Online Casino Operators Threaten to Go to Court over “Unlawful” UK Gambling Laws

Gibraltar-licensed companies disagree with changes proposed by the UK Government and are threatening to go to court.

The UK Government has been planning to bring changes to the current British gambling laws for a while now, but the latest proposals have stirred up a lot of complaints from online casino operators. The Gibraltar Betting and Gaming Association (GBGA), an organization representing the interests of gambling companies based here, is even threatening to apply for a judicial review of the changes.

After reading the recently-published Gambling Act, which outlines a new regulatory framework for remote gambling, the GBGA has expressed some very serious concerns. Not only are the new changes “unlawful”, but they would also “threaten the safety of consumers online”, the association says. As a result, GBGA felt it should take action to prevent the new law from passing.

New licensing and taxing regime

Under the proposed regime, all gambling companies would have to apply for a remote gambling license issued by the UK Gambling Commission, regardless of where they are operating from. This applies for all firms that want to provide services or advertise their products to consumers living in Great Britain.

This means foreign-based operators, who are already under the scope of their own licensing authorities, would also have to answer to the UK Gambling Commission. Remote operators would be required to alter their licensing regime based on the “point of consumption” – meaning the place where the bets are made – rather than their “point of supply”, which is where the operators are actually based.

Meanwhile, UK lawmakers are also preparing a new tax regime for companies providing services remotely. The plans are included in this year’s Finance Bill and state that taxes must be paid for every arrangement between a casino firm and a “UK person”.

Benefitting unlicensed casinos

The proposal would change the conditions under which casino operator licensed outside Great Britain can offering their services remotely to players located in the UK. And companies don’t like it.

Popular online gambling sites licensed in Gibraltar:
• Ladbrokes
• Party Poker
• William Hill
• 32Red Casino

According to GBGA chief executive officer Peter Howitt, the new licensing regime combined with the upcoming tax changes would cause gamblers to turn to unregulated or poorly regulated operators, “leaving them exposed to unnecessary risks”.

“This Act allows operators from 165 new jurisdictions to gain licenses to operate and advertise in the UK and the Gambling Commission is supposed to regulate this industry with no extra-territorial information gathering or enforcement powers. Clearly that spells a new danger for British consumer,” he explained.

The Gambling Commission would have to police firms from all over the world, without having proper oversight or enforcement powers.

“We know of no precedent where any regulator in any industry will be granted the role of licensing and regulating operators all over the world in this way, threatening to criminalize companies and people who fail to submit to its regime.”

“This is bad for UK consumers, bad for the regulated industry, bad for Gibraltar and is in breach of European law, but fantastic news for operators who choose to avoid proper regulation,” Howitt concluded.

UK breaches European law?

The association also believes the new Gambling Act might not conform to European regulations, as it is neither reasonable, nor proportionate in its goal to provide better consumer protection. It does nothing but offer an unfair advantage to unlicensed online and mobile casinos, experts say.

The GBGA sent out letters both to the UK Government and to the Gambling Commission, warning British lawmakers that the proposed regime is in “disproportionate and unjustified interference with the right to free movement of services”.

Furthermore, the new set of rules is “not capable of improving consumer protection because it will be largely unenforceable” and would only end up having “adverse unintended consequences, which will outweigh any possible benefits”, as well as “deliver a competitive commercial advantage to unscrupulous operators”.

The GBGA would like to see politicians implement a “passport” regime, where national regulators would continue to offer licenses to their own operators, while also working together with foreign authorities and exchanging information. But the UK Government rejected this proposal, the association said.

Now industry representatives are preparing to do everything that stands in their power to stop decision-makers from adopting a law that is “discriminatory in that it places the same burden on all operators irrespective of the local legal and regulatory regime” and said they were even willing to go to court.