Skill with prizes (SWPs)
These are NOT gaming machines. A skill with prize machine can be sited anywhere. You might see them in the foyer of a cinema, shopping centre or a social club for example.
The difference between SWPs and gaming machines is that you must have a licence or permit for a gaming machine but for SWPs you don’t need one.
How can you tell the difference between an SWP and a gaming machine?
It depends on whether any of the games offered on the machine amount to ‘gaming’ as defined in section 6 of the Gambling Act 2005 (the Act). In the Act ‘gaming’ means playing a game of chance for a prize.
Is the game played on the machine a game of chance?
If just one game from a group of skill games is a game of chance then the machine as a whole is classed as a gaming machine.
Consider all four of these questions to help you decide.
Question 1: Does the outcome of the game depend entirely on chance?
If the answer is ‘yes’ then the game is clearly a game of chance and, if played by means of a machine, that machine is a gaming machine. An example of a game whose outcome is determined entirely by chance is roulette.
Question 2: Does the game contain an element of chance as well as an element of skill?
A game in which the result can be influenced by chance is a game of chance for the purposes of the Act. Therefore the machine on which the game is played is a gaming machine.
It does not matter for these purposes whether the element of chance is greater than the element of skill. Nor does it matter whether the element of chance can be eliminated by great skill.
An example of a game which contains both an element of chance and skill is poker.
Question 3: Is the element of chance involved in the game significant enough to make a difference?
There comes a point where the element of chance is so small that it should be disregarded.
An example of a game where the element of chance should be disregarded is chess, where the element of chance introduced by determining who is to play as white and black is so small as to be likely to be considered irrelevant.
Question 4: Is the game presented as involving an element of chance?
Where the game does not involve an element of chance it may still be considered to be presented as involving an element of chance. You will need to look at:
- How the game appears to the player
- What the game is called and whether it contains language associated with gambling
- The livery of the machine and whether it contains symbols or graphics associated with gambling
- The appearance of the game itself and whether it contains symbols or graphics associated with gambling, including (but not limited to) the turn of a wheel, the spin of a coin, the roll of a dice, reel bands, or the random selection of numbers
- Whether the game involves the player in actions associated with gambling including (but not limited to) placing chips or markers on numbers, or engaging in prediction
- Any contextual indications such as advertising signage or marketing material.
Any one of these factors by itself may not be enough to classify a machine as a gaming machine. For example, a picture of dice in a game by itself doesn’t necessarily make it a gaming machine.
What do I need if it is a gaming machine?
If the answers to the questions above indicate that the game in question is ‘gaming’ then you need an appropriate licence not only to make it available for use but also to manufacture, supply, install, adapt, maintain or repair the gaming machine.
Gaming machine licences
Is it really a skill-based game?
If you have answered the questions above and you think the machine is an SWP then you should ask these further questions.
Games with any of the factors set out below are likely to contain a significant enough element of chance that the machine would be a gaming machine, even if the game claims to test a player’s skill in order for them to win a prize.
It doesn’t matter whether the factors are present at all times, or whether they are introduced by means of a compensation mechanism. The factors are:
- a suitably skilful player does not have sufficient time to exercise their skill
- an outcome based on a player’s reactions is not genuinely achievable
- a game based on memory does not give the player the opportunity for all the necessary information to be retained and recalled
- a game where the player controls operate in an inconsistent manner, for example where a pressure sensitive button does not give the same output for the same applied pressure in each go on that machine.
Finally, if it is not possible for all of the advertised prizes to be won, then the game may be a fraud, in which case we would draw it to the attention of other agencies.
What is the maximum stake/prize on an SWP?
As you don’t need a licence or permit there is no legal limit for stake or prizes.
However, it would be very difficult to manufacture a genuine SWP machine that is economically viable and offers prizes over £50 (the prize limit set by the industry trade body following discussion with us).
We would be likely to raise questions about machines with prizes above this range.
Some SWPs have a compensation mechanism. In broad terms ‘compensation’ affects payout. It can alter the chances of winning depending on the circumstances (for example the amount of money a machine has already taken/paid out).
Compensation can also result in the outcome of a game, which may be presented as dependant on skill, being in fact predetermined.
There are many different types of compensation mechanism. It is not possible to generalise as to their legal effect. Each case needs to be considered on its individual facts. However, the operation of compensation is clearly a relevant factor when considering the questions above.
Where a compensation mechanism introduces a random element into the game, this may result in the game being one of chance, but it does not necessarily follow in every case.
Not every random or unpredictable element in a game necessarily leads to the conclusion that the game is a game of chance. There will be cases where the unpredictable or random element is present for the very purpose of testing the skill or knowledge of the player. For example, to challenge the player’s use of skill, whether that be manual dexterity or knowledge.
It follows that compensators that vary the degree of skill required to win a prize, without introducing an appreciable element of chance, will not necessarily, in and of themselves, make a game a game of chance, provided that compensation does not prevent a suitably skilful player from being able to win any of the published prizes.
The interpretation of the Gambling Act is, of course, ultimately a matter for the courts.
There are duties to be paid on SWP machines so you should read this information in conjunction with the characteristics published by HMRC
VAT Betting and Gaming guidance