Concerns grow over UK grey market revenue declaration
UK licence applicants must declare any market where they derive more than 3% of revenues and prove they are doing so legally
Operators applying for a licence from the UK Gambling Commission this year face an anxious wait for details concerning the requirement to disclose any market where more than 3% of revenues are derived and to prove they are doing so legally.
Given the ambiguous nature of many countries’ online gambling regulation, the requirements “ outlined in a response to a question posed following the issue of recent guidelines “ have caused concern within the industry over how strictly they will be applied.
According to the response, applicants must provide details of markets where they accepts players and that account for 3% or more of total revenue.
They must then either provide evidence of a licence or demonstrate they have “taken appropriate steps to assure themselves that they are not operating illegally”, most likely in the form of legal opinion.
“If we are not satisfied by the explanation provided we may seek further information,” the response states.
Where the percentage of revenue is below 3% the Commission will only require applicants’ assurance that ‘to their knowledge’ they are not operating in a black market.
The requirement also applies to existing UK licence holders, and while further advice is expected this week or next, operators have been urgently seeking clarification as they prepare their applications.
“This goes right to the heart of what the government means when it says it wants to create a transparent and vibrant sector,” said Paul Leyland, a consultant at Regulus Partners.
“In some territories online gaming is illegal but most [non-regulated markets] are dark grey, so it will be interesting to see exactly what the regulator means by proving it is ‘legal’.”
Remote Gambling Association (RGA) chief executive Clive Hawkswood told eGR he had been engaging in dialogue with the Commission over the requirements.
He highlighted the need for clarification regarding what the regulator would consider illegal activity and to what extent ‘legal opinion’ would suffice, given its subjective nature.
“What happens when one operator receives advice that it is OK [accept bets in a market] and another has been told that it is illegal to do so? How do you arbitrate that?” he said.
Leyland said it is likely that the regulator will be lenient in its initial approach given the near impossible task of having a definitive opinion on every country’s law applying to online gambling.
“Given the exposure of certain operators it is unlikely to be enforced too heavily,” he said. “Philosophically you can’t argue against it but it could become a political football for those whiter-than-white operators who want to level the playing field.”