Lotteries and gaming - the legal aspects of gaming on licensed premises

John Porter looks at the legal aspects of gaming on licensed premises and examines the position pubs are left in as a result of the Government's review of gambling.

Government plans for the deregulation of the gambling industry do not look as though they are going to be of much benefit to the pub sector.

As reported in Your Business in May, the trade had high hopes that the Government's Gambling Review would recommend permitting some forms of gambling in pubs. However, when the actual review was published in July the pub trade was disappointed.

Although the final period for consultation expires at the end of October, it seems likely that the recommendations will be followed. These include:

• A rise in all-cash AWP machine maximum prizes from £15 to just £25, a figure which is less than the industry had hoped. This was met with disappointment from the pub trade
• Credit cards will be permitted for some types of gambling, but not for use in gaming machines, the main form of gambling in pubs
• A policy that commercial gambling should in principle be confined to premises which are specifically licensed for gambling and where that is their main purpose - in other words, betting shops.

The report drew attention to research that indicates people may gamble more than they intended and take more risks when they mix alcohol and gambling.

In that light, the review body took the view that it could not recommend allowing betting or any other gambling on licensed premises beyond that which is already permitted.

Impact​

While this also means that betting shops will not be allowed to serve alcohol, there are a number of other recommendations within the report which are likely to have an impact on pubs. These include:

• As with pubs, licensing of gambling premises will pass from magistrates to local authorities, raising the possibility that local councillors may lump pubs and betting shops together when considering granting or renewing licences particularly if there are concerns raised by local voters
• Betting shops will be able to sell food and non-alcoholic drinks, creating more competition
• The 24-hour rule for admission to casinos and membership requirement for casinos and bingo clubs will be abolished, again making it easier for them to compete with pubs
• Casinos will be allowed to provide live entertainment and alcohol on the gaming floor, and slot machines with unlimited stakes and prizes
• Apart from pubs permitted to have more than two AWP machines by licences valid on July 17 2001 - the date the recommendations were published - a two-machine limit will be imposed.

Helpful​

On the other hand, recommendations which may be helpful to pubs include:

• Jackpot machines to be removed from private clubs, putting them on the same footing as pubs - the higher payout has long been attraction for social clubs. However, betting shops will be permitted to have four jackpot machines
• The maximum stake for all-cash AWP machines to be increased from 30p to 50p, with the maximum prize increased from £15 to £25. Further increases only to be in line with inflation as and when agreed with the Gambling Commission
• AWP machines to be banned from unlicensed premises, such as cafés, fish and chip shops and minicab offices.

Raffles​

The fund-raising raffle is a standard feature in many pubs. However, many pubs breach the strict rules on raffles.

A typical pub raffle might offer regulars the opportunity to win a bottle of spirits or other relatively low-value prizes, with proceeds going to a local charity.

While there is no legal definition of a raffle, this would probably come under the umbrella of "small lotteries," as defined in the Lotteries and Amusements Act 1976.

Failure to comply with this could lead to a maximum fine of £5,000 or a maximum of two years imprisonment.

The Act is extremely specific about the running of small lotteries and states that they can only take place during a bazaar, dinner, dance or similar entertainment. The result of the lottery must be declared during the entertainment as well.

None of the prizes must be money and there are also various rules about expenses and the amounts to be used for purchasing prizes. So, if you sell tickets as part of a charity night with other entertainment on offer, you should be within the law.

If you are simply selling tickets over the bar, it would have to be a society's lottery to be lawful. These have to be run for charity, sporting or cultural activities, not for commercial or private gain. The society must be registered - if you contact the charity you wish to support, it may have a raffle you can sell tickets for. Supporting a raffle of this type puts the onus on the society to ensure that all the rules are met.

So what about the annual Christmas raffle? Well, technically these are illegal too, but with virtually every pub in the land holding one and due to it being the season of goodwill, police have tended to turn a blind eye.

Gambling permitted in pubs​

Under the Gaming Act 1968, dominoes, cribbage and any similar games authorised by licensing authorities can be played for small stakes.

However, the main source of gambling revenue for pubs is gaming machines. There are two types permitted:

• Amusement With Prizes (AWP)​

The official description of the familiar fruit machine. AWPs are legally divided into three categories, based on the size of the payout they offer

Under the Gaming Act 1968, pubs are permitted to have up to two AWPs with an appropriate permit from the local licensing magistrates, with separate permission needed for more than two machines. This discretion to allow additional machines is to be removed by the gambling reforms.

Pub fruit machines have a percentage payout of between 78 per cent and 84 per cent. The Gaming Board of Great Britain sets the minimum fruit machine payout percentage, as well as maximum jackpot.

• Skills With Prizes (SWP)​

Machines which require an element of skill or knowledge to win a prize, often referred to as quiz or trivia machines.

This is seen as an area of the market with the most potential growth, particularly using machines linked to the internet. SWPs are not covered by the same restrictive legislation that applies to AWPs. They normally allow users to accumulate prize money which increases with the number of questions correctly answered.