comment


Julian Harris, Partner, Harris Hagan harris@harrishagan. com


On 14 July 2011, the Government announced that it was proposing to amend the Gambling Act 2005 to remove the permission for EEA and ‘White List’ operators freely to advertise in the UK. In future, all operators targeting UK customers will require a licence from the UK Gambling Commission. This development is heavily influenced by the fact that many other European jurisdictions are moving to licensing systems which require online gambling operators to obtain a local licence if they wish to transact with customers in that jurisdiction. The position set out in the 2005 Act reflected the Government’s interpretation of European law at that time: that companies based in other EEA jurisdictions should have the freedom to provide services to the UK. However since that date, the European Commission has accepted licensing regimes in other European jurisdictions which required all companies wishing to target that market to obtain a local licence on the basis that operators in other European jurisdictions were free to obtain a licence as local operators were. It comes as no surprise, then, that the UK Government has decided to follow that model. The reason given for the UK’s proposed change to the legislation is consumer protection, namely the fact that without investigating and regulating those companies offering gambling services to UK residents there is currently no way for the Gambling Commission to ensure that an appropriate level of protection (for example against problem gambling or unfair practices) is in place.


The UK is a very attractive market to online gambling operators at the moment, as by basing themselves in tax efficient jurisdictions such as Alderney, Gibraltar, Malta or the Isle of Man, operators can target this lucrative market without paying tax in the UK. The Government has yet to make any comment on the tax implications of the proposed changes, but we see no reason to believe that the current gaming duty of 15% on gross gambling prohibits will not apply to all new licensees. Given the value of the UK as a target market, it is our view that the majority of operators currently targeting the UK will obtain a UK licence when the requirement comes into force, most likely at some point in 2012. Although paying gaming duty will no doubt have a significant impact on the bottom line, the 15% duty rate in fact compares favourably to that imposed in other jurisdictions such as France and Italy. Further, as all operators will be required to pay the same rate, the impact may be less than anticipated. The real losers may ironically be UK consumers, as UK facing gambling operators will no longer be in a position to offer the same bonuses and incentives. Although the Government does not propose to introduce enforcement measures such as IP blocking, we anticipate that it will become almost impossible to advertise unlicensed gambling services in the mainstream media in the UK, as the media will insist upon sight of a UK licence before accepting advertisements – otherwise, they risk committing the criminal offence of advertising foreign gambling.


off-shore the UK government has been left with little to regulate and a lack of income from its taxes and licensing sector within the online field. The government is now keen to demand something in return as the UK’s entire online gambling market is beyond the scope of the both the gambling commission and the treasury.


The whole topic has been brought to a head recently and in April 2009 the government decided to review the UK position and “create a level playing field” for all UK gambling operators. In January 2010 the Sports Minister announced its proposals to review the current system of online licensing which in turn also led to a focus on ensuring protection for UK players. The government has recently looked at the off-shore companies which operate in the UK and therefore avoid paying taxes or obtain licensing.


The Regulatory Future of Remote Gambling in the UK report recommends that in line with other European countries every off-shore gaming company will now have to obtain a British specific licence on top of that which it already holds from an acceptable off-shore gambling jurisdiction.


The implementation of this proposal would involve an amendment of the 2005 Act specifically imposing a licence that will be needed to transact with UK customers and


theRe is talk of a dRamatic


clampdown on off-shoRe


opeRatoRs to stop them adveRtisinG in the uk.


would make it a criminal offence to do so without a licence.


The application is expected to be simpler and quicker for white list jurisdictions which already operate legally in an approved jurisdiction.


This could of course have serious implications for both operators and jurisdictions due to the tax implications as well as ‘secondary’ licensing costs. It has been hinted this could match the current 15 per cent fee which UK licensees currently have to pay. Companies could be hit with tax bills amounting to millions.


There is also talk that there will be a dramatic clampdown on the off-shore based operators to stop them advertising in the UK coupled with


a ban on credit cards. Some suggest that this will not make the UK more attractive, but instead by merely imposing restrictions on overseas operators, the effect may be to create a level playing field on which nobody wants to play. The consultation period ended in June 2010 and has now been presented to the government.


the cuRRent situation Approximately 72 per cent of the adult population in the UK take part in some sort of gambling activity. In 2008 the betting industry as a whole saw gross revenues of around £3.7bn and was responsible for 40,000 plus jobs.


Remote gambling is defined by the UK Gambling Act 2005 as gambling using either the internet, telephone, television, radio or any other kind of electronic or technology for facilitating communication.


Basically it permits remote casinos and betting facilities to operate from the Great Britain


It is of course an offence in Britain to provide facilities for remote gambling without obtaining the correct licence if at least one piece of the equipment is situated in the UK, even if the facilities are not provided for use wholly or partly within Great Britain.


It is primarily made up of the large and


64


united kinGdom


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68