Operating under another company's licence
There is an exception which allows a person or company to provide facilities for gambling under another’s operating licence without themselves holding a licence.
You should always seek your own legal advice.
Where a person provides facilities for gambling, as defined in section 5 of the Gambling Act 2005, in the course of a business carried on by another person who holds an operating licence they can, in the case of betting or gaming, take advantage of the exception in section 33(3)(a) of the Act.
There is a similar exception in the case of lotteries, section 258(3), but that cannot be taken advantage of by anyone who acts as an external lottery manager.
These are the general principles we take into consideration when deciding if a company is acting in the course of another’s business within the scope of this exception:
- The company must be doing the licence holder’s work. If the company does the same sort of work for other people, it is likely to be acting in the course of its own, discrete business and would require its own operating licence.
- Company accounts are likely to be consolidated with the licence holder's or, where that is not the case, the company’s sole customer would be the licence holder.
- The company is likely to be a wholly owned subsidiary of the licence holder.
- Responsibility for compliance lies squarely with the licence holder. We would expect that policies are decided, drawn up and enforced by the licence holder and they are responsible for ensuring compliance with all Licence conditions and codes of practice (LCCP) and information requirements.
- Responsibility for adherence to technical standards lies with the licence holder and they have controls in place to ensure the company complies.
- Governance arrangements clearly show that the business is controlled by the licence.
This list is not exhaustive and we would also look at:
- any employment contracts that may be in place (to satisfy the provisions in section 93 and 94 of the Act where relevant)
- who owns any relevant intellectual property rights
- what licences are held by the company in other jurisdictions and why.
It is important to note that these are guidelines only and we will look at the individual circumstances and relationships in each case before coming to any decision as to whether a company can come within the scope of another’s operating licence rather than requiring its own. Whilst we may consider such arrangements acceptable in one instance, we might not in another due to seemingly small but significant differences or other relevant information available.
Types of gambling to which this exception can apply
There are other limitations on the ability of a person to operate under the umbrella of another’s licence, depending on the type of gambling.
In the case of betting (other than pool betting), the ability of a person to operate under another person’s licence is limited by the requirement that bets can only be accepted by the licence holder, or a person employed by them under a written contract of employment or the holder of another general betting operating licence (see section 92 of the Act).
In the case of pool betting, equivalent restrictions apply but in addition there are specific permissions for individuals to act as agents in accepting bets on tracks in reliance on an occasional use notice or in relation to football pools, subject in either case to needing to be authorised in writing (see section 93 of the Act).
In the case of lotteries we may impose a requirement that all arrangements are made by someone holding a lottery manager’s operating licence (see section 98 of the Act).
Gaming machines and gambling software
The exemption in section 33(3)(a) is not available to gaming machine and gambling software manufacturers/suppliers because section 33 does not apply to them (they are covered by sections 41 and 243).
There is no express provision in sections 41 and 243 to allow a person manufacturing/supplying gaming machines or gambling software to operate under another’s licence.
However, where the operational decisions for these companies are made by the owning parent company it can be appropriate for that owning parent company to be accountable for the group, as opposed to the individual companies being directly accountable, and for it to be the parent that holds the licence.
We might, in appropriate circumstances and where the general principles outlined above apply, issue licences to manufacturers/suppliers which authorise the licence holder to carry out the relevant activities either directly, or through the subsidiary and include the name of the subsidiary in the licence.
Provided the named companies carry out the licensed activities for the licence holder they will be covered by the licence. The licence holder will be responsible for the activities carried on by those companies as its agents, in particular that the machines and games comply with all technical standards.
The licence holder must ensure these are named agents on its licence. The licence holder will be in breach of sections 41 or 243 if it operates through a company that has not been named as an agent on its licence.
Naming the subsidiary companies as agents on the licence makes it absolutely clear that the licence holder is responsible for all compliance issues. We will take action if necessary against the licence holder if by reason of the acts of any of the agents it fails to comply with LCCP or technical standards.
You should always seek your own legal advice, if in any doubt, contact us to discuss your individual circumstances.