These regulations, which come into force on 1 July 2020, are made under the Gambling Act 2003 (the Act). They amend the Gambling (Class 4 Net Proceeds) Regulations 2004 (the principal regulations).

Regulation 5 amends regulation 10 of the principal regulations. Regulation 10(1) sets the minimum amount a corporate society that is licence holder must apply to, or distribute for, authorised purposes for each financial year. The amount is the proportion of net proceeds equivalent to 40% of the society’s gross proceeds. New regulation 10(5) has the effect of suspending the application of regulation 10(1) as from 25 March 2020, for each corporate society, for a financial year ending in 2020 or 2021 so that there is no minimum amount that these licence holders need to apply or distribute during this period. This does not limit the requirement under the Act that all available net proceeds must be applied to, or distributed for, authorised purposes.

Regulation 6 amends regulation 11 of the principal regulations by inserting new regulation 11(3) and (4). Under regulation 11(1), corporate societies are required to—

• apply or distribute all, or nearly all, of the net proceeds for a financial year to or for authorised purposes on a quarterly basis; and

• apply or distribute the remainder of the net proceeds for a financial year to or for authorised purposes within 3 months after the end of that financial year.

New regulation 11(3) has the effect of disapplying the strict quarterly and financial year-end requirements in regulation 11(1) during these licence holders’ financial years ending in 2020 and 2021 (while still requiring them to make timely distributions of all or nearly all available net proceeds for those years, subject to new regulation 11A). Licence holders will be required to ensure that all or nearly all of their net proceeds are distributed in any quarter ending after their 2021 financial year. They will also be required to distribute any net proceeds remaining from their financial year ending in 2021 by the end of their next financial year.

Regulation 7 inserts new regulation 11A, which permits withholding an amount of net proceeds from distribution to maintain a maximum working capital ratio of 1.5 to 1 (calculated as current assets divided by current liabilities). This retention is permitted solely for the purpose of satisfying the requirement in section 52(1)(c) of the Act that a corporate society’s gambling operation must be financially viable for it be licensed as a class 4 operator. New regulation 11A will not affect the requirement for licence holders to distribute a minimum of 40% of the gross proceeds to authorised purposes for the financial year ending 2022 and subsequent years. It will temporarily affect the requirement to apply or distribute all or nearly all available net proceeds to or for authorised purposes within each financial year under regulation 11 (until the maximum 1.5 to 1 ratio is reached).

Regulation 8 inserts new Schedule 1 into the principal regulations. New Schedule 1 sets out the relevant transitional, savings, and related provisions.