Fundamental changes to the way online gambling is regulated in Great Britain: a summary
Draft legislation published by the Government on 3 December 2012 will require all operators (irrespective of where they are based in the world) to obtain a licence from the UK’s Gambling Commission to deal with British consumers and to advertise in Great Britain.
March 2013
The Government has published the draft Gambling (Licensing & Advertising) Bill which, if passed into law, will amend the Gambling Act 2005 so that remote gambling by consumers living in Great Britain will be regulated on a 'place of consumption' basis instead of the current 'place of supply' basis.
At the moment, the Gambling Act 2005 requires each operator that wants to offer its services in Great Britain to be licensed or regulated by one of the jurisdictions approved by the UK's Gambling Commission – the 'white-listed' jurisdictions. Licences issued in these 'white listed' countries are treated as having been issued in Great Britain.
However the Government is concerned that without specific requirements imposed by overseas jurisdictions, operators may not be compelled to report certain information, such as instances of suspicious betting activity, to the Commission. Although some operators voluntarily share information with the Commission in addition to their home regulator, it is often of insufficient detail to be used in an investigation. As such, the Government asserts that "it [is] essential for the Gambling Commission to have a greater degree of oversight in respect of the gambling offered into Great Britain."
To that end, the main change set out in the draft Bill is an obligation for overseas operators who sell into the British market to obtain a licence from the Gambling Commission. Therefore operators will be required to abide by the provisions of the Gambling Act 2005 and its regulations, as well as the social responsibility and technical standard requirements issued by the Gambling Commission. This means that, for the first time, operators based abroad will be under a legal obligation to notify the Gambling Commission in respect of suspicious betting patterns involving British consumers to help combat illegal activity and corruption in sports betting.
Hugh Robertson, Minister for sport and tourism, said that "these proposals are an important measure to help address concerns about problem gambling and to bridge a regulatory gap, by ensuring that British consumers will enjoy consistent standards of protection, no matter which online gambling site they visit." Also Philip Graf, Chairman of the UK's Gambling Commission, announced that "we welcome the proposed changes as currently we regulate less than 20 percent of online gambling by British consumers and cannot insist on overseas operators providing us with information about suspicious sports betting transactions."
The Government also proposes that operators will be required to pay licence fees, and to also contribute to research, education and treatment of British problem gambling and regulatory costs. In addition, the documents that were published with the draft legislation state that "subject to HM Treasury, operators would also contribute to UK gambling tax". It is highly likely that operators would seek to challenge this proposal on the basis that such a tax would constitute an unjustified attempt to restrict the free movement of goods and services in the EU for tax purposes.
In fact, challenges from operators to such a tax would be almost inevitable given that several, including Ladbrokes, have invested heavily in shifting their online businesses to gambling-friendly tax havens such as Gibraltar and the Isle of Man over the past decade. It was reported earlier in the year that Ralph Topping, chief executive of William Hill, has received legal advice on the potential introduction of a "consumption tax" and had received "encouraging noises" about how to challenge its implementation if proposals were put forward.1
The tax point aside, the Government insists that gambling operators based in traditional 'white listed' jurisdictions will not be subject to significant burdens as a result of the proposed legislation. It states that "operators in well-regulated jurisdictions whose regulators can provide, for example, the necessary compliance information, will not face significant increases in licensing costs – those whose regulators cannot provide such information will need to pay the compliance costs associated with being subject to the same requirements as other Gambling Commission licensees.”
The Government plans to introduce the draft Bill before spring 2013.
See Draft Gambling (Licensing & Advertising) Bill.
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"The Government also proposes that operators will be required to pay licence fees, and to also contribute to research, education and treatment of British problem gambling and regulatory costs."