Gibraltar BGA Challenges 2014 UK Gambling Act

June 23rd, 2014 | by Greg Shaun

The Â 2014 UK Gambling Act: “A wholly unjustified, disproportionate and discriminatory interference with the right to free movement of services, a right enshrined in European Law.” (Image: visitgibraltar.gi)

The Gibraltar Betting and Gaming Association (GBGA) has written to the UK government, claiming that imminent changes to the country’s gambling laws not only threaten UK consumers, but are illegal under European law.

The legal online gambling industry in the UK is currently comprised of operators that are regulated, licensed and taxed in a number of jurisdictions around the world, including Gibraltar. These jurisdictions have been approved, or “white-listed”, by the government in Westminster under the 2005 Gambling Act.

However, the new 2014 Gambling Act seeks to change this, introducing regulation and taxation at the point of consumption, rather than the country of origin. That means that for an operator to engage with the highly lucrative UK market, it will have to hold a UK Gambling Commission license and pay the UK remote gaming tax of 15 percent of gross profits; significantly higher than many of the white-listed jurisdictions.

New Law Will Drive Consumers to Unregulated Markets

While the stated aim of the bill is to give the consumer greater regulatory protection, it’s not going to hurt the exchequers coffers either, and the concerns for the industry are that “dot.country” markets with higher tax rates do not tend to thrive; France’s ailing online poker industry being a case in point.

However, GBGA’s argument goes a step further: that far from protecting the consumer, the act will make UK players far more vulnerable to illegal offshore sites.

“Under the proposed new regime the UK is opening the UK market andÂ consumers to operators based anywhere in the world and some of whom will not obtain a licence,” stated GBGA in a press release. “The regime will effectively require the Gambling Commission to police the online sector on a worldwide basis.”

The new law, coupled with the unfavorable tax rate, it says, will drive consumers towards “the unregulated or poorly regulated market, and so ensure that a significant proportion of UK consumers will be unprotected when they play and bet with foreign operators.”

Breach of European Law

Furthermore, Chief Executive of the GBGA Peter Howitt argues that the act is a breach of European Law, specifically article 56 of the Treaty on the Functioning of the European Union (TFEU), which deals with the right to trade freely across borders. Howitt has instructed the law firm Olswang to write to the Secretary of State for Culture, Media and Sport, Sajid Javid MP, the Attorney General, Dominic Grieve QC MP, and the Gambling Commission to outline the association’s grievances and to notify them of their intention to challenge it.

“All this Act achieves is a wholly unjustified, disproportionate and discriminatory interference with the right to free movement of services, a right enshrined in European Law,” said Dan Tench, a partner at Olswang.Â “For these reasons, the Government must reconsider this law or we shall have no option but to ask the courts to review it for them.”

The GBGA argues that the new law, which is due to take effect in August, is simply “not necessary as Gibraltar has one of the effective regulatory regimes in the world.” The letter has placed on the UK Gambling Commission a notice of judicial review and the Commission now has about 10 days left to respond.

“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,” said Howitt.

UK Gambling Act of 2005

The Gambling Act 2005 is a piece of legislation in the United Kingdom that allows local authorities to license gambling activities directly, while also creating a national Gambling Commission as a regulatory body for Great Britain. The bill is also notable for formally regulating online gambling in the UK for the first time, and for allowing such businesses to advertise on television and radio broadcasts. Controversially, the bill was originally slated to allow eight “super casinos” in the UK; this was eventually reduced to just one, and then cancelled entirely.