Out-Law / Your Daily Need-To-Know

Remote gambling laws finalised but legal challenge may yet be launched by operators

Out-Law News | 16 May 2014 | 3:31 pm | 2 min. read

Gambling operators based outside of Great Britain but wishing to provide remote gambling services to GB-based consumers will need to obtain a licence from the Gambling Commission to do so, under legislation that has now received Royal Assent.

A new 'point of consumption' (POC) regulatory framework for remote gambling is outlined in the Gambling (Licensing and Advertising) Act, which was passed by the UK parliament in April.

Under the Act, all gambling operators, regardless of where they are based, will be required to obtain a remote gambling licence from the Gambling Commission if they want consumers in Great Britain to bet via their websites.

The new POC regime will come into force once the UK government introduce new secondary legislation to implement the provisions of the new Act. The Gambling Commission recently published a number of changes to the licensing conditions that account for the incoming POC regime. The bulk of the amendments are set to come into force from August, although new licensing conditions around the manufacture, supply, installation and adaption of gambling software will not take effect until 30 January 2015.

Separately, a new POC tax will apply to remote gambling activities in Great Britain. Under those 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.

At the moment, remote gambling in Great Britain is regulated from a 'point of supply' perspective and means that gambling operators have been able to obtain licences to operate in other jurisdictions, such as Gibraltar, and still provide services to consumers in Great Britain. The provision of remote gambling services from an overseas location to GB consumers is not currently subject to the UK's tax regime.

In a recent article published in the New Statesman, Gibraltar Betting and Gaming Association chief executive Peter Howitt warned that the POC regulatory regime could encourage a significant black market for online gambling in Great Britain. He said that gambling operators may lodge a legal challenge against the new regime.

"Without some significant modification, the current POC proposals will create confused regulatory supervision and market disruption on a worldwide basis," Howitt said. "Our concern is that, ultimately, this will benefit unlicensed operators based outside of the European Union, to the detriment of consumers."

"The GBGA has tried to engage in a constructive dialogue with the UK government to ensure that any new legislation actually helps the regulated gambling industry, the government and, most importantly, the consumer. To date we have not met with success in our efforts with the UK and this may leave the industry with little choice but to accept the proposed changes or challenge their lawfulness under EU law," he said.

Howitt also said that the GBGA believes the UK has failed to establish genuine legal grounds for the change in regulatory approach from a consumer protection perspective.

Gambling law expert Susan Biddle of Pinsent Masons, the law firm behind Out-Law.com, said that any legal challenge could significantly delay reforms to the regulatory and licensing regime around remote gambling in Great Britain.

"If a challenge is brought, then this may disrupt the proposed timetable for implementation," Biddle said. "By analogy, the Alcohol (Minimum Pricing) (Scotland) Act 2012 received Royal Assent on 29 June 2012 and was intended to come into force in April 2013, but has still not done having been challenged by the Scottish Whisky Association, and two other representative bodies for the European drinks industry, on the basis those laws are illegal under EU law. The challenge was referred by the Court of Session in Edinburgh to the Court of Justice of the EU (CJEU) at the end of April this year. This means there will be a further delay in the implementation of those minimum pricing rules, if indeed they are deemed lawful by the CJEU."

Helen Grant, the UK's minister for sport, said: "This Act marks a significant step in increasing protection to consumers based in Great Britain, by ensuring that all remote gambling operators will be subject to robust and consistent regulation. This includes a requirement for operators to support action against illegal activity and corruption in sport, and to comply with licence conditions that protect children and vulnerable adults."