With the Treasury's recent and surprising decision to increase the duty levels on Category B machines from 20% to 25%, together with the DCMS proposed changes to further regulate and control the betting sector, which we reported on here, primary gambling activity (PGA) had seemingly dropped off the radar. However, the First Tier Tribunal (FTT) decision in the case of Luxury Leisure v The Gambling Commission has highlighted the nagging issue again. Whilst some may have thought that this might have put the issue to bed, there may be a few more twists and turns before we finally reached a conclusion.

Background

The concept of 'primary gambling activity' (which has also been called primary purpose or principal purpose) first arose in early 2008, shortly after the Gambling Act 2005 came into force on 1 September 2007.   The phrase was first used by the Gambling Commission and was initially born out of the bingo industry's attempt to address the removal of what were known as s.21 machines as a consequence of the Act coming into force.

The bingo industry, in common with many gaming sectors, sought to address the removal of these machines by 'splitting' their premises so as to increase their machine entitlement (which were limited to 4 Category B3 machines per premises as a consequence of the new Act).  Notwithstanding the creation of the concept of PGA, in seeking to split their premises the action of the bingo sector may, to some extent, be responsible for the subsequent changes in legislation which saw the number of Category B3 machines in bingo clubs increase firstly to 8 and then to the current limits of  20 % of the total number of gaming machines made available for use (or for those premises in existence before 13 July 2011 eight category B gaming machines, or 20% of the total number of gaming machines, whichever is the greater).

Whilst the bingo sector's own problems in this area now largely resolved, the same cannot be said of the betting industry.

The Gambling Commission, and numerous licensing authorities across the country, have grappled (in some case unsuccessfully) with the concept of PGA. It is, at times, difficult not to have sympathy with the local licensing authorties given the changing and contrary advice they have received.

The recent decision of the FTT, and indeed the High Court, may however have provided the licensing authorities and the industry with the clarity they have been looking for.

Facts

Luxury Leisure (Luxury) operated a betting office in Newcastle providing 4 FOBT's alongside betting facilities which comprised a table, chairs, TV screens and a copy of the Racing Post. A machine linked to BetFair was also installed.

The ambling Commission notified Luxury that the Commissions Regulatory panel had found them in breach of condition 16 of their Operators Licence.

Condition 16 states, inter alia, that:

'gaming machines may only be made available for use in licensed betting premises only at times when there are sufficient facilities for betting available'.

Luxury appealed to the FTT.  The FTT came to the conclusion that the words 'sufficient facilities for betting' should be interpreted by reference to the 'plain words of the condition' and should not, as the Commission argued, be taken to mean that 'betting is the primary gambling activity on the premises'.

Furthermore, the FTT also reached the conclusion that, when considering whether or not the facilities for betting were sufficient, the test should be the 'existence' (or provision) of facilities for betting and not the use of those facilities.

This decision follows on from the recent High Court case (R (oao) London Borough of Newham v Thames Magistrates Court) following the refusal of Newham Council to grant a betting office licence to Paddy Power (a decision which was subsequently overturned on appeal in the Magistrates Court and which was pursued to the High Court by the Council).

Impact on the industry

The decision will have a significant impact for the industry and should be welcomed as they represent yet another nail in the coffin for the concept of PGA, which the industry has long argued at best does not exist at all, and at worst should be viewed with reference to the provision, rather than an arithmetic examination of the use, of betting facilities in an office. The decisions will also help provide licensing authorities with the clarity which they have long strived for.

Notwithstanding the recent FTT decision, We understand that Newham Council has, again, refused a betting office licence on the basis that the PGA on the premises is not betting.

It would therefore appear that whilst the issue of PGA has not quite reached the finishing post, it mat only have a little further to run.