The Gambling (Operating licence and Single-Machine Permit Fees) (Amendment) Regulations 2008

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Gambling (Operating Licence and Single-Machine Permit Fees) Regulations 2006 (“the 2006 Regulations”) made under the Gambling Act 2005 (“the Act”). The amendments create certain new fee categories and set new levels of fees that will be payable under the 2006 Regulations from 1^st August 2008.

The 2006 Regulations prescribe fees relating to operating licences (application, annual and other fees) and single-machine supply and maintenance permits (application fees only) issued under Parts 5 and 10 of the Gambling Act 2005 (“the Act”) respectively.

Regulation 3 inserts a series of new definitions into the 2006 Regulations.

The first of these defines a new fee category of a betting intermediary (trading room only) licence which is a licence which authorises a person to act as a betting intermediary but any betting facilitated by a service provided by the licence holder pursuant to the licence is carried out on the premises from which the licence holder is providing the service, and only in circumstances where the betting is carried out by persons who are (a) present on the licensed premises, (b) using remote equipment, and (c) betting through intermediaries other than the licence holder. In addition, the holder of the licence must not be a party to any bet made or accepted by those persons.

Regulation 3 also introduces two new fee categories together referred to as “supplementary operating licences”. The two new categories are a “supplementary gambling software operating licence” and a “supplementary gaming machine technical operating licence”. The former is defined as a gambling software operating licence (as defined in section 65(2)(i) of the Act) that authorises a person to manufacture, supply, install or adapt gambling software for use in connection with gambling facilities provided by the licence holder. The latter is defined as a gaming machine technical operating licence (as defined in section 65(2)(h) of the Act) that authorises a person to supply, install, adapt, maintain or repair a gaming machine (or part of such a machine) where the licence holder is the only person who makes the machine available for use. In relation to both new categories, the licence holder must not be authorised to incur costs of more than £50,000 for the purpose of carrying out the activities authorised by the licence during the period of one year commencing on the day after the day the licence is granted, or in any subsequent one year period.

Regulation 3 also defines the term “new controller” by reference to the local definition in section 102 of the Act for the purposes of the provisions being introduced by Regulation 13.

In addition, regulation 3 amends the definition of the existing fee category of a “gaming machine technical (software) operating licence” to include within its scope the activities of supplying, installing and adapting gambling software for a gaming machine.

Regulation 4 amends Regulation 4(2) of the 2006 Regulations by adding references to the new fee categories described above so that Part 2 of the 2006 Regulations applies in respect of non-remote licences that fall within the new categories.

Regulation 5 introduces a new regulation 4A into Part 2 of the 2006 Regulations to prescribe application, annual and first annual fees for non-remote supplementary operating licences.

Regulation 6 amends Regulation 6(1) of the 2006 Regulations to exclude non-remote supplementary operating licences from the scope of Schedule 1 to the 2006 Regulations. It is not necessary for the Schedule to apply in relation to such licences, as the fees in relation to them are determined in accordance with the new regulation 4A, and not by means of categories assigned under the Schedule.

Regulation 7 amends Regulation 9 of the 2006 Regulations by adding references to the new fee categories described above so that Part 3 of the 2006 Regulations applies in respect of remote licences that fall within the new categories.

Regulation 8 amends Regulation 10(1) of the 2006 Regulations to exclude remote supplementary operating licences from the scope of Schedule 4 to the 2006 Regulations. It is not necessary for Schedule 4 to apply in relation to such licences, as the fees in relation to them are determined in accordance with the new regulation 14A (see below), and not by means of categories assigned under the Schedule.

Regulation 9 introduces a new Regulation 14A into Part 3 of the 2006 Regulations to prescribe application, annual and first annual fees for remote supplementary operating licences.

Regulation 10 amends Regulation 15 of the 2006 Regulations by defining the extent to which the provisions of Part 4 of the 2006 Regulations (which deal with fees for combined and multiple operating licences) apply to supplementary operating licences. The effect of the amendments is that a supplementary operating licence that is combined with one or more other kinds of licence and an application for a supplementary operating licence are to be disregarded in applying Part 4 of the 2006 Regulations.

Regulations 11 and 12 exclude supplementary operating licences from the scope of regulations 20 and 21 of 2006 Regulations.

Regulation 13 substitutes new regulations 23, 23A and 23B for regulation 23 of the 2006 Regulations. These provisions modify the fees applicable in respect of an application to the Commission for a determination that an operating licence is to continue to have effect following a change of control of a company limited by shares which holds the licence. Such an application is referred to in the Regulations as a “change application”.

If the person who acquires a controlling interest is not already the holder of an operating licence at the time the application is made, the fee for a change application is to be determined in accordance with the new regulation 23A. The applicable fee is to be determined under that provision according to whether-

• the licence in question is a combined operating licence (an operating licence that combines more than one kind of non-remote or more than one kind of remote operating licence) in which case the fee is 75% of the application fee referred to in regulation 16(a) of the 2006 Regulations, or

• change applications are made simultaneously in respect of a non-remote operating licence and a remote operating licence (other than an ancillary remote operating licence) in which case the fee is to be determined in accordance with the formula set out in new regulation 23A(3), or

• if neither of these cases applies the fee is 75% of the application fee which would be payable for an operating licence of the kind to which the change application relates at the time the application is made.

If the person who acquires a controlling interest is the holder of an operating licence at the time the application is made, the fees are to be determined in accordance with the new regulation 23B. The applicable fee is to be determined under that provision according to whether-

• the new controller becomes a controller within the meaning of section 422 of the Financial Services and Markets Act 2000 solely be acquiring a holding of 10% or more of the shares, (in which case the applicable fee is £100 regardless of whether the change application relates to a combined operating licence or a simultaneous application for a non-remote and remote operating licence), or

• the new controller becomes a controller within the meaning of the 2000 Act in circumstances other than by solely acquiring a holding of 10% or more of the shares (in which case the applicable fee is determined according to whether (a) the licence is a combined operating licence, in which case the fee is 25 per cent of the application fee referred to in regulation 16(a) of the 2006 Regulations); (b) simultaneous change applications are made in respect of a non-remote operating licence and a remote operating licence (other than an ancillary remote operating licence), in which case the fee is to be determined in accordance with the formula set out in new regulation 23B(4); or (c) in any other case the fee is 25% of the application fee which would be payable for an operating licence of the kind to which the change application relates at the time the application is made.

Regulation 14 amends regulation 24 of the 2006 Regulations (fees for applications to vary operating licences) in two respects:

• where an application to vary a condition attached to an operating licence would bring the licence into a new category under regulations 5, 6 or 10 of the 2006 Regulations, the fee is to be 25% of the application fee for a licence within that category (if the category is “higher” than, i.e. denoted by a letter in the alphabet later than, the existing category), and otherwise £25;

• where an application to vary a licence under s104(1)(b) or (c) seeks to change a reference in the licence to an individual, to an office or a post held by an individual, or to the responsibilities of an individual, an office or a post, the application fee is to be £100 if the Commission have, before the application is made, indicated (by publication on their website or by other means they consider appropriate) that a criminal records check of any person is required before the change is made.

The Regulations introduce above inflation increases to application and annual fees in relation to a number of gambling activities (e.g. non-remote and remote casino, bingo and general betting (standard) operating licences). The level of fee increases, and the extent to which these apply to different gambling activities, is based on assessment undertaken by the Gambling Commission of the level of regulatory work required to ensure compliance by gambling operators in particular sectors of the industry. Further details are contained in the Final Impact Assessment.

• A full regulatory impact assessment of the effect that this instrument will have on the costs of business is annexed to the Explanatory Memorandum prepared in relation to the instrument.