Primary Activity Update: Luxury Leisure Ltd v Gambling Commission 2014

ON THE DECISION FROM THE FIRST TIER TRIBUNAL ON THE CASE OF LUXURY LEISURE LIMITED v THE GAMBLING COMMISION (GA/2013/1), 13 MAY 2014, AND RAMIFICATIONS FOR THE CONTROVERSIAL IDEA OF “PRIMARY ACTIVITY”

As regular visitors to this blog will know, I have commentated on the thorny issue of “primary activity” under the Gambling Act 2005 for several years, including my blog entry “The Newham Ripple” from 11 March 2013.

We now have a very useful decision from the FTT which provides further guidance on the legal status of “primary activity”. The full text can be accessed here: Luxury Leisure Ltd v Gambling Commission 2014.

Luxury Leisure Limited were subject to an operating licence review on the grounds that they were not adhering to the infamous Condition 16 of LCCP concerning providing “sufficient facilities for betting”. The Gambling Commission upheld the review and issued a written warning. Luxury Leisure appealed this decision.

Judge NJ Warren is at times withering in his assessment of the concept of primary activity and Condition 16. He says the phrase “primary gambling activity” is used ambiguously, sometimes meaning “the ‘prime purpose’ of the licence“, sometimes meaning “not merely consideration of the ‘parent’ licence [ie is it betting, bingo etc] but a factual assessment of what actually goes on in any one set of premises“.

The Gambling Commission sought to argue that the test here was whether there were sufficient facilities for betting such as to indicate that betting is the primary activity. NJ Warren has rejected this, saying “the [Gambling Commission interpretation] inserts into the condition, without justification, words which are simply not there“. He then (correctly in my view) notes that there is a difference between existence of facilities and dominance of facilities. He goes on to make a key statement: “I conclude that Condition 16 does not require a contest between betting and the FOBTs as to which is or could be the primary activity at any given time“.

He does, however, reject a separate argument that Condition 16 itself was ultra vires noting the provisions of s.86(1)(a) of the 2005 Act (which prevents the Commission from attaching conditions to operating licences about the number or category of gaming machine which may be used), saying that it is still open to the Commission to regulate what he calls the “atmosphere” in which machines may be used. He also rejects the view that once a premises licence is granted it is a matter for the licensing authority and not the Commission, saying that the Act envisages some “overlap” between the two. These comments will be welcomed by the Commission even though they have lost this case.

The judge then goes on to strongly criticise the Gambling Commission Code of Practice due to the ambiguity of definitions and interpretations and ultimately concludes it is of no use in determing whether Condition 16 has been met in this case. What then, is the efficacy in such a Code?

He has more to say concerning the physical layout and operation of the premises in question, which had historically been a premises for FOBTs and indeed on old justices condition insisted on that, the presence of a Betfair machine and so on. Ultimately he brings us back to the issue of “existence vs dominance”. He concludes that “existence” is enough to satisfy the “sufficient facilities for betting” test in Condition 16.

This decision is of considerable use to operators who have had a Damocles sword over their licence in review processes or even with licensing authorities, to try and meet a disputed test which has been in a state of flux for years. My view is that the concept of primary activity is one which never existed in the law in the first place, was not intended by Parliament. It is a sort of para-statutory creation by the Commission themselves, and has again been found wanting. The outcome of this case for the trade generally is that it allows operators to “push back” when targeted and can refer to the “existence vs dominance” principle laid down by the FTT in this case. Whilst this case relates to operating licences, it is the best judicial analysis of primary activity we have and it is certainly of relevance in relation to premises licences and licensing authority action/decision making too.

I expect that the Gambling Commission will respond to this by redrafting the Condition following another consultation, just as they did with the recent Trafalgar case, and the word “dominant” may appear in Condition 16.

The various incarnations of Condition 16 and introduction of new concepts with which to support it such as “actual use”, “typical betting shop” and so on betray, to me at least, that there was always a fundamental issue with enforcing a concept which does not exist in the primary legislation.

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About Stephen McGowan

Leading Scottish licensing solicitor at TLT. Chairman of BII Scotland.
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