The UK Gambling Commission and Department of Culture, Media and Sport yesterday announced that the implementation of the point-of-consumption licensing regime under the Gambling (Licensing and Advertising) Act 2014 (the 2014 Act) would be delayed due to a High Court challenge from the Gibraltar Betting and Gaming Association that seeks judicial review of the new law.
The 2014 Act requires remote operators wishing to provide gambling facilities to players located in the UK to hold a UK gambling licence from the Gambling Commission and was set to come into force on October 1, 2014.
Following yesterday’s announcement, the POC licensing regime will now come into force on November 1, 2014. In addition to this change, HMRC will also require gambling operators to pay 15 per cent tax on their profits if they offer remote gambling to a person who usually lives in the UK and this change will take effect from December 1, 2014.
The introduction of the 2014 Act closes an unintended loophole in the Gambling Act 2005, which previously allowed operators licensed in white-list territories such as Alderney, Antigua, the Isle of Man and Gibraltar to advertise (and therefore sell to) players located in the UK without obtaining a licence from the UK Gambling Commission or paying any tax on their profits.
The change in law has prompted concern in the industry. Certain operators, such as Mansion Poker, have announced they will exit the UK market. However, many others (who will undoubtedly still be hoping that the GBGA’s case is successful) are hedging their bets.
It is understood that 161 applied for temporary continuation operating licences from the Gambling Commission in preparation for October 1, the date on which the 2014 Act was supposed to come into effect. If the GBGA is successful and the 2014 Act is declared unlawful, it is likely these operators will have wasted time and money preparing and submitting their applications.
One can but wait and see what the outcome of the GBGA’s proposed judicial review will be and ultimately, how long it will take the High Court to reach judgment. If successful, many operators will be grateful to the GBGA for its efforts. However, even if the High Court declares the 2014 Act lawful, it is not necessarily all bad.
Certain private-equity firms, such as Permira, have announced that they now see the online gaming industry as a potential target because the anticipated change in law clears up previous uncertainty regarding the tax and regulation of operators, making the market more interesting to potential investors.
In the meantime, the real winner in the delay game is the Gambling Commission, which will probably be grateful for a month’s grace. The delay in implementation will allow much-needed time which it can use to process the 161 continuation licence applications it received from operators before the deadline of September 16, a much higher number than expected.
Gemma Boore is a corporate and commercial solicitor at Bates Wells & Braithwaite London LLP with an interest in the regulation of gaming, betting and gambling.
