Licensed vs Unlicensed FECs: Which Permit Do You Need?

If you operate — or plan to operate — a Family Entertainment Centre in Great Britain, the first question the Gambling Act 2005 forces you to answer is straightforward but consequential: do you intend to offer Category C Amusement With Prize (AWP) machines? The answer to that single question determines everything that follows. Get it wrong and you are either carrying compliance obligations you do not need, or — worse — operating without the licence the law requires.

The Two Routes: A Quick Decision Framework

There are exactly two regulatory routes for a Family Entertainment Centre in Great Britain. The first is the unlicensed FEC permit, granted by the local licensing authority with no involvement from the UK Gambling Commission (UKGC). The second is the licensed FEC route, which requires both a UKGC operating licence and a premises licence from the local authority. The trigger is Category C machines: if you want them, you need the UKGC licence. If you do not, a local permit suffices.

For the majority of operators — seaside amusement arcades, holiday park venues, indoor family leisure centres — the unlicensed FEC permit covers everything they need. The licensed route becomes relevant only when Category C revenue is part of the business model. Both routes fall within the broader gaming machine permit framework established by the 2005 Act.

The Unlicensed FEC Permit: Category D and Local Authority Only

An unlicensed FEC permit authorises the operation of Category D AWP machines — and only Category D machines — in a premises that is wholly or mainly used for making gaming machines available. The UKGC has no role in granting or overseeing this permit. The entire process sits with the local licensing authority.

Key characteristics of the unlicensed FEC permit:

• Machine entitlement: Category D gaming machines only. No Category C, B, or A machines are permitted under this route.
• Permit duration: 10 years from the date of grant, unless surrendered, lapsed, or revoked.
• No UKGC licence required: The UKGC does not licence these premises and does not collect regulatory returns from them.
• Open to all ages: The premises may admit customers of any age, consistent with the family-oriented nature of Category D machines.
• No conditions by local authority: Once granted, a permit cannot have conditions attached by the licensing authority.
• Premises definition: The permit cannot be issued for an entire shopping centre, bowling alley, or airport. The gambling activity must be the primary purpose of the space.

Because the UKGC does not collect data from unlicensed FECs, there is no centralised count of how many operate in Great Britain. BACTA, which represents over 500 companies in the amusements sector, has consistently described this category as running into the thousands — the majority of seaside amusement arcades and most holiday park arcades fall into this classification.

The Licensed FEC Route: When You Need a UKGC Operating Licence

A licensed FEC requires two separate authorisations: a UKGC operating licence and a premises licence from the local authority. You need both. You cannot operate Category C machines in a family entertainment setting on a premises licence alone, and an operating licence alone does not authorise any specific premises.

The defining feature of the licensed FEC is the ability to offer Category C AWP machines alongside Category D. However, this comes with a non-negotiable physical requirement: the Category C area must be physically segregated from the rest of the premises and restricted to customers aged 18 and over. A barrier must be in place with prominent signage at the entrance stating that under-18s are not permitted. The area must be supervised — either by a member of staff with a line of sight to the machines, or through monitored CCTV. Full details on these obligations are covered in our guide to age verification in licensed FECs.

The number of licensed FECs has fallen substantially over recent years. According to the Government’s consultation on Category D gaming machines, published in November 2025, there were 220 licensed FECs in 2018 and 171 by 2024 — a decline of approximately 22% over six years. Gross gaming yield for the sector fell from £53.6m in 2018–19 to £38.7m in 2023–24, an average annual decline exceeding 5%. The shrinkage reflects a combination of post-pandemic closures, inflationary cost pressure, and operators concluding that the UKGC compliance burden cannot be justified by Category C machine revenues.

How to Apply for an Unlicensed FEC Permit

Applications go directly to your local licensing authority. There is no central process and requirements vary between councils, but the Act and UKGC guidance to licensing authorities establish minimum expectations that most authorities follow.

You should expect to provide:

• Application form in the form and manner specified by the authority.
• Premises plan showing the layout of the space, including the location of machines.
• Evidence of understanding of the maximum stakes and prizes permissible for Category D machines.
• Evidence of no relevant convictions as listed in Schedule 7 of the Gambling Act 2005. Some authorities request a disclosure to satisfy this requirement; others accept a written declaration. Requirements differ by council — confirm with your authority before submitting.
• Evidence that staff are trained to understand the machine parameters.
• Child protection policies — many authorities expect written procedures for protecting children on the premises.
• Application fee — set by each authority; check your council’s current schedule.

Once the application is received, the authority forwards a copy to the relevant police force, which has 14 days to comment. After that period, the authority grants or refuses the permit. Authorities cannot add conditions to a grant. If granted, the permit runs for 10 years from that date.

One practical note: because requirements vary by authority, operators with venues in multiple local authority areas should not assume that documentation satisfying one council will satisfy another. Confirm the specific requirements of each authority in advance.

How to Apply for a UKGC FEC Operating Licence

The UKGC operating licence for a licensed FEC falls under the Gambling Act 2005. The application is made directly to the UKGC and is distinct from — and must precede, in practice — the local authority premises licence application.

The UKGC application process requires:

• Online application through the UKGC’s eServices portal.
• Fit and proper assessment — the Commission assesses the suitability of the applicant, including officers and key personnel.
• Personal Management Licences (PMLs) for certain management roles within the operation.
• Application fee and ongoing annual fee, both set according to the UKGC’s fee schedule. FEC operating licences attract lower fees than higher-risk categories such as remote casino, reflecting the Commission’s lower regulatory effort assessment for this licence type.
• Compliance with the Licence Conditions and Codes of Practice (LCCP) from the date the licence is granted. This includes social responsibility obligations, record-keeping requirements, and reporting duties to the UKGC.

Once the operating licence is in place, you then apply to your local licensing authority for a premises licence covering the specific venue. The premises licence application must demonstrate compliance with the licensing objectives — preventing gambling from being a source of crime, ensuring gambling is conducted fairly, and protecting children and vulnerable persons.

The full UKGC guidance for applicants is published on the Commission’s website and updated periodically. Given LCCP changes in recent years — including updated obligations around customer controls and fund transparency introduced in 2025 — operators should work from the current version of the guidance, not older copies circulated by consultants or industry contacts.

The Commercial Case: Is the Licensed Route Worth It?

For most operators adding Category C machines, the honest answer is: it depends on volume, venue footprint, and whether you can deliver the physical segregation requirements without cannibalising your family-friendly offer.

The compliance burden of the licensed route is not trivial. You are subject to the full LCCP, you carry annual UKGC fees, you require Personal Management Licences for key personnel, and you must maintain ongoing reporting obligations to the Commission. The segregated Category C area requires capital investment in barriers, signage, and supervision — either staff hours or CCTV infrastructure.

Set against that, Category C AWP machines carry higher maximum stakes and prizes than Category D, which means higher average revenue per machine per hour when play is active. For a larger seaside arcade with consistent adult footfall — particularly evening trade — the economics can work. For a holiday park venue that operates a short seasonal window with a predominantly under-18 customer base, the Category C revenue rarely justifies the compliance overhead.

The declining licensed FEC count — from 220 to 171 in six years — suggests that a significant number of operators have run this calculation and moved to the unlicensed route, either by surrendering their licence or by not renewing. That is not necessarily a sign of sector decline; it may reflect a rational regulatory choice by venues whose Category C revenue did not cover the compliance cost.

Before committing to the licensed route, operators should model: projected Category C gross gaming yield, annualised UKGC fees and LCCP compliance costs, capital cost of segregation and supervision, and the potential impact on family and junior customer footfall if a significant portion of the floor is adult-only. If the net position is marginal, the unlicensed FEC permit delivers a sustainable, lower-cost operation.

What the 2025 Category D Consultation Means for FEC Operators

The Government’s November 2025 consultation on Category D gaming machines proposes parameter changes that, if enacted, would directly affect what unlicensed FECs can offer — potentially improving the commercial case for remaining on the unlicensed route.

The key proposals as published:

The context for these changes is significant. Coin pusher and non-slot parameters were last revised in 2014. Crane grab machine limits have been unchanged since the category was introduced in 2009. Based on Bank of England / ONS data cited in the consultation, average consumer prices rose by over 55% between 2009 and 2025 — which means prize values have eroded substantially in real terms over that period.

The consultation also proposes introducing an 18+ age restriction for cash-out slot machines and separating reel-based machines into a distinct sub-category. This would effectively tighten the Category D landscape while increasing the headline stake and prize values for redemption-style and pusher machines that form the commercial core of most unlicensed FECs.

For operators currently weighing the licensed versus unlicensed route, the direction of travel from government matters. If the proposed Category D uplifts are enacted, the revenue differential between an unlicensed FEC and a licensed FEC narrows. The compliance overhead of the UKGC licence becomes harder to justify on Category C income alone.

The consultation closed in mid-2025. Operators should monitor DCMS and GOV.UK for secondary legislation implementing any confirmed changes.

Frequently Asked Questions

Can I operate Category C machines on an unlicensed FEC permit?

No. An unlicensed FEC permit authorises Category D machines only. To offer Category C AWP machines you require a UKGC operating licence and a local authority premises licence. There is no intermediate route.

How long does an unlicensed FEC permit last?

Ten years from the date of grant, unless surrendered, lapsed, or revoked by the licensing authority.

Does a local authority have to grant an unlicensed FEC permit?

The authority may refuse a permit but cannot add conditions to one it grants. Refusals are relatively uncommon for premises that satisfy the basic eligibility criteria — that the premises is wholly or mainly used for gaming machines, and that the applicant demonstrates no relevant convictions and an understanding of Category D machine parameters.

What happens if I already hold a licensed FEC premises licence and want to downgrade to the unlicensed route?

You would surrender your UKGC operating licence and premises licence, remove all Category C machines, and apply to your local authority for an unlicensed FEC gaming machine permit. There is no automatic conversion between the two routes.

Do travelling fairs need a permit to offer Category D machines?

No. A travelling fair operating at a site that has been used for fairs on no more than 27 days in that calendar year may offer an unlimited number of Category D gaming machines without a permit, provided gambling is ancillary to the fair’s overall amusement offering. This is a distinct exemption under the Gambling Act 2005 — it is not an FEC route and does not permit Category C machines.

Does an unlicensed FEC have to be open to all ages?

Yes. Unlicensed FECs may not restrict entry by age. The Category D machine classification is specifically designed for family environments and all-ages access is inherent to the permit. If a venue wants an adult-only area with Category C machines, it must take the licensed FEC route and maintain physical segregation for that area.

Where can I find my local authority’s application form and fee schedule?

Requirements vary between councils. Search your local council’s website under gambling licences or permits, or contact the licensing department directly. The UKGC’s Guidance to Licensing Authorities sets the minimum requirements, but individual authorities may ask for additional documentation.