When the UK gambling law regime was overhauled by the Gambling Act 2005, online gaming seemed set fair to flourish. But high duties and restrictive rules have so far confounded expectations. Now the DCMS is consulting on changes, as reported by Nick Johnson.
Topic: Betting and gaming
Who: DCMS, Gambling Commission
When: 7 January 2010
Law stated as at: 3 March 2010
The DCMS announced proposals for a radical shake-up of Great Britain's regulatory approach to overseas on-line gambling operators targeting British consumers. Under the proposal, which will now go to consultation, these operators would need to be licensed by the Gambling Commission.
That would be a significant shift. The current regime under the Gambling Act 2005 permits overseas remote gambling operators based in EEA countries, Gibraltar and certain other "white-listed" territories to advertise to British customers. They are not required to have a Gambling Commission licence unless any of their "remote gambling equipment" is situated in Great Britain. They are also not generally subject to British remote gambling tax or corporation tax.
Why this matters:
Much of the detail around the proposal remains unclear at this stage, and the DCMS has expressly confirmed that potential taxation of overseas operators will not be considered in the consultation (although there is a commitment to making overseas bookmakers pay "their fair share" of the Horserace Betting Levy).
It also seems unlikely that the proposal could be put into effect before the general election this year. However, if the proposal were to be adopted, there would be some key consequences for advertisers, agencies and media owners, including the following:
– British media owners and British advertising agencies would have a much easier job working out whether they can lawfully do business with particular overseas operators. Section 331 of the Gambling Act 2005 provides for a strict liability offence of advertising foreign gambling, subject to an exception for remote gambling the arrangements for which are "subject to the law about gambling of an EEA State [or "white-listed" territory] (whether by being regulated, exempted, prohibited or otherwise)".
This makes it essential for media owners and agencies based in Great Britain to ensure that gambling advertisers they deal with are based and properly licensed in a permitted territory. This inevitably requires a level of due diligence and investigation.
If the new proposal goes ahead, a simple search of the Gambling Commission's register would suffice.
– Media owners and others who have white-labelled online gambling offerings operated by offshore entities will need to make sure those offshore partners become properly licensed in Great Britain. Given that these proposals are on the table, it would be prudent in any event to review existing contracts and check they give adequate protection against the possibility that the offshore provider could decide not to submit to Gambling Commission licensing. Any new contracts entered into should reflect this possibility.