Have bookmakers in Scotland been dealt a blow?

Stephen McGowan, partner and head of licensing (Scotland) at law firm TLT and a member of the Law Society of Scotland’s Licensing Law Sub-committee looks at why it’s a significant time for bookmakers and the gambling industry in Scotland.

Should the entirety of gambling laws be delegated to Holyrood? I ask because it has been a significant month for the gambling industry and in particular bookmakers, with the UK Government at Westminster announcing in May that the maximum stake on so-called fixed-odds betting terminals (FOBTs) would be slashed to £2. It is claimed that these machines are particularly addictive and due to style of player interaction, a lot of money can be staked and potentially lost over a short period of time.

These claims are not new; a campaign to ban FOBTs or at least reduce the stake has been ongoing for several years and a number of local and national politicians have actively lobbied against them. This was particularly so around the time of the independence referendum, so much so that the Smith Commission (established to agree further delegated powers for the Scottish Parliament) specifically included a Scottish power to limit the use of these machines north of the border. Paragraph 74 of the Commission’s report stated: “The Scottish Parliament will have the power to prevent the proliferation of Fixed-Odds Betting Terminals”.

This eventually became section 52 of the Scotland Act 2016 (2016 Act), which empowers the Scottish parliament to legislate to enable Scottish licensing boards to control the number of FOBTs by virtue of a betting premises licence. At present, there is an automatic right to have up to four terminals on a betting premises.

This new Scottish power, however, only applies to machines where the maximum charge to play is greater than £10. I followed the passage of this section of the Scotland Bill closely (yes, I was the one!) and still can’t fathom why the figure of £10 was selected. At the moment, FOBTs can be caught by this power, but now that the stake is to be cut to £2, this effectively torpedoes the 2016 Act’s provisions. The Gambling Commission, the independent regulator of the trade, had suggested to the UK Government that a reduction to £30 would be proportionate – and this would have retained the teeth of section 52 of the 2016 Act. Presumably the effect of section 52 was merely overlooked.  One must assume that section 52 was overlooked rather than this being a direct hit.

Of course, the 2016 Act could be amended to reflect the £2 stake as it has not yet taken effect; but there may be unintended consequences yet again. If section 52 is amended to refer to the £2 limit, then that would capture a much wider range of gaming machines than just the much-maligned FOBT. This is because the 2016 Act unhelpfully does not use the language of the Gambling Act 2005 in respect of different machine categories – it merely talks of maximum charge for use. To be technical, FOBTs are category B2 gaming machines. Other categories may be made available – machines that have not attracted the same grief as FOBTs. As a result, we could end up with a Scottish power far greater in scope than was originally intended.

How this will be resolved remains to be seen, but what is interesting is that the original Scottish power was created to address the “clustering” of machines as opposed to the maximum stakes. There has been no attempt, as yet, to introduce some form of overprovision or cumulative impact test under the Gambling Act 2005. Indeed, the old style “demand” test was specifically stripped from gambling laws. Further, a licensing authority must “aim to permit” the grant of a gambling licence so the default position is to grant and many authorities will publicly say it is extremely difficult to refuse an application because of this onus.

The Scottish Government is on record for formally requesting not just powers over machines or overprovision, but that the entirety of gambling laws should be delegated to Holyrood. It is certainly true that one can point to various lacunae in cross-border licensing law where the Scottish position has been overlooked. Section 52 is the latest gremlin.