UK Gambling Act Effective Date Moved to November 1

It may be great news or it just may be delaying the inevitable. Either way, the controversial UK Gambling (Licensing and Advertising) Act 2014 has been pushed back to November 1st. It was scheduled to go into effect next week, on October 1st.

uk-flagThere are many pieces to the new act, but there are two main points of controversy. The first is a new requirement for all operators, no matter where they are based, to obtain a UK gambling license. The second is actually part of a companion bill, not slated to take effect until December 1st, that taxes all operators 15 percent on gross profits derived from United Kingdom players.

The delay for the Gambling Act is because of the legal challenge filed against it by the Gibraltar Betting and Gaming Association (GBGA) about five weeks ago. It was apparently just not feasible for the High Court to make a ruling in time for the original October 1st target date.

The UK Gambling Commission posted a brief note on its blog Thursday to explain:

Due to a High Court challenge to the Gambling (Licensing and Advertising) Act 2014, DCMS will be taking the necessary steps to postpone this legislation coming into force until 1 November 2014. This will allow a judgment to be made without undue time pressure.

In a statement issued on August 18th, the GBGA wrote:

The GBGA argues that the new regime, introduced through the Gambling (Licensing and Advertising) Act 2014 and also the guidance and policies of the Gambling Commission of Great Britain, is “unlawful, because it is an illegitimate, disproportionate and discriminatory interference with the right to free movement of services guaranteed by Article 56 TFEU, and is irrational.”

Whereas the declared intent of the law is to protect consumers, the Association fears that it could achieve exactly the opposite and cause consumers real harm.

Here in the United States, we point to the lack of regulation of, or more specifically, the prohibition of online gambling as a reason people would end up patronizing riskier, “black market,” or “underground” sites. The GBGA takes a slightly different approach, saying that the UK Gambling Act is at the same time too restrictive and will be not be policed properly:

“The absence of effective supervision and enforcement, coupled with the burdensome regulatory requirements, will encourage the growth of and migration to unregulated or poorly regulated operators which will present genuine risks to the British consumer”, the Association argues in its submission to the High Court of England and Wales. “When introducing the New Licensing Regime, the Defendants rejected the option of a “passporting” regime. This would have been both less onerous to legitimate operators and more effective in protecting consumers, since it would have been based on effective supervision and cooperation between the GC and overseas regulators.”

The GBGA argues that the Act was developed simply to protect native UK gambling operators.

The most significant consequence of the Act is a reshuffling of the online gambling operators who will service the United Kingdom. Some sites have already announced they are leaving the market: Carbon Poker on the Merge Gaming Network and Mansion Poker are two of the more well-known names. It is expected that many smaller operators will either leave or combine with other sites because of the burden of the new licensing and tax regime.

The larger poker sites are expected to stay, but possibly make changes. PokerStars recently announced that it wasn’t going anywhere, as did Full Tilt Poker, Unibet, Titan Poker, and Winner.com. PokerStars did say, though, that starting next year, it will be reducing its player rewards “slightly.” This is a direct consequence of the increased tax bill it will have to pay; PokerStars’ higher expenses are (understandably) being passed through to the players. Full Tilt and Unibet have said that there are no plans to cut back on rewards programs.

Other than the possibility of fewer rewards, players on sites that stay in the UK likely won’t feel much impact from the new Act, assuming it passes. The auto-rebuy perk will disappear on PokerStars, but really, there is small sliver of a fraction of players who would care at all about that. GBGA

In the August statement, Peter Howitt, chief executive of the GBGA said of the Act:

The only beneficiaries of this change are the UK domestic industry and the Gambling Commission itself, which has persuaded the UK Government that it should be the global regulator of this high tech and complex industry. It has neither the resources, the legal powers, nor the skills to operate successfully across the globe. This is bad news for consumers, and for international competition. We have an effective and knowledgeable regulator in Gibraltar. That the Gambling Commission believes it is better placed to regulate the industry here is laughable.

A number of major gaming providers are based in Gibraltar, including Mansion, 888 Holdings, Betfair, Ladbrokes, Ongame, and bwin.party.

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