UK

The Gambling Act 2005 replaces most of the existing law about gambling in Great Britain and puts in place an improved, more comprehensive structure of gambling regulation. This includes a new structure of flexible protections for children and vulnerable adults and, in particular, brings the burgeoning Internet gaming sector within British regulation for the first time. It creates a new independent regulatory body, the Gambling Commission, which will be the new, tough national regulator for commercial gambling in Great Britain.

The Act also allows for a controlled increase in the number of casinos in Great Britain. There will be a maximum of 17 new style casinos, whose locations will be proposed by an independent advisory panel. Existing casinos will be able to continue broadly as now. These new casinos will be significant leisure developments that will bring jobs and improved leisure facilities where they are wanted. But the Act also puts in place a strong role for local authorities in licensing gambling premises in their area, and authorities will be able to resolve not to license any new casinos in their area if they do not want them.

Officials from more than 30 countries debated ways to regulate the global Internet gaming industry on Tuesday, just weeks after the United States effectively banned online gambling.

Britain's Culture Secretary Tessa Jowell, who was hosting the gathering, said there was broad agreement at one session to improve regulation of the industry amid fears it could exploit children and encourage criminal activity.

Jowell said that a regulated Internet gaming industry would offer gamblers better protection than the U.S. decision to outlaw the practice.

"Remote gambling has gone from a niche to mass market in a matter of years," Jowell told journalists during a break in the gathering, the first summit to discuss the global impact of Internet gaming.

"We are optimistic that by the end of the day we will have achieved a number of things. There is a recognition that it is in the interests of all our citizens that we move to a framework of global standards on Internet gaming."

However, U.S. officials declined an invitation to take part in the talks at the Royal Ascot race course outside London.

Officials from Australia, South Africa, New Zealand and online jurisdictions such as Malta, Costa Rica and Antigua and Barbuda were expected to attend.

The U.S. Congress caught the gaming industry by surprise when it added a provision to a bill aimed at improving port security that would make it illegal for banks and credit card companies to settle payments to online gambling sites. U.S. President George W. Bush signed the law Oct. 14.

The decision closed the most lucrative region in a market worth US$15.5 billion (euro12.4 billion) this year in "spend" value -- the amount gambling companies win from their clients, or the amount gamblers lose.

Jowell likened the U.S. decision to a new form of the 1920s Prohibition on alcohol, warning that it would drive the industry underground.

A draft communique from Tuesday's meeting noted concerns surrounding the industry, including its vulnerability to misuse for criminal activity and its threat to children.

The communique proposed the use of age and customer verification tools to protect young people and the vulnerable. It also called for ongoing communication between national jurisdictions through the International Association of Gambling Regulators.

Antigua in particular is engaged in a strong defense of Internet gaming, one of the tiny Caribbean state's few economic success stories.

It argues that the U.S. ban is in direct contravention to a ruling by the World Trade Organization last year that the United States amend some of its legislation to permit Antiguan gaming operations to offer their services to U.S. citizens on a level playing field.

Mark Mendel, who leads Antigua's WTO legal team, said he hopes that a closer relationship with Britain will develop stronger support for the ongoing WTO case as well as opening up opportunities for Antiguan licensed companies listed on the London Stock Exchange.

"We believe that once the United States ultimately comes into compliance with the WTO rulings in Antigua's favor, which it must, you will see the FTSE AIM-listed companies re-entering the American market via subsidiaries or affiliates located, licensed and regulated in Antigua," Mendel said.

Several London-listed Internet gaming companies and a handful in Europe and Australia sold off or shut down their U.S. operations after the ban, losing around 80 percent of their combined business in the process.

In Britain, new legislation next year will clear the way for super casinos and an influx of online gaming businesses.

Under the new laws, online operators have a "social responsibility" duty written into licenses and policed by the independent Gambling Commission watchdog.

It requires them to work to prevent underage gambling, give prominent warnings about addiction and inform users how much time and money they have spent on the site.

Britain hopes to persuade the offshore centres that are reaping the lion's share of the explosion in online gambling to sign up to new controls on the sites.

Tessa Jowell, the culture secretary, told the Financial Times she would host a summit in October to try to get international agreement on a new code of practice.

Centres that host online gambling sites include Gibraltar, the Cayman Islands, the Turks and Caicos Islands, Antigua and Costa Rica.

The government plans to invite the International Monetary Fund and World Trade Organisation, along with ministers from all the main offshore gambling jurisdictions.

However, Britain could face an uphill task in persuading offshore centres to put at risk a lucrative source of revenue by imposing much tighter regulations.

The code of practice would include provisions such as requiring age verification checks.

"I don't pretend that it will be easy or straightforward to put together an agreement," Ms Jowell admitted. But she said she hoped the reputational benefits in creating customer confidence would encourage centres to sign up.

Last year's Gambling Act set up a legal framework for gambling sites to be based onshore in the UK from September next year. Licensed UK-based sites will be able to offer games such as online poker.

But Ms Jowell conceded that the new regime might fail to win back much business from the offshore centres.

"It's perfectly possible we will provide these protections here in the UK but people in significant numbers will continue to gamble online with sites in centres such as the Cayman Islands," she said.

The main factor influencing the commercial viability of the new UK-licensed sites will be the tax regime and that is out of Ms Jowell's hands.

Gordon Brown, the chancellor, is expected to defer the politically tricky decision on whether to offer the sites tax breaks until next year's Budget.

Ms Jowell refused to be drawn on what levels of tax she thought should be imposed on internet gamblers, saying it was "obviously a matter for the Treasury".

But she insisted the new licensing scheme would not necessarily be a flop. "I hope we'll see a significant number of applications," she said. "There are reputational advantages in being UK-licensed, UK-based, UK taxpaying and complying with UK regulations."

The prospect of government-approved poker sites could provoke another media backlash. Ms Jowell was forced to reduce the number of new "super-casinos" allowed by the Gambling Act from eight to one, following a tabloid newspaper campaign.

However, speaking to the FT, Ms Jowell blamed the U-turn on political manoeuvring by the Tories, rather than the media.

She said the government had "absolutely no intention" of allowing more super-casinos unless the opposition party changed its stance.

Having marked five years as culture secretary, Ms Jowell is now used to juggling business demands for liberalisation with the populist pressure for tighter regulation in areas such as drinking and gambling.

She said it was "too early" to judge whether the Licensing Act, which came into effect last year, had struck the right balance.

But she insisted the "vast majority of people welcome the greater flexibility in opening hours".

Famed for being the first minister to fly an England flag ahead of the World Cup, Ms Jowell resisted the temptation to jump further on to that political bandwagon by predicting a win for the domestic team.

Asked if the government had plans to celebrate an England victory, she said: "Not yet. We're very superstitious about these things."

The Gambling Commission had on March 10, 2006 published a draft of the new rules which will govern British gambling in future.

The changes are being introduced under the Gambling Act 2005. They are designed to secure the Act’s three objectives of keeping crime out of gambling, making sure gambling is fair and open and protecting children and vulnerable people from harm. They will apply to casinos, bingo clubs, lotteries and gaming machines, as well as betting and online gambling which are being brought under the Gambling Commission’s jurisdiction for the first time.

The Commission’s Licence Conditions and Codes of Practice sets out a raft of provisions, including new rules designed to combat problem gambling.

All gambling operators must have published policies and procedures for promoting socially responsible gambling. These must include how they will contribute to research, to education about the risks of gambling, and to the treatment of problem gamblers.
Information about responsible gambling and help available to problem gamblers must be prominently displayed wherever gambling takes place, as well as in discreet areas such as toilets. Online operators must make this information accessible on their home and login pages.
Operators must exclude people in cases where there are clear signs of problem gambling, and customers who feel they have a problem must also be able to exclude themselves.
Casino and bingo operators must introduce measures to control continuous and repetitive play, such as designing sites and implementing procedures to encourage breaks in play and making customers aware of the time they have spent gambling. Alcohol must not be used as an inducement to encourage people to gamble. Strict technical standards will be imposed to control the speed of gaming machines. Online operators must make sure that customers are aware of how much time and money they have spent on their sites.
Operators must train their staff about problem gambling and about dealing with customers who may be affected.
Operators must follow strict procedures to prevent underage gambling, including age checks on anyone who appears to be under 21. Specific rules will apply to casinos, which will be required to employ trained supervisors to keep anyone underage away from gambling. Online operators must carry out random credit card checks, and filtering software must be made available to allow adults to block access by children and young people.
Key staff such as managing and finance directors must be licensed by the Commission, as must casino employees such as dealers and cashiers. The application process for those licences is an important step in keeping crime out of gambling.
The rules of games, odds, house edge and average return to the player must all be clearly displayed, and operators must have well-publicised complaints procedures which include an external, independent element. Gambling Commission Chairman Peter Dean said: ”Our new rules are all designed to keep crime out of gambling, to make sure it is fair and open, and to protect children and vulnerable people. Combating problem gambling is particularly important to us: this is the first time the Commission has had the power to do something about it, and we intend to use that power to maximum effect. We’ve drawn from international experience to make sure that standards of social responsibility amongst gambling operators will be the highest in the world.

”We will monitor all British gambling operators to make sure they comply with our rules. We have the power to fine or revoke the licences of those who fail to do so, and to prosecute illegal gambling. We won’t hesitate to use these powers if need be.“

Secretary of State for Culture, Media and Sport Tessa Jowell said: "Gambling is not an industry like any other. What can be a harmless pastime for one person can be a life-destroying addiction for another. That’s why these new rules to prevent problem gambling are so important. Be it a betting shop, a casino or a gambling website, gambling operators across the country will soon have to comply with these tough requirements. Without the Gambling Act this would not have been possible."

The Gambling Commission’s Licence Conditions and Codes of Practice are being published for consultation, with responses due by 2 June 2006. The new conditions and codes will apply from September 2007, when the Gambling Act 2005 comes fully into force.

As well as the new rules, the Commission has published a policy paper on problem gambling, which sets out the background to its approach to this issue (see 'Commission policies').