Analysis: Canbet case offers UK regulator reality check
With the UK set to embark on a new regulatory regime later this year, has the Canbet episode given the Gambling Commission a timely taster of the task ahead?
It is expected that by this summer a sizable proportion of the online gambling industry will be beginning to get to grips with the UK’s new Point of Consumption (PoC) regime.
As most will already be aware, the new regulatory framework will require operators and suppliers that wish to transact with customers based in Great Britain, or advertise their services on the island, to be in possession of a licence from the UK Gambling Commission.
Although the stated intentions of this new framework “ to better protect consumers – have been broadly welcomed by the industry, trade associations such as the Gibraltar Betting and Gaming Association (GBGA) have been vocal about the regime’s shortcomings.
One of the GBGA’s concerns is that the Birmingham-based Commission will struggle to regulate operators and suppliers based in far-flung corners of the globe. The Commission, of course, rejects this argument, however, the current case involving bookmaker Canbet might just be a case in point.
Although licenced in the UK and with offices in London, Canbet’s main operations and decision makers are based in Melbourne, Australia, following the online bookie’s acquisition by Interactive Gaming & Sports in early 2013.
However, since the takeover the operator has run into problems, with reports of customers unable to withdraw money from their Canbet accounts dating back to October. Canbet has continually attributed this failure to “an ongoing system malfunction” and last week brought a temporary halt to all operations in order to rectify the problem.
Audrey Ferrie, gaming lawyer and legal director at Pinsent Masons, believes the current situation involving Canbet is “ironic” given that “one of the stated purposes of the new Act (assuming it comes into force) is better customer protection”.
“[Canbet] is a UK company which is licensed by the Commission,” she adds, “but from a practical point of view it may prove difficult to regulate those companies which are subsidiaries of foreign entities.”
Only in the past week has the Commission requested that Canbet’s auditors provide evidence of the operator’s ability to pay customers the monies owed “ a precautionary measure it perhaps should have taken long before the operator was forced to shut down.
Although there is no evidence to suggest Canbet’s problems are a result of anything other than a technical issue, the Commission seems to be dealing with the situation in a reactive manner, rather than proactively “ perhaps hamstrung by it being located half a world away from the troubled operator.
According to the GBGA, the Commission has so far failed to communicate any practical proposals as to how it will review, supervise and monitor overseas companies. This leaves the regulator “in no position to effectively supervise senior management or any systems of control for UK facing elements” with operators “largely left to their own devices”.
The regulator may well now face renewed calls to illustrate exactly how it plans to scrutinise international operators. And one thing this case does illustrate is that the Commission faces no easy task in keeping on top of problems developing overseas and will be largely dependent on co-operation from local regulators.
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