The UK Gambling Commission
The legal uncertainty that surrounds the British Gambling (Licencing and Advertising) Act means that lucrative football sponsorship deals in the English Premier League may be jeopardised, an expert has warned.
James Earl is a sports law specialist, who works for Pinsent Masons. This week, Mr Earl said that gambling operators which are based outside of Great Britain should not be required to obtain a licence from the Gambling Commission in order to enter into sponsorship deals with British sports clubs, in situations where the firm does not provide remote gambling services to British consumers, and nor when they are targeting their services at a British audience.
Mr Earl said: “Commercial partnerships between Premier League clubs and global gaming and betting companies, such as the recently announced shirt sponsorship deal Hull City unveiled with 12BET, are becoming increasingly important sources of income for the clubs.
“The global reach and attraction of the Premier League represents an excellent opportunity for overseas gambling operators to gain exposure in markets outside Great Britain where they operate or are targeting future growth. Premier League clubs, alongside the Premier League, have been working hard to open up new commercial markets, Asia being a prime example, and this includes making large investments in personnel and marketing strategies.
“However, if Premier League clubs or other sports teams cannot provide prospective partners like overseas gambling operators with certainty about compliance with the local regulatory landscape in Britain, then those rapidly growing and lucrative revenue streams for clubs, alongside the substantial investments they have made, will be put at risk,” he said. “That regulatory landscape includes the advertising of gambling services, and the position the Gambling Commission has taken on the issue and how it concerns overseas-based operators has the potential to negatively impact British sports clubs’ income without a justified reason for doing so.”
The Act means that all online gambling companies will be required to obtain a British licence in order to advertise in Britain. As it stands, many online betting companies are licenced abroad. This is expected to come into force on 1 October 2014 under amendments made to the Gambling (Licensing and Advertising) Act.
The Gambling Commission has suggested that even if an overseas operator blocks British consumers from gambling on its website, the operator and anyone carrying its advertisements may still, nevertheless, be breaking the law under the revised Gambling Act if those advertisements are visible in Great Britain but the gambling is not licensed by the Commission.
However, the Gambling Commission confirmed that overseas gambling operators are only likely to be issued with a licence to advertise their services in Great Britain, if they provide gambling services to British consumers too. They said that no “advertising only” licences are likely to be issued.
The Gambling Commission said: “The Commission has received enquiries about the possibility of an ‘advertising only’ licence, i.e. a licence to permit overseas operators to advertise to those in overseas markets by means, for example, of sports sponsorship or advertisements on the perimeters of sports fields but not accept transactions from British consumers.
“The Commission will not normally license such operators unless they have a British facing business and either currently transact with British consumers or have a clear business plan for doing so in the future.
“It has been suggested by some stakeholders that an operator will not commit an offence of advertising unlawful gambling if it blocks access by British consumers to their gambling website. As such, it is suggested, operators can advertise in Britain without a relevant Commission licence,” it said. “The Commission does not provide legal advice and only the courts can provide a definitive view on the legal position. However the Commission considers that the position on non-remote advertising is arguable both in terms of the law and the facts of any particular case.”
The Commission, however, acknowledged the difficulty of stopping people accessing unlicensed sites online.
“The Commission also notes that blocking technology is not 100% reliable and that it is possible for consumers to circumvent blocking measures; sports clubs carrying advertising from unlicensed operators (and taking the arguable position that blocking access to British consumers is sufficient) will be wholly reliant on that operator having appropriate and effective measures in place to block access to British consumers if they are to avoid committing an offence of unlawful advertising.”
Furthermore, under the new change in law regarding how gambling companies are taxed, called the “Point of Consumption Tax” (and also known as the 15 p Tax.) As it stands today, gambling companies are taxed on their profits in the country that they are based, but in December, the law will be changed so that companies are taxed on where the bets and wagers are actually placed by their customers.
James Earl said that “there is nothing in British gambling laws as amended to prohibit the advertising of remote gambling facilities in Great Britain where those facilities cannot be used in Great Britain.”
However, the Commission claim that there are other factors behind their decision.
“In addition to the legal risks indicated, the Commission has policy and operational reasons for its opposition to non-remote advertising (for example, shirt sponsorship) of unlicensed remote gambling,” the Commission said. “These include ensuring that those advertising remote gambling in Britain are all subject to the provisions around reporting suspicious betting activity and the general player protection framework.
“A general presumption against non-remote advertising of unlicensed gambling provides greater clarity to operators and the carriers of advertising as to who is and is not able to advertise. This is important because without such clarity compliance and enforcement of the advertising provisions would be more complex and costly; costs borne by the licensed industry through their fees,” it said.
Mr Earl speculates that the risks which are presented by unlicensed sports betting operations which are based in Asia may have prompted the Commission to take the position it has. However, he believes that the Commission is now susceptible to a legal challenge, if it insists on enforcing its position, which is currently is at odds with the amended legislation.
The Commission’s position was outlined this week in response to industry queries about how the new regulatory and licensing regime for remote gambling activities in Great Britain will actually work in practice.
The Gibraltar Betting and Gaming Association (GBGA) – which represents Gibraltar-based remote gambling operators – has told the British government as well as the Commission that it plans to apply for a judicial review of the changes in the law, on the basis that they are in breach of the European Union’s article 56 on the Treaty on the Functioning of the EU, which states that European firms have the right to freely trade.
The Commission’s policy has already impacted on the market, and last week Magic 888 Casino collapsed, reportedly because of the Point of Consumption Tax. This is also the case for the site Love Bingo, which closed at the end of last week.
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