District Judge Paul Goldspring found no evidence linking gambling and anti-social behaviour and granted Paddy Power the license to open a new betting shop in the East London borough of Newham.
Newham Council had rejected Paddy Power's application to open a new shop in the borough, which already has more than 80 betting shops, on the grounds that it would generate most of its income from fixed-odds betting terminals rather than traditional betting on sports and horse racing.
Councillors in Newham also claimed that betting shops attract crime and anti-social behaviour, but in his ruling, the Thames Magistrates Court District Judge said it is up to the police to object to a license and the local authority did not have the power to reject the license application in order to prevent crime.
"I find it significant the police did not object to the license and agreed conditions. One would have thought, that if the concerns of the local authority were evidenced and well founded, the police would have said so then and at this appeal," said the District Judge.
Local authorities across the UK looked at the Newham Council stand against Paddy Power as a test case to contain the diffusion of betting shops on high streets.
Bookmaker Paddy Power commented in a press release: "We welcome the fact that the confusion surrounding primary activity has been clarified, with Newham conceding during the proceedings that the 2005 Gambling Act relates only to whether an operator provides facilities for a genuine betting business."
"In granting the license, the judge said that he disagreed with the decision of the sub-committee to reject the license on the basis of crime & disorder which was 'wrong' on the evidence presented. He concluded that the granting of the license would be reasonably consistent with the licensing objective of preventing crime and disorder. He also pointed to flaws in the crime statistics relied on by Newham and lack of evidence to support the assertion that betting shops in Newham are a source of crime or disorder."
"Paddy Power makes a positive contribution to local communities in which it operates. The UK high street is currently facing unprecedented challenges and our expanding retail presence adds much needed vitality and footfall to localities around the country as well as vital employment. Paddy Power is a responsible operator that takes proactive measures to offer a safe and responsible leisure experience for its customers and the community."
"Paddy Power is committed to maintaining a close working relationship and open dialogue with all local councils. We are committed to building our relationship with Newham Council and do not want the community to lose out as a result of this case. We have therefore decided to donate all costs awarded to Paddy Power to charities working across Newham. We want to fund initiatives that support the local community, particularly around up-skilling, getting people into and back into work and social enterprise. We would like to set up a meeting to discuss this with Newham Council and the local MP, Stephen Timms to enable us to put the money to work as soon as possible."
Councillor Ian Corbett said Newham Council was deeply disappointed with the decision and considering whether it was a matter for a judicial review.
He then introduced a new matter: "Taking legal action at a time when our services are under severe pressure is something we have been forced to do because the Gambling Commission refuses to act as a regulator."
Speaking to the Independent, the Gambling Commission stated: "Local authorities possess extensive powers under gambling legislation to manage local gambling provision in order to keep crime out and to protect children and vulnerable people. We also ensure that licensed gambling operators meet with the requirements of their operating license, which governs the way in which gambling is provided in a variety of different premises."
"The Gambling Commission encourages local authorities to use their varied powers to achieve desired local outcomes, which they alone are best placed to judge."
But according to anti-FOBT campaigner Derek Webb, the decision in the Paddy Power-Newham Council case highlighted the weaknesses of the Gambling Commission.
The founder of the Campaign for Fairer Gambling said: "The Gambling Commission is willing to stop adult gaming centres having betting licenses if they aren't doing enough betting business, but it won't take the same action against betting shops, where betting now accounts for less than 20% of shop turnover."
"The Gambling Commission refused to support the Newham Council and is failing to uphold the licensing objectives of the 2005 Gambling Act, so is clearly unfit for purpose."