Last week the Department for Culture, Media & Sport (DCMS) published a list of 12 consultation questions following a paper entitled Proposals for Gambling Commission Fees. The consultation paper sets out proposals made by the DCMS and Gambling Commission for fees that will apply from 1 January 2007 and invites comments before a 13 October 2006 deadline. A Regulatory Impact Assessment (RIA), at present in draft form, is intended to ensure that fees for operating and personal licences are set at a level which enables cost recovery of the Commission’s licensing and regulatory activities whilst being fair and value for money for the gambling industry.

The consultation document explains the rationale for implementing the new framework for the delivery of the licensing and regulatory regime, and the duties undertaken by the Commission for which fees will be charged to recover the full cost of its activities. These activities will include issuing operator and personal licences, setting general conditions for such licences, issuing codes of practice, monitoring licence holders and the investigation and prosecution of illegal gambling or other offences. Non-refundable application licence fees, annual operating licence fees, 5-yearly maintenance fees for personal licences and other regulatory fees are intended to cover the Commission’s costs.

Those paying the proposed operating fees, estimated for costs of £11.8 million in 2006/7 and £13.6 million in 2007/8, are 19 casino operators, 146 commercial bingo operators, 3,600 bookmakers, approximately 1,000 Adult Gaming Centres and 1,000 Family Entertainment Centres, 3 registered football pool promoters, 661 society lotteries, 20 pool betting competitions, 680 machine suppliers and repairers, 15 external lottery managers and 31 dog track pool betting operators. Fees will also come from around 10,000 personal licences for people with section 19 certificates of approval under existing legislation. Licences fees are for both remote provision and non-remote provision.

According to the draft RIA, there are essentially three major risks associated with the regulations: that fees will be too high, will be too low, or will affect particular sectors of the gambling industry at disproportionate levels. Because of these concerns the Government and Commission will consult existing and potential operators, and a wide range of other stakeholders, including religious groups and those involved in problem gambling prevention and treatment, that have an interest in the proposed regulations. Other Government Departments and public bodies will also be consulted. Four possible options for funding the Gambling Commission are outlined, including the government’s preferred option of covering all costs through licence fees with a review after one year.

It is recognized that the Gambling Commission’s costs will be much greater than those of the Gaming Board for Great Britain. This reflects the more extensive remit the Commission will have, with online gambling and an increase in gaming machines. The draft RIA states that a conservative estimate on projections from a range of consultancy studies suggests that the new regulatory regime could lead to an increase in net consumer expenditure on commercial gambling of £1,000 million (US$1.8 billion) every year for five years starting 2004/5. Licensing online gambling will also enable British-based operators to compete for a share of the global market, estimated to double over the next five years from present revenue of US$12 billion, whilst retaining a reputation for both quality and integrity.

The Commission will license and regulate virtually all commercial gambling in Great Britain, including casinos, bingo, betting (including pool betting), arcades, larger lotteries and the manufacture, supply and use of gaming machines and gambling software. The Commission will license operators in both the non-remote and remote sectors (e.g. the Internet and mobile telephones). The Commission will not license or regulate the National Lottery, which remains the responsibility of the National Lottery Commission, or spread betting, which remains the responsibility of the Financial Services Authority. The three licensing objectives are a) to prevent gambling from being a source of crime and disorder, being associated with crime or disorder or being used to support crime; b) to ensure that gambling is conducted in a fair and open way; and c) to protect children and vulnerable persons from being harmed or exploited by gambling. (E-07.24.06)

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