Yes Minister! By Andrew Tottenham, Managing Director, Tottenham & Co July 31, 2019 at 2:45 am If you want a case study in glacial gambling reform and how to “kick the can down the road”, Japan is not the only candidate – Ireland is also a good case in point. The current state of affairs in Ireland is that gambling is hardly regulated, although successive Governments have acknowledged that it needs root and branch reform. The main piece of legislation that covers both gaming and betting is the The Gaming and Lotteries Act, 1956, which was described by a Government Committee in 2008 as “minimalist”. Obviously, a great deal has changed since 1956, not only within the gambling industry but also with Ireland itself. The country’s economy has grown to become one of the most successful in Europe. Dublin, with its pool of available talent and low tax environment, has become a magnet for high-tech companies. But badly needed legislation to modernise Ireland’s unfit-for-purpose gambling laws hasn’t managed to get out of the gate, despite a great deal of energy and probably money being expended by Government committees that have studied the gambling industry and written reports. Very few of the committees’ recommendations have found their way on the floor of the Dail, Ireland’s lower House of Parliament. So where are we today? As mentioned, Ireland’s main piece of legislation is the 1956 Act. It regulates betting in betting shops and makes all other forms of gambling unlawful. This hasn’t stopped the spread of gambling machines, albeit amusement with prize (AWP)-style machines and private members’ clubs offering casino games. These have popped up throughout the country, but are mainly in Dublin, where almost 30 percent of the population of the country reside. Yet overall, there is no real regulation of gambling machines and practically no enforcement. For gaming machines to be lawful, a local authority must approve the operation of slot machines within their boundaries. Once approved, an operator applies to the district court for a certificate and the Revenue Commissioners provides the licence. In effect, provided the local authority has approved gambling machines and the annual license fee is paid, the machine is lawful. There are no county-wide minimum standards and enforcement, which is left to local law agencies, is practically nil. For example, the city of Dublin has not approved the operation of any slot machines, yet it is possible to find casino-style, high stake, and prize slot and video poker machines overtly promoted and operated in venues throughout the city. Or consider that the Revenue Commissioners say that they issued approximately 11,500 (annual) machine licences in 2018, but industry sources believe the number of machines in operation is over 40,000. Private clubs offering poker games have been operating in Ireland since the 1970s. It was not until almost the end of the last century that these clubs morphed into casinos, offering roulette, blackjack, and slot machines. Whilst casino games are definitely illegal under the 1956 Act, operators rely on Section 4(3) of the Act, which reads: “Gaming shall not be unlawful if no stake is hazarded by the players with the promoter or banker other than a charge for the right to take part in the game, provided that — (a) only one such charge is made in respect of the day on which the game is played, and (b) the charge is of the same amount for all the players, and (c) the promoter derives no personal profit from the promotion of the game.” In effect, a private members’ club providing casino games is doing so using a provision which was enacted to allow card games for money in private homes. How blackjack, roulette, and slot machines manage to be legal in private members’ clubs I cannot see. Due to the growing number of unregulated “casinos”, a Casino Task Force was created in 1995 to look into a system of regulation and licensing for casinos. This was also in response to the significant interest by overseas casino operators in the possibility of creating a large casino with a hotel and a convention centre in Dublin. In its final report, the Casino Task Force outlined various options available to the Government but made no recommendations, leaving it up to the Government of the day to decide. It was during this time that I was acting as a consultant for Harrah’s. We had created an outline proposal of what could be done if casino gambling was truly legalised and properly regulated. We arrived in Dublin, armed with our presentation demonstrating the economic impact of our project, including the number and types of jobs that could be created, and beautiful renderings of the proposed facility. We made presentations to a number of government ministers and politicians. One question from a minister in the audience summed up the Government’s reaction, “Wonderful, wonderful, but could you not make the sign a little smaller or even remove the word ‘casino?’”. Ultimately, the casino was decoupled from the convention centre because of fear that a negative public reaction to expanded gambling would slow down the process for a badly-needed convention centre. Once this separation was done, the Government ditched the proposal to establish a casino. A smaller convention centre was built, but due to lawsuits flying around, this award-winning facility was not opened until 2010, at three times the original cost proposed. In 1999, another committee, The Interdepartmental Group, was created by the then-Minister of Justice, John O’Donoghue. The Group’s remit was to “review the regulatory environment within which gaming and lottery activities are carried out” and to make recommendations. The Group published their report in 2000, making numerous recommendations, but with regards to casinos they took the view that they were “not in a position to make any recommendations.” They did reaffirm the existing prohibition on casino type games in the 1956 Act, despite the fact the private members’ clubs had driven a coach and horses through that prohibition. Next was pressure from the Financial Action Task Force (FATF), an international body originally created by the OECD in 1989 to combat money laundering and terrorist financing. In a report published in 2006, the FATF stated that the system of regulation, or lack thereof, created real risks of money laundering, that the Irish Government should be aware of the risks of money laundering created by unregulated casinos posing as private members’ clubs, and that the Government should be prepared to address these problems. FATF’s criticism of the lackadaisical approach to regulation of casinos forced the Government’s hand. To understand what Ministers are up against when they try to address gambling, a quote from Michael McDowell, Minister of Justice (2006/7), is useful, “When I got to Cabinet, the department’s and my proposals ran into huge opposition, that effectively we were being illiberal and unrealistic, that amending the law to suppress these institutions [private members’ clubs offering casino games] was wrong.” Again, rather than address the problem head on and legislate for a comprehensive regulatory system for all gambling in Ireland, the Government took an easy way out, using the 2009 Finance Act to push through some AML regulations that would apply to these clubs. In some quarters there was a political will to modernise Irish gambling law. In 2013, the government published the outline of the Gambling Control Bill 2013, which would have updated Ireland’s entire legislative framework for all types of online and land-based gambling. It proposed to set up a Gambling Commission with authority over licensing and to remove the involvement of the Revenue Commissioners, local authorities, and all of the other bodies involved in the processes for granted licences for the different types of gambling. The Bill proposed to restrict the total number of casinos to 40 and the number of tables in each casino to 15 and slot machines to 25, which killed any interest from overseas operators. That was a win for the incumbent industry, which has been vehemently opposed to any changes lest it open the door to well-capitalised foreign operators. While the 2013 Bill was treading water somewhere in the corridors of power, the government realised it had to deal with growth of online gambling. It separated out the parts of the Bill that dealt with online betting and managed to get those enacted in 2015. In early 2018, there were some reports in the media that suggested the Government was preparing to walk away from the 2013 Bill and propose a shiny new Bill, on the basis that the 2013 proposals were outdated and no longer fit for their purposes. If you want to kick something into the long grass, what do you do? Straight out of the playbook of Yes Minister, you form a committee to study the problem. In 2018, the Government created an interdepartmental working group to look at the future regulation of gambling. Their report was published earlier this year. Commenting on the report, the Minister responsible for gambling, David Staunton, said something quite surprising: “The group considered the need for the further development of an appropriate licensing, monitoring and enforcement regime for land-based gaming machines in casinos and elsewhere that may be played for monetary reward. “It would not be realistic to seek to enforce prohibition on certain physical gaming machines over other types of machine as it would risk further migration to online versions that are widely available on most operators’ websites and may be difficult to monitor effectively.” In March 2019, the government approved the establishment of a gambling regulatory authority and formally proposed the Gaming and Lotteries (Amendment) Bill. There is no mention of casinos in this Bill, and the government cautioned that it might take up to 18 months to form the new regulatory authority.