Regulation and the Public Interest: Commercial Gambling and the National Lottery
| DOI | http://doi.org/10.1111/j.1468-2230.1966.tb02095.x |
| Date | 01 July 1996 |
| Published date | 01 July 1996 |
THE
MODERN LAW REVIEW
Volume
59
July
1996
No.
4
Regulation and the Public Interest: Commercial
Gambling and the National Lottery
David
Miers”
Introduction
The National Lottery etc Act 1993 (the 1993 Act) introduced into Great Britain and
Northern Ireland a state lottery similar to those that are commonplace within the
rest of the European Union and in North America. An abbreviated version of the
Government’s vision statement indicates that the National Lottery ‘should
be
amongst the best in the world, capturing the imagination of the nation with a series
of
fun
and simple, high quality games.
The
Lottery should be seen as
a
tasteful and
acceptable way to win money, whilst generating money for the National Lottery
Distribution Fund (NLDF). It must be
run
in a fair and trustworthy manner that is
beyond reproach.’l The Lottery is managed by Camelot plc,
a
private sector
company licensed under section5
of
the Act by the Director General of the
National Lottery. It holds separate licences, awarded under section 6, for the
promotion of individual games. With weekly ticket sales during its first year of
approximately E90m (E65m from the on-line game and E25m from the various
Instants
games),
a
turnover
of
E4.68bn will generate E561m by way of Lottery duty
(12 per cent), E234m
(5
per cent) to the retail outlets that sell the tickets, E280m (6
per cent) to Camelot to cover its operating costs and profit, E2.29bn in prizes (49
per cent), and E1.31bn (28 per cent) to the five good causes specified in the Act:
the arts, sport, charity, the national heritage and events to mark the next
Millennium. These sums are significantly greater than the Government’s more
modest initial expectations for the Lottery, constituting a 20-25 per cent increase
in a national gambling turnover of some E20bn in 1995.*
The main theme of this article is that the public interest argument in favour of
the expansion
of
gambling opportunities in the name of good causes threatens to
compromise the structure within which the National Lottery is regulated. This
structure is overseen by a new statutory agency established by section 3 of the Act,
the Office of the National Lottery (OFLOT), and is a structure that has for some
*Professor of Law, Cardiff Law School.
This is
a
revised version of
a
paper given at the 9th International Conference on Gambling and Risk
Taking, University of Nevada, June 1994.
I
am grateful to Stefanie Malik and
to
the
Review’s
referees for
helpful suggestions on the draft version, though
I
am
responsible for what is written.
1
OFLOT, Director General of the National Lottery, Annual Report 1993/94, HC 672 (1994) para 3.1.
2
Peter Davis, Director General of the National Lottery, Evidence to the Committee of Public
Accounts,
Evaluating
the
Applications
ro
Run
rhe
National
Lorrery,
HC 96-i (1995-96)
q
267.
489
0
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years been employed
in
the pursuit of a countervailing argument
in
favour of their
containment. This theme
will
be developed
in
the four sections which follow this
introduction. They deal in
turn
with the public interest justifications for the
regulation of commercial gambling (in particular, gaming); the impetus for and the
distribution of the proceeds of the Lottery; the identification of a basic model for
the regulation of commercial gambling; and, fourthly, an evaluation of the manner
of its implementation in the case of the Lottery.
The public interest in the regulation
of
commercial gambling
The decision to introduce the National Lottery was a marked departure from the
policy that has traditionally characterised the approach of successive British
governments to commercial gambling; that is, that to the extent that there exists an
unstimulated demand for the particular gambling medium, it is the function of
government only to regulate its supply
so
as to satisfy that demand. This policy
underpinned the structures introduced in 1960 to regulate the off-track betting
market and in 1968 to regulate commercial gaming. In the latter case, the failures
of the unregulated market unwittingly created by the Betting and Gaming Act 1960
prompted the enactment of a highly complex and sophisticated regime designed to
regulate both the quality and quantity of the supply of gaming faci1ities;and
suppliers’ compliance with performance standards and information disclosure rules
contained in the legi~lation.~ The constant threat of a repetition of the spillovers
that led to the introduction of this regime is evident in the recent remarks of the
Gaming Board for Great Britain, the agency which was established by the Gaming
Act 1968 to
be
responsible for it.
Gambling is an activity in which the only product which changes hands is money.
All
commercial gambling is therefore cash generating and cash circulating, and
as
such is
susceptible to criminal involvement (for example, with money laundering) and can be
addictive to individuals. Excessive gambling can cause misery to individuals and their
families.
As
a consequence, gambling is regulated in all developed countries and, whilst the
nature
of
the regulatory system varies from one country to another, the Board believes that
the following objectives are common to them
all:
-
permitted forms of gambling should be crime-free (both in terms of those who operate
them and the players they attract), conducted in accordance with regulation and honest.
-
players should know what to expect and be confident that they will get it and not be
exploited.
-
there should
be
some protection for children and vulnerable persons?
The regime governing commercial gaming is a paradigm of an interventionist
approach to social regulation. Market entry is monitored by an agency which is
formally independent of the enterprise; it has power to set
or
to modify standards
of entry and performance, and, in the event of non-compliance, may invoke
sanctions which temporarily
or
permanently exclude the supplier from the market.
In one vital respect, however, the regulation of commercial gambling has differed
from other instances
of
social regulation: the social value of the regulated activity
has, generally speaking, been perceived
as
marginal. The facilitation by the state of
opportunities for consumers to spend their discretionary income in commercially
organised gambling outlets has, in Great Britain at least, never been justified by
3
Miers, ‘The Regulation
of
Commercial Gaming’
(1984)
I1
JLS
33.
4
Gaming Board
for
Great Britain, Annual Report
1994/95,
HC
587 (1995)
para
2.2.
490
0
The Modem
Law
Review Limited
1996
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