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Legal uncertainty over remote gambling advertising puts lucrative British sport sponsorship deals at risk, says expert

Out-Law News | 29 Jul 2014 | 10:28 am | 4 min. read

Legal uncertainty over the right of offshore gambling operators to advertise their services without a licence could put potentially lucrative sponsorship deals at jeopardy for English Premier League football clubs, an expert has warned.

Sports law specialist James Earl of Pinsent Masons, the law firm behind Out-Law.com, said that gambling operators based outside Great Britain should not be required to obtain a licence from the Gambling Commission to enter into sponsorship deals with British sports clubs in cases where they do not provide remote gambling services to British consumers, nor are targeting those services at a British audience.

"Commercial partnerships between Premier League clubs and global gaming and betting companies, such as the recently announced shirt sponsorship deal Hull City unveiled with 12BET, are becoming increasingly important sources of income for the clubs," Earl said. "The global reach and attraction of the Premier League represents an excellent opportunity for overseas gambling operators to gain exposure in markets outside Great Britain where they operate or are targeting future growth. Premier League clubs, alongside the Premier League, have been working hard to open up new commercial markets, Asia being a prime example, and this includes making large investments in personnel and marketing strategies."

"However, if Premier League clubs or other sports teams cannot provide prospective partners like overseas gambling operators with certainty about compliance with the local regulatory landscape in Britain, then those rapidly growing and lucrative revenue streams for clubs, alongside the substantial investments they have made, will be put at risk," he said. "That regulatory landscape includes the advertising of gambling services, and the position the Gambling Commission has taken on the issue and how it concerns overseas-based operators has the potential to negatively impact British sports clubs' income without a justified reason for doing so."

The basis on which gambling is regulated in Great Britain is moving from regulation based on the supplier's location to regulation based on the player's location. This new regime is expected to come into force on 1 October 2014 under amendments made to the Gambling Act by the Gambling (Licensing and Advertising) Act. 

The Gambling Commission has suggested that, even if an overseas operator blocks British consumers from gambling on its website, the operator and anyone carrying its advertisements may be committing an offence under the revised Gambling Act if those advertisements are visible in Great Britain but the gambling is not licensed by the Commission.

However the Gambling Commission recently confirmed that overseas gambling operators are only likely to be issued with a licence to advertise their services in Great Britain if they provide gambling services to British consumers too. No 'advertising only' licences are likely to be issued, it said.

"The Commission has received enquiries about the possibility of an ‘advertising only’ licence, i.e a licence to permit overseas operators to advertise to those in overseas markets by means, for example, of sports sponsorship or advertisements on the perimeters of sports fields but not accept transactions from British consumers," the Commission said. "The Commission will not normally license such operators unless they have a British facing business and either currently transact with British consumers or have a clear business plan for doing so in the future."

"It has been suggested by some stakeholders that an operator will not commit an offence of advertising unlawful gambling if it blocks access by British consumers to their gambling website. As such, it is suggested, operators can advertise in Britain without a relevant Commission licence," it said. "The Commission does not provide legal advice and only the courts can provide a definitive view on the legal position. However the Commission considers that the position on non-remote advertising is arguable both in terms of the law and the facts of any particular case."

"The Commission also notes that blocking technology is not 100% reliable and that it is possible for consumers to circumvent blocking measures; sports clubs carrying advertising from unlicensed operators (and taking the arguable position that blocking access to British consumers is sufficient) will be wholly reliant on that operator having appropriate and effective measures in place to block access to British consumers if they are to avoid committing an offence of unlawful advertising," the Commission said.

Under the new 'point of consumption' regime in Great Britain, it will be an offence to provide or advertise facilities for remote gambling without a licence if you know or should know that the facilities are used, or are likely to be used, in Great Britain.

James Earl said that "there is nothing in British gambling laws as amended to prohibit the advertising of remote gambling facilities in Great Britain where those facilities cannot be used in Great Britain".

However, the Commission said that there are also other reasons why it has adopted the stance it has.

"In addition to the legal risks indicated, the Commission has policy and operational reasons for its opposition to non-remote advertising (for example, shirt sponsorship) of unlicensed remote gambling," the Commission said. "These include ensuring that those advertising remote gambling in Britain are all subject to the provisions around reporting suspicious betting activity and the general player protection framework."

"A general presumption against non-remote advertising of unlicensed gambling provides greater clarity to operators and the carriers of advertising as to who is and is not able to advertise. This is important because without such clarity compliance and enforcement of the advertising provisions would be more complex and costly; costs borne by the licensed industry through their fees," it said.

Earl said that risks presented by unlicensed sports betting operations based in Asia may have prompted the Commission to take the position it has, but said that the regulator may be susceptible to a legal challenge, including one brought on competition law grounds, if it seeks to enforce its position which, currently is at odds with the amended legislation.

The Commission's position has been outlined in response to industry queries about how the new regulatory and licensing regime for remote gambling activities in Great Britain will work in practice.

The Gibraltar Betting and Gaming Association (GBGA), which represents Gibraltar-based remote gambling operators, has informed the UK government and the Gambling Commission of its intention to apply for judicial review of the changes, on the basis that they are in breach of European law because the new rules are neither a reasonable nor proportionate means of achieving the government's stated aim of better consumer protection.