New regulatory framework for remote gambling in Great Britain receives parliamentary approval

Out-Law News | 05 Apr 2014 | 10:22 am | 2 min. read

Overseas-based gambling operators that provide remote betting services to consumers in Great Britain will be subject to a new regulatory and licensing regime in the country as a result of new laws that have been approved by the UK parliament.

The new 'point of consumption' regulatory framework is outlined in the Gambling (Licensing and Advertising) Bill. The Bill has received UK parliamentary approval and is awaiting Royal Assent, which is expected to happen in May.

Under the Bill, all gambling operators, wherever they are based, would be required to obtain a remote gambling licence from the Gambling Commission if they wished to provide remote gambling services to consumers in Great Britain.

The new law, if introduced, would bring many foreign-based operators within the scope of direct regulation by the Commission by altering the licensing regime to one based on where bets and wagers are placed –  the 'point of consumption' (POC) – rather than where the operator is based – 'the point of supply'.

A last minute amendment to the Bill, finalised in the UK parliament late last month, will see overseas betting companies serving consumers in Great Britain pay a levy on gross profits taken on horse racing bets. At the moment the horse race betting levy only applies to betting operators based in Great Britain.

Changes to the law, however, may yet be delayed. According to previous media reports, the Gibraltar Betting & Gaming Association (GBGA) could consider raising a judicial review challenge against some of the proposed reforms. Some gambling operators that provide remote betting services to consumers based in Great Britain have their businesses based in Gibraltar.

The Gambling Commission has separately published some changes to the Licence Conditions and Codes of Practice (LCCP) (63-page / 417KB PDF) that gambling operators subject to gambling laws in Great Britain have to adhere to. The rules will need to be adhered to remote gambling operators subject to the new POC regulatory regime outlined in the Gambling (Licensing and Advertising) Bill.

Among the changes detailed by the Commission is an obligation on remote gambling operators to inform the Commission where their "key equipment" is based. The Commission said that it will be a condition of licence that the companies apply for permission from it to relocate their key equipment to another jurisdiction.

The Commission is expected to publish other final changes to the LCCP before the end of April. It previously launched a consultation on the LCCP changes in September 2013.

Separately from the new Bill and LCCP changes, the UK government has decided to implement a new tax regime for remote gambling which will also follow a POC approach.

Under the plans the obligation to pay tax would apply where there are arrangements between a gambling operator and a "UK person" for that UK person to participate in remote gambling, subject to some limited exemptions.

A 'UK person' is defined as either "an individual who usually lives in the United Kingdom, or a body corporate which is legally constituted in the United Kingdom", according to the draft legislation. The proposals set out a power for the Treasury to amend this definition and to provide guidance on the steps to be taken to establish whether an individual is a 'UK person' for the purposes of the framework. Notably in some circumstances there will be a presumption that an individual will be a 'UK person' for the purposes of the regime if there is "a failure to produce sufficient evidence to the contrary".