Insight

The publication of this Report is significant, as it is the first time an Irish Government position paper has openly supported a more permissive gambling regulatory regime. Even the idea of resort casinos, for example, was something that previously did not have broad political support. There appears to be political consensus that the existing legislative regime is not fit for purpose and requires a radical overhaul. However, with a general election likely in the coming months, it is difficult to predict, when draft legislation will be produced.

Key Points in the Report

• Betting, gaming and lotteries will be permitted subject to regulation and licensing under a single Act
  
• A Gambling Control Unit within the Department of Justice will act as a regulator
  
• All forms of remote gambling will be regulated
  
• Off-shore gambling providers will be regulated where they sell gambling products into Ireland and where Ireland is used as a base for offering gambling services abroad
  
• Certain types of casinos will be permitted, subject to strict regulation and licence
  
• Betting exchanges will be regulated and subject to licence
  
• Advertising of all forms of gambling will be regulated

Regulation Generally

The proposed new legislation will be a modern, responsive code that recognises that some people gamble and enjoy gambling, and at the same time takes into account considerations such as the protection of minors and vulnerable people, that gambling should be fairly and openly conducted and that gambling is kept free of crime. The legislative divide between betting on the one hand and gaming and lotteries on the other will not be continued, with all forms of gambling to be regulated under one piece of legislation. This approach is in line with the modern gambling environment where many different forms of gambling are delivered as a package, particularly online.

Gambling, betting, gaming, participating in a lottery, as well as all forms of remote gambling, i.e. gambling over the internet, by telephone, mobile phone, interactive TV, will be clearly defined in the new legislation. It will also specifically regulate all forms of remote gambling for the first time under Irish law.

Gambling will only be permitted on foot of a licence, permit or some other form of registration, subject to exemptions in respect of private gambling. Secondary legislation will flesh out the detail of the regulatory regime in terms of standards, inspections, age verification systems, anti-money laundering compliance, codes of practice, periodic changes to stakes, pay-outs and prizes, facilities for gambling and so on. To the extent that it is possible, the new legislation will be drafted in a way that allows for further technological developments. There will be a range of penalties for non-compliance with the regulatory system, ranging from administrative-type penalties to criminal law sanctions.

Remote Gambling

The Report proposes that an operator of remote gambling services (“remote operator”) must be licensed if it has Irish-resident customers, irrespective of where it is established. A remote operator operating from Ireland, must be licensed, even where it has no Irish-resident customers. Any licence granted under the new regime will not entitle remote operators to offer products to any other jurisdictions without having a licence to do so in that jurisdiction. There are no definite conclusions in the Report as to how unlicensed remote operators, which by their nature may not be subject to the jurisdiction of the Irish Courts, will be sanctioned although it is suggested that the Minister for Justice could be given powers to block offending websites and impact on their financial transaction processing. This represents one of the key challenges to the legislature in drafting legislation in this area.

Casinos

The Report suggests that two kinds of casinos would be defined and permitted in the new legislation:

Registered Casinos: These would be small undertakings with no more than 15 gaming tables (excluding poker tables) and a maximum of three gaming machines per table. This type of casino would meet the demand for casino gaming that has resulted in the emergence of the “private members” gaming clubs. All clubs currently offering casino games would have to be licensed as registered casinos. Only approved casino games, which would be defined in secondary legislation, could be operated and any licence fee would be calculated on the basis of table and machine numbers. In terms of the licensing process, a combination of a court-based and regulatory authority based system is suggested. Licences would also be subject to the grant of appropriate planning permission, regardless of what activity had taken place in the premises prior to the licence application. This will have implications for operators of existing private members clubs which would be unlikely to have planning permission for casino use.

Resort Casinos: These would be very significant developments (perhaps up to 5000 square metres of floor space with as many as 1,000 to 1,500 gaming machines) typically involving other customer services such as live entertainment, dining and restaurant areas. Such facilities should have the potential to contribute significant employment and other revenue generating opportunities. Operating licences for this type of casino would be for a fixed term, eg. 15 years.

The Report notes that the question of whether any, or how many resort casinos would be permitted would have to be decided in the future. In the event that a decision was made to permit such casinos, the Report suggests a rigorous location adjudication process which would be managed by a specially established Independent Casino Adjudication Panel. Recommendations by the Panel would be made to the Government and the Government decision in the matter would then be the subject of a debate in the Dail. Following a positive decision in relation to location, applications would be invited for a licence to establish and run a resort casino. 

Betting

The existing legislation, i.e. the Betting Act, 1931 (as amended) would be repealed and re-enacted to form part of the new gambling legislation. The existing licensing process for bookmakers would not be significantly changed. Responsibility for regulation would be transferred from the Minister for Finance to the Minister for Justice. Betting exchanges (which to a large extent have been unregulated to date) would be regulated and subject to licence. Gaming machines would not be permitted on licensed bookmaking premises, however bookmakers should be permitted to exploit technological advances so that services normally permitted over the counter may be offered through terminals.

Gaming Machines/ Licensed Gaming Centres

The Report proposes that gaming machines would be regulated and only permitted in the licensed environment of a casino or licensed gaming centre. Gaming machines will be categorised in accordance with their maximum stake and payout, with machines at the higher end of the scale only be permitted in certain specified premises. 

Two types of licensed gaming centres are proposed:

(1) Adult Gaming Centres, which would be restricted to over-18s and would be permitted to offer a range of gaming machines up to a maximum number. No casino games or betting would be permitted.

(2) Amusement Centres, which would be permitted to offer a range of gaming machines at the lower end of the scale, together with amusement machines with prizes. Under-18s would be permitted to enter, but would not be permitted play any form of gaming machine.

Lotteries

Under the current law a lottery can only be promoted by a charitable or philanthropic body and lotteries (including bingo) represent a significant revenue stream for the charities sector and voluntary bodies. The Report proposes that this link be maintained but the circumstances under which lotteries would be permitted should be updated. The existing lottery licensing procedure, involving a District Court application, would be replaced by a permit system operated through the Department of Justice. Maximum prizes would be substantially increased (up to €50,000 per week or €250,000 per month). A new category of promotional lottery is proposed to deal with lotteries operated in conjunction with a sales or marketing drive, also to be operated under permit from the Department of Justice.

The position in relation to bingo, which has been held to be a lottery under Irish law, is less clear cut. It is suggested that bingo may be removed from the definition of lottery which would allow it to be offered on a purely commercial basis as far as the online environment is concerned. However, the Report also suggests that the link with charities should be maintained in respect of land-based bingo for at least a certain period of time. At a later date it might be appropriate, following a review by the Minister to permit land-based bingo to be operated as a commercial activity similar to gaming.

The National Lottery

The National Lottery would maintain its separate status with the Department of Finance. However it would be subject to any codes developed under the new gambling regulatory regime in respect of responsible gambling and protection of minors.

Advertising

The Report suggests that the new legislation would regulate the advertising of all forms of gambling, create new offences relating to the advertising of unlawful gambling and provide powers to make regulations controlling the content of gambling advertisements. Any gambling operator without an appropriate licence or permit would not be permitted to advertise in the jurisdiction and media providers would be prohibited from accepting such advertisements.

Enforceability of gambling contracts

The Report proposes that the provisions in the existing legislation preventing the enforceability of gambling contracts would be discontinued. This is in line with the position taken by Great Britain in its Gambling Act, 2005.

Taxation

The Report acknowledges that taxation is not part of its remit. However it notes that all gambling activities (excluding lotteries) should be subject to a form of gambling tax payable in addition to other taxes. In respect of gaming, it is suggested that a gambling tax might be levied based on the gross profits concerned. In the casino sector taxation arrangements would be analogous and might be levied at various progressive rates on gross gaming revenue. It suggests that as a matter of equity, remote operators should also be subject to a gambling tax in respect of gambling products sold into the Irish market.

For more information, please call +353 1 232 2000 and ask to speak to the following in our Intellectual Property Group:

Alistair Payne or Valerie Shaw.

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© Matheson Ormsby Prentice 2011

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