The new UK Gambling Act 2005 came into force on 1 September 2007. The introduction of the Gambling Act 2005 has resulted in serious unintended economic and social consequences with the traditional business industry now in terminal decline with weekly increases in closures and redundancies.
Because the Gambling Act has reduced gaming machine stakes and overall machine numbers in traditional softer adult gaming venues (such as adult only areas in seaside arcades, bingo halls and adult gaming centres), customers have migrated to high stake gaming machines in other venues. Every week brings more business closures and redundancies, not just at the seaside but destroying suppliers to pubs and clubs and the manufacturing sector.
In response to British trade body BACTA's lobbying there was an increase in Category C and D stakes and prizes this summer as follows:
For Category C machines - the maximum stake and prize limits increased to £1 and £70 respectively from 50p stake £35 cash
For Category D crane machines - the maximum stake and prize values increased to £1 and £50 respectively from 30p stake £8 non cash
For Category D mixed cash prize/non-cash prize machines - maximum stakes remainedunchanged, but the prize value of ‘penny falls' or ‘coin pushers' increased to £15 (of which a maximum of £8 can be cash) from 10p stake £5 cash
These increases already appear to have provided a major boost to gaming machine manufacturers and suppliers. The increase in stakes and prizes has encouraged operators to invest in new equipment and thereby helped to alleviate the downturn and ensure that there is a future for the traditional seaside amusement sector, which is a stalwart of the British tourism industry.
Current Taxation Rates as at 22 April 2009:
From 4pm on, 22 April 2009 all rates of amusement machine licence duty (AMLD) increased and from 1 June 2009 some of the Gaming duty bands increased in line with the new stake and prize levels.
In the 2009 budget, the Government announced that it would consult on moving the taxation of gaming machines onto a gross profits tax basis. BACTA is opposed to the introduction of a Gross Profit Tax (GPT) to replace the current Amusement Machine Licence Duty (AMLD) and VAT systems. It believes that HM Treasury should abandon any plan to consult formally on these proposals, and should instead focus on working with industry to improve the existing AMLD system to deliver efficiencies for Government and business.
GPT would place additional administrative burdens on an industry where operators tend to renew all their AMLD in one transaction. Separating machine takings into gaming and non-gaming profits will prove a major inconvenience. It would also be difficult, if not impossible, to introduce a single rate without significantly penalising some operators or sectors.
Introducing more than one rate brings more administrative and operating complications, leading to the conclusion that GPT is an unviable means of taxation.
The Gambling Commission Report 2009:
"It has been a productive year for the Gambling Commission. The Gambling Act 2005 has now been in effect for 18 months. Following the successful completion of the transition from Gaming Board to Commission, including an extensive exercise to licence the gambling industry under the new Act, we have been focused this year on delivering a proportionate, risk-based approach to regulation. We are now organised to ensure that front line activity and intelligence inform and are informed by risk- based regulatory policy and decision making.
This year we have spent time and effort developing understanding of the interpretation and practical implications of the 2005 Act and making sure that the gambling industry understands the need to comply with the licensing objectives, while at the same time we recognise the real challenges faced by the industry from the world-wide economic recession. Our compliance managers have visited over 2,800 licence holders across Britain, we have carried out a series of mystery shopping exercises on line and in betting shops and we have handled over 17,000 calls to our enquiries line including a number on house competitions.
We have also been collecting and interpreting data from all our licence holders through regulatory returns. The data is needed to underpin our approach to risk as well as providing an overview of the industry and operators' performance in relation to the three licensing objectives. While the data collection was initially slow and the quality of the information provided uneven, we are working with the industry to make the process more effective by providing a better explanation of the rationale for the returns and the data they provide.
To further improve our understanding of the 2005 Act we consulted with our key stakeholders on topics such as primary purpose, house competitions and whether bingo machines are in fact gaming machines.
With gradually improving data we have been able to focus our compliance and enforcement activity more in those areas where we can maximise our impact based on what is, inevitably at this relatively early stage, a broad brush risk analysis. For example, we concentrated our compliance efforts on assessment of the larger gambling operators and, on the enforcement side, commenced a nationwide drive against the illegal supply of gaming machines, working closely with police and licensing authorities.
In addition we looked at areas where the law appears to be poorly understood, for example, betting in pubs - an illegal activity that, due to our compliance work, has all but ceased in certain areas of the country.
Betting integrity, especially in sports betting, is a subject of particular public interest and we published proposals in March 2009 for strengthening the effectiveness of our approach, including plans for working more closely with other agencies to improve detection and enforcement. We therefore welcome the Minister for Sport's initiative to set up an expert panel, including key people from the main organisations involved, to work together to develop a collaborative approach and a coordinated strategy.
Alongside this activity we have continued to build a network of organisations that support our regulatory role. This includes developing a collaborative approach with, for example, other regulatory bodies and the police as well as with local licensing authorities who license gambling premises and authorise other gambling facilities in their licensing areas. While we have made progress in furthering relationships with a wide range of organisations, we recognise there is still a long way to go, in particular with regard to licensing authorities, who have an indispensable role to play in securing the licensing objectives.
To ensure we identified and addressed any issues that might prevent early achievement of full compliance with the Hampton and Macrory regulatory principles, we volunteered for an early Hampton implementation review. This took place last September and confirmed that if our current plans are successfully implemented we should be in a strong position to demonstrate the characteristics of better regulation.
The review team acknowledged the scale of the tasks confronting the Commission as a new regulator, and were impressed by the skills and commitment of the Commission's employees. The review indicated some areas that needed more attention and we accepted the recommendations. As indicated above, we are already working to improve engagement with our stakeholders by explaining better our objectives, processes and thinking, and developing our approach to risk, outcomes and data collection. We have made closer working relationships with local licensing authorities a priority.
As part of our remit to provide advice to government on issues relating to gambling, we were asked by DCMS to carry out a review of research, education and treatment. Following extensive consultation we reported back to the Minister for Sport in October 2008. Our recommendations were accepted and as a result we set up the Responsible Gambling Strategy Board, an independent expert body chaired by Baroness Neuberger, in February 2009 to advise on the research, education and treatment components of a national responsible gambling strategy.
Additionally, the Responsibility in Gambling Trust is transforming into a fundraising body and a separate distribution body. We also developed proposals, on which DCMS consulted, for the implementation of a statutory levy, while at the same time supporting the industry's effort to develop a voluntary funding system that would make a levy unnecessary.
We also carried out a range of research projects ourselves during the year, including some secondary analysis of the British Gambling Prevalence Survey 2007. In particular we responded to a request from the Minister of Sport for advice on the risks associated with high stake, high prize gaming machines. We proposed a staged approach to ensure that any research commissioned by the new Strategy Board is of use for regulatory purposes and can be funded under the new research, educationand treatment arrangements, and will be reporting on the first stage shortly."
Brian Pomeroy, Chairman and Jenny Williams Chief Executive, The Gambling Commission
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