The Gambling Act 2005 received Royal Assent in April this year. The present gambling
legislation will remain in force until the new Act is fully implemented, which is expected to be in
2007. However, the Gambling Commission is being established to be responsible for the granting of
operating licences and existing and new gaming operators are preparing themselves for the new
gaming regime.
While the new Act covers many aspects of gambling and gaming, this article concentrates
on the changes to remote or online gaming operations in the UK. Online gambling has become an
increasingly lucrative industry - statistics show that Britons spend a staggering £5 billion a year
on online gambling.
The Present Position
Online betting is presently permitted under the Betting, Gaming and Lotteries Act 1963. However
the Gaming Act 1968 effectively prevents the establishment within the UK of an "online" or other
remotely operated casino. This is because under the present law operators must be licensed by the
Gaming Board to offer casino gaming and must do so on licensed and registered premises. The Gaming
Board's position is that persons taking part in the gaming must be on the premises at the time the
gaming takes place. So no licence may be obtained by an operator wishing to offer online gaming
services.
There is nothing in the present law that makes it illegal for British gamblers themselves to
play on the internet or via their mobile phones. However, they may not do so from internet cafés or
otherwise in "public places" (where the "public place" would be likely to be committing an
offence).
Although the requirement for licensing has led to operators setting up offshore, it is likely
that they are providing "interactive" services to British residents, e.g. taking payments from the
British gambler who must provide personal information. This falls within the English jurisdiction,
even though the offshore operator may well be licensed in his local jurisdiction.
Advertising is another area restricting gaming operators under the present law. Even offshore
gaming operators are not permitted to advertise gaming sites on television or radio and there are
substantial restrictions on advertising in "non-broadcast media". The advertisements must be
"socially responsible", not encourage excessive gambling and must not exploit the vulnerable.
The New Legislation
- Remote Gambling
The new definition encompasses the internet, telephone, television, radio and all likely future
technological developments.
- Licensing
Remote operators based in the UK will require an operating licence. There will be ten different
operating licences; an online facilities operator (other than in relation to Bingo) will require
a "Casino Operating Licence". The requirement for an operating licence will depend upon providing
"facilities for gambling". This will no doubt be a moot point: e.g. will providing a hyperlink to
a gambling site be considered to be a "facility for gambling"? It will be immaterial whether the
facilities are provided in or outside the UK.
- Advertising
All licensed operators based in the EEA will be permitted to advertise in the UK. Whilst it is
possible that Ofcom will relax their present prohibition on television and radio advertising, it
seems clear that non-licensed operators will not be permitted to advertise in any media in the
UK. There will therefore be great commercial incentives for operators to obtain licences under
the new legislation.
- Tax
The tax position of operators under the new legislation is presently unclear. Potentially there
are gambling taxes, Corporation Tax, VAT and National Insurance considerations for operators
working within the UK.
- Conclusion
Whilst there are clearly matters to be resolved, existing and future remote gambling operators
will be keen to get ahead of the game and establish themselves and their brand names in the new
marketplace. Anyone seeking to set up operations under the new law should seek legal advice at
the earliest opportunity.
For further information, please contact Howard Ricklow on 020 7468 7231.