5 The Gambling Commission |
184. The Gambling Commission (the Commission)
was created by the Gambling Act 2005 as a unified regulator for
the UK commercial gambling industry, excluding spread betting
and the National Lottery.
This will change in future as the Gambling Commission is due to
merge with the National Lottery Commission. The Commission is
a Non-Departmental Public Body sponsored by the Department for
Culture, Media and Sport, but its work is funded by fees from
the gambling industry. It was designed as a national regulator
to operate in a system of shared regulation alongside local licensing
authorities and boards: UK gambling operators must be licensed
by the Commission while local licensing authorities provide permits
and premises licences.
Its three statutory objectives are those of the 2005 Act, to
keep crime out of gambling; to ensure gambling is conducted fairly
and openly; and to protect children and vulnerable people from
being harmed or exploited by gambling. The Commission also has
a duty to advise the Government on matters related to gambling.
185. The remit of the Commission is not identical
to that of its predecessor, the Gaming Board for Great Britain
(GBGB). Not only has it the additional task of regulating the
betting industry, but also the 2005 Act was intended to make the
UK a home for the online gambling industry, leading the way both
in terms of regulation and innovation. It was expected that large
numbers of providers would base their operations in the UK and
therefore be regulated by the Commission. The Act was also expected
to lead to a significant increase in the land-based gambling industry,
which would be regulated and licensed by the Commission. The scale
of the Commission when it was first set up reflected both this
anticipated increase in industry size and the extra resources
that would be required to issue new licences and develop new regulatory
186. As a result of several factors, including
the economic climate, fiscal regime and the fact that no Regional
Casinos were developed, the Act has not resulted in a significantly
larger industry than the one regulated by the GBGB. Partly as
a result of this, the Commission has been seen by many as too
large and expensive for the current industry.
However, it is important to note that, under the 1968 Act, the
GBGB was subsidised by the taxpayer by several million pounds
per year. Local licensing authorities were also subsidised by
the taxpayer: below-cost fees were applied in some places.
The 2005 Act, however, introduced a statutory requirement on the
gambling industry to pay licensing fees which fully reflected
the costs of the regulatory regime, and this alone, as the Hampton
Review Report of 2007/8 into the Commission found, meant a
very significant increase in costs for many companies.
Cost and value
187. The then Government's impact assessment
for the new 2005 Act regime predicted that the cost of regulating
the industry would rise from £8 to £12 million per year.
As Table 3 below demonstrates, this was an under-estimate.
Gambling Commission Accounts 2008-2011
Table 3: Gambling Commission Accounts 2008/2011
188. The Commission and DCMS argued thatin
comparison with the GBGBthe Commission had "a significantly
broader remit" with the addition of betting regulation, while
the costs of both the GBGB and Commission were broadly similar
as a percentage of the industries' Gross Gaming Yield (GGY).
The Commission costs 0.15% while the GBGB cost 0.14% (see Table
4). However, the 0.15% figure for the cost of the Commission includes
the significant (1.9 billion euros) GGY of the online gambling
sector, which the Commission does not currently regulate. It includes
this sector in its calculations as it has a duty to advise the
Government on it, but this makes the figures less directly comparable.
189. As table 3 shows, after the initial period
of system implementation and the issuing of new licences, the
Commission responded to criticisms of its size and cost by reducing
its workforce and operational costs. It told us that its operating
costs had decreased by about £1.9 million over the two previous
Between 2009/10 and 2010/11 it reduced employee costs by 3.5%,
and its other operating costs by 5.5%.
The Commission's structures and practices were reviewed in the
Hampton Implementation Report in 2008. This was broadly
positive but produced a series of recommendations for improvement,
which the Commission, according to much of the evidence we have
received, has broadly acted upon.
Witnesses from the gambling industry argue, however, that the
Commission still needs to do more to reduce its operating costs.
|Gambling Commission (as at March 2011)
||Gaming Board for Great Britain (GBGB)
|Industry Gross Gaming Yield (GGY)
|Total Cost||£13 million
|Cost to tax-payer||*
|Cost as % of GGY||0.15%
Table 4: Gambling Commission cost. *The Commission
received Grant in Aid finding from DCMS of £481,000 to support
its research work. This funding has now ceased.
190. The Bingo Association told us that "the
Commission is less effective than the Gaming Board, yet costs
more, representing poor value for money".
The British Amusement Catering Trade Association (BACTA) described
the Commission as "gold-plated" and argued that there
had been "no practical implementation of Hampton" reforms.
BACTA said that the Commission appeared to be not "fit for
BALPPA told us that it did not agree with the Commission's justification
for its staff levelsthat its role is significantly increased
from that of the Gaming Board for Great Britain. Instead, it held
that its workload had "only risen marginally with extra involvement
in the Arcade sector".
Regulatory activities of the
191. BACTA set out some of the areas where much
of the industry felt that the new licensing and regulatory regime
had added to its costs, including:
the new licensing regime, removal of Section 16 and
21 machines from arcades and bingo halls, new amusement machine
technical standards, implementation and training for new licence
conditions and codes of practice, change of premises structures
to address new requirements of the Act, professional advice from
lawyers and accountants in making application for licences and
preparing and submitting regulatory returns. 
192. Noble Group's Solicitor, Elizabeth Speed,
described the increase in annual regulatory costs, before and
after the Act, as "astronomical" for "no noticeable
difference in the regulation".
Costs had risen from around £11,000 to £800,000 in one
of the Group's divisions. The increase does, though, include conversion
fees which were the result of the Commission issuing new licences.
A leading AGC operator, Talarius Ltd, cited costs such as the
introduction of an internally regulated "Think 21 Policy"
and the extra administrative burden of compliance procedures as
factors affecting profitability.
193. The Bingo Association argued that current
fees did not represent value for money in terms of their correlation
to frequency of inspections and the broad nature of inspections.
John Carpenter, a bingo hall manager, made the same point. Describing
the situation under the GBGB, he said that his venue had an in-depth
visit four or five times per year by a local inspector who would
speak to staff and customers as well as examining paper records.
In contrast, he told us that he had seen his Commission inspector
twice since the introduction of the Gambling Commission.
Gala Coral told us that, whilst the Gambling Commission was "not
an expensive regulator per se", it could "certainly
provide increased value for money".
194. Questions were also raised about duplication
of roles between the Commission and local authorities. Nikolas
Shaw Limited told us that all of its premisescomprising
casinos, arcades and betting shopswere visited by the Commission
but that these visits simply duplicated those made by local authorities
(in relation both to venues' gambling and liquor licences).
195. The focus of the Commission on tackling
illegal gambling activity was called into question by several
witnesses. Simon Thomas said that it appeared to be "weak
on enforcement against illegal operations" and was "often
mired in red tape and ineffective in being able to address real
negative regulatory issues".
He expressed frustration that the responsibility for tackling
illegal poker clubs was being passed between local authorities
and the Commission and getting "lost between the two".
Jenny Williams, Chief Executive of the Gambling Commission, responded
to our question to her on this issue saying that it was "very
much a matter for the local authority".
She said that the Commission had assisted local authorities with
"various actions" and described one case where four
out of five poker clubs identified as illegal had been closed
(with the fifth "dying or dead").
196. There was a desireexpressed by industry
witnesses and the Gambling Commissionfor a move away from
"blanket" stake and prize limitations towards more flexible,
risk-based regulation. Roy Ramm, Director of the NCiF, said that
"one of the issues we have been talking about with the Commission
is not having a blanket stake and prize regime at the higher end"
of the scale for stakes and prizes. Instead, they had discussed
the desirability of working towards a regime where controls were
"more focused, [and] more surgically addressed to individuals".
197. The Gambling Commission
needs to provide greater clarity about what it means by moving
away from a blanket stake and prize regime. We are concerned that
a move towards allowing individual venues or operators to have
stakes and prizes set at a different level to the rest of the
marketbecause the Gambling Commission considers that they
are well controlledcould destabilise the regulatory pyramid.
198. The Commission impacts on the financial
health of the industry, through licensing fees as well as the
regulatory requirements it places on operators. A leading AGC
operator, Praesepe plc, told us that there had been a "12
fold increase in fees for the majority of operators since the
introduction of the new Act".
Smaller operators, particularly in betting shops and arcades,
complained most strongly about the costs imposed on them by the
Commission. Nikolas Shaw Limited said that the "annual fees
for the commission and local authority is a substantial cost that
is difficult to justify",
while Ladbrokes told us that the costs to its business per shop
had increased under the Act "from around £150 plus a
£25 renewal cost, to a potential £1,600 payment to the
Gambling Commission, in addition to a £600 annual charge
by the Local Authority".
Talarius ltd told us that its premises licence costs had risen
from £18,700 in 2006 to £224,475 in 2010. It said that
it had been further affected by operating and personal licence
costs introduced by the Act, which came to £81,125.
199. A specific issue raised by our witnesses
was the steep increase in cost when moving from one licence fee
band to another. Small independent betting shop operators argued
that this system, whereby fees could increase significantly with
the addition of one betting shop, put them at a financial disadvantage
in relation to the larger operators. Warwick Bartlett of the Association
of British Bookmakers (ABB) said that an ABB member with 50 shops
paid £17,514 annually but that this fee would increase to
£45,426 if he opened one more shop.
He also told us that the fee structure meant that, "if you
are operating a company say with 2,000 shops, you pay £152
per shop but a company with one shop pays £1,531".
 This increase
in cost is the result of the Commission's banded licence fee structure.
Jenny Williams told us that this situation was the consequence
of "practical trade-offs" and that an alternative, sliding
fee structure would cause practical problems. She also said that
an owner of a small chain of betting shops wishing to open one
or two new premises was able to "take out a separate licence"
to "get across the boundary problem".
In its submission to us, DCMS stated that "the Government
believes there is scope for reducing regulatory costs and burdens".
However, under the Commission's proposed new fee structure, the
steep increase in licensing costs at between fee bands would continue.
200. Another issue of concern to betting shop
operators has been the dual licensing system whereby both local
authorities and the Gambling Commission carry out separate sets
of compliance inspections. The ABB points to statistics from the
Gambling Commission's licensing authority statistics for April
2010 to March 2011 which show that over that period:
212 licensing authorities made a total of 1649 pre-planned
visits to betting shops, which equates to around 1 in every 5
betting shops. 152 licensing authorities did not visit a single
betting shop and only 65 visits were made as the result of a complaint.
In 87% of percent of cases, including the complaint visits, no
return visit was considered necessary and no local authority reviewed
or revoked a betting premises licence.
201. The Gambling Commission has shown signs
of redoubling its efforts to consult with the industry on fees.
The Commission and DCMS jointly conducted a fees consultation
in September 2011 which is now closed and awaiting a response.
The Commission's proposals are to reflect its efficiency savings
in the fee structure by "maintaining the overall fee burden"
at 2009 levels (in cash terms) which it said would represent a
"significant reduction in real terms".
202. Disagreement between the
regulator and the industry it regulates over the appropriate level
for licensing fees is unsurprising to the extent that no business
welcomes costs imposed upon it. However it is important that the
industry has a clear understanding of why it has to pay certain
fees and what it is getting in return. It is clear from some of
the evidence we have received that this is not always the case.
We recommend that the Gambling Commission provide the gambling
industry with a clear and easily accessible summary of where the
fees it charges are spent as a part of its Annual Report. This
would improve the relationship between the Commission and the
industry, as well as highlighting areas where value for money
is not currently being achieved. This requirement should also
help to reduce well intentioned mission creep by the Commission
into areas such as sports integrity, which isand should
continue to bethe responsibility of the sports' governing
203. We remain unconvinced by
arguments from the Gambling Commission that changing the licence
fee banding system would lead to too much complexity. On the contrary,
the current system is too simplistic and in some cases leads to
the ridiculous situation where operators face steep fee increases
when they open just one new premises. The Commission should introduce
a new licence fee structure which gives a much clearer reflection
of the amounts charged per shop. Small independent operators should
certainly be paying less than they are now. The Commission should
also be looking to charge large operators less than they currently
204. Particularly given the
absence of a significant UK-regulated online sector or any Regional
Casinos, the Gambling Commission remains an overly expensive,
bureaucratic regulator. We consider that the Commission has not
gone far enough, in particular, in its efforts to reduce its operating
costs. We recommend that an independent review of Gambling Commission
expenditure be carried out as soon as possible after a new system
for remote licensing is in place. We consider that it is important
for such a review to be carried out externally so that the industry
has confidence in its conclusions. The reviewing body should have
the power to recommend changes to the Commission with a view to
reducing its costs and the regulatory and fees burden imposed
on the industry taking into account the Commission's ability to
fulfil its licensing objectives.
CHAMPION OR REGULATOR?
205. Much of the industry argued that the Commission
should follow the recommendation of the Hampton Review
regarding its relationship with operators. The review stated that:
Regulators should recognise that a key element of
their activity will be to allow or even encourage, economic progress
and only to intervene when there is a clear case for protection.
Industry representatives suggested that the Commission
should be more pro-active in its support for them.
Witnesses from the bingo sector argued that there should be a
"champion of the industry".
The GREaT Foundation argued that the Commission should have the
role of depoliticising the "process of regulation
and deregulation" by reporting to DCMS annually on issues
where it judged changes needed to be made (for example amending
or removing regulations).
206. Philip Graf, Chair of the Gambling Commission,
responded to suggestions that the Commission should "champion"
the gambling sector by saying that:
I do not think it is a regulator's job to promote
an industry [...] we are not an economic regulator [...] If we
were to end up promoting an industry, it would cause real issues
for our credibility with wider stakeholders and our ability to
be properly objective and to fulfil our duties. I think our job
is to provide solid, good regulation, which encourages a responsible
industry and ensures a competitive industry.
207. Much of the industry's concern about its
relationship to the Commission seems to stem from its disappointment
at the final form of the 2005 Act (and the fiscal regime that
followed). The Gala Coral Group said that the Act was heralded
as "balancing legitimate commercial interests with effective
regulation" as well as leading the way in responsible gambling.
It pointed to DCMS's response to the Budd review, both of which
"saw gambling as a modern leisure pursuit which provides
harmless fun for a vast majority of participants".
In Gala Coral Group's view, the Act failedas a result of
political "in-fighting" and a "negative press campaign"to
deliver on these aspirations. It also pointed to the fact that
DCMS did not mention gambling in its latest Departmental business
208. We concur with the view
taken by the 2008 Hampton Review Report that allowing the economic
progress of a regulated industry is an important role of any regulator
and that the Gambling Commission should only intervene when necessary
to protect the consumer. However, the Gambling Commission should
not have an explicit duty to encourage economic progress in the
gambling industry. Whilst we believe that the Gambling Commission's
primary objectives, and its ability to maintain a good relationship
with all gambling stakeholders, are best served by it remaining
as an impartial regulator, there is no such barrier to the Department
for Culture, Media and Sport having a more supportive role towards
the industry. Despite the statement, displayed on the website
for the Department for Culture, Media and Sport, that it is a
sponsor for the gambling industry, it makes no mention of the
gambling industry in its Departmental Business Plan of 2011/15.
We call on the Government clearly to set out its position on whether
the gambling industry constitutes a legitimate mainstream leisure
pursuit and whether it intends to be a pro-active sponsor of,
or simply to tolerate, the UK gambling industry.
RELATIONSHIPS AND COMMUNICATION
209. Whilst we heard several criticisms of the
Commission, much of the industry reported having a broadly positive
relationship with the organisation and its staff.
Praesepe plc noted that the Commission had "experienced growing
pains and a steep learning curve for its staff", whilst Rileys
described it as "constructive and able to recognise strengths
and weaknesses in the implications and running of the Act".
210. In contrast to many of the positive submissions
regarding relationships with the Commission, Leslie MacLeod-Miller
argued that BACTA no longer had a "collaborative approach"
with the Commission, which he accused of being "unaccountable".
A possible explanation for this apparent disparity in operators'
experiences of the Commission is that "the smaller operators
have less visibility to the Gambling Commission" and therefore
have not been able to develop the same strong links as have the
211. Evidence from the amusement
and arcade sectors, in particular, suggests that the Gambling
Commission has not been able to develop strong relationships and
lines of communication with some smaller operators.
212. Some of our witnesses complained of the
poor standard of the Commission's website. Praescepe plc said
that, whilst it was "designed to be industry rather than
consumer facing, it is difficult to navigate and has a Search
Engine that still does not list results or documents in date order.
Even a simple everyday search for sector or category fee rates
is a laborious and time consuming process".
The Bingo Association observed that the website "also misses
the opportunity to advise and support players by providing relevant
information or appropriate referral, particularly on online gambling".
During this inquiry we have
found the Gambling Commission's website, which should be a significant
tool for communication, frustrating. This should not be the case
with a modern regulator and we recommend that the Commission move
quickly to rectify any technical or design issues which prevent
its website from being an effective communication tool. Specifically,
the Gambling Commission should ensure that the search engine built
into its website is functional and that links are maintained.
213. As a part of its enforcement and advisory
roles, the Commission collects a large amount of data from the
gambling industry. The 2008 Hampton Report made a clear
recommendation that the Commission should ensure that "the
purpose of data collection is clear and understood by businesses
and used when information is not available from existing sources".
There appeared, however, to be a lack of understanding amongst
some in the industry about the reasoning behind some of this activity.
Betfair, for example, told us that it remained unsure as to what
use the Commission made of data on "self-exclusion tools
and the numbers of under-age people who seek to gain access to
an operator's site".
214. The Gambling Commission
needs to continue to make improvements in the way it communicates
with the businesses it regulates, particularly when conveying
the reasons behind its regulatory activity. In particular, it
should ensure that the purpose of requests for data are made clear.
215. The Commission appears to enjoy broadly
positive relationships on a wider European Union level with other
regulators. According to Betfair it was "well-regarded in
Europe as an example of how a national regulator can effectively
monitor and control a dynamic licensed gambling market".
We heard evidence from witnesses from the Jersey and Alderney
Gambling Commissions, which had positive relationships with the
Andre Wilsenach said that, from his "perspective, it puts
a lot of time and effort into relationships with other regulators
around the world".
Phillip Brear, Commissioner for the Gibraltar Gambling Commission
(GGC), however, described cooperation with the UK Commission as
"a one-way street", with the GGC offering to cooperate
in joint exercises and getting "nothing back".
216. A consequence of the 2005 Act was that local
authorities were given a role in granting gambling premises licences.
The industry complained that local authorities have had different
interpretations of the Act, and as a result its implementation
had been inconsistent. It is vital that good lines of communication
exist between the Commission and local authorities for the Act
to function properly because of their joint regulatory and licensing
roles. Jenny Williams acknowledged that the sharing of responsibilities
between the Commission and local authorities was "still an
issue" and would be one of its priorities for the coming
year. She blamed
this situation partly on local authorities not prioritising gambling
issues and partly on the dissolution of the Local Government Association's
central organising body, with which the Commission had previously
217. The London Borough of Haringey raised concerns
that shared responsibilitybetween local councils and the
Commissionfor checking age verification compliance was
"confusing" and it saw little evidence of "significant
coordinated activity" between the joint regulators. It argued
that local authorities should be given a "clearer and stronger
role in the delivery of programmes of under age sales test purchasing"
as they had a good track-record of running similar schemes in
relation to other industries. Local authorities are responsible
for coordinating national enforcement and advice through the Primary
Authority scheme which, it said, could be "used to coordinate
Ladbrokes informed us that the Better Regulation Executive was
"currently consulting as to whether age verification checking
should come under the Primary Authority scheme".
218. We welcome the Gambling
Commission's moves to improve communication channels between it
and local authorities through the creation of a liaison unit.
The Commission should provide clear, accessible guidance to operators
and local authorities, setting out its regulatory responsibilities
and those of the local authorities. This would help to avoid regulatory
and enforcement activity falling between the two responsible bodies.
THE FUTURE: MERGING COMMISSIONS
AND THE MOVE TO BIRMINGHAM
219. Whilst the Gambling Commission is coming
to the end of its 'bedding down' phase, it is still undergoing
significant changes. The Commission is due to merge with the National
Lotteries Commission (NLC) at some point in 2012, subject to the
approval of secondary legislation under the Public Bodies Act
2011. Proposed changes to the regulation and licensing of online
gambling could add significantly to the role of the Commission.
Jenny Williams stated, in the Commission's latest Annual Report,
that the two Commissions were working together to ensure the "achievement
of our respective objectives".
This statement raises the question of whether the merger will
lead to a set of aligned objectives or whether the two bodies
will remain essentially separate commissions, simply sharing office-space.
220. Witnesses from sectors currently regulated
by the Gambling Commission have been generally supportive of the
proposed merger of the two regulators. However, groups representing
lotteries other than the National Lottery have raised some concerns.
The Lotteries Council said that:
The two Commissions, as currently constituted, have
markedly different objects. The GC being a neutral regulator guarding
the three principles, with the NLC having a clear brief to protect
and promote the National Lottery. We are very concerned that these
two sets of objectives cannot be aligned without compromise; an
outturn which may adversely affect our members' fundraising interests.
221. The People's Postcode Lottery was more optimistic,
saying that the new merged body should regulate charity lotteries
and the National Lottery in the same way thus eliminating what
it saw as an uneven playing field which gave the National Lottery
an unjustified advantage.
Camelot Group was concerned that it had "had no clear
steer from Government as to how they envisage the new merged body
working" and that bringing the National Lottery under the
2005 Act could negatively affect it.
222. The Government and both
Commissions should clarify what effect the planned merger of the
Gambling Commission and the National Lottery Commission will have
on the objectives, regulatory policies and practices of the resulting
unified regulator, in particular the newly merged regulator's
approach to society and charitable lotteries and the National
223. The process of merging both Commissions
had already begun in 2006, with the National Lottery regulator
moving into the Gambling Commission's offices in Birmingham: a
move which the Government expected to "achieve synergies
and ultimately some cost-savings", though these would be
temporarily offset by transition costs.
The relocation from London to Birmingham came as part of wider
Government efforts to decentralise and reduce costs following
from the Lyons Review.
The Bingo Association and Praesepe plc argued that there had "certainly
been no evidence of reduced costs for the Commission" following
this move. The
relocation inevitably led to the loss of most London-based staff
(acknowledged by the Commission in its 2005/6 Annual Report)
which, they claimed, resulted in a loss of institutional knowledge
and experience. 
While many of our witnesses told us that Commission staff had
the knowledge that they needed to perform their duties, others
claimed that low staff-retention and the Commission's move to
Birmingham had led to ineffective regulation. 
224. Jenny Williams described as a "popular
myth" the idea that "moving to Birmingham was a disaster".
She said that new staff would have been recruited to develop and
implement the new regime wherever the Commission was based and
it was able to make "large" savings on accommodation.
Birmingham was also a good place to "recruit large numbers
of people in fairly short order".
225. The move to Birmingham
came at a time of transition, with the development of the Commission
from the old Gaming Board of Great Britain and the implementation
of the new Act. It is therefore difficult to assess the true impact
of the relocation in terms of reduced costs. We would expect the
merger of the Gambling Commission and the National Lottery Commission
in Birmingham to be completed within the next year. This merger
should produce significant savings. The Gambling Commission should
continue to effect cost-saving measures as a part of its merger
with the National Lottery Commission wherever these would not
interfere with its statutory objectives.
The Health Lottery
226. The 2005 Act allows for two kinds of licensed
lottery: the National Lottery and small-scale society or local
authority-run lotteries. The fundamental differences between the
two types of lottery are that the National Lottery is more highly
regulated whilst the small-scale ("society") lotteries
have fixed prize limits. Society lotteries must also operate purely
on a not-for-profit basis and must contribute a minimum of 20%
of their proceeds to good causes.
227. The Health Lottery, launched in September
2011, is a brand composed of 51 community lotteries promoted by
a single external lottery manager (ELM). This is possible under
the 2005 Act because a lottery manager's operating licence is
held by the ELM while the 51 community interest companies (CICs)
hold separate society lottery operating licences, each giving
20.34% of their proceeds to the People's Health Trust (a registered
charity) to fund charitable causes in their distinct geographical
228. The Health Lottery has been heavily criticised
by Camelot, the operator of the National Lottery for, in its view,
operating as a national lottery in competition with itself and
acting for profit in contravention of its Gambling Commission
229. While the Health Lottery
appears to us to accord with neither the spirit nor the intention
of Parliament as set out in the National Lottery Act 2006 and
the Gambling Act 2005, we cannot comment on its legality or make
any other recommendation, in light of the recently announced Judicial
230. The Government should provide
clarity one way or the other as to what constitutes a national
lottery and what constitutes a local lottery connected to other
local lotteries. If the Government decides to allow more than
one national lottery then it should ensure fair competition by
requiring any new national lottery provider to pay lottery duty
and meet the same legal requirements as the existing National
231. The 2005 Act introduced a new licensing
regime for lotteries. It created two broad classes of lottery:
large society lotteries and lotteries run for the benefit of local
authorities (licensed by the Gambling Commission); and small society
lotteries, registered with local licensing authorities. The National
Lottery is currently regulated separately by the National Lottery
232. The Act generally relaxed lottery law, in
i. relaxed the limits on the percentage of proceeds
that could be applied to expenses or prizes;
ii. allowed rollovers of the prize fund from
one lottery to another; and
iii. allowed for the sale of tickets by an automated
process; and removed the maximum price for a lottery ticket.
However, the impact of the Act has been disproportionately
to regulate some sectors. The Gambling Commission told us that
the Act "arguably imposes burdensome requirements on small
lotteries that make it harder for small charitable enterprises
to use lotteries to raise funds for 'good causes'".
233. The Hospice Lotteries Association and the
Lotteries Councilrepresenting society lotteriesraised
two issues in particular. They argued first, that small and society
lotteries are impractical under the Act because operators are
required to register in advance with the Local Authority and to
and secondly, that the current definition of remote gambling under
the Act means that lotteries that utilise the internet, telephone,
television, radio or other electronic technology are subject to
a requirement for a remote licence in addition to their standard
licence. The Lotteries Council said that it "questioned the
need for concurrent licensing in both non-remote and remote activities,
given that the latter imposes a higher standard of compliance
than the former".
Removing this requirement would mean altering the definition of
remote gambling under the 2005 Act. The
2005 Act has created a situation where small society lotteries
are required to hold ancillary licences for remote gambling, increasing
their operating costs through additional administrative burdens
and fees. We recommend the immediate and practical solution of
making ancillary remote licences free of charge for small society
lotteries. This would not, however, have any effect on the amount
of bureaucracy involved in small lotteries making licence applications
and renewals. We recommend that the Department for Culture, Media
and Sport work with local licensing authorities to review the
registration process for small society and charity lotteries with
a view to reducing their administrative burdens.
234. Under the 2005 Act, proceeds of society
lotteries have been restricted since a 2008 review to £2,000,000
per lottery, £10,000,000 per year and £400,000 per draw.
The People's Postcode Lottery (PPL) told us that there was an
"extremely uneven playing field between charity lotteries
and the UK National Lottery" which is protected under the
Act by the limitations placed on charity lotteries. 
It argued that these restrictions reduced the amount of money
that could be raised through small lotteries. Despite the Government
raising the limits on proceeds in 2008, the PPL held that the
limit should be abolished altogether. The Lotteries Council argued
that these "arbitrary" restrictions were the result
of DCMS and Ministers wishing to protect the National Lottery
from competition. It said that society lotteries did not compete
with the National Lottery and that the Gambling Commission was
"on record as stating that there is no justification for
limits on Society Lotteries and therefore implicitly their removal
would not pose any threat to the objects of the Act".
The then Minister for Tourism and Sport, Richard
Caborn, stated in 2004 that the National Lottery was ring-fenced
in order to help good causes.
The Lottery Council challenged this argument saying that "typically
55% of proceeds" from society lotteries went to good causes
while the figure for the National Lottery was 28%.
The National Lottery is however liable for lottery duty at 12%.
235. We recommend that the Government
should establish whether there is evidence that the National Lottery
would be adversely affected by society lotteries with the right
to offer increased or unlimited prizes. If it cannot be demonstrated
that the current limits on small lotteries are necessary to protect
the National Lottery from competition, then they should be reduced
or removed. If the limits on small lotteries are removed then
they should be subject to lottery duty on the same basis as the
229 Regulated respectively by the Financial Services
Authority and the National Lottery Commission. Back
The Commission also has the ability to require additional licence
conditions of operators on an individual basis. Back
Ev W 32, and 217 Back
Ev 261 Back
Better Regulation Executive and National Audit Office, Gambling
Commission: A Hampton Implementation Review Report,
2007/8, p5 Back
DCMS, Regulatory Impact Assessment of the Gambling Act 2005,
Ev 237 and 261 Back
Ev 237 Back
Gambling Commission: Annual Report and Accounts 2010/11,
Ev W 36 p37, see also: Gambling Commission: A Hampton Implementation
Review Report. For the opposing view see: Ev 217 Back
Ev 217, Ev 158, For views on the Commission's value for money
see: Ev 152, Ev 227 Back
Ev 227 Back
Q 221 and 318 Back
Ev 217 Back
Ev W 44 Back
Ev 217 Back
Q 282 and 314 Back
Q 315 Back
Ev 234 Back
Ev 227 Back
Q 202 Back
Ev 152 Back
Ev 01 Back
Ev 158 Back
Q 48 Back
Q 686 Back
Q 202 Back
Ev W 06 Back
Ev W 01 Back
Ev 231 Back
Ev 234 Back
Q 54 Back
Q 675 Back
Ev 261 Back
Ev 303 See also Gambling Commission Licensing Authority Statistics,
1 April 2010 to 31 March 2011, p7. Back
Ev 237 Back
Hampton review report, p7 Back
Ev 152; see also Ev 165,Ev 231, 148, 152 Back
Q 273; see also Ev 158 Back
Ev 165 Back
Q 667 Back
Ev 152 Back
Ev 152 Back
Ev 04, 161, Ev W 62, Q 315 Back
Ev W 17 Back
Q 318 Back
Ev W 06 Back
Ev 227 Back
Hampton review report, p8 Back
Ev 161 Back
Ev 161 Back
Ev 185, Q 657 Back
Q 657 Back
Q 663 Back
Ev W 93 Back
Ev 231 Back
Gambling Commission: Annual Report and Accounts 2010/11,
Ev W 99 Back
Ev W 62 Back
Ev W 36 Back
Ev 261 Back
HM Treasury, Well Placed to Deliver? Shaping the Pattern of
Government Service, Sir Michael Lyons, March 2004 Back
Ev 227, Ev W 06 Back
Gambling Commission: Annual Report and Accounts 2005/6,
Ev 227, Ev W 06 Back
For the former view see: Qq 202, 271-3. For the latter view see:
Ev 227, Ev W 06 Back
Q 658; see also Q 665 Back
Ev 293 Back
Ev 237 Back
Ev W 99 Back
Ev W 62 Back
Ev W 99 Back
HC Deb, 13 September 2004, col 970 Back
Ev W 99 Back