Ruling clarifies gambling regulator's power to withhold operating licences

Out-Law News | 11 Feb 2016 | 12:05 pm | 3 min. read

The Gambling Commission has the power to refuse applications for gambling operating licences if approving them would be inconsistent with the Gambling Act's licensing objectives even if the applicants satisfy all other criteria necessary for obtaining those licences, a regulatory tribunal has confirmed.

Upper tribunal judge Howard Levenson said that the Commission's power to act in this way applies even if in refusing those applications it could be considered as "trespassing" on licensing issues that the Gambling Act assigns to local authorities to consider.

Expert in gambling licensing laws Christopher Rees-Gay of Pinsent Masons, the law firm behind Out-Law.com, said that the upper tribunal's decision was an important one.

"The ruling means that for an operator seeking to obtain an operating licence, they will not only have to ensure that financial, integrity, suitability and competence criteria are met; but that the proposed operation is consistent with the licensing objectives so that the Gambling Commission is in a position to permit the gambling," Rees-Gay said. 

The upper tribunal upheld an appeal by the Commission against a December 2014 ruling by a first-tier tribunal which had ordered the Commission to grant pub retailer and brewer Greene King bingo operating licences for eight of its premises.

In February 2014 the Commission's regulatory panel had refused Greene King's applications for the bingo licences despite stating it was "satisfied as to the suitability and competence of [Greene King], and persons relevant to the applications, to offer the proposed licensed gambling activities".

In refusing the applications, the Commission's regulatory panel raised "concerns about the development of commercial bingo in what have traditionally been pub premises" and said granting the licences requested by Greene King would not be "reasonably consistent" with the licensing objectives set out under the Gambling Act.

There are three licensing objectives under the Act and the Commission has a statutory duty to promote those objectives. The first objective is to prevent gambling from being a source of crime or disorder or being associated with or used to support such activity. The second objective is to ensure that gambling is conducted in a fair and open way. The third objective is to protect children and other vulnerable people from being harmed or exploited by gambling.

The Commission's regulatory panel had said that the combination of high stake bingo machines and other high stake fixed odds betting terminals with a pub environment "has the potential to jeopardise the second and third [licensing] objectives".

The Gambling Act does set out restrictions on some of the activities that the Gambling Commission can directly regulate. This accounts for the fact that gambling operators must obtain a premises licence from the relevant local authority in addition to operating licences from the Commission to provide gambling services on their premises.

The first-tier tribunal, in hearing Greene King's appeal against the decision of the Commission's regulatory panel, determined that the Commission's regulatory panel had refused to issue the bingo operating licences to Greene King so as to prevent the company from applying for a premises licence. The tribunal ruled that in doing so the Commission had strayed into licensing issues reserved for the jurisdiction of local authorities under the Gambling Act.

However, the upper tribunal accepted arguments raised by the Commission that the first-tier tribunal had "erred in law in finding that the Commission had taken into account matters which were exclusively for the licensing authorities on a premises licence application", according to the judgment. The Commission had argued that the earlier ruling ran contrary to both the Gambling Act and its functions as national regulator.

The upper tribunal said that the Gambling Act should not be interpreted as making the Commission powerless to refuse to grant operating licences and forced to lobby local authorities on a case by case basis to prevent premises licences from being granted if it considers fundamental inconsistencies with the licensing objectives to be at stake.

The Act confers on the Commission "the main responsibility for ensuring compliance with the licensing objectives and, in particular, the protection of vulnerable persons", judge Levenson said. The Act is "clear that primacy is to be given to the decisions of the Commission on where to grant an operating licence", he said.

"It cannot really be the case that when such matters are at issue the legislation, having established the Commission and detailed its responsibilities, then requires the Commission to step back in individual applications and let the multitude of local licensing authorities deal with these national policy issues on a case by case basis," judge Levenson said. "Neither can it be the case that in pursuit of such national policy objectives the Commission is required to conduct some kind of guerrilla warfare in each separate locality."

Greene King can challenge the merits of the Commission's decision to refuse its bingo licences applications, rather than its power to exercise that decision, before the first-tier tribunal, the judge said.

The ruling was welcomed by the Gambling Commission's programme director Helen Venn.

"In our view commercial betting, gaming and bingo and any associated high stakes and prize machines, should only be provided in separate premises licensed for that specific purpose – premises that adults make a deliberate choice to visit in order to gamble," Venn said.