Amusement arcade legal issues

Group of friends at amusement arcade with two friends on motorbike game

The following is an outline of some of the key pieces of legislation that may apply to your business.

What licences does an amusement arcade need?

If you're building a new arcade or changing the use of existing premises, it's likely that you'll need to obtain planning permission from your local authority.

Permission to operate an arcade

Current gambling laws require that anyone who wants to set up an arcade in Great Britain must observe the following:

  • to operate an adult gaming centre or a licensed family entertainment centre you need an operating licence and possibly one or more personal licences from the Gambling Commission. A criminal record check is likely to be required as part of the Gambling Commission licensing process. You will also need a premises licence from your local authority. Operating licence holders are required to follow a Code of Practice and to submit annual regulatory returns
  • to operate an unlicensed family entertainment centre you will only need a gaming machine permit from your local authority

You can find out more about the permits and licences you will need on the Gambling Commission website. Your local authority will be able to give you more information about gambling premises licences and gaming machine permits.

To operate an amusement arcade in Northern Ireland you will need an amusement permit from your local authority. You can download more information about amusement permits in Northern Ireland from the Department for Communities website.

Registering for Machine Games Duty

Machine Games Duty (MGD) is the main taxation system for gaming machines. Briefly, the key details of MGD are:

  • MGD is payable on machine games where players hope to win a cash prize that is more than the cost to play the game
  • there are two rates of MGD; the lower rate of 5% for machines where the maximum stake is 20 pence and the maximum cash prize is £10 and the standard rate is 20%, which applies to all machines not covered by the lower rate
  • you are required to register with HMRC at least 14 days before machines are available to play

(The higher rate of MGD in force from March 2015 only applies to Category B2 machines that arcades aren't allowed to offer.)

Full details of MGD are available from the HMRC section of the website

Other licences

You're also quite likely to need a Music Licence from PPL PRS Ltd. There is an annual fee for this which you can pay online on the PPL PRS website.

Gaming legislation

In Great Britain, anyone who is involved in the gambling industry is likely to be regulated under the terms of the Gambling Act. The Act introduced three different licences - operating, personal and premises. In Northern Ireland, gambling is regulated by the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order.

If you operate an adult gaming centre (AGC) or a licensed family entertainment centre (FEC) in Great Britain you will need an operating licence from the Gambling Commission. You will also need this licence if you supply, install, repair or adapt gaming machines. Both AGCs and licensed FECs also need a premises licence from the local authority. Unless your business is exempt because it is a small scale operation, your staff may need personal licences from the Gambling Commission. A criminal record check is also likely to be required as part of the Gambling Commission licensing process. If you operate an unlicensed FEC you only need to apply for a FEC gaming machine permit from your local authority.

Depending on your operating licence or permit you will be able to operate some or all of Category B3, B4, C or D gaming machines. You can operate machines in these categories that were manufactured before 31 August 2007 - they are called legacy machines. If you decide to substantially alter them, the machines will need to comply with the machine standards introduced by the Gambling Act from September 2007.

You will also need to comply with the licensing conditions and codes of practice for gaming machines and arcades and submit annual returns to the Gambling Commission.

In Northern Ireland, amusement arcades need an amusement permit from their local authority. The machine gaming regulatory regime in Northern Ireland is significantly different to the rest of the UK. Arcades can offer amusement with prizes (AWP) machines with a maximum stake of 30 pence and a maximum prize value of £8, or with a maximum stake of 30 pence and a maximum prize of £25. There are two types of amusement permits available - one that allows an arcade to offer both types of machine and one that allows an arcade to offer only the machines with the lower payout value. There is no restriction on the number of machines. Under 18s must be prevented from using higher value prize machines.

This is a brief overview of the gaming legislation that might apply to your arcade and you should contact the Gambling Commission or the British Amusement Catering Trades Association (BACTA) for further details. More information about gaming machine legislation in Northern Ireland is available on the Department for Communities website.

Amusement Device Inspection Procedures Scheme (ADIPS)

If you operate 'amusement devices' such as kiddie rides you must have them checked every year to make sure they are safe. Most arcades use the ADIPS (Amusement Device Inspection Procedures Scheme) which is administered by the trade association BACTA. Visit the BACTA website for more information about the inspection scheme and the reports you must keep.

Workplace smoking ban

Don't forget that smoking is no longer permitted in all public places, clubs, workplaces and work vehicles and you must display appropriate 'No Smoking' signs. The legislation varies slightly in different parts of the UK so contact your local authority for details of how the ban affects you. You can also find out more on the HSE website.

Food safety

If you will be offering café sales you will need to comply with strict food safety legislation. Before you open you must register your business with your local authority environmental health department. There's a great deal of useful information on the Trading Standards Business Companion website.

Health & Safety, fire

You must comply with workplace health and safety and fire safety legislation.

Employment legislation

Anyone employing staff must comply with employment legislation. Important areas of legislation include recruitment, employment contracts, pay, working hours, holidays, employment policies, sickness, maternity, paternity, discrimination, discipline, grievances, dismissals, redundancies and employment tribunals.

Insurance for an amusement arcade

Contact an insurer or insurance broker and explain exactly how your business will operate - they will then explain what insurance cover you must have by law, and other cover you should consider. This might include:

  • premises, machines, fixtures and fittings
  • goods in transit (for example prizes being collected from a cash and carry)
  • cash
  • business interruption
  • employer's liability
  • public liability
  • motor insurance (for any business vehicles)

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