UK government requests ongoing Gambling Commission-regulator consultation
Response to Select Committee report restates plans to phase out White List, but calls for approval of selected jurisdictions.
The UK government has called on the Gambling Commission to continue regular consultations with regulatory bodies and egaming operators, as part of a detailed response to last year’s Select Committee report into gambling.
The government confirmed that the existing White List for approved jurisdictions will be phased out on the basis that “The Commission’s focus under the remote reforms will be on the suitability of operators, not jurisdictions.”
The DCMS response notes Committee recommendations that: “The Commission should approve certain overseas regulators and continue to monitor their performance where they meet its requirements…[and]… also test whether regulators it has not yet approved carry out sufficient licensing checks,” and states “The proposed licensing requirement will provide an important safeguard that would allow the Commission to intervene directly where problems occur which are not sufficiently dealt with by other regulators.”
In its response, however, the government is keen to stress that “We are clear that the proposals will not duplicate the work of other regulators or unnecessarily increase burdens imposed on operators.”
At present, only operators licensed in white-listed jurisdictions including Gibraltar, Alderney and the Isle of Man are permitted to market to UK customers, however the Gambling Commission also has a memorandum of understanding in place with French regulator ARJEL over the sharing of information. The government also makes reference to ongoing communications with bodies such as the International Association of Gaming Regulators “To explore areas for reducing duplication of regulation.”
Ashley Averill, lawyer with DLA Piper, described the comments about certain external licensing regimes as “predictable,” and questioned the proposed approval of selected regulators, saying: “If certain overseas regulatory regimes are to be “approved”, then how does an additional layer of regulation benefit the consumer, which purports to be the justification for the change as opposed to a vehicle for taxation.”
Restricting unlicensed operators
While the 30-page report only focuses in part on online gambling, it also makes strong points with regard to restricting unlicensed operators from the UK once a point of consumption tax is introduced in 2014. A bill proposing a point of consumption tax and UK licensing regime was formally outlined in December last year, following the publication of the DCMS report over the summer.
The government response specifically cites references in the committee report “the Full Tilt case”, whereby British players’ balances were frozen for more than a year following the shutdown of the Alderney licensee in June 2011.
In supports recommendations over consulting with British-licensed operators to discuss suitable measures over the ring-fencing of player funds, with such a process having been described by the committee as “A proportionate response to the worries arising from this unfortunate episode”, and states: “The Government notes the helpful suggestions from the Committee about the regulation and enforcement of the new regime and looks forward to receiving the Committee’s comments on the draft Bill and accompanying documentation.”
Another key element to the government’s response concerns the battle to ensure players are not drawn to depositing funds on unregulated sites, something warned of in a report commissioned by William Hill 12 months ago.
Among the committee recommendations to be reinforced by the government are: “Introducing a kite-marking system for gambling websites, indicating which sites are regulated in the UK” and the importance of “[E]ffective enforcement methods [being] put in place to prevent unlicensed companies from operating into the UK and that the Department for Culture, Media and Sport and other agencies also work to encourage international co-operation and a common approach.”
Plans to introduce a point of consumption tax were first confirmed by Chancellor of the Exchequer George Osborne last March, at which point he made reference to the egaming industry largely moving offshore.
This week’s communication revisits the same point, noting “The Gambling Commission will determine whether businesses are suitable to obtain or continue to hold a licence in Great Britain.
“However, the Government and the Gambling Commission have made clear that it would not be proportionate to duplicate enquiries or investigations already carried out elsewhere; the Commission will therefore use information provided by other regulators where that information is available, up to date and relevant,” it continues.
Of the leading UK-facing operators, only bet365 has remained in the country, with Betfair among the most recent to make the move to Gibraltar. When Betfair moved offshore, its then-CEO David Yu spoke of the move giving Betfair the freedom “[T]o compete on a level basis in the UK market.”
At a parliamentary hearing in November 2011, bet365 co-CEO John Coates warned of double-tax concerns driving even more operators offshore, however such fears have since been allayed by the Chancellor.