UK LEGAL COMMENT
Increase in machine numbers Recognising that increasing the number of gaming machines made available on British high streets may not be a vote winner, the Government took pains to justify the proposed increase in the White Paper. It cited evidence from casino operators that the limited machine numbers were leading customers to play longer to avoid losing their place to another player, the greater player protections put in place by operators since the implementation of the 2005 Act and the fact that many other jurisdictions permit higher numbers of machines and/or higher numbers per gaming table. Customer demand was also a factor, with the Government noting that the Hippodrome casino has 75 customers for each of its 20 gaming machines at busy times. The proposed increases in machine numbers take two forms:
firstly the ratio of gaming machines to available gaming tables in 2005 Act small casinos will be increased from 2:1 to 5:1. Secondly, the number of machines permitted in 1968 Act casinos will be increased from the current 20, in proportion to the size of the casino. 1968 Act casinos matching the overall size and non-gambling space requirements of 2005 Act small casinos will benefit from the same maximum of 80 gaming machines, subject to the 5:1 ratio. Currently, section 172 of the Gambling Act 2005 provides
that, in order to offer the maximum 80 gaming machines allowed, small casinos must have 40 gaming tables available for use, regardless of whether there is customer demand to use such tables. Subject to consultation, the Government proposes to amend section 172 to apply the current large casino ratio of 5 gaming machines per 1 gaming table to all casinos, subject to only live tables with a dealer counting towards the ratio. Maintaining a ratio of gaming tables to machines (rather than simply increasing machine entitlements) was recommended by the Gambling Commission in its advice to the Government, with the objective of supporting a balance of gaming products. A sliding scale of increased machine numbers was proposed
by industry and adopted in the White Paper. 1968 Act casinos meeting the minimum space requirements of a 2005 Act small casino (at least 500 square metres of gaming space and at least 250 square metres of non-gaming space), of which the Government estimates there are around 45, will benefit from the same machine numbers as a small casino – an increase from 20 to 80 – subject to the 5:1 ratio. A further 50 1968 Act casinos will benefit from some increase based on the sliding scale, leaving around 40 with no increase due to being too small. An indication of how the sliding scale may work is given in the White Paper, with the example of a casino with 140 square metres of gaming space and 140 square metres of non-gaming space being allowed 25 machines.
It is worth noting that the Government proposes that casino
operators will be able to choose whether to opt-in to the new allowance. It will come with increased licence fees and the imposition of mandatory conditions in line with 2005 Act casinos, such as the requirement for a minimum sized area dedicated to table gaming. Based on operators’ published accounts and data from the
Gambling Commission about machine uptake and casino floor space utilisation, the Government estimates that the extra machines could increase overall GGY for land-based casinos by £25 million to £65 million – a 14% to 36% increase in current machine GGY. The benefit for individual casinos will of course depend on the number of additional machines permitted for that premises (based on its size) and the use levels of current machines.
Timing Each of these proposals will take time to implement. Changes to the allocation of unused large and small casino licences is possible under the current legislative framework, subject to amendment of the relevant Regulations setting out the chosen areas. However, a process must be put in place to enable local authorities to apply to receive one of the licences, including new criteria set for decision making and, potentially, the establishment of a new Casino Advisory Panel. Once the licences have been re-allocated, the chosen local authorities will need to launch competition processes to allocate the licences to operators. As we know from the last process, this can take many years with legal challenges along the way. Changes to gaming machine numbers and ratios requires amendment to both primary and secondary legislation, in particular changes to section 172 of the Gambling Act, the Categories of Casinos Regulations and the Mandatory and Default Conditions Regulations. A DCMS consultation exercise will commence in Summer 2023, with the measures likely to come into force in around mid-2024.
Melanie is a gambling regulatory lawyer with 13 years’ experience in the sector. Melanie advises on all aspects of gambling law including licence applications, compliance, advertising, licence reviews and changes of control. She has acted for a wide range of gambling operators including major online and land-based bookmakers and casinos, B2B game and software suppliers and start-ups. She also frequently advises operators of raffles, prize competitions, free draws and social gaming products. Melanie has a particular interest in the use of new technology for gambling products and novel product ideas.
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