JUDGMENT
Commissioners for Her Majesty’s Revenue and
Customs (Respondent) v The Rank Group Plc
(Appellant)
before
Lord Neuberger, President
Lord Reed
Lord Carnwath
Lord Toulson
Lord Hodge
JUDGMENT GIVEN ON
8 July 2015
Heard on 21 April 2015
Appellant Respondent
Paul Lasok QC George Peretz QC
Valentina Sloane Laura Elizabeth John
(Instructed by Forbes Hall
LLP
)
(Instructed by HMRC
Solicitor’s Office
)
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LORD CARNWATH: (with whom Lord Neuberger, Lord Reed, Lord
Toulson and Lord Hodge agree)
Introduction
1. The narrow question raised by this appeal is whether, during the period 1
October 2002 to 5 December 2005, the takings on a particular category of machines
(“the disputed machines”) operated by the appellants (“Rank”) were subject to VAT.
The answer depends on whether the takings resulted from the provision of a “gaming
machine” as defined in Note (3), more particularly whether for the purposes of that
definition the element of chance in the game was “provided by means of the
machine”. If not, the takings were exempt.
2. The question comes to this court by a somewhat oblique route. On 21
December 2005 Rank made a substantial claim for repayment of tax (a net figure of
more than £25m) for that period. That was on the basis of differences between the
treatment between takings from the disputed machines, assuming they were exempt,
and those from other similar machines which were taxable, thereby infringing the
EU law principle of fiscal neutrality. The long and complex procedural history by
which that claim has been litigated in the domestic and European tribunals and
courts was sufficiently summarised by Rimer LJ in the Court of Appeal (paras 5-8,
50-52), and need not be repeated. The Court of Appeal answered the present
question in favour of HMRC. Rank appeals with permission of this court.
The disputed machines
3. The disputed machines were all slot machines used for gaming. Traditionally
such machines are coin-operated, with three or more mechanical or video reels
which spin when a button is pressed or, in the case of older machines, when a handle
is pulled. The machine typically pays out according to the patterns or symbols on
the machine when it stops. The basic form of the machines is sufficiently described
in the agreed statement of facts, based on the findings of the VAT and Duties
Tribunal:
“… the hardware of a slot machine consists of a cabinet containing the
electronic control board, power supply coin insert and pay-out
mechanisms, reels and/or video screens and cashboxes. The electronic
control board is an embedded microprocessor control system that
generates the winning and losing games and displays the results to the
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player via the reels, lamp displays or video screens. The machine’s
software is a list of instructions that the processor executes in order to
generate the winning or losing games. Such software is controlled
either by embedded software that is controlled or random or by a
remote ‘random number generator’. ‘RNG’ (for ‘random number
generator’) is used to describe the system for producing numbers for
the machine’s software, whether the system is embedded in that
software or provided by means of another device.”
As is apparent from that description, and was explained in evidence, modern
machines are entirely computerised:
“In modern slot machines, the reels and lever are present for historical
and entertainment reasons only. The positions the reels will come to
rest on are chosen by an embedded RNG contained within the
machine’s software.
The RNG is constantly generating random numbers, at a rate of
hundreds or maybe thousands per second. As soon as the lever is
pulled or the ‘Play’ button is pressed, the most recent random number
is used to determine the result. This means that the result varies
depending on exactly when the game is played. A fraction of a second
earlier or later, and the result would be different.” (quoted by Rimer
LJ, para 26)
4. Much evidence was given about the development from the 1960s of different
forms of gaming equipment, including for example bingo machines and “fixed odds
betting terminals”, and in particular the development of different forms of RNG.
This evidence was illustrated by photographs of different types of system from
commercial brochures of the time. The evidence was described at some length by
Rimer LJ, and again it is unnecessary to repeat it. For present purposes the
significant points are the development, and (from the late 1970s) the commercial
use, of RNGs in conjunction with different types of gaming equipment; and from
about 2003 the development of “multi-machine” products, with a single RNG
serving a number of playing terminals.
5. As Rimer LJ noted (para 24) it has always been common ground that the
definition of “gaming machine” in note (3) is satisfied by at least one form of slot
machine: that is the type of machine in which the element of chance was provided
by “an electronic or mechanical component within, and forming an integral part of,
the body of the machine”. The debate before the tribunal turned on the treatment of
different forms of system using RNGs, either “single-terminal RNGs” or “multi-
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terminal RNGs”. As Rimer LJ explained (paras 31-35) the tribunal made findings
on certain forms of single-terminal RNGs. They included RNGs “hanging by a wire
from the terminal”, or “velcroed to the wall directly behind the machine or screwed
to the wall” (Rimer LJ’s category 1); or contained in a separate plinth on which the
terminal stood, and linked to the terminal by a wire passing through a hole in the
bottom of the terminal cabinet (category 2). The tribunal concluded (paras 54-56;
summary of conclusions para 2) that terminals constructed with dedicated RNGs
were gaming machines within note (3) “where the RNG was used with the machine
whether or not the RNG had been detached”, although they observed that the
position might have been different if “the cable could be unplugged, the RNG did
have an independent power source and was ordered and supplied separately” (para
55).
6. The machines in issue in the present appeal are all multi-terminal systems.
As Rimer LJ explained (paras 36-39) the evidence referred to three different types
of system (his categories 3(a) to (c)), but the differences are not material for present
purposes. It seems that in each case the RNG was connected by a wire to the playing
terminals, but had its own power supply, and it might be housed in a separate box
or hung on the wall. Up to six terminals might be served by a single remote RNG.
Further, according to evidence summarised in the agreed statement of facts (para
20), each terminal was designed to be used with the RNG obtained from the
manufacturer of the terminal, the terminals and RNGs were sold together, and each
RNG was “manufacturer-specific” so that a replacement if needed would have be
obtained from the same manufacturer. Though linked to a single RNG, each terminal
could be operated independently and could offer the same or different games as the
operator wished.
The legislation
7. The Finance Act 1972, which introduced VAT to the United Kingdom,
provided in Schedule 5 for certain exemptions. They included Group 4 “Betting,
Gaming and Lotteries”, defined in these terms:
“Item no.
1. The provision of any facilities for the placing of bets or the playing
of any games of chance.
2. The granting of a right to take part in a lottery.”
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The general effect of this provision, which remained unamended until 1 November
1975, was to exempt from VAT the takings of all machines used for gaming. Note
(1) to item 1 made three exclusions (a), (b) and (c) not relevant to the present dispute.
Note (2) provided that “game of chance” had the same meaning as in the Gaming
Act 1968.
8. With effect from 1 November 1975 the notes to item 1 were amended by the
Value Added Tax (Betting, Gaming and Lotteries) Order 1975 (“the 1975 Order”),
subsequently consolidated into the Value Added Tax (Consolidation) Order 1976
(SI 1976/128). By a new paragraph (d) to note (1), it was provided that item 1 would
not apply to “the provision of a gaming machine”, that term being defined by note
(4):
“(4) ‘Gaming machine’ means a machine in respect of which the
following conditions are satisfied, namely –
(a) it is constructed or adapted for playing a game of chance
by means of it; and
(b) a player pays to play the machine (except where he has
an opportunity to play payment-free as the result of having
previously played successfully), either by inserting a coin or
token into the machine or in some other way; and
(c) the element of chance in the game is provided by means
of the machine.”
It is common ground that the disputed machines fall within (a) and (b) of the
definition, the area of disagreement being confined to (c).
9. Subject to minor amendments, including that what had previously been note
(4) became note (3), the exemption and the exclusions remained unchanged until 6
December 2005. With effect from that date, note (3) was amended by article 2 of
the Value Added Tax (Betting, Gaming and Lotteries) Order 2005 (SI 2005/3328)
in a way which left no doubt that takings from the disputed machines were
thenceforth taxable.
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Gaming Act comparisons
10. The concept of an element of chance “provided by means of the machine”
can be traced back to Part III of the Gaming Act 1968, which applied to “Gaming
by Means of Machines”. For this purpose, section 52 defined “machine” as including
“any apparatus”. Section 26 provided, so far as material:
“26 (1) This Part of this Act applies to any machine which –
(a) is constructed or adapted for playing a game of chance by
means of the machine, and
(b) has a slot or other aperture for the insertion of money or
money’s worth in the form of cash or tokens.
(2) In the preceding subsection the reference to playing a game of
chance by means of a machine includes playing a game of chance
partly by means of a machine and partly by other means if (but only
if) the element of chance in the game is provided by means of the
machine.” (Emphasis added)
The significance of the definition in that context was in identifying the different
forms of regulatory control to be applied. Part II of the 1968 Act applied to gaming
on licensed premises, other than gaming by means of a machine to which Part III
applied. Section 21 provided for the regulation of machines not falling within the
Part III definition; hence the expression “section 21 machines”, used in the evidence
and the judgments below. By contrast, the main regulatory provisions for “Part III”
machines were in sections 31 to 34 of the Act.
11. The appellants place reliance in particular on section 31, which contained
restrictions on the use of such Part III machines on premises licensed or registered
for the purpose. Section 31(2) and (3), as originally enacted, provided:
“(2) Not more than two machines to which this Part of this Act applies
shall be made available for gaming on those premises.
(3) The charge for play for playing a game once by means of any such
machine on the premises shall be a coin or coins inserted in the
machine of an amount not exceeding (or, if more than one, not in the
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aggregate exceeding) one shilling or such other sum as may be
specified in an order made by the Secretary of State for the purposes
of this subsection.”
Reference has also been made to section 37(1) which gives the Secretary of State a
general power to impose “such restrictions as he may consider necessary or
expedient” on the “sale, supply ,maintenance or use of machines” to which Part III
applies.
12. There was substantial evidence before the tribunal and the courts discussing
the treatment (not always consistent) of various categories of machine by the
regulatory authorities under the 1968 Act at different times. There was evidence of
guidance issued by HMRC which related the tax treatment of different forms of
equipment to its treatment under the 1968 Act. For example, guidance issued in
January 2005 proceeded on the basis that “section 21 gaming terminals” were not
gaming machines, as defined for either regulatory or tax purposes, because “the
element of chance is not provided by the terminals themselves but by a RNG which
is outside the machine”. That stance is clearly inconsistent with the position taken
by HMRC in the present appeal, but it is not suggested that this is in any way
determinative.
13. Some help as to the meaning of the critical expression as understood in the
mid-1970s, when the exclusion was drafted, can be taken from the well-known
description by Lord Denning MR of games of prize bingo in R v Herrod, Ex p Leeds
City District Council [1976] 1 QB 540, p 558D-H:
“I expect that everybody knows ordinary bingo. It is played at bazaars,
sales of work, and so forth, for small prizes and is perfectly lawful.
Now prize bingo is like ordinary bingo, but played with sophisticated
apparatus. Instead of cards with numbers on them, there are dials
facing the players. A player puts in a coin (5p for two cards).
Thereupon two dials light up showing numbers corresponding to two
cards. When the game starts, instead of someone drawing a number
out of a hat, a machine throws a ball into the air. A gaily dressed lady
plucks one of them and calls out the number. If it is one of the numbers
on the dial, the player crosses it out by pulling a cover over it. If he
gets all his numbers crossed out correctly before the other players, he
gets a prize. This is obviously a lottery or a game of chance, but it is
not a ‘gaming machine’ because the element of chance is not
‘provided by means of the machine’ but by means of the gay lady: see
section 26(2) of the Gaming Act 1968.
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In some of these premises there are also some ‘one-armed bandits’.
These are gaming machines. The player puts in a coin. This enables
him to pull a handle to forecast a result. Cylinders revolve and give an
answer. If he succeeds, he gets the winnings. If he fails, he loses his
money. This is undoubtedly a ‘gaming machine’ because the element
of chance is provided by means of a machine: see section 26(1) of the
Act of 1968 …”
The contrast there drawn is between an element of chance provided by machinery
within the device itself, and one provided by an outside agency of some kind. That
approach may have been readily applied to the relatively simple types of equipment
then in use. However, it is of little assistance in applying the statutory words to the
more sophisticated forms of gaming device later developed.
The decisions below and the arguments on the appeal
14. The tribunal concluded that the disputed machines were not “gaming
machines” as defined by note (3). They said:
“48. It is not in dispute that in respect of all the potential
comparators, whether multi-terminal or single terminal, the element
of chance was provided by the RNG. In the case of slot machines it is
clear that ‘the machine’ to which Note (3)(b) refers was the terminal
into which the coins or tokens were inserted. If the conditions in (b)
and (c) were both to be satisfied both the terminal and the RNG had
to refer to the same machine. The use of the definite article before the
word ‘machine’ in (b) and (c) makes this clear. Indeed condition (a)
had to be satisfied also. Where the RNG was situated inside the
terminal so as to be an integral part of it, we have no doubt that the
RNG and the terminal formed part of a single machine …
53. Where the RNG was situated outside the terminal and served a
number of terminals we conclude that the terminals were not ‘gaming
machines’ because the RNG was not part of any terminal and the
element of chance was not provided by means of the machine
containing the slot. We do not consider that the language of Note (3)
was apt to cover a series of terminals linked to one RNG. The result is
that by reason of Note (1)(d) to Group 4 the provision of gaming
facilities by multi-terminal products was exempt as a matter of law.”
15. In the High Court Norris J agreed with their approach. He said:
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“The argument proceeded on the footing that the element of chance
had to be provided by ‘the machine’ and the problem lay in identifying
‘the machine’. The ‘element of chance’ is the determining event which
governs the outcome of the game being played on the machine which
has the slot in it and which the player is playing. Where the
determining event is a random number there is I think no difference in
principle between a human being selecting a numbered ball, an electric
ball shuffler (such as that used in the National Lottery) producing a
numbered ball or a microprocessor emitting a stream of numbers. It is
a question of fact in each case whether that determining event is
produced by ‘the machine’, and fine distinctions might have to be
drawn. In my judgment the principle by reference to which those
judgments have to be made is whether the outcome of the game may
sensibly be regarded as determined by an external event which the
machine records or is produced by the machine itself. Like the tribunal
I would hold that the random generation of a number in a separate unit
which serves various player terminals (which may themselves be
running different games) is properly regarded as an external event and
not one produced by the machine that the player is playing. Like the
tribunal I do not think it is possible to elaborate further.” (para 67)
16. He had earlier rejected the suggestion that the machine might include both
terminals and the RNG as conflicting with the statutory restriction on numbers:
“The regulatory context helps me to decide that the argument that ‘the
machine’ is the system of terminals linked to a common RNG is wrong
(because it would effectively mean that the restrictions on numbers of
machines on any given premises for which Part III provides would be
meaningless since the restriction would relate to the RNG in each
system, to which vast numbers of playing terminals could be linked).”
(para 63)
17. The Court of Appeal disagreed. Rimer LJ attached weight to considerations
related to the scope of Part III of the Gaming Act 1968. It cannot, he thought, have
been the purpose of Part III “to confine its control to equipment comprised in a selfcontained single unit or terminal and to exclude from such control two separate, but
linked, items of equipment that together perform an identical function” (para 76).
He had earlier (para 67) noted without comment the argument that a broader
construction would cause difficulties for the purpose of the limits on numbers of
machines under section 31(2), and the response (given by Mr Peretz for HMRC) that
the problem could be met by use of the Secretary of State’s general regulatory
powers under section 37.
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18. He concluded that such a “narrow, literal” construction would lead to
absurdity:
“77. That cannot be the correct construction of the word ‘machine’.
The word must, if the language of Part III is to be given a sensible and
practical effect that will enable it to achieve its obvious purpose, be
interpreted as including equipment ancillary, and connected, to the
playing terminal that automatically provides the element of chance
that determines the outcome of the game played on the terminal …
79. If this is right, it follows in my view, and for like reasons, that
a purpose built system comprising a terminal with a separate, but
connected, RNG is also properly characterised as a ‘machine’. The
terminal cannot be used for gaming purposes except by being linked
to the RNG; and the RNG is designed to be linked to the terminal in
order to enable the game to be played. Again, no doubt they constitute
two separate items of equipment; but to treat the terminal as a separate
‘machine’ in considering the impact or otherwise of Part III is
unrealistic. They are being used together for the purpose of playing a
game on the terminal and the RNG forms an essential element of the
system.
80. If right so far, I also do not understand why the multi-terminal
systems should be treated any differently. The fact that there is only
one RNG serving several terminals cannot make a material difference.
In substance, the systems are exactly the same as in both previous
configurations. By like reasoning, I cannot see why each terminal and
the single RNG do not together constitute a machine within section
26. That is the substance of any such multi-terminal system; and it is
the substance of the matter that counts.”
19. Having reached that view in respect of the Gaming Act definition he saw no
reason to take a different view in respect of note (3). There again he rejected a
“narrow, literal” reading which would reduce VAT on gaming machines to a
“voluntary tax”, since tax could be avoided “by a simple re-design of the playing
equipment, whilst leaving its essential function unchanged.” (para 82)
20. In this court the appellants have supported the reasoning of the tribunal,
which as a “multifactorial assessment based on a number of primary facts” should
have been respected by the appellate courts (Procter & Gamble UK v Revenue and
Customs Comrs [2009] EWCA Civ 407, [2009] STC 1990 para 9ff). The Court of
Appeal were wrong to think that the narrow construction deprived the definition of
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sensible meaning, for regulatory or tax purposes, a position never previously taken
by the Gaming Board or HMRC. It is not possible to identify any specific regulatory
purpose which would justify a departure from the ordinary meaning of the words.
Absent an abusive practice (as explained in Halifax plc v Customs & Excise Comrs
(Case C-255/02) [2006] Ch 387, [2006] STC 919) the operators were entitled to
design their machines in the most tax-efficient way.
21. The respondents in turn support the reasoning of the Court of Appeal, relying
on a “purposive” construction, and like them taking account of the Gaming Act
regime. In particular they adopt the Court of Appeal’s conclusion that the word
“machine” in the definition is apt to cover “a configuration of separate, but
connected, items that together enable the playing of a game of chance at a terminal
…”. For good measure, they seek to turn on its head the appellants’ reliance on the
principle of neutrality. So far as it applies, they argue, it favours an interpretation of
note (3) which minimises any difference in treatment of similar items (Marks &
Spencer plc v Customs and Excise Comrs (Case C-62/00) [2003] QB 866, [2002]
ECR I-6325, para 24).
Discussion
22. It is necessary first to dispose of a possible argument suggested by the court
during the hearing but not adopted by either party – rightly in my view. This would
treat the words “by means of the machine” as requiring no more than that the
relevant information be communicated to the player “by means of” the machine on
which he is playing, regardless of where or how that information is generated. Thus
when the player pulls a lever or presses a button on the terminal, which in turn
triggers the operation of the RNG, whether or not connected to other terminals, the
terminal on which he is playing becomes “the means” by which the element of
chance is communicated, and so “provided”, to the player for the purposes of his
game. In my view, that is not the natural sense of the words used. The question is
how the element of chance is provided “in the game”. The definition implies an
active function in the game as it is played, rather than the mere passive transfer of
information to the player.
23. Secondly, with respect to the Court of Appeal, I do not consider that much
help is to be gained from comparisons with the treatment of the various machines at
different times under the Gaming Act. Rimer LJ observed (para 74) that much of the
argument before the Court of Appeal had been directed to the question whether the
disputed machines had been “Part III” machines for the purpose of the 1968 Act,
and thought it logical to start by considering that question. I find that difficult to
accept. The sole issue in the appeal concerns the construction of the VAT legislation
at the relevant time. The draftsman has not simply applied the definition of gaming
machine used in the Gaming Act, as he did when defining “game of chance”, but
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has merely adopted some of its elements. It cannot be assumed that he intended
precisely the same results. Furthermore, even if one assumes that the policy thinking
of the VAT draftsman was guided by that of the 1968 Act, that assumption is of little
assistance unless perhaps a proposed interpretation conflicts materially with some
aspect of the comparable provisions in the latter legislation, or if it reveals a clear
basis for distinguishing in that context between the categories now in issue. With
one exception relied on by Norris J (see para 16 above), no such conflict has been
identified. On the other hand, it is of some relevance that no-one has suggested any
convincing policy reason for distinguishing, in either legislative context, between,
on the one hand, embedded software or a single-terminal RNG, and on the other a
multi-terminal RNG such as is in issue in this appeal. Unless the language points
clearly in a different direction, policy considerations favour treating them in the
same way.
24. Much of the argument in the tribunal and the lower courts turned on the
meaning of the word “machine”. The tribunal did not refer to any dictionary
definition of the term. However, they seem to have proceeded on the assumption
that the word connoted a single item of equipment, which in the context of paragraph
(b) of the definition, had to be that which was “played” by the player, and into which
he inserted his coin or token. Accordingly, for both (b) and (c) to be satisfied “both
the terminal and the RNG had to refer to the same machine”, that being made clear
by the use of the definite article before the word “machine” in both. Where the RNG
was situated outside the terminal and served a number of terminals, it was a separate
item of equipment, so that the element of chance was not provided by means of the
machine containing the slot. Norris J took a similar view. He also treated the relevant
“machine” as that “which has the slot in it and which the player is playing”. It was
then a question of fact whether the outcome of the game is “determined by an
external event which the machine records or is produced by the machine itself”. The
Court of Appeal interpreted the word “machine” in a broader sense, as extending to
a “configuration of separate, but connected, items of equipment that together enable
the playing of a game of chance at the terminal”. Again they made no reference to
any dictionary definition, relying instead on what they deemed the absurdity of a
more narrow interpretation, which they thought would deprive the provisions of
“sensible and practical effect”.
25. I see some force in the appellants’ criticisms of the Court of Appeal’s reliance
on arguments of absurdity, which seem difficult to reconcile with HMRC’s own
acceptance in the past of a narrow interpretation. However, their approach can
arguably be supported by reference to the natural meaning of the word “machine”
in its context. We have not been referred to any dictionary definitions of the word
“machine”, but reference to the standard dictionaries does not indicate any linguistic
reason to confine the word to a single item of equipment. It is in some ways a
chameleon-like word, and the dictionaries contain a variety of meanings. A typical
and in my view accurate definition, taken from the Concise Oxford English
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Dictionary, is: “an apparatus using or applying mechanical power, having several
parts, each with a definite function and together performing certain kinds of work”.
26. This is of interest in the present context for two reasons. First the use of the
word “apparatus” as a synonym suggests that no particular significance is to be
attached to the absence in the VAT legislation (as compared to the 1968 Act) of a
specific reference to “apparatus” as part of the definition. Secondly, the emphasis is
not so much on the physical nature of the equipment or its parts, as on the functions
they are performing together for the purpose of a particular type of work. In the
present context the overall purpose or task is the creation for a game of chance for
the player, in which purpose both the terminal and the RNG play, and are designed
to play, essential and connected functions. It should not matter whether that task is
being performed by a single item or a combination of linked items designed for the
same task.
27. If that is the correct analysis, the tribunal’s approach is open to the criticism
that it limits its attention to the physical identity of the equipment as viewed by the
player, but ignores the necessary components of the task which it is performing. The
terminal is useless for the task of playing the game without the RNG. Where the
RNG is linked to a single terminal, the tribunal apparently saw nothing unnatural in
principle in viewing them as together constituting a single machine for playing the
game. On that view, it does not matter that the coin or token is paid into one part,
and the element of chance is provided by another; nor that the player may be
unaware that the “machine” which he is playing has more than one component.
28. Similarly, even where the RNG is serving several terminals, it seems no less
appropriate to treat the combined set of apparatus as a composite “machine”, at least
where (as here) the combination has been designed and supplied for use together in
the same premises, and the RNG functions for all material purposes in exactly the
same way as embedded software in each terminal. From the player’s point of view,
it may be less natural to think of him “playing”, or inserting his coin into, the
combined machine. But viewed objectively that is what he is doing, since without
the RNG his coin will not achieve its purpose, and the game will not be played.
29. The principal objection to that interpretation is that relied on by Norris J by
reference to the limits in section 31 of the Gaming Act 1968. Read naturally and in
context, the restriction of the numbers of “machines” on any premises seems
directed at the terminals available to individual players. It can hardly have been
intended that it could be satisfied by two multi-terminal machines serving an
unlimited number of players. As already noted, Mr Peretz’s answer is that, even if
the draftsman in 1968 may not have had in mind the possibility of multi-terminal
“machines” that cannot change the natural meaning of the words; section 37 was
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available to deal with changes in technology which might call for different or more
sophisticated restrictions.
30. In my view, it is not necessary to resolve this debate, since one can arrive at
the same practical answer as the Court of Appeal, without departing from the view
that the word “machine”, where it matters, can refer to an individual terminal. The
relevant phrase is “the element of chance in the game is provided by means of the
machine”. In the words of Norris J, it is “the determining event which governs the
outcome of the game being played on the machine … which the player is playing”.
Chance is the possibility of something happening, not in the abstract, but for a
particular player in the context of a particular game; in other words, the possibility
of that player getting the combination of numbers which wins a prize or conversely
a combination which does not.
31. Here what determines the outcome of the game is the pressing of a button (or
pulling a lever) on the terminal. The pressing of the lever is a more sophisticated
equivalent of a player rolling a dice. In that context, it can fairly be said, the winning
number is produced “by means of” the player’s action in throwing the dice. So here
the RNG produces a pre-programmed sequence of numbers which changes very
rapidly. The element of chance in any game is provided “by means of” the action of
the particular player in pressing the button and so interrupting that ever-changing
sequence at a particular moment. The terminal is not simply communicating
information from the RNG, but is the active means by which the winning or losing
combination is generated. The RNG is a necessary part of that process, but its
response (wherever situated) is entirely automatic. In those circumstances, it is a fair
use of language in my view, and consistent with the apparent policy of the
legislation, to describe the element of chance as provided “by means of” the
terminal.
32. Accordingly, albeit for somewhat different reasons, I agree with the
conclusion reached by the Court of Appeal and I would dismiss the appeal.
