Legal advice: the increase in AWP stakes and prices

Recent concerns that customers are no longer spending as much money on AWPs as they used to could be addressed by the early introduction of the promised increase in stakes and prizes. This was originally due to come into play with the implementation of the Gambling Act 2005 in September next year.

Instead, the order came into force last week (on October 27) and means that the maximum stakes for AWPs located in pubs, clubs and arcades has now risen from 30p to 50p. At the same time, the maximum prize has risen from £25 to £35. It follows that increased prizes attract more players and pubs should therefore see a profit boost from gaming machines should they decide to take advantage of the increase.

The Department for Culture, Media and Sport (DCMS) has put the early appearance of the order down to the hard work of various leisure trade associations in agreeing to form and implement codes of conduct which will complement the objectives upon which the Gambling Act 2005 is based, namely:

• preventing gambling from being a source of crime and disorder, being associated with crime or disorder or being used to support crime;
• ensuring that gambling is conducted in a fair and open way, and
• protecting children and other vulnerable persons from being harmed or exploited by gambling.

Many trade associations are making compliance with the new codes of conduct a condition of membership. The codes, which put the emphasis on social responsibility, include the following measures:

• machines will be kept under the supervision of staff
• all machines will display the updated sign prohibiting the use of the machines by under-18s
• details of the GamCare helpline (the association that deals with gambling issues, particularly addiction), must be given.

Non-adherence to the above codes does not yet carry with it an enforceable penalty. However, Richard Caborn, the sports minister, has clearly stated that the order will be withdrawn should the industry flout the codes, and it is inevitable that the DCMS will conduct inspections.

As the codes will form the starting point for mandatory conditions for the use of all AWP machines next September, the decision for operators seems to come down to when, and not if, you should implement the increase.

A vital element to consider is the amusement machine licence duty (AMLD) tax. Should you increase the stakes and prizes on your machines now, the new maximum prize of £35 will be subject to a higher level of AMLD tax because gaming machines are defined in terms of their prize payouts under excise law.

Currently, AWPs (or Category C machines as they will be known under the new Act) are defined as machines which do not pay out in excess of £25 and so the upgraded machines would fall into the next tax bracket. In effect, operators will consequently be paying rates for Category B4 machines (those which can currently pay out up to £250) on their Category C machines.

The difference between tax brackets is such that some may conclude that the new increase is not worth introducing due to the high AMLD rate. No publican is under obligation to raise the stakes and prizes on their machines and it appears prudent to wait until the Budget next March when the gaming machine definitions will be amended, making the tax situation more favourable to operators. So, although the increase is undoubtedly a positive step, the industry will have to wait a few more months to reap the real benefits.