of premises, and these have not been updated since 2007.

DCMS is proposing to increase these fees to allow local authorities to cover the costs of enforcement and administration of their gambling duties. The three proposed options are:

1. A 10% increase in all maximum fees.
2. A 20% increase in all maximum fees.
3. A 30% increase in all maximum fees.

The proposed increase will not provide local authorities with an automatic right to increase their fees, as they must be able to demonstrate the increase is necessary to undertaken their licensing and regulatory functions.

How to respond
The consultation will close at 11:55pm on 4 October 2023 and can be responded to here – Consultation on Measures Relating to the Land-Based Gambling Sector (qualtrics.com) or via email to gamblingactreview@dcms.gov.uk.