A New Tack in the U.K.?
By Nick Nocton

In an act of political efficacy and in order to avoid the embarrassment of a Parliamentary defeat over the Gambling Bill, on the eve of the May 2005 General Election, the U.K. government cut a deal with the opposition parties that there would be only one “regional” casino in the United Kingdom (at least in the short term), plus eight “large” and eight “small” casinos (the categories being defined by means of minimum gaming areas, each with certain slot limits and table-to-slot ratios).

Subsequently, the independent Casino Advisory Panel (CAP) decided in January 2007 that the right to licence the regional casino should be awarded to the Manchester City Council. This caused much controversy elsewhere, in particular in Blackpool, which had been considered the leading contender, as it was much in need of significant inward investment and a new focus for its dwindling tourist industry.

However, in July 2007, shortly after Gordon Brown took over as Prime Minister, a review of various parts of the Gambling Act 2005 was announced, including the suspension of plans for the regional casino, to predictable consternation within Manchester City Council.

A motion in the House of Commons in February 2007, proposed by the member of Parliament for Blackpool, raising concerns about the CAP’s choice of Manchester, had received notable support from other members, and rumors abounded that the Gambling Commission’s “Gambling Prevalence Survey” (published on Sept.19, 2007) would find a considerable rise in problem gambling. Both of these factors may have influenced thinking within the newly reconstituted government. However, Brown is widely believed to be sceptical about the expansion of the gambling industry, so perhaps this was always in the cards.

It seems that the eight large and eight small casinos are still in the pipeline, although we understand that the government has written to the 16 councils (municipalities) that were each awarded the right to issue one of the 16 licences to check whether they still wish to do so. In several cases, changes in the balance of local government following the local elections in May 2007 means that there is some doubt that those chosen still want a casino.

Therefore, the current position on new 2005 Act casino licences is somewhat chaotic.

Meanwhile, the 2005 Act came fully into force on Sept. 1, 2007, with the much-heralded relaxation of the rules governing the advertising of gambling products. Previously, it had been possible to advertise Bingo, football pools and (charitable) lotteries in all media, and to advertise betting (including spread betting) in print media. The old law also enabled offshore online gaming sites (casino and Poker) to advertise in print media, but not offshore sports books. As of Sept. 1, provided the gambling is duly licensed either in the United Kingdom, any other EEA member state, Gibraltar or any place on the “white list” (currently Alderney and the Isle of Man), it can be advertised in any media in the United Kingdom, subject to compliance with specific gambling advertising regulations.

But the U.K. government’s threat to review the 2005 Act also had implications with the new advertising freedoms. A number of industry trade associations and interested parties have collaborated to produce a voluntary code of conduct regarding gambling advertising, which includes one or two additional requirements over and above the compulsory regulations. Significantly, in the run up to Sept. 1, the industry groups inserted a provision into their voluntary code that there would be no television advertising of any gambling (except Bingo, sports betting and the National Lottery) before the 9 p.m. “watershed.” We understand that the government received this initiative well and that it may have averted more fundamental governmental interference, at least in the short term.

When the “Gambling Prevalence Survey” was published on  Sept.19, it contained a pleasant surprise for the industry. The overall number of people surveyed who had a gambling problem according to two measures (DSM IV and PGSI) was largely unchanged from the last survey, in 1999. Overall participation in gambling was down due to falling numbers of participants in the National Lottery. However, casino use was very similar to that in 1999, although the relaxation of advertising is expected to lead to significantly increased market penetration.

There is insufficient time now to deal with other important developments in the United Kingdom, including the implementation of new gaming machine and software technical standards and testing. Suffice to say, the industry is facing significant change and the regulatory landscape remains confusing. Perhaps not as confusing and out-of-date as the one we had before the 2005 Act, but it is still not the clear, modern regulation that was originally planned. No doubt when the dust settles and the industry becomes more familiar with the new order, this perception will change. Certainly there is still potential in the U.K. market, and the advertising and marketing freedoms, although somewhat restricted, are still bound to have a positive impact for the industry.

MINI BIO Nick Nocton is a Partner at Jeffrey Green Russell. He can be reached at njn@jgrlaw.co.uk.