Primary gambling activity and licence applications

RCJ portrait 146x219Gerald Gouriet QC and George Mackenzie report on the outcome of a keenly-awaited High Court hearing on the question of 'primary gambling activity'.

Following an interim hearing in the High Court in London on 12 February the threat to the gambling industry posed by the judicial review proceedings in the case of London Borough of Newham v Thames Magistrates’ Court has effectively been neutralised.

The proceedings concern the decision of District Judge Goldspring, sitting in the Thames Magistrates’ Court, to grant a premises licence to Paddy Power in respect of premises on Green Lane, Upton Park, Hackney on 17 June 2013.

Newham LBC appealed the decision on the basis that during the course of his decision the District Judge observed (though the appeal was decided on other grounds and did not turn on this point) that licensing authorities were not permitted to take into “the issue of primary gambling activity” into account when determining applications for new premises licences.

Newham LBC sought a declaration in the following terms: “The District Judge erred in law in deciding that licensing authorities have no power to consider the issue of primary gambling activity when discharging their functions under the Gambling Act 2005.” They did not explain what was meant by “the issue of primary gambling activity.”

There was genuine concern at industry level about the ambiguity, inconsistency and ultimately the lawfulness of the myriad of Gambling Commission’s policy (expressed in their statutory guidance, non-statutory advice notes, standard operating licence conditions and ordinary code provisions) which refers to primary gambling activity.

In particular there was real concern that through the ever-expanding notion of primary gambling activity, the Gambling Commission were seeking to direct licensing authorities to have regard to the expected use of betting and gaming facilities which are, or which are proposed to be, made available in licensed premises.

This would be direct conflict with s. 153(2) of the Gambling Act 2005 which provides that “In determining whether to grant a premises licence a licensing authority may not have regard to the expected demand for the facilities which it is proposed to provide.”

There was a real concern that through the vehicle of the judicial review proceedings Newham LBC would obtain a High Court judgment that might have been read as endorsing the proposition that “primary gambling activity” is about the use of betting facilities rather than the genuine provision of them.

Accordingly Paddy Power sought a direction ordering Newham LBC to explain what was meant by “the primary gambling activity issue”. At the hearing Mr Justice Blake permitted Newham LBC to abandon the wording of the declaration originally sought and adopt the wording of the declaration sought by the Gambling Commission, itself an interested party in the case. That declaration is in the following form:

“The effect of section 153 of the Gambling Act 2005 is to require a local licensing authority carrying out its functions – including considering applications for premises licences – to have regard to any code of practice under section 24 and any guidance document under section 25 issued by the Gambling Commission, including provisions of that code and the principles contained in that guidance. On the present drafting of the code of practice and the guidance document, one provision of the code and principle contained in the guidance to which a local licensing authority must have regard is that of primary gambling activity.”

This, in the words of Blake J, was drafted with considerably more precision than the declaration originally sought by Newham LBC. The judge had asked Counsel for the claimant whether Newham “wanted anything more from the declaration” than the Gambling Commission, and if so, what it was. After a short adjournment Newham decided to adopt the different wording suggested by the Gambling Commission.

Blake J therefore declined to order Newham LBC to explain what was meant by “the issue of primary gambling activity” because the new form of the declaration sought simply follows the wording of section 153 of the Gambling Act 2005 and does not raise the meaning of “primary gambling activity” as an issue. He described the declaration as now worded as “more anodyne” than the declaration originally sought.

It is important to note that Blake J made it clear that the s. 153(1) duty does not extend to documents produced by the Gambling Commission on a non-statutory basis, such as their “special edition bulletins” and “press releases”. Following his judgment it is now once again a live issue as to the extent to which these documents should be taken into account by licensing authorities when determining premises licence applications.

Blake J also made clear that the statutory obligation to have regard to the documents listed in the declaration did not mean that the contents and principles expressed in those documents had necessarily to be applied in any given case. Whether what is contained in a document to which regard must be had should be applied in any given case depends, ultimately, on the lawfulness of that content.

The judge held that the lawfulness of the notion of primary gambling activity, insofar as it is expressed in documents to which s. 153 requires regard to be had, will need to be tested on another occasion. He did say, obiter, that he had no problem with para. 19.19 of the Gambling Commission September 2012 guidance to local authorities which refers to “sufficient facilities for betting” and that that paragraph should be the focus of attention of licensing authorities.

Though he did not express the view that they were unlawful the judge was more circumspect when it came to a particular paragraph in the Gambling Commission’s August 2012 Bulletin which refers to the “use made of facilities for betting” and Ordinary Code Provision 9 which refers to “the use, either expected or actual, to be made of the different gambling facilities”. As has been mentioned above, consideration of future use, would seem to be to be in conflict with section 153(2).

Where are we after the interim decision in the Newham case? The High Court hearing was only a directions hearing which may well now be settled by consent. The industry can be fairly confident that the High Court will not be ruling on what is meant by “the issue of primary gambling activity” in the context of this case. However, in reality, it does seem that this matter will be brought to the fore soon enough. In the meantime the declaration sought in the Newham decision does little more than repeat s. 153(1) of the Gambling Act 2005.

There is nothing in the decision or the order that can be used against the industry in order to lend credence to the proposition that the notion of primary gambling activity is (a) lawful or (b) concerned with use of facilities and/or the demand for them, rather than the genuine provision of facilities. Until there is a definitive test case on the meaning of “primary gambling activity” licensing authorities and magistrates’ courts will need to decide these two matters for themselves.

They will also need to decide what regard to have to non-statutory guidance produced by the Gambling Commission. Given that some of these documents appear to stray into the forbidden territory of demand (see s. 152(3) of the Gambling Act 2005) there must be a real question as to the extent to which it would be lawful to do so.

The directions hearing left the waters largely undisturbed, though they are still murky. As Shakespeare might have said, the much-anticipated Newham judicial review became a tale full of sound and fury, signifying nothing.

Gerald Gouriet QC and George Mackenzie are barristers at Francis Taylor Building.