Licence conditions and codes of practice

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1 Licence conditions and codes of practice Consultation response questions You are invited to comment freely on any aspect of the consultation document. Below is a list of questions which cover the main points on which we would particularly welcome views. Please: be as specific as possible in your responses; where you disagree with what the Commission propose, explain why; and say what alternative you would suggest in place of the Commission s proposal. Chapter 1: The regulatory framework Q1. What comment do you have on the Commission s broad approach to regulation? Generally the broad approach is correct, however on reflecting on the licensing objectives it would have been clearer if the term honest and ethical were added to the term fair and open. The assumption must be that the Commission and all prospective licensees would read fair and open as if it included honest and ethical. Q2. Do you have any comment on the list of high-level principles (for example, the need for integrity) that we expect to be followed by holders of operating or personal licences? The high-level principles are essential, particularly the need for integrity. It should go without saying that all high-level principles should be in compliance with both criminal law and civil law. The assumption is that the Commission understands that the need for integrity should be interpreted to include compliance with the law. However, challenging the law has been normal business practice for certain companies in the betting sector and in the remote gambling sector. Relevant examples include the status of fixed odds betting terminals, illegal trading in certain countries, illegal advertising to UK players and commercial theft of intellectual property in games. Q3. How should we further develop our approach to risk?

2 For a regulator to function adequately there must be a strong enforcement division that is well trained and well funded. Ideally there should be independent oversight of the regulator by a public body. Just as the Police are answerable to independent authority, the regulator policing gambling should be seen to be answerable to a dedicated independent authority. The primary function of this authority should be to determine that the Commission is developing the best approach to risks to the statutory licensing objectives. Q4. How should we strike the right balance between proper regulation of the remote sector and the danger of driving operators and customers away to sites outside Great Britain? It will be impossible to find the perfect balance. Ultimately the Treasury will have strong influence on operator decisions when the remote gambling tax level is established. Also any imposition of restriction on UK operators trading in certain countries will have an influence. A real problem is that UK players do not understand that UK companies, particularly high street brand names, may not be licensed in the UK. It is essential that there is widespread publicity of the introduction of the UK kite-mark. An incentive to operators to locate to the UK would be a firm financial commitment by the Commission to adequately publicise the UK kite-mark. If funds could be allocated for this specific purpose then operators would be more willing to accept a tax rate on parity with other sectors. To further encourage operators to locate in the UK the Commission could establish conditions for a black-list of operators and jurisdictions that do not comply with certain minimal standards. A firm financial commitment to publicise a black-list would help convince more operators to come on board with UK regulation. It will only be through a well financed affirmative campaign to sell UK licensed remote gambling as a brand of the highest integrity that the UK will become a market leader in remote gambling. Q5. Do you have any other comment or suggestion on this section? In 1968 the Gaming Act was introduced because casino style gaming had been allowed to proliferate unregulated. The majority of operators were not granted licences with the number of locations operating casino games reduced from over 1,000 to around 100. In 1968 it was correct not to grandfather-in and rubber-stamp established operators, practices and games. In recent years the remote gambling industry has been allowed to proliferate unregulated. Today it will be correct to apply stringent regulation to remote gambling and not to allow the remote gambling lobby to dictate how the industry will be regulated. If a UK regulator had held the power to regulate all sectors of gambling when remote gambling started, then the position today would be very different. Existing UK licensees would not have been able to commence offshore gambling, except by compliance with UK regulator expectations. Existing licensees would ultimately have been expected to locate a remote gambling entity in the UK under UK regulation. There is no reason why these expectations should not be made real today. It is well understood that a licence is a privilege rather than a right. If an entity wants to enjoy the privilege of a UK licence for any sector of gambling then that entity should be willing to be licensed in the UK to operate remote gambling. If an entity is unwilling to do so, then that entity should be obliged to divest itself of one of either UK licensed gambling or offshore remote gambling. The terms of such asset sale should ensure

3 no continuity of any ownership interest and not cause any confusion of players by retaining any continuity of, or commonality of, brand name. Many remote gambling entities, even well known UK public companies, have set up complex structures, with trading subsidiaries, partners and affiliates. Senior executives from such a UK public company have been active in lobbying as to how remote gambling should be regulated. However, when litigation was filed in a USA court against that company, the company stated that (it) does not, and never has, engaged in or conducted the business of online gaming... all business is conducted through (its) licensed trading subsidiaries The company did not even identify who those trading subsidiaries were! Any entity managed with such duplicity should not be granted a licence in the UK and should not be granted an audience with government or regulators to lobby for remote gambling. Another example of deception relates to a non-uk based public company with a UK licence for an entity within its corporate structure. Also operated within its corporate structure are remote sports betting, casino and poker. An advert in a non-uk publication advertised all these remote facilities. However, the advert used the text UK Licensed, Publicly Traded and Play online at (the name of the remote gambling entity). The reality, of course, is that certain of the advertised facilities are not UK licensed. Also, whilst the parent company is publicly traded, the entity that is offering the remote gambling is not. Again any entity managed with such duplicity should not be granted any UK licence and the existing UK licence should be terminated. The Commission should consider if such structures are acceptable. If such structures are acceptable, then any entity with a substantial ongoing trading relationship with a remote operator or remote system provider, whether as a subsidiary, a partner or an affiliate, should also be subject to licensing. This consultation paper does not address certain important issues related to remote gambling. We commissioned a Survey on UK Remote Gambling Regulation prior to the publication of this consultation paper. A complete copy of this Survey is available at our website Three major issues highlighted by the Survey, that are of concern to UK players are detailed below. Firstly, many sites are managed by the system provider rather than the site name owner. Players are entitled to know if this is the case. Players may only have selected that site because they were familiar with the UK high street brand name and thought the site was being managed by the brand name owner. Secondly, many sites have relationships with entities that introduce players to those sites. These entities are known as affiliates and receive payment from the site for the introduction. This payment can be related to the amount that a player loses. Players who are made aware of this may not wish to play under those circumstances. This may be particularly so when the affiliate is a site that appears to be an independent and is providing information on gambling.

4 Thirdly, many sites operate proprietary games without permission of the game inventor or game owner. Players who are made aware of this may not wish to play that game, or indeed any other game, at that site. All these three issues show that to date remote gambling has not been conducted honestly, ethically, fairly and openly or with a high level of integrity, which is the primary consideration for suitability of licensing. The unauthorised use of proprietary games is a totally unjustified deception of players. The Commission should impose licence conditions on remote gambling operators to provide information regarding site management and affiliate relationship. Also the Commission should determine a standard to establish a game as a proprietary game and not allow operation of that game except with the relevant proprietary permission. Ultimately, if only a small fraction of the remote gambling industry is willing to locate in the UK, then that will just confirm that the majority of the remote gambling industry does not wish to accept stringent regulation. This will not mean that the Commission has failed, but it will mean that there has not been adequate power granted to act against overseas operators accessing UK players. Chapter 2: Licensing process Q6. Do you agree that those holding the roles of chief executive, finance director, chief compliance officer and marketing director should be required to hold personal management licences (PMLs)? What other roles, if any, should be restricted to personal management licence holders? Yes. Other roles that should be restricted to PML holders are head legal counsel and head of information services. These two roles will have increasing prominence in the future. Q7. Do you agree that in larger operators, where responsibility for issues of regulatory interest is delegated, managers responsible for regions or areas or individual sites should be required to hold PMLs? Yes. Q8. Personal functional licences (PFLs) provide some assurance of the post-holder s competence and against the post-holder exploiting his position for crime. With this in mind, the Commission proposes to continue to require personal licences in casinos for: dealers, cashiers, inspectors and supervisors of gaming activities. Do you agree? If not, what posts would you add or remove, and why? Consistent procedure and adequate surveillance are more effective in ensuring competence and crime-free gaming than licensing of these roles. The Commission should consider

5 whether resources could be better spent on covert visits by dedicated trained Commission staff rather than on licensing these roles. Q9. Do you have any other comment or suggestion on this section? There does not appear to be any dedicated section relating to remote gambling in this chapter. PMLs should be required for all proposed roles, including head legal counsel and head of information systems, for remote gambling operators and remote gambling system suppliers. A PFL should be required for any role with access to a gambling system. If the Commission allows complex remote gambling models of multiple associated subsidiaries, partners and affiliates, then all above roles in all such entities with substantial trading relationships should require appropriate licences. For all sectors, where a role is allowed to be performed externally on a retained consultancy basis, then the licensing requirement should also apply. Chapter 3: Technical standards Q10. Do you have any comment on the way the Commission proposes to require compliance with our technical standards on gaming machines, remote gambling systems and bingo and casino equipment other than machines? (We will consult separately, in summer 2006, on the technical content of the standards). Proposals are generally adequate. Section 4.1: Financial robustness: general requirements Q11. What indicators should the Commission use in assessing financial robustness of applicants for operating licences and for subsequent monitoring? Q12. What other methods of financial assurance should we require from different types of operators? Q13. What specific financial underpinning should be required, if any, to secure the payout of sizeable winnings? Do you have any comment on our proposal to require the payout of winnings on demand and for notification of any failure to comply? No comment on specific underpinning. Agree with proposal for winnings on demand and notification of failure to comply.

6 Q14. What would be an appropriate level for the cumulative prize liability below which we should rely on self-certification by small operators? Q15. Do you have any other comment or suggestion on this section? Section 4.2: Protection of customer funds Q16. What comment do you have on the proposal that customer funds held by operators must be ring-fenced from operators own funds? Do you have views on how best to make this proposal effective? Ring-fencing of player funds is essential. Q17. Does this approach to the protection of customer funds pose any particular problem for operators? If so, do you have any suggestions for solving them? Q18. What would be an appropriate threshold below which the Commission should not require independent assurance of the effectiveness of the ring-fence? Q19. Do you have any other comment or suggestion on this section? Section 4.4: Cash handling Q20. The Commission proposes that operators must draw up and implement documented procedures on cash handling to minimise the risk of theft, money-laundering and illicit credit and to monitor compliance with the fair and open licensing objective. Is our proposal sufficiently specific to be effective? If not, what do you suggest? No comment on specifics. Q21. What comment do you have on the proposal that operators must (subject to specific exceptions) bank customer cheques promptly, within two banking days, in order to

7 prevent any delay which could give the customer illicit credit? Q22. Do you have any other comment or suggestion on this section? The Commission reference to the fair and open objective in this section indicates a broad interpretation of this objective which is the correct interpretation. Section 4.5: Money laundering Q23. What comment do you have on the Commission s proposal for code of practice provisions to reflect the duties on operators under money laundering laws? Q24. Do you agree that code provisions similar to those applying to non-remote casino operators should apply to all remote gaming? If not, what alternative approach do you propose? Q25. We propose code provisions for betting operators on arrangements for Suspicious Activity Reporting. Do you have any comment on this proposal? If you disagree, what alternative approach do you propose? Q26. Do you agree that, for other gambling operators, who are subject to the same general requirements as any other commercial or retail businesses in respect of anti-money laundering legislation, there is no need to apply any specific further requirement? If not, what requirements do you propose? Q27. Do you have any other comment or suggestion on this section? Certain public companies engaged in remote gambling have advised their shareholders in public reports that their activity may be illegal in certain jurisdictions. If that is so, then all revenue from remote gambling conducted in those jurisdictions will be the proceeds of crime. Therefore those remote gambling companies are engaged in money laundering! The

8 Commission should not license any entity that has either engaged in an illegal activity or admitted that it may be engaged in an illegal activity. This non-licensing standard should also apply to any entity that has any commonality of ownership with such a remote gambling entity. Section 5.2: Access to gambling by children and young people Q28. The Commission proposes licence conditions and code provisions on controlling access to premises subject to age restrictions. What comment do you have on the general approach and with the specific requirements proposed? If you disagree, what specific alternatives would you propose? Q29. What comment do you have on our proposals for licence conditions and code provisions to prevent underage gambling in premises open to children and young people? Q30. The Act requires a code of practice on access to casino premises, with a special role for supervisors at each entrance or in the case of the regional casino, the gambling area. Do you have any comment on our proposed code? Q31. We propose licence conditions and code provisions on preventing gambling using remote gambling facilities in breach of the statutory age restrictions. What comment do you have on the general approach and the specific requirements proposed? What alternatives do you advocate specifically? Q32. Should there be any further controls on underage gambling, additional to those we propose? From a certain date, all new machines for all sectors should be accessible by card only and not by cash. Cards would be obtained by verification on the licensed premises and be used to place funds on deposit. Subject to satisfactory operation, a subsequent date should apply, by which all old machines should be replaced by new cash-free machines, or converted to a cash-free format. A similar card system could also be used at casino table games, whereby buy-ins could be deducted from funds on deposit. Alternatively, a simpler card system could be used at casino table games merely as an identity confirmation. This type of system applied in Missouri as a method of tracking total buy-in per cruise. The card was required in order to enter the gaming area.

9 Q33. Do you have any other comment or suggestion on this section? Section 5.3: Continuous and repetitive play Q34. The Commission proposes licence conditions requiring operators to put in place policies and procedures aimed at preventing continuous and repetitive play. In addition, technical standards will contribute to the same objective. Is there more we should do in this area? Agree in general but have limited confidence in the effectiveness of the proposals. It is actually the low stakes that can be played on machines and in remote gambling that encourage continuous and repetitive play. A solution would be to increase the minimum wager amounts a measure that is in radical contrast to all previous suggestions on this subject matter. Q35. Do you have any other comment or suggestion on this section? Some slot and video competitions reward participants who are able to play the fastest within a certain period of time. This format encourages playing in a repetitive manner and should not be permitted in either terrestrial or remote casinos. Section 5.4: Information on how to gamble responsibly and on help for problem gamblers Q36. The Commission proposes requirements on most sectors of the industry to ensure that operators provide appropriate information to customers about safe gambling and about sources of help in dealing with problem gambling. Are the general approach and the specific proposals right? Are there specific additional topics the information should cover? Agree in general but have limited confidence in the effectiveness of the proposals. Q37. Do you have any other comment or suggestion on this section? The probabilities of winning are included in information to be promulgated. The previous attempt to introduce house edge information on casinos table games included false information, which is far worse than no information. Section 5.5: Intervention Q38. The Commission proposes requirements to ensure appropriate intervention by certain

10 operators in cases where problem gambling is suspected. Do you have any comments on our approach? Q39. Should other types of gambling operator such as pool betting operators, licensed family entertainment centres and lottery operators be required to intervene in cases where they suspect problem gambling? Yes. Q40. How far is it feasible to use technology such as smart cards and loyalty systems to track, and intervene in, problem gambling behaviour? What behaviour would suggest problem gambling? To what extent is it possible to identify problem gambling in the remote gambling sector based on patterns of play? More research and consultation is needed. The remote gambling industry has better ability than other sectors to provide more input into this area. Q41. Is it acceptable for the information gained from such systems to be used to identify cases of problem gambling, provided that this is made clear to customers when they first join the system? Yes. Q42. We argue that operators should take into account information from third parties such as family members in cases where a possible problem gambler lacks the capacity to make adult decisions. However, we do not propose a formal requirement in this area. What is your view? Q43. Do you have any other comment or suggestion on this section? Problem gambling is a broader issue than pathological problem gambling. Persons with limited finances are particularly vulnerable to certain forms of gambling and the consequent problem of financial hardship. However such persons may not be in position to gamble frequently enough or high enough to be recognised as problem gamblers. Game content that would appeal to this type of player are the new casino machines, the lottery, progressive jackpots, remote gambling and machine versions of roulette including fixed odds betting terminals. Section 5.6: Self-exclusion

11 Q44. The Commission proposes requirements on certain operators to operate self-exclusion schemes. Do you have any comment on our general approach? Is our proposed coverage (i.e. not including pubs, licensed or unlicensed family entertainment centres and lotteries) right? Agree with the general approach but should include all sectors. Q45. Do you consider that the proposed minimum period of six months for self-exclusion is reasonable? If not, what alternative do you propose and why? Q46. We propose a time limit of 14 days within which restrictions on marketing must be implemented after an individual has chosen self-exclusion. Is this reasonable and practical? Q47. Do you have any other comment or suggestion on this section? Section 5.7: Employment of children and young persons Q48. Operators must comply with the Act s restrictions on the employment of children and young people on gambling premises. The Commission proposes code provisions indicating how operators must implement these restrictions. Are they sufficient? Young persons should not be employed in gambling premises. Q49. We consider that children and young people employed in remote gambling operations are not likely to be directly involved in providing facilities for gambling. Our tentative conclusion is that no additional guidance or code provisions are needed. We would particularly welcome views on this. Young persons should not be employed by remote gambling operators. Q50. Do you have any other comment or suggestion on this section? Section 5.8: Provision of credit by operators and the use of credit cards

12 Q51. What comment do you have on the Commission s proposal to permit payment by credit card for certain types of operator, subject to a number of provisos? Do you support the proposed list of provisos? All sectors should be treated similarly with respect to credit card use. Q52. To what extent do remote gambling operators currently offer credit to their customers? Is there a sufficient justification for allowing remote operators licensed by us to do so? All sectors should be treated similarly with respect to credit extension. Remote gambling operators can ensure that they hold sufficient deposits to cover liabilities and can apply an automatic stop-loss should deposits be insufficient. Q53. Do you have any other comment or suggestion on this section? The industry should not engage in the pursuit of debt recovery if the cause of the debt was problem gambling or if financial hardship will result. Section 5.9: Money lending between customers Q54. What comment do you have on the proposal that operators should take steps to prevent systematic or organised money-lending between customers on their premises, including the exclusion from the premises of customers suspected of involvement? Q55. Do you have any other comment or suggestion on this section? Section 6.1: Fair and open provisions rules and information display Q56. The Commission proposes to require all gambling operators to make available their terms of business to customers, to satisfy themselves that their terms do not breach the Unfair Contract Terms Act and the relevant regulations under the Act, and to be ready to give evidence that they have done so. Do you agree? Q57. Is our proposed list of issues to be covered in the information operators must make available to customers, together with the proposed requirements for making the information accessible, sufficient to secure the necessary openness?

13 In the Q5. response, three fair and open licensing issues related to site management, affiliate relationships and unauthorised game use are identified. This is basic information that players are entitled to. This information may be more likely to influence player behaviour than some of the other proposed information requirements. Q58. Do you have any other comment or suggestion on this section? In virtually all USA jurisdictions, in respect of non-tribal casinos, there is regular public information provided. Virtually all regulators provide a monthly report showing win, drop and hold percentage on a per game basis in respect of tables and on a win, drop and win percentage per denomination basis in respect of machines. (Hold percentage is win divided by drop where drop is the amount used to purchase chips to play at a game). Whilst this information is collated into regions in certain states, it is shown on a casino by casino basis in other states. The position in the UK is that minimal information was provided on an annual basis by the previous regulator, the Gaming Board. The best model of information being presented is monthly by table game and slot denomination, by casino. Players can then understand what an average hold or win percentage experience at a particular game or denomination might be. Players can also understand how much their personal loss at a casino is contributing to the casino win on the particular game or denomination. Further, it is in the interest of operators to be able to see detailed performance criteria as this enables comparison across properties and leads to a more efficient industry. This will become more relevant as more new products are introduced. The provision of detailed public performance information should apply to all gambling sectors. Two items in list of information to be provided are the odds or the house edge and average return to player. If the Commission intends to police compliance then the Commission needs to be aware of the correct information and should therefore be able to disseminate that information itself. In 2002, we notified all parties, including the previous regulator, the Gaming Board for Great Britain, that the house edge leaflet was not accurate. In particular, the leaflet implied that the house edge for a wager on the progressive jackpot on casino stud is around 5% when in reality there is negative expected value to the player in excess of 20%. The fact that this incorrect information continued to be provided to players for years after we provided notification of the misinformation, is a black mark against the industry, the regulator and the government. A primary function of the Commission should be to ensure that all information on odds, house edge and average return to player is correct. This could be conducted in-house by the Commission or by an independent certification system established by the Commission. There needs to be a significant change of culture regarding the importance of fair, open, transparent and accountable conduct and regulation. The casino sector, the most highly regulated sector, failed in this objective in something as simple as the house edge. Previously unregulated sectors have a culture that is less respectful of the fair and open

14 objective than the casino industry, so unless there is stringent enforcement the fair and open objective will not be achieved. The remote gambling issues of site management, affiliate relationships and proprietary games are simple factual issues that can easily be addressed. If the Commission fails to act on these issues, it will fail to deliver the fair and open objective. In such circumstances how could the Commission possibly deliver on the newer, and more complex, social responsibility objective? Section 6.2: Display of licensed status Q59. Do you agree that non-remote operators should be required to indicate at their premises that they are regulated by the Gambling Commission? Yes. Q60. Would it be too burdensome to require that Commission-licensed lottery tickets should bear the note Licensed by the Gambling Commission? Q61. Should display of licensed status be required for internet website operators licensed by us? If so, is it important that customers should be notified when they are leaving a Commission-licensed site? Both licensed status should be displayed and notice of leaving should be displayed. The practice of linking a licensed site to an unlicensed gambling site should not be accepted. UK licensed operators in any gambling sector should not be able to operate any non-uk licensed remote gambling. Q62. Do you have any other comment or suggestion on this section? Display of licensed status in respect of remote gambling should display the license of both the site owner and the system provider. Also if the Commission has allowed multiple entities with substantial trading relationships to be associated with a site, then the licenses of all such entities should be displayed. Section 6.3: Types and rules of casino games Q63. Should terrestrial casinos be limited to offering games on a list approved by the Commission, including some test games, played on Commission-approved rules? There should be an approved list of games. In the USA there is a wide divergence of test procedures for new games. Three Card Poker, the most successful new game ever, was removed from the first test casinos in both Nevada and New Jersey. We have strong views on

15 the best method of tests and new game introduction and intend to petition USA regulators on this subject matter. We would welcome an opportunity to present recommendations once the Commission is ready to consider the best process for test games and the introduction of new games. Q64. Are there any games that you would like to be proscribed on Commissionlicensed sites, terrestrial or remote? If so, why? Many types of games and bets do not fit with the objective of fair and open gambling. Games with bets with high house advantages. This type of game generally appeals only to inexperienced players and is detrimental to the long-term interest of gambling being understood to be fair. Unfortunately two such games, sic bo and big six, were approved by the previous regulator, the Gaming Board for Great Britain. Games with maximum aggregate payout. Certain jurisdictions have allowed application of a maximum aggregate payout per round on certain games, whereby all winnings on a round are accumulated together and payouts are reduced accordingly if exceeding the maximum aggregate payout. Operators should have low maximum wagers on such games and honour payouts in full, rather than apply the maximum aggregate payout method. Games with progressive jackpots with diminished payouts. The previous regulator, the Gaming Board, approved a method whereby if two players at the same time have hands that win the whole of, or a percentage of, the progressive jackpot then there is a diminution of the winning amounts. A fairer method is that all winning hands should be paid the full amount due. This should include all hands dealt and being dealt at the time that the first such winning hand is declared. Games with an envy bonus feature. Certain games include an envy bonus whereby a player with a bet of a least a certain amount receives a payout if another player has a certain type of hand. This is an inducement both to make the bet and to make the bet for at least the relevant amount. Games with bets that encourage contradictory play strategy. Certain games with at least two bets have strategy contradictions between the bets in certain situations. For example a certain blackjack side bet is sometimes best played by taking a third card whereas the basic blackjack game, at the same time, is sometimes best played by not taking the third card. Such a situation encourages incorrect play. Games with bets that are optional but in reality are virtually mandatory. Certain games have structures whereby, in order to play correct strategy, an optional bet should be placed over 90% of the time. An extreme example is a game with a correct strategy to place an optional bet 100% of the time. This structure induces player errors and is deceptive. (Also applies to a converse situations and structures such as allowing a player to take back all or

16 part of a bet, when it is virtually always incorrect to do so.) Proprietary games with a dispute over ownership. Where there is a dispute over the ownership of a game, then this dispute should be resolved prior to approval of the game. Remote casinos only deck depletion games except if declaration is used. In a terrestrial casino a player can see what percentage of the total deck will be used prior to shuffling in a deck depletion game (that is a game such as blackjack or punto banco where multiple rounds are dealt from the same deck(s) of cards.) Remote casinos should be required to declare the minimum percentage of the deck to be utilised, or the maximum number of cards or hands to be utilised, prior to shuffling. Examples of such declarations are Guaranteed minimum 85% penetration. or Shuffle after every hand. Q65. Would it be sensible to relax the current controls on the rules of games in terrestrial casinos or would this risk unfairness? A relaxation of rules will not risk unfairness if a sound process of game variation approval and of new game introduction is applied. Prior to establishing such a process, the Commission should determine what standard is required to establish that a game is a proprietary game and what game types should be proscribed. It is well understood that there are many variations of rules of public domain games. Examples of variations of UK approved games that could be considered are single deck blackjack, double deck blackjack, more liberal blackjack rules, double zero roulette, USA style craps, and reduced commission punto banco / baccarat. Each variation should have a dedicated title such as single deck blackjack, split any pair, double any two cards, surrender option, dealer stands soft 17 or double zero roulette. (Variations to rules of proprietary games should only be approved with permission of the owner of the proprietary rights.) Q66. Should remote operators retain the freedom to offer any games, subject to providing sufficient information about how to play, and subject to meeting technical standards and testing requirements for games software? Would this pose any threat to the licensing objectives? Remote casinos have many significant operational advantages over terrestrial casinos. The vast majority of remote casino table game revenue is from UK approved games. No table game invented by a remote casino has yet crossed over to terrestrial casinos. Virtually all games operated by remote casinos that are not UK approved games, or variations of UK approved games, are games that have had some success in Las Vegas. The methodology of remote casinos is to copy these games and infringe USA proprietary rights. There is no reason to allow remote casinos to operate games that are not approved in UK terrestrial casinos. Q67. We tentatively propose a code provision that if remote operators offer similarlynamed but different casino games they should identify any differences that may

17 confuse players. Do you think that there is a real problem? Do you support our proposal? Support both the proposal and an expansion of the proposal in that a game should not be called by different names - (Three Card Poker is currently also operated as Casino Brag based on operator request, but this was not the right thing to do). Each approved game should only be known by one name the name it is approved as. Allowing remote casinos to only operate approved games, the problem of similarly-named games will disappear. Establishing a proprietary standard prior to game approval, then the problem of remote casinos making a minor insubstantial change to a game, such as a name change, in an attempt to avoid acknowledging proprietary rights, will disappear Q68. Do you have any other comment or suggestion on this section? Commission comment refers to the opportunity for game rules to be displayed at a remote casino and playing for free. But game rules can always be obtained at a terrestrial casino and read at any time and that free play experience at a remote casino could be used prior to play at a terrestrial casino. Further Commission comment is that many terrestrial casinos are too small to offer a diversity of games, but a new game could prove to be viable in the majority of UK casinos, as was the case with Three Card Poker. With the right introduction process, terrestrial casinos and remote casinos can offer the same new game at the same time. Section 6.5: Types and rules of games played in bingo clubs Q69. The Commission proposes to make a list of proscribed games that bingo operators will not be allowed to offer. Do you agree? Yes. Q70. We expect that bingo operators will want to introduce new games. We would particularly welcome views on what type of games should be available in bingo halls in future and what related restrictions on stakes and prizes should apply. Q71. Do you have any other comment or suggestion on this section? Section 6.6: Card clubs, card room gaming and card competitions games of equal chance Q72. Do you agree with the Commission s proposal to continue the present rule that there

18 should be no levy on stakes or winnings in card room gaming, but casinos may continue to charge for the use of the card room? Charges and fees should be transparent. When poker is raked by taking a percentage of each pot it is difficult for players to track the amount of fees they are paying. Remote poker should also be operated on the same basis as in terrestrial casinos, with no raking of pots. Q73. Do you agree that we should scrap the current detailed guidelines on the running or hosting of card competitions and rely instead on the general licence condition (section 6.1) that customers must have the information necessary for informed decisionmaking? The objective of fair and open gaming should apply to the card room. There should be guidelines as to how card room competitions should be operated. Unlicensed betting on the outcome of competitions should not be permitted. Deal making should not be permitted. (Players making deals focus on eliminating players that are unwilling to make deals rather than on eliminating each other). Re-buy competitions should not be permitted. (The practice of re-buy collection has been known to have been abused by card room staff. Re-buys were only of benefit to allow larger prize pools when poker was not as popular as today.) Guaranteed prize pools should not be permitted, except if all entrance amounts are returned to the prize pool if the guarantee is exceeded. (Otherwise this practise allows the operator to not return all entrance amounts if the guarantee is exceeded.) Remote poker should operate to similar standards in respect of competitions as terrestrial card rooms. Q74. Do you have any other comment or suggestion on this section? Card room games of equal chance should not be permitted unless supervised. In respect of variations of card room poker there should be an industry standard uniformity of rules for each variation. (Each card room should have the discretion to choose which variations to offer from the standard list, and if choosing to allow dealers choice, which variations can be played in dealers choice). Remote poker should comply with a similar process of standard uniformity of rules and variations in line with terrestrial card room rules. Legal action is being taken against entities that offer supervised poker with dealers without a casino license, despite the fact that many casinos are unwilling to offer supervised poker. Clearly the unlicensed entities are catering to a demand that is not being satisfied by the licensed entities. If the authorities persist in taking legal action against unlicensed entities then a requirement to offer poker as a new license condition should be implemented. Section 6.7: Off-course betting Q75. The Commission makes detailed proposals on the information off-course betting operators should be required to make available to customers. Do you agree with our

19 proposals for what operators should display at their premises; include in their full rules; and show on betting slips? Would you add or remove anything from our proposed list? Agree in general except in respect of maximum payout. It is unfair for a punter to be in a situation where a wager can lose but can not win the full amount due. If the Commission is unwilling to remove the maximum payout limit, then an alternative method could apply as in the following example. An accumulator has 40,000 riding on an event that is priced at 3 to 1, with a total potential payout of 160,000, but the bookmaker has a maximum payout of 100,000. The amount of 20,000 should be allocated as being bet at 3 to 1. This would give a payback of 80,000. The 20,000 not allocated to the bet should be paid to the punter as a part-win regardless of the result of the event. This gives a total maximum payout of 100,000 if the bet wins. Where there is more than one event to be completed, but the maximum payout will be achieved on the first event, then the bet should be resolved using this method on the first event only. Where due events transpire at the same time then the order that they are recorded on the betting slip or on the remote betting records should apply. Single event wagers should always be paid in full. Q76. Do you have any other comment or suggestion on this section? The betting operator should display the maximum amount that a punter can win on a single wager at the current price. All punters should be granted the opportunity to bet to at the current price for a predetermined maximum win amount. Different amounts could apply to different types of events and different types of bets. Bets could be accepted that would win higher amounts at the discretion of the operator. It is unfair for bookmakers to advertise prices and then refuse to transact even small wagers at those prices to punters that are known to have some level of competence. In betting premises there should be a notice displaying details of all uncollected bets that have not been paid within a certain time period. This display should be maintained for a period of time. The display should indicate at least the bet number, date, time, type of bet, amount of the wager(s) and amount due. This is fair to any punter that may have mislaid a winning ticket or forgotten a specific bet. Section 6.8: On-course betting Q77. The Commission makes detailed proposals on the information on-course betting operators should be required to make available to customers. Do you agree with our proposals for what operators should display at their premises; include in their full rules; and show on betting slips? Would you add or remove anything from our proposed list? Maximum payout should be uniformly defined to either include or exclude the wager (maximum winnings) and the opportunity to place a wager to win that amount should be

20 available to any punter. Q78. We consider it is not necessary to apply our requirements for operators at approved horserace tracks to betting operators at dog racing tracks and non-approved horse racing tracks. Do you agree? Q79. Do you have any other comment or suggestion on these sections? Section 7.1: Advertising Q80. Do you agree with the principles of the advertising code that the Commission envisages? Is there anything you would add or remove? Q81. Do you agree that adherence to the code by licensed operators should be required by a licence condition, to make it mandatory? Q82. What do you think of the suggestion that gambling advertising should be required to include educational messages on responsible gambling? Q83. Do you have any other comment or suggestion on this section? The Commission has publicly identified the type of advertising that is currently regarded as unlawful. Any entity that continues to advertise in an unlawful manner should not be allowed the privilege of a UK license. Certain types of advertising are directed towards vulnerable persons with limited finances. Such advertising should be restricted. For example, the amount of a progressive jackpot should not be displayed except at that particular table game, machine game or the game page of the appropriate game at a remote casino. Certain types of bet advertising are misleading. For example - Bet 10 and Win 50 - Bet team X at 4 to 1 The reality is that the payout is 50 but the win is 40.

21 Section 7.2: Inducements Q84. Is there evidence that particular inducements increase problem gambling? All forms of inducement are designed to increase gambling. As such it is inevitable that inducement increases problem gambling. Q85. Should operators be required to put in place systems enabling them and the Commission to track the impact of inducements? Q86. Should we seek to distinguish between ordinary marketing and potentially harmful inducements? How can such a distinction best be drawn in a licence condition or in a code? Agree but have limited confidence that such distinctions can be made. Q87. We propose prohibiting the use of alcohol as an incentive. What is your view? Free alcohol should not be available at licensed premises. The price point for alcohol should be at least on parity with bars and restaurants in local hotels. Q88. Do you have any other comment or suggestion on this section? In the USA, some companies that are the most successful with using the inducement of a reward card (as a payback to players) are also the same companies that have been predominant in increasing the house edge (reducing the payback to players). These are contrary positions, but the reward appeals to novices and inexperienced players, whereas house edge changes are only understood by experienced players. A preferable situation is that no inducements are allowed and operators compete on service, facilities and reputation. With liberalised rules and game diversity, operators can also compete by offering game variations with reduced house edges. Section 7.3: Live entertainment Q89. The Commission proposes that the relevant advertising codes should require any advertisement for live entertainment on gambling premises to make clear that it will take place on gambling premises. Do you agree? Q90. Do you have any other comment or suggestion on this section?

22 Section 7.4: Mailing lottery tickets to non-society members Q91. Do you agree with the proposed restrictions on mailing lottery tickets to non-society members, in particular that no more than 20 worth of tickets should be sent to any one non-member address? Disagree with any mailing of tickets to non-members. Q92. Do you have any other comment or suggestion on this section? Chapter 8: Dispute resolution Q93. The Commission proposes to require operators to keep records of complaints and disputes and to put in place best practice procedures including an independent element. Do you have any comments? Q94. Do you have any other comment or suggestion on this section? The Commission should function as the ultimate arbitrator. A knowledgeable and active enforcement division that is on call at all operational hours can assist in resolution of the vast majority of disputes. Section 9.1: Training Q95. Do you agree that it would be impractical and unnecessary to require accredited training qualifications for staff holding Commission licences? If not what do you propose should be required and why? Q96. What responsibility do you see us having in ensuring that staff we license are properly trained and kept up to date? And how should we discharge that responsibility? Q97. What should we do to encourage the development of nationally accredited standards both for technical and for social responsibility related training in the gambling field?

23 Q98. Do you have any other comment or suggestion on this section? If operators are aware that infractions will be punished by a public system of fines and that repeated infractions will result in termination of license there will be adequate training. The use of covert dedicated Commission staff could assist in ensuring that operator staff is adequately trained. Section 9.2: Fraternisation between gambling employees and customers Q99. The Commission proposes that operators be required to put in place policies and procedures to manage any such relationships and to avoid prejudice to the licensing objectives. Do you agree that this is sufficient? Q100. Do you have any other comment or suggestion on this section? Section 9.3: Tipping of gambling employees Q101. The Commission proposes that tipping of staff that hold personal licences should be banned. This will broadly continue the present position. However, the arguments are finely balanced. What is your view? Tipping should be allowed, but on a pooled basis rather than an individual basis. However, tipping should not be used by operators as an excuse for stagnation of salary and benefits. Q102. Do you have any other comment or suggestion on this section? If the Commission is adamant in not allowing conventional tipping at the game then an alternative is that a sizeable tip box should be placed at the cash desk in a prominent position with an appropriate notice displayed. Information on tipping could be included in information on gaming. Either all staff could share all tips or the tip box could be for gaming staff only and non-gaming staff tips as per current methods. Section 9.4: Gambling by operators employees Q103. The Commission proposes to remove the current restrictions but to require operators to ensure employees have access to advice on responsible gambling. Do you agree?