Many of you will have heard rumours that a couple of new corporate societies are trying to enter the sector and are approaching venues to establish contracts with them.
We have not received any applications from these societies yet. However we want to encourage any venue operator considering signing up with a new Class 4 society to conduct their own due diligence. This should include establishing the compliance history of those listed on the application and doing the same regarding anyone who may be known to be exercising significant influence within the new entity.
It is of course illegal for venue operators to influence a society’s grant decisions and the Gambling Act 2003 envisages a profit-neutral relationship between venues and societies. Where a society offers to pay a venue more than another society, venue operators should ask how the increase is legally justified. Venues also need to be aware of any inducements proposed by societies to transfer to their operation that contradict the purposes of the Act.
The Department is not anti-competition, though we do carefully scrutinise every new society application we receive. In particular we are interested in the motivations that led to the application being submitted and who all the key people are involved with the society, whether they are listed on the application or not. As such, new society applications are an area of focus for the Department as the introduction of a new society can negatively impact the overall benefit the community receives from gambling and detract from the purposes of the Act.
These applications do take time to consider and often involve in-depth investigations into all those associated with the application. Two recent examples resulted in an applicant withdrawing their application and another, for the Phoenix Charitable Trust, was refused by the Secretary – a decision later upheld by the Gambling Commission. In this example the Commission was not satisfied that Phoenix would maximise net proceeds from Class 4 gambling, minimise operating costs associated with that gambling, and that Phoenix was unable to comply with regulatory requirements. The Commission also noted concerns with the covert involvement of an unsuitable key person.
There is more information on choosing which society to work with in issue # 56 of Gambits. The information is at the bottom of the article, “Compliance focus: Increasing integrity in the gambling sector” – see: Choosing which society to work with: information for venue operators