Rating Manual section 6 part 3: valuation of all property classes

Section 923: amusement arcades

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

Section 923: Amusement arcades

1.0 Scope

1.1 This section is intended to cover all types of amusement arcade. There are three different types as far as licensing is concerned, each able to operate different categories of machine. Under the Gambling Act 2005 gaming machines are subdivided into four broad categories A B C and D with the category generally relating to the size of the stake and the prize. A being the highest and D being the lowest. See Appendix 1 and 2 for full details.

1.2 Adult Gaming Centres

The operator must hold a Gaming Machines General Operating Licence issued by the Gambling Commission and also a Premises Licence issued by the Licensing Authority (local authority). They can operate a specified number of B3 and B4 machines and an unlimited number of category C and D machines. No one under 18 is permitted into an adult gaming centre.

1.3 Licensed Family Entertainment Centre

The operator must hold a Gaming Machine General Operating Licence (FEC) issued by the Gambling Commission and have a Premises Licence from the Licensing Authority (local authority). They can operate an unlimited number of category C and D machines. Category C machines must be located in a separate area where access is limited to those over 18 years of age.

1.4 Unlicensed Family Entertainment Centres

The operator must hold a permit from the licensing authority (local authority) which 923 permit lasts 10 years and only category D machines can be operated at the premises. Unlicensed family entertainment centres are often located in seaside resorts.

2.0 List Description and Special Category Code

Bulk Class: Shop Primary Description: LT1 List Description: Amusement Arcade and Premises Scat Code:011 Suffix G

3.0 Responsible Teams

Amusement Arcades are a generalist class. Each unit will be responsible for identifying and valuing their own amusement arcades. It is recommended that units appoint named co-ordinator(s) or Lead Valuer(s) to act as a point of contact within the unit so that they can liaise with other Lead Values within other units on technical and valuation issues.

4.0 Co-ordination

The amusement Arcade Class Co-ordination team has overall responsibility for the co-ordination of this class.

5.1 Amusement Arcades are sui generis for planning purposes this includes all types amusement arcades.

5.2 Amusement Arcades are regulated under the Gambling Act 2005. This sets out various types of amusement arcades and details the categories gaming machine based upon the size of the stake and the prize. The Gambling Act 2005 set up the Gambling Commission and they issue Gaming Machines General Operating Licences to Adult Gaming Centres and Licensed family Entertainment Centres. Details of the permitted number of Gaming Machines and details of the individual types of machine are set out in Appendix 1 and Appendix 2.

6.0 Survey Requirements

Amusement arcades should be measured to NIA. The inspection Check List set out in Appendix 3 should be completed for each amusement arcade. In addition it is mandatory that photographs of the exterior of the property and its surroundings are provided, so that the use of the surrounding property can be determined.

7.0 Survey Capture

7.1 Survey Data should be captured in RSA. Plans and surveys should be stored in the property folder of the Electronic Data Record Management (EDRM) system.

7.2 The size and location of the arcade will determine whether it is appropriate to data capture the arcade using the zoning method or whether it should be data captured on a non zoned basis. Further guidance can be found in the current Practice Note.

7.3 All types should be scat coded 011.

8.0 Valuation Approach

The rental method is the primary method adopted for this class of property.

Appendix 1

Number of Gaming Machines Permitted in Amusement Arcades

  Machine category
  B3 B4 C D
Adult gaming centre (AGC) Maximum of 20% of the total number of gaming machines which are available for use on the premises categories B3 or B4* No limit on category C or D machines
Family entertainment centre (FEC)(with premises licence)     No limit on category C or D machines
Family entertainment centre (FEC)(with permit)   No limit on category D machines
  • AGC premises are entitled to make available a number of category B3/B4 gaming

  • AGC premises are entitled to make available a number of category B3/B4 gaming machines not exceeding 20% of the total number of gaming machines which are available for use on the premises.

Premises in existence before 13 July 2011 are entitled to make available four category B3/B4 gaming machines, or 20% of the total number of gaming machines, whichever is the greater.

AGC premises licences granted on or after 13 July 2011 but before 1 April 2014 are entitled to a maximum of four category B3/B4 gaming machines or 20% of the total number of gaming machines, whichever is the greater; from 1 April 2014 these premises will be entitled to 20% of the total number of gaming machines only.

Source www.gamblingcommisson.co.uk

Appendix 2

Details of individual category machines including maximum stake and prizes and permitted locations

>Machine category >Maximum stake (from January 2014) >Maximum prize (from January 2014) >Allowed premises
>A Unlimited Unlimited Regional Casino
B1| £5 £10,000 (with the option of a maximum £20,000 linked progressive jackpot on a premises basis only) Large Casino, Small Casino, Pre-2005 Act casino and Regional Casinos
>B2 £100 £500 Betting premises and tracks occupied by pool betting and all of the above
B3 £2 £500 Bingo premises, Adult gaming centre and all of the above 
>B3A £2 £500 Members’ club or Miners’ welfare institute only
B4 £2 £400 Members' club or Miners’ welfare club, commercial club and all of the above.
C £1 £100 Family entertainment centre (with Commission operating licence), Qualifying alcohol licensed premises (without additional gaming machine permit), Qualifying alcohol licensed premises (with additional LA gaming machine permit) and all of the above.
D money prize 10p £5 Travelling fairs, unlicensed (permit) Family entertainment centre and all of the above
D non-money prize (other than crane grab machine) 30p £8 All of the above.
D non-money prize (crane grab machine) £1 £50 All of the above.
>D combined money and non-money prize (other than coin pusher or penny falls machines) 10p £8 (of which no more than £5 may be a money prize) All of the above.
D combined money and non-money prize (coin pusher or penny falls machine) 20p £20 (of which no more than £10 may be a money prize) All of the above

Source: www.Gamblingcommission.co.uk

Appendix 3

AMUSEMENT ARCADE  .  INSPECTION  CHECKLIST  
Occupier    
Address    
Rental details  
Amusement Arcade Type See Rating Manual Section 6 - Part 3 section 1 Adult Gaming Centre 2 Licensed Family Entertainment Centre 3 Unlicensed Family Entertainment      
Location    
Car Parking,  
Competition/ Comparables  
Building External Built:  
Construction       No. of floors  
Customer access    
Use of any external areas for children's rides etc     continued.../
   
Building Internal   Refurbished:   Fit out:  
Disabilities    
Accommodation        
Extraordinary features      
Natural light    
Customer WCs  Extent and Quality     Lifts & Escalators Type manual/automatic, goods, passenger, staff/ customers, capacity, floors served    
Other occupiers in the building       Shared facilities:    
Services.  Fire Precautions. Security    
Air Conditioning (age) Cassette or ducted. Purpose.  Extent of area covered. Heating. Fuel. System          
General remarks        
Date of survey    
       

Practice note: 2017: Amusement arcades

1. Market Appraisal

1.0 All amusement arcades are sui generis under Town and Country Use Classes Order. Within the use class of amusement arcades there are three different types as far as licensing is concerned see RM Section 6 - Part 1 - section 923 para 1.2-1.4 each able to operate different categories of machine. Under the Gambling Act 2005 gaming machines are subdivided into four broad categories A B C and D with the category generally relating to the size of the stake and the prize. See RM Section 6 - Part 1 section 923 Appendix 2 for full details.

1.2 Since 2005, amusement centres in general have seen a number of legislative change. These legislative changes have taken place prior to 1 April 2015 and are now reflected in the market for this class of property.

The most notable changes include:

1.2.1 Gambling Act 2005 which came into force in September 2007. It consolidated previous legislation and updated the regulatory structure creating the Gambling Commission. It also introduced new categories for gaming machines A-D and stipulated where each category could be operated see Appendix 2 of the RM section.

1.2.2 Smoking Ban introduced in England 1 July 2007 and Wales 2 April 2007.

1.2.3 Triennial Review of Gaming Machine Stake and Prizes which lead to Categories of Gaming Machines (Amendment ) regulations 2014 and resulted in increases in the stakes and prizes of some machine categories. The next review is due to take place in 2016.

1.2.4 Machine Games Duty (MGD) was introduced on 1 February 2013 it is a tax on gaming machines. It replaced both Amusement Machine Licence Duty and VAT charged on the income from these machines. MGD is charged when customers pay to play machine games to win a cash prize that’s more than the cost to play the machine. MGD isn’t payable on machine games that only offer non-cash prizes or cash prizes that are less than the cost to play. There are three rates of MGD 5% Where maximum stake is 20p 20% Where stake is 20p to £5 25% Where stake is more than £5

1.2.5 Changes to the maximum permitted number of B3 and B4 gaming machines in Adult Gaming centres from 1 April 2014 see Appendix 1 of the RM section.

1.3 Generally over the last few years this class of property has been adversely affected by the by the recession. The Gambling Commission publish statistics in relation to Adult Gaming Centres and Licensed Family Entertainment centres and these show that that there has been a decline in the number of Adult Gaming Centres with a slight increase in the number of Licensed Family Entertainment Centres although these now appear to be declining from a peak in numbers reached in 2013.

Number of Premises

Licensed activity at 31 Mar 2011 at 31 Mar 2012 at 31 Mar 2013 at 31 Mar 2014 at 30 Sept 2014 Adult gaming centre (AGC) 2,103 2,247 1,657 1,584 1,512 Family entertainment centre 293 295 356 343 321

Number of Machines Adult Gaming Centres

2009/2010 2013/2014 B4 170 46 C 35994 26741 D 18193 14399

Number of Machines Licensed Family Entertainment Centres

2009/2010 2013/2014 C 3460 1853 D 26785 27861

Source Gambling Commission Industry Statistics April 2009 to March 2014

1.4 It should be noted that as the Gambling Commission does not licence unlicensed Family Entertainment Centres they do not collect regulatory returns from these businesses and they are therefore not represented in the above statistics.

1.5 In addition to the economic climate, the industry faces competition from on line gambling. Seaside arcades also face challenges competing for the income of the disposable income of the under 18s in a changing digital environment.

1.6 Looking to the future, Adult Gaming Centres may continue to be affected by the availability of B2 machines in Licensed betting offices. Under the Gambling Act Licensed Betting Offices can operate up to 4 Category B2 Machines also known as Fixed Betting Odds terminals (FBOT) these machines cannot be situated in Adult Gaming Centres.

1.7 Unlicensed family entertainment centres make up the majority of seaside amusement arcades and the biggest influence on their viability will be the popularity of the holiday resort in which they are located. Visitor numbers to seaside resorts can be influenced by a number of factors such as the economy and the weather.

2. Changes from the Last Practice Note

2.0 No previous Practice Note published.

3. Ratepayer Discussions

3.0 None.

4. Valuation Scheme

4.0 There is no agreed valuation scheme.

4.1 Nationally, there is a predominance of freehold and long leasehold interests (subject to ground rent only) within this class. Arcades are commonly offered for sale as going concerns, often including domestic accommodation and reflecting the seasonal nature of trade according to locality.

4.2 Rental evidence relating to arms-length new lettings and lease renewals is typically in short supply and spread thinly across a variety of settings and building types - ranging from coastal town seafront and seasonal camp site, to urban high street.

4.3 Having noted the categories of licences and permits required by the Gambling Commission and local authorities, valuers should take care to have regard to the principle to “compare like with like” analysing rental evidence and devising valuation schemes to ensure the basket of evidence is appropriate.

4.4 There are two main types of locations for amusement arcades:

4.5.1 Those situated in non-coastal town centres.

For this type, the main evidence of rental value will be the passing rent on the property and the comparative rental values of nearby retail premises. If the rent passing is in excess of nearby retail values this may be associated with the sui generis planning use class due to, for instance, local planning policy restricting the number of such uses.

4.5.2 Arcades situated on or adjoining the sea front in coastal towns and villages.

4.5.3 These arcades may be individually located in mixed use areas, grouped together in parades or ‘strips’, or simply stand-alone.

4.5.4 For those arcades located in mixed use areas, the main evidence of rental value will be the passing rent on the property and the comparative rental values of nearby premises (typically shops, or A3 Restaurants and Cafes). If there is a passing rent, consideration may be given to any premium value perceived to be associated with the ‘sui generis’ planning use class due to, for instance, local planning policy restricting the number of such uses.

4.5.5 Where the arcade is located in a parade or ‘strip’ of arcades or is a stand-alone, rental evidence is better derived from the subject property and/or other comparable amusement arcades.

4.5.6 Often where there is a concentration of amusement arcades, they can be larger than standard shop units in the locality. Some stand-alone properties may also have different characteristics to standard shop units in the adjoining area.

4.6 A consistent approach must be adopted when determining which properties should be valued on a non-zoned basis. Where properties are valued on a non-zoned basis, location/pitch should be reflected in the base price adopted. The base price should also reflect the ‘normal’ size range for arcades in the locality. It may be appropriate to make adjustments to reflect significant size variation from the ‘norm’ and to account for other factors such as layout, shape and changes in floor levels. Any adjustments should be carefully weighed relative to any rental evidence that underpins the local basis.