This Bill was introduced by the UK government at the end of 2012. If the Bill becomes law, it will introduce a national system of gambling regulation, like that envisaged in the HIT LARIX case.
The Bill impacts online gambling. Currently, under the Gambling Act 2005, a licence from the Gambling Commission is only required to provide gambling services in the UK if an operator has at least one piece of remote gambling equipment located in Britain. This means that a gambling operator based outside Britain (say, Malta) who provides remote gambling services to consumers within Britain via a website needs a licence from the Gambling Commission if a piece of its remote gambling equipment (e.g. a server) is based in Britain. However, if all of its remote gambling equipment is located outside Britain, no licence is needed.
The Gambling Act also regulates how gambling services are advertised in the UK. Operators based outside the UK, but regulated in an EEA state or Gibraltar can freely advertise in the UK. Operators based in the Isle of Man, Alderney, Tasmania, Antigua and Barbuda are also able to advertise in the UK by virtue of being included in a 'white list' created by the Secretary of State. Operators regulated outside the EEA or the white listed countries cannot advertise in the UK.
The Bill would amend the 2005 Act so that all operators advertising to or transacting with UK consumers would need to be licensed by the Gambling Commission. They would also have to pay a compulsory point of consumption gambling tax, effectively taxing online operators on the basis of the location of their customers regardless of where the operator is based. The white list would be phased out.
The general consensus in the industry is that the real impetus for this Bill is the desire to tax online operators based outside the jurisdiction. The documents accompanying the Bill justify the changes it introduces as the need to give greater protection to UK consumers, arguing that the current system is flawed. However, the documents produce no clear evidence that UK consumers are being harmed by the current system of regulation. Nor are they specific about the flaws in the current system.
Requiring operators from outside the jurisdiction to be licensed by the Gambling Commission provides the much needed 'link' between the UK and the operator, on which a tax charge could be based. New tax legislation needs to be approved at EU level. Generally it will be approved if the changes it introduces are in the public interest (other than merely financial benefits). It is probably no coincidence then that this new point of consumption tax is included in a piece of legislation which is ostensibly for consumer protection.
Should the Bill become law, the government's plan is for there to be light touch regulation by the Gambling Commission relying, for example, on work done by regulators in other territories so as to avoid duplication of effort. This is very much in line with the European Commission's 'Action Plan' (see below). This does, however, beg the question why additional regulation is needed at all if only a light touch is required.
The Bill must still pass through a number of stages before it can become law. It is currently before the European Commission which will assess its compliance with Treaty obligations. Then it will be subject to scrutiny by the Culture, Media and Sport Select Committee. It must also withstand scrutiny by both the House of Commons and the Lords and defeat any challenge to its legality on the basis that it may restrict freedom to provide services in the UK (although the HIT LARIX case suggests that any such claim would be difficult).
The likely implementation date is December 2014. For now, operators are advised to simply watch this space.