The UK gambling draft regulations that if enacted will require offshore operators to obtain a UK Gambling Commission licence in order to transact with, and advertise to, British customers have been published.
As a result of being licensed in Great Britain, operators will be subject to all the conditions of the Gambling Act 2005 and its corresponding regulations and all the UK Gambling Commission's policies and requirements. Although dealt with separately, operators will also be liable to pay tax on gross gaming yield for all transactions with British customers, which in all likelihood will be 15%.
The Government's reasoning for the reforms stems from consumer protection concerns; the fact that customers can transact with operators that are licensed in numerous offshore jurisdictions and arguably do not afford the same level of regulation as Great Britain.
Commentary in the draft leans heavily on the inadequacies that can exist in other licensing jurisdictions such as insufficient methods of self-exclusion, deficiency of reporting requirements and the absence of contributory costs to regulation, research or education and treatment of problem gambling. However, many operators are questioning whether the UK Gambling Commission's regulatory processes are any more robust than some of the more developed offshore hubs such as Gibraltar, Alderney or Malta. Notably, the draft points out that "the majority of operators currently targeting British customers are subject to established and effective regulatory regimes" although it does not specify which jurisdictions.
It will be interesting to see if this sentence becomes a point of focus for the many operators and the industry bodies that represent them. As such parties seek to find weaknesses in the Government's proposals, searching for points for potential legal challenge, the admission by the Government that many operators are already subject to adequate controls is a somewhat unexpected one.
Benefits derived from the proposals will see existing EEA-licensed operators automatically obtaining a transitional licence in order to prevent disruption to trading. Also, given that the white-list will be phased-out, every operator, no matter where they are located, will be permitted to advertise into the UK with a Commission licence. The draft also points out that the proposals will be "cost- and benefit-neutral to British based remote gambling operators…and may even be some (as yet unquantified) marginal benefits in relation to fees". Given that only one of the top 20 operators targeting the UK is licensed in Great Britain, this will be irrelevant for most major online operators.
A stage of pre-legislative scrutiny will now commence and operators will get another opportunity to express their views on the proposals, which no doubt they will take advantage of.
The full draft can be accessed here and if you need any clarification feel free to contact me, Giulio Coraggio, and I will be happy to put you in contact with my UK gambling colleagues.