Speedread

New legislation to amend Irish law on gaming and lotteries has recently been enacted and is expected to be commenced shortly. The Gaming and Lotteries (Amendment) Act 2019 (the 2019 Act) makes a number of changes to the licensing regime for gaming and lotteries. This legislation is an interim measure, pending broader legal reform for the Irish gambling industry.

The broader reform is anticipated in the next one/two years – although it has recently been suggested than an independent regulator, with up to 120 staff, could be established in 'sleep mode' as early as this year. However, with a possible change of government after an early February election, the timing of these measures could be affected.

This update provides a brief summary of the changes under the 2019 Act and anticipated future reforms. Gaming and lottery operators should seek specific advice on the implications of the 2019 Act for their business.

Key highlights

  • Once the legislation is commenced, it will be an offence to offer gaming without either a police permit or a licence from the Irish Revenue Commissioners.
  • This new offence caused concern for operators of private members clubs while the draft legislation was going through parliament. Many clubs made submissions to government outlining their concerns. Despite reassurances from the Minister that private members clubs are not affected by the new legislation, at least one club announced that it had decided to cease operating because of the new legislation.
  • One of the more significant changes under the 2019 Act is the increase in stakes and prize limits for gaming machines. Once the Act is commenced, gaming machine operators will be able to offer stakes of up to €5 and prizes of up to €500 per game. These limits were reduced from €10 and €750 in the original draft legislation due to concerns that there were no limits on the number of games that could be played. While the limits are still likely to be considered low by operators, it's a significant increase on the limits of 3c for stakes, and 50c for prizes, as set out in the original Gaming and Lotteries Act 1956.
  • There are also material changes for lotteries. The 2019 Act retains the current system of lottery 'permits' and 'licences', but introduces some substantive changes to the conditions applying to these. The existing exception for 'private lotteries' is repealed, but certain low value charitable lotteries and lottery-based marketing promotions will no longer require a licence or a permit.
  • Alongside changes to the licensing regime, the 2019 Act will introduce an age limit of 18 for all gaming and lottery activities, as well as for tote betting (consistent with the current position on betting with a licensed bookmaker). It will also significantly increase the penalties for breaching the legislation.

Analysis:

New form of gaming permit

The 2019 Act will repeal the previous prohibition on promoting or facilitating 'unlawful gaming'. Instead this will be replaced with a restriction on promoting gaming which is not carried out under either a new form of 'gaming permit', or a 'gaming licence' (for gaming machines).

The new 'gaming permits' will be issued by the Gardaí (Irish police). The maximum stake allowed under a gaming permit will be €10 per player, and the prize limit per player will be capped at €3,000 (including where they play multiple games or more than one game at the same time).

Gaming permits are likely to be of limited use to operators as they can only be issued for games where "…the chances of all players, including the banker, are equal". This would appear to rule out most traditional forms of casino gaming. The decision as whether or not a particular game is one in which the chances of all the players, including the banker, are equal, appears to be left to the police superintendent under the 2019 Act. There is a risk that this could lead to different decisions being taken in different districts, though operators have a right to appeal a refusal of a permit to the District Court.

The 2019 Act also expressly provides that gaming machines won't be allowed on a premises with a 'gaming permit'.

Changes to gaming licences for amusement halls and funfairs

The 2019 Act will also increase the permitted stakes and prizes for gaming machines from 3c to €5 for stakes and 50c to €500 for prizes per game respectively. Gaming machines can only be operated in licensed amusement halls or funfairs under a gaming licence, and only in areas where the local authority allows licensed amusement halls or funfairs. There were calls for the powers granted to local authorities to be repealed under the 2019 Act but these were resisted by government.

The 2019 Act will also allow the District Court to attach additional conditions on opening times and on the types of gaming permitted under a gaming licence.

New regime for lotteries

In summary, the 2019 Act recognises four categories of lotteries as follows:

(a) Lotteries for charitable or philanthropic purposes

No licence or permit will be needed for lotteries held for charitable or philanthropic purposes, where the promoter makes no personal gain. The total value of the prizes cannot exceed €1,000 and the ticket price must not be more than €5. A maximum of 1,500 tickets can be sold and this exemption can only be availed of once every three months.

(b) Marketing promotions

Likewise, lotteries which are part of a marketing promotion will no longer need a licence or a permit.

(c) Lottery permit

Lottery permits will continue to be granted by the Gardaí but a new extended notice period of 60 days will apply to these applications. The maximum prize limit remains at €5,000 and the cost of the lottery ticket cannot exceed €10.

The 2019 Act will allow holders of lottery permits to promote the lottery for their own benefit – this is a change from the existing position whereby a lottery permit holder cannot personally profit at all from a lottery.

Where the lottery is held to raise funds for a charitable organisation, the permit holder can only retain up to 5% of the proceeds.

(d) Lottery licence

Lottery licences continue to be granted by the District Court. An extended notice period of 60 days before the application goes before the court, will also apply to applications for lottery licences under the 2019 Act. The weekly prize limit of €30,000 will be retained, with an additional cap of €360,000 for a once off annual lottery.

As regards the distribution of lottery proceeds, the 2019 Act introduces a number of new thresholds:

  • Only 25% of the lottery proceeds can be retained by the licence holder and used for the expenses of promotion, including commission
  • A maximum of 75% of the total proceeds can be allocated to prizes
  • A minimum of 25% of the total proceeds must be allocated to a charitable or philanthropic purpose

New age limits

The 2019 Act will introduce a minimum age limit of 18 (up from 16) for all gaming and lottery activities, consistent with the position on betting with a licensed bookmaker. It will also amend the Totalisator Act 1929 requiring a minimum age of 18 for betting with the Tote.

Accepting a stake from anyone under 18 will be an offence. It will, however, be a defence for a holder to prove that they had a reasonable belief that the minor was over 18.

Updated penalties and sanctions

The 2019 Act will introduce a raft of new penalties and sanctions. Individuals and corporate entities found guilty under the 2019 Act may be subject to fines of up to €5,000, and/or six months imprisonment on a summary conviction. Fines of up to €50,000 and/or two years imprisonment will apply to more serious offences, prosecuted on indictment. Operators convicted of an offence under the 2019 Act, will also face potential revocation of any gaming or lottery licence or permit awarded to them.

Broader reform agenda

The 2019 Act has been described by David Stanton, the Minister with responsibility for the 2019 Act, as an interim measure, pending broader reform of Irish gambling law. In March 2019, a report recommending reforms to Irish gambling law was published by a government established interdepartmental working group.

On foot of this report, it is anticipated that a new Scheme for a Gambling Control Bill will be published at some point in 2020, although the general election scheduled for early February could impact on that timing. The Scheme, which will be followed by a draft Gambling Control Bill, is expected to overhaul – and modernise – Irish gambling law by introducing a suite of new licensing and regulatory measures for all gambling activities, including both land-based and online activities.

A key recommendation in the report is the establishment of a new independent regulator for the industry. In a recent media interview, Minister Stanton, indicated that the government is considering establishing this new regulator in 'sleep mode' by the end of 2020 with a view to it going live in 2021. He said that the new regulator will be self-financing and will need around 120 staff members. This reflects a serious intent on the part of the government to press ahead with legislative reform in this section.