GPWA Times Magazine - Issue 19 - February 2012

By Melanie Ellis, Harris Hagan I t is only just over four years since the U.K.’s Gambling Act 2005 came into force. But the U.K. is already considering regulatory changes to its thriving online gaming market. The fact that the government is already proposing to change its provisions in re- lation to online gambling is testament to how rapidly the gaming industry, and the way it is regulated, is changing. In the next few years we believe it is in- evitable that online operators targeting the lucrative U.K. market will be forced to obtain a U.K. license, which comes with the key drawback of the requirement to pay 15 percent duty on gambling revenue from U.K. residents. While operators are likely to have a couple more years’ respite due to the need for Parliament to debate primary legislation to effect the change, they should prepare for this requirement to come into force in the medium term. The online market The 2005 Act introduced a regulatory re- gime for online gambling for the first time in the U.K., and the U.K. was one of the first jurisdictions to issue online licenses. Of course Internet gambling had been around for a decade already, but no one has ever accused the law of being ahead of its time. The U.K. is an attractive market for online gambling operators, with 11.9 percent of the population participating in some form of remote gambling. While remote gaming and betting duty at 15 percent of gross gambling yield combined with U.K. corporation taxes make the U.K. an unattractive home for online gambling operators, the fact that operators are permitted to target the U.K. from low- tax “white list” jurisdictions means it has been a lucrative market. The Gambling Commission estimates that 75 percent of remote gambling carried out by U.K. resi- dents is with operators located overseas. Rather optimistically, the 2005 Act was intended to be a modern and flexible piece of legislation, if not completely future proofed. The legislation does allow for the regulation of new forms of gambling which were not envisaged at the time it was drafted, such as social media gaming, even though this does sometimes require careful legal interpretation. By introducing wide 27