Introduction

Legal definition of ‘gambling’

What are the legal elements required for an activity to be regarded as gambling?

Definition of gambling

Gambling is defined as one of the following: gaming, betting or participating in a lottery. If an activity does not fall within the definition of gaming, betting or a lottery then it is not regarded as gambling.

The definitions of gaming, betting and lotteries differ in terms of the legal elements required.

Gaming

Gaming is ‘playing a game of chance for a prize’. This constitutes three elements: ‘playing a game’, ‘chance’ and a ‘prize’. If any one of the three elements is missing, the product is not gaming (but may nevertheless be betting or a lottery).

The concept of ‘playing a game’ depends to an extent on the perception of participants, but includes a game with a sole participant, even where a computer represents the actions of other players. A game of chance includes games involving both chance and skill, such as poker, even where the chance element can be eliminated by superlative skill. ‘Prize’ is defined as including money or money’s worth and playing for a prize encompasses a chance of winning, whether or not the player risks any loss.

Gaming does not necessarily involve the player making a stake or bet on the game and social gaming or ‘free play’ can still constitute gaming, if there is a ‘prize’. However, it is generally accepted that the mere opportunity to play a game again does not constitute a prize, as it is not recognised as having any monetary value.

‘Equal chance gaming’ (such as bingo) exists if the game does not involve playing or staking against a bank, and if chances are equally available to all participants.

‘Prize gaming’ means games where the prize is not determined by the number of people playing or the amount paid for gaming.

Betting

‘Betting’ is defined as the making of or acceptance of bets on:

  • the outcome of an event;
  • the likelihood of anything occurring or not; or
  • whether something is true or not.

There are several subcategories of betting:

  • real event betting (including fixed odds betting);
  • virtual event betting (based on a random number generator);
  • betting intermediary (peer to peer);
  • pool betting (including fantasy football-type competitions), which is betting made on terms that all or part of the winnings will be determined by reference to the total stakes of those betting, that the winnings will be divided among the winners, or that the winnings will be something other than money; and
  • prize competitions.

Spread betting and binary betting are regulated by the Financial Conduct Authority (to the extent they constitute a regulated activity within section 22 of the Financial Services and Markets Act 2000), rather than the Gambling Commission (the Commission).

Lotteries

Lotteries are defined as simple lotteries if all of the following applies:

  • payment is required to participate;
  • one or more prizes are allocated to one or more members of a class; and
  • the allocation of prizes relies wholly on chance.

A complex lottery exists if, in addition to the first two points above, prizes are allocated by a series of processes, the first of which relies wholly on chance. The definition therefore includes events that contain an element of skill after the initial process.

There are several types of lotteries but the main types are society lotteries (small and large), private lotteries and the National Lottery (subject to separate legislation).

Remote activity

With respect to remote or other cross-border activity, where is the wager deemed to take place?

The licence requirement is based on both the location of the operator’s key equipment and the location of the player. Either locating key equipment in Great Britain or conducting a gambling transaction with a customer located in Great Britain will trigger the requirement to hold an operating licence from the Commission.

Age restrictions

What is the minimum age for participating in lawful gambling?

It is an offence for a person to invite another person under 18 to gamble or to enter gambling premises. It is also an offence for a young person aged 16 or 17 to take part in gambling or enter gambling premises, other than various exceptions including lotteries, football pools and non-commercial gambling.

Penalties

What are the penalties for offering unlawful gambling?

It is an offence to provide facilities for gambling unless an exception applies or an operating licence is held from the Commission that authorises the relevant gambling activity. The offence applies to facilities for gambling provided to customers located in Great Britain and also to facilities for gambling provided using remote gambling equipment located in Great Britain. A person guilty of this offence can be subject to imprisonment for up to 51 weeks or an unlimited fine, or both.

It is also an offence to advertise ‘unlawful gambling’. Gambling is unlawful if, in order for it to take place as advertised without the commission of an offence under the Gambling Act 2005 (the 2005 Act), it is or may be necessary to rely on a licence or exception under the 2005 Act. Therefore, if the provision of facilities for gambling is an offence (as the appropriate licence is not held), the facilities cannot be advertised in the United Kingdom. The penalty for advertising unlawful gambling is imprisonment for up to 51 weeks or an unlimited fine, or both.

Does the law penalise the gambler directly for participating in unlawful gambling?

It is not an offence in Great Britain for a person to take part in unlawful gambling, provided they are not involved in providing facilities for the gambling to take place.

Social and non-profit gambling

Are there exceptions for social gambling, or charitable or non-profit gambling?

Exceptions to the requirement to hold gambling licences exist for the following.

Gaming
  • Gaming taking place in private premises, provided no charge is made for participation (other than stakes).
  • Equal chance gaming taking place in other premises to which the public do not have access, provided no charge is made for participation (other than stakes).
  • Equal chance gaming or prize gaming taking place at a non-commercial event, to raise funds for a specified purpose other than private gain.
  • Equal chance gaming taking place in a pub or private members’ club, subject to limits on stakes and prizes.
Betting
  • Betting transactions made on premises in which each party to the transaction lives or between people who are employed by the same employer.
  • Entering a betting transaction otherwise than in the course of a business.
Lotteries
  • Small society lotteries, which must be registered with the local licensing authority.
  • Lotteries organised to raise funds for purposes other than private gain or profit:
    • lotteries incidental to an event;
    • private society lotteries;
    • workplace lotteries;
    • residents’ lotteries; and
    • customer lotteries.
Bingo
  • Bingo that takes place in a pub, club or institute, subject to limits on stakes and prizes.
Regulatory authorities

What entity regulates land-based and remote gambling, and what are the regulator’s powers?

The Commission is responsible for regulating operators of both land-based and remote gambling. Land-based operators are also regulated by the licensing authority of the area in which their premises are situated. Both regulators must have regard to the licensing objectives set out in section 1 of the 2005 Act when carrying out their functions. These are:

  • preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime;
  • ensuring that gambling is conducted in a fair and open way; and
  • protecting children and other vulnerable persons from being harmed or exploited by gambling.

The Commission’s primary functions include:

  • issuing operating licences and personal licences;
  • specifying licence conditions;
  • issuing codes of practice;
  • regulating licence holders;
  • investigating and prosecuting offences under the 2005 Act;
  • issuing guidance to licensing authorities; and
  • advising the Secretary of State on the incidence of gambling, how it is carried out, its effects and its regulation.

Under the 2005 Act the Commission can initiate investigations:

  • to establish whether licence conditions are being complied with;
  • where it fears a licensee has been convicted of a relevant criminal offence;
  • where it considers a licensee to be unsuitable to continue holding a licence; or
  • generally, where a review is deemed appropriate.

Following a review, the Commission may:

  • issue a warning to a licensee;
  • attach an additional condition to a licence;
  • remove or amend a condition on a licence;
  • suspend a licence;
  • revoke a licence; or
  • impose a financial penalty following breach of a licence condition.

In addition to licence reviews, the Commission has regulatory powers that include:

  • suspending a licence at the outset;
  • imposing a financial penalty, where the Commission thinks that a condition of a licence has been breached;
  • voiding a bet;
  • deciding that a licence has lapsed if a licensee becomes incapable of carrying on the licensed activities by reason of mental or physical incapacity; or
  • revoking a licence for non-payment of an annual fee.

Licensing authorities have broad discretion in regulating local gambling provisions. These include:

  • issuing a statement of licensing policy setting expectations about how gambling will be regulated in a particular area;
  • granting, refusing and attaching conditions to premises licences;
  • reviewing premises licences and attaching conditions or revoking them as a result; and
  • registering small society lotteries.

They are also entitled to request information required to make effective licensing decisions and satisfy themselves that their licensing decision is reasonably consistent with the licensing objectives and Commission’s codes. Such information may include a suitable business plan or the operator’s own assessment of risk to the licensing objectives locally.

Anti-money-laundering regulations

Are gambling licensees considered financial institutions for purposes of anti-money-laundering and similar financial services regulatory requirements or are they otherwise subject to such requirements?

Remote and land-based casinos fall within the scope of the Money Laundering Regulations as ‘relevant persons’ to whom the Regulations apply, but the UK government has chosen to exclude other types of gambling operators from its scope. However, all gambling licensees are required to have policies and procedures in place designed to reduce the risk of money laundering or terrorist financing.

Land-based gambling

Types

What types of land-based gambling are permitted in your jurisdiction, and is gambling regulated at a national or subnational level?

The following types of land-based gambling are permitted where operators hold the appropriate licences issued by the Commission and their local licensing authority:

  • casinos;
  • arcades, comprising adult gaming centres (AGCs) and family entertainment centres (FECs);
  • betting; and
  • bingo.

Licences are also required by manufacturers and suppliers of gambling machines, which can be installed in the above types of premises and premises holding an alcohol premises licence or gaming machine permit.

Establishment licensing

Please describe the licensing criteria to operate land-based gambling of each type or classification. Does your jurisdiction limit the number of available licences?

Operators proposing to provide land-based gambling must hold:

  • an operating licence from the Commission; and
  • a premises licence from the licensing authority for the area in which the premises is located.

All applicants for a premises licence must hold, or have applied for, an operating licence from the Commission authorising the type of gambling for which the premises is to be used. The applicant must have a right to occupy the premises to which the application relates, which can be a freehold, leasehold or tenancy.

Applications for a premises licence must be made to the licensing authority for the area in which the premises is situated, which must aim to permit the use of premises for gambling insofar as it thinks it in accordance with codes of practice and guidance issued by the Commission, its own statement of licensing policy and reasonably consistent with the licensing objectives.

Arcades, betting, bingo and tracks

There are no limits on the numbers of premises licences available for these types of gambling premises.

Casinos

There are three categories of casino licence: small, large and ‘converted’. These are the only types of licence that are limited in number. Card rooms and poker rooms must hold a casino premises licence.

‘Converted’ casino premises licences are those that were awarded under the repealed Gaming Act 1968. These may be moved to alternative premises within the same Licensing Authority area but no new licences are available. Eight small and eight large casino licences were made available under the 2005 Act. These were allocated to 16 licensing authority areas and each licence is subject to a public competition, with the licensing authority determining which bidder will be awarded the licence. The majority of these licences have now been awarded.

The usual licensing criteria applies to the first stage of a casino competition process and the licensing authority will make a provisional decision to grant a premises licence or provisional statement (if the premises is yet to be constructed or altered) to all applicants who pass that test. If there are more applications than there are licences available, at the second stage the licensing authority must determine which application would, in its opinion, result in the greatest benefit to the area and award the winner a casino premises licence or provisional statement.

Director, officer and owner licensing

Must individual directors, officers or owners of licensees also be licensed or reviewed for suitability?

Shareholders holding 10 per cent or more equity in a licensee must submit an ‘Annex A’ application and will be reviewed by the Commission, but are not licensed unless they also hold a management role. Subject to an exception for small-scale operators, individuals who hold a ‘key position’ with, or are able to exercise significant influence over, the operator are required to hold a personal management licence (PML). The key positions are:

  • overall strategy and delivery of gambling operations;
  • financial planning, control and budgeting;
  • marketing and commercial development;
  • regulatory compliance;
  • gambling-related IT provisions and security; and
  • in the case of a casino operator, the nominated officer for AML and associated purposes must hold a PML.

The Commission’s criteria regarding an individual’s suitability to hold a PML include:

  • identity and ownership;
  • finances;
  • integrity;
  • competence; and
  • criminality.
Location

May a gambling location be part of a resort, restaurant or other multi-purpose location? What limitations apply?

The location of gambling premises is to a certain extent restricted by regulations that attach conditions to gambling premises licences, relating to where the premises may be entered from and what activities may be carried out on the premises. Gambling premises may be part of a resort or other multi-purpose location subject to the following restrictions.

Casinos

The principal entrance to a casino must be from a street (this means a public thoroughfare and includes shopping centres), and no entrance to the premises may be from other premises that are used wholly or mainly by under 18s or other gambling premises.

Bingo

No entrance to the premises may be from a casino, AGC or betting shop.

Betting

Access to the premises must be from either the street or other premises with a betting premises licence. No music, dancing or other entertainment may be provided or permitted on the premises, other than where it provides information about events on which bets are accepted. No alcohol may be consumed on the premises at any time when gambling facilities are provided. There must also be no direct access from a shop of any kind (unless it is a licensed betting premises).

Arcades (AGC and FEC)

No entrance to the premises may be from premises holding a casino, bingo or betting premises licence, or a gaming machine permit. No alcohol may be consumed on the premises at any time when gambling facilities are provided.

Passive/institutional ownership

Are there provisions for passive or institutional ownership that allow for exemption or modification of licensing requirements?

If a gambling business is owned by a publicly listed company or a company regulated by another regulated entity that meets the Commission’s probity requirements, such as the Financial Conduct Authority, the Commission may agree that it does not need to carry out further investigation of the ultimate beneficial owners of that entity. There are no exceptions for passive ownership as all individual owners with 10 per cent or more of the equity or voting rights will be investigated, regardless of their level of day-to-day involvement.

Responsible gambling

What responsible gambling obligations apply to licensees?

Land-based operators must comply with the Licence Conditions and Codes of Practice (LCCP) attached to their operating licence, which includes extensive provisions in relation to responsible gambling. The requirements include that licensees must have policies and procedures to:

  • promote socially responsible gambling;
  • prevent underage gambling;
  • provide training to staff on their responsibilities for preventing underage gambling;
  • minimise the risk of lottery tickets being sold to children;
  • provide information on how to gamble responsibility and how to access help in respect of problem gambling;
  • interact with customers where the customer’s behaviour indicates problem gambling;
  • provide training to staff on their responsibilities for customer interaction;
  • provide for self-exclusion for a minimum period of six months and up to at least five years;
  • provide training to staff on their responsibilities for self-exclusion;
  • contribute to and participate in a national multi-operator self-exclusion scheme. SENSE is the land-based centrally maintained self-exclusion database currently in operation, which allow players to self-exclude from all participating land-based casinos. A national online multi-operator self-exclusion scheme has been established but is not yet obligatory;
  • ensure proper supervision of gaming is carried out;
  • set out the rules of gambling opportunities on offer;
  • ensure incentives and rewards are socially responsible, for example, proportionate to the customers’ level of gambling and not requiring customers to gamble for a fixed length of time;
  • ensure advertising is fair and not misleading; and
  • contribute to responsible gambling organisations.
Taxes

What type of tax and what tax rate applies to each form of lawful land-based gambling activity?

The applicable tax regimes for land-based gambling for the tax year 2018-19 are as follows.

Bingo

Bingo duty based on percentage of bingo promotion profits is 10 per cent.

Betting

General betting duty based on percentage of ‘net stake receipts’:

  • for fixed odds bets, totalisator bets on horse or dog races and bets taken on betting exchanges: 15 per cent;
  • for financial spread bets: 3 per cent; and
  • for all other spread bets: 10 per cent.

Pool betting duty based on percentage of bookmaker’s profits from bets that are not at fixed odds and are not on horse or dog racing is 15 per cent.

Lottery

Lottery duty based on percentage of the price paid or payable on taking a ticket or chance in a lottery is 12 per cent.

Gaming machines

Machine games duty based on percentage of net takings from dutiable machine games:

  • games with a maximum cost to play not more than £0.20 and a maximum cash prize not more than £10: 5 per cent;
  • games with a cost to play between £0.21 and £5 and a maximum cash prize of £11 or more: 20 per cent; and
  • games with a maximum cost to play of more than £5: 25 per cent.

If a machine has more than one type of game, the applicable rate is that for the highest rated game and it applies to all takings from the machine.

Casinos

Gambling at a casino in the United Kingdom (gaming duty), based on gross gambling yield for a six-month accounting period:

  • the first £2,423,500: 15 per cent;
  • the next £1,670,500: 20 per cent;
  • the next £2,925,500: 30 per cent;
  • the next £6,175,500: 40 per cent; and
  • the remainder: 50 per cent.
VAT

The majority of gambling activities are exempt from VAT.

Remote gambling

Types

Is remote gambling permitted and, if so, what types?

All types of remote gambling on any device (including online and mobile) are permitted, subject to the operator holding a remote operating licence from the Commission.

Licensing

What are the criteria for obtaining a licence to operate remote gambling?

Operating licence applications must be submitted using the Commission’s online application system. The Commission determines operating licence applications on the basis of the suitability of the applicant to carry out the licensed activities and whether it will uphold the licensing objectives.

When considering the suitability of the applicant the Commission considers the following:

  • identity and ownership - the applicant company’s identity and the identity of other people relevant to the application including the ultimate beneficial owners;
  • finances - financial and other circumstances, past and present, of the applicant and of people relevant to the application. This includes consideration of the resources available to carry out the licensed activities;
  • integrity - the applicant’s honesty and trustworthiness and that of people relevant to the application;
  • competence - the applicant’s experience, expertise, qualifications and history and that of people relevant to the application; and
  • criminality - the applicant’s criminal record (if any) and that of people relevant to the application.

The Commission will also consider the applicant’s policies and procedures for ensuring that the licensing objectives will be adhered to, its understanding of the relevant legislation and evidence that the applicant’s arrangements will meet social responsibility requirements.

How do the licensing criteria for remote gambling operators differ from those applicable to land-based operators?

There is no limit on the number of remote gambling licences. The Commission’s criteria for determining applications for remote operating licences are the same as for land-based operating licences.

Cross-border gambling

May operators located in other countries offer internet gambling to consumers in your jurisdiction without obtaining a licence there?

Operators located in other countries may not offer online gambling to consumers located in Great Britain without obtaining an operating licence from the Commission.

May operators licensed in your jurisdiction offer internet gambling to consumers in other countries?

The legislation is silent on whether operators licensed by the Commission may offer online gambling to consumers located in other countries, it is neither expressly permitted nor is it prohibited. However, the Commission expects operators to assess the legality of their activities in other jurisdictions and they are required to inform the Commission if:

  • a group company is advertising remote gambling facilities in a new jurisdiction; or
  • they begin generating revenue, in a sustained or meaningful way, that equals 3 per cent or more of the group’s revenue (or 10 per cent or more for operators with total revenue under £5 million a year) from a given jurisdiction.
Taxes

What tax rate applies to each form of remote gambling?

Remote gambling duty is based on revenue from customers whose usual place of residence is in the United Kingdom only.

Casinos

Remote gaming duty based on gross gaming revenues is 21 per cent.

Bingo

Bingo duty based on percentage of bingo promotion profits is 10 per cent.

Betting

General betting duty based on percentage of ‘net stake receipts’:

  • for fixed odds bets, totalisator bets on horse or dog races and bets taken on betting exchanges: 15 per cent;
  • for financial spread bets: 3 per cent; and
  • for all other spread bets: 10 per cent.

Pool betting duty based on percentage of bookmaker’s profits from bets that are not at fixed odds and are not on horse or dog racing is 15 per cent.

Lottery

Lottery duty based on percentage of the price paid or payable on taking a ticket or chance in a lottery is 12 per cent.

Intellectual property

Patents

Are gambling games - land-based or remote - patentable in your jurisdiction?

A scheme, rule or method for playing a game is not an invention so is not patentable. Furthermore, only software that makes a technical contribution is patentable. Patent applications might otherwise succeed but trademark and copyright are better mechanisms for protecting games.

In a leading case (IGT v The Comptroller General of Patents [2007] EWHC 1341), a company applied to patent four pieces of software which altered the gameplay of fruit machines. One piece of software allowed players to store their bonus entries for later use. All four applications were rejected because their function was to change the rules and methods for playing a game, meaning they were not inventions.

Trademarks

Are there limitations on how brands, logos or other types of marks may be used in promoting gambling games?

There are no specific limitations from an intellectual property perspective.

There are limitations contained in multiple public policies but most are of a general nature and not gambling-specific. See question 24 for information on advertising gambling generally.

Advertising

Restrictions

What types of restrictions apply to advertising gambling games?

‘Advertising’ is widely defined and includes doing anything with a view to encouraging or increasing the use of facilities for gambling. The definition covers most forms of advertising and marketing, including online advertising and emails to customer databases.

Unlawful advertising

Section 330 of the 2005 Act creates the offence of advertising unlawful gambling, which makes it illegal to advertise gambling that requires a licence under the 2005 Act but is not subject to one. The prohibition applies to advertising by remote communication when the advertising is intended to come to the attention of, or is likely to be accessed by, customers in Great Britain and the gambling facilities are capable of being used there. Effectively, it is an offence for any operator not licensed in Great Britain to advertise there, unless the facilities for gambling are incapable of being used by any customers located in Great Britain.

Advertising codes

It is a condition of an operating licence issued by the Commission that the operator complies with:

  • the UK Code of Non-Broadcast Advertising and Direct & Promotional Marketing (the CAP Code) for non-broadcast advertising;
  • the UK Code of Broadcast Advertising (the BCAP Code) for broadcast advertising;
  • the Gambling Industry Code for Socially Responsible Advertising (the Industry Code); and
  • the Commission Licence Conditions and Codes of Practice (the LCCP), which apply to all UK-licensed operators.
The CAP and BCAP Codes

The CAP and BCAP Codes are administered by the Advertising Standards Authority (ASA). The Codes ensure that gambling is advertised in a socially responsible manner, for example by providing that adverts should not be of particular appeal to children or exploit vulnerable people. There are no criminal sanctions in respect of any breach of the Codes; however, the ASA has sanctions available to it including publishing an adjudication following a complaint about an advertisement and the use of an ‘ad alert’, which is circulated to those accepting adverts for publication alerting them to advertisers who have not complied with the ASA’s instruction to withdraw an offending advertisement.

The Industry Code

The Industry Code provides social responsibility standards for gambling operators and operates as a supplement to the CAP and BCAP Codes. It was developed collectively by the gambling industry. The Industry Code is not legally binding, but it sets a benchmark against which gambling operators’ commitment to social responsibility will be measured.

Two key aspects of the Industry Code are social responsibility messaging and the watershed for television advertising.

Gambling operators must display the www.begambleaware.org website address on all advertising where it is feasible, practical and necessary to do so. The website provides advice and information about responsible gambling as well as links to both national and local problem gambling services.

Gambling advertisements should not be shown on television before the commonly accepted watershed of 9pm. Notable exceptions to this rule are the advertising of bingo and the advertising of sports betting around televised sporting events.

The LCCP

The key provisions of the LCCP relating to advertising are:

  • All advertising of gambling products and services should be undertaken in a socially responsible manner.
  • Operators should comply with the CAP Code, the BCAP Code and the Industry Code.
  • Adverts must not include a child or young person and no one who is or seems to be under 25 may be featured participating in gambling.
  • Operators must satisfy themselves that their adverts are not misleading.
  • Operators must comply with any provisions of the CAP and BCAP codes in relation to free bet and bonus offers, including by stating significant terms and directing customers to the full terms, which should be no further than one click away.
  • No adverts should appear on any webpage that provides advice or information on responsible gambling.
  • Operators must not place adverts on websites providing unauthorised access to copyrighted content and must take all reasonable steps to ensure that third parties (eg, affiliates) do not do the same.
  • Operators must be able to terminate contracts with third parties who breach this provision.
Inducements

There are no restrictions on the type of sign-up bonuses and other inducements that may be offered to new customers, although under the Industry Code they may not be advertised on television before 9pm.

Inducements must comply with the marketing provisions of the LCCP and the terms must be fair to customers and set out in plain and intelligible language. The terms of the offer should be no more than one click away from any advertisement promoting it.

The Commission expects marketing of inducements to comply with undertakings given by a number of gambling operators to the Competition and Market Authority. These undertakings include agreements that all significant conditions of promotions must appear in marketing material and that operators clearly set out what requirements and play restrictions apply to bonuses.

Suppliers

Licensing

What types of suppliers to gambling operators require licences?

Providing facilities for gambling

Some suppliers will fall within the scope of ‘providing facilities for gambling’, which triggers a requirement to hold an operating licence. A person ‘provides facilities for gambling’ if he or she satisfies one of the following:

  • invites others to gamble in accordance with arrangements made by him or her;
  • provides, operates or administers arrangements for gambling by others; or
  • participates in the operation or administration of gambling by others.
Host licences

Online operators who host gambling products for other operators on a business-to-business basis may obtain a host operating licence provided they hold a software operating licence as well as a casino, betting or bingo operating licence, but do not contract directly with the customer. The main difference with this type of licence is that a host licence has a reduced LCCP, so that the customer-facing provisions of the LCCP (such as those that deal with customer funds, customer interaction and self-exclusion) do not apply.

Software licence

A gambling software operating licence is required by anyone who manufactures, supplies, installs or adapts software for use in connection with remote gambling. It is a condition on all operating licences that all gambling software used by the licensee must be manufactured, supplied to them, installed and adapted by the holder of a gambling software operating licence.

Machines

A gaming machine technical operating licence is required by anyone who manufactures, supplies, installs, adapts, maintains or repairs gaming machines or parts of gaming machines (including their software).

Affiliates and white labels

Companies that provide only advertising services or branding to a gambling operator do not require a gambling licence. Key examples are affiliates and white-label partners of gambling operators.

Registration

If licensing is not required, is there a registration or other process suppliers are subject to, and what triggers that process?

There is no registration or process for suppliers who do not require a gambling licence, other than that operators must ensure that payment service providers they use are appropriately authorised, typically by the Financial Conduct Authority.

Casino projects

Casino development

What considerations arise in developing a casino resort project that are not typical to other resort development?

Casino premises licences are only available in certain Licensing Authority areas and, in most cases, the available licences have already been granted. To award a casino premises licence, the Licensing Authority must go through a competition process where it evaluates competing bids. Casinos located in resorts have been desirable to licensing authorities owing to the regeneration that comes along with the project. Casinos occupy their own planning class, so in addition to a premises licence, the casino operator must expressly obtain planning permission for the development.

Labour and employment

Wage and hour rules

Are there particular rules governing hours and wage treatment for casino employees?

There are no specific rules governing the hours or wages of casino workers. However, under the Working Time Regulations 1998, all workers are entitled to paid holiday, a maximum 48-hour week (unless workers opt out of that maximum 48-hour working week) and 20-minute rest breaks every six hours, and the working hours of night workers are limited to an average of eight hours per 24-hour period. All employees are entitled to be paid the national minimum wage.

Collective labour

Must casino employees be members of labour unions or similar organisations?

Employees have the right to choose whether to join a union or not, there is no obligation on an employee to be a member of a union. Employers are not permitted to offer benefits to entice employees to leave a union or treat employees unfairly depending on whether they belong to a union or not. Casino owners are very unlikely to recognise a trade union but there are a number of trade unions - particularly Unite and GMB - that target casino workers as members and campaign against their employers to uphold their rights. Current campaigns include zero hours contracts, working time rights, especially paid rest breaks and paid holidays, and employment status.

Land-based casino operators may only permit tipping of staff who hold personal licences where a tronc system is in operation, which involves all tips being pooled and distributed among relevant staff.

Acquisitions and changes of control

Change of control

How are licensee changes of control, and substantial changes in shareholdings of licensees, addressed?

The Commission must investigate and approve all controllers of licensees. A controller is a person or company that (whether directly or indirectly) holds 10 per cent or more of the equity or voting rights in the licensee or is able to exercise significant influence over the management of a licensee. If there is a change that results in a new shareholder with 10 per cent or more of the equity, the licensee must within five weeks apply to the Commission for a determination that the operating licence shall continue to have effect. In considering the application, the Commission must determine whether it would have granted the operating licence to the licensee had the new controller been a controller of the company when the original licence application was made. If the Commission is not satisfied that it would have granted the application, it must revoke it.

Bankruptcy

How are gambling licences treated in bankruptcy?

If a licensed company ceases to exist or goes into liquidation, its operating licence and premises licence (if held) will lapse. In relation to a premises licence, in the six months following the lapse of the licence, an application may be made to the licensing authority for the licence to be reinstated, with the applicant as the licensee. Personal management licences will also lapse if the licence holder becomes bankrupt.

Under the LCCP, the liquidation or bankruptcy of a licensee is classed as a ‘key event’ and the licensee must notify the Gambling Commission of this event within five working days.

If a creditor takes control of a gambling licensee, the licensee must apply to the Commission for approval of the change of control in the usual way.

Quasi-gambling

Regulation

How are forms of ‘quasi-gambling’ regulated? Are any treated as ‘gambling’, and what triggers such treatment?

Daily fantasy sports are usually regulated and licensed as pool betting, if there is a payment to enter and prize of money or money’s worth. If either the payment to enter or prize is missing, daily fantasy sports products are not usually licensable.

Social gaming is regulated as gaming if customers are playing a game of chance and there is a prize of money or money’s worth. If there is no prize, social gaming is unregulated. It is not relevant whether or not there is a payment to take part.

Matters become complicated when social games of chance offer prizes in virtual money. If no real money is paid out to players and winnings have no monetary value, social games will not attract regulation because the virtual money does not constitute money’s worth, on the basis that it is not exchangeable for any goods or services and cannot be traded for anything other than additional play. Where in-game items or currencies that can be won, traded or sold can be converted into cash or exchanged for items of value, under the 2005 Act they are considered money or money’s worth. Where activities blur the lines between social games and gambling, the Commission will focus on those made available to children, those involving expenditure and those presented as gambling or associated with traditional gambling games.

Skill games where there is no element of chance are usually unregulated, unless they fall within the definition of betting.

Licensing

Does your jurisdiction license quasi-gambling operators?

Operators are only licensed if their activities fall within those requiring an operating licence.

Other restrictions

Does your jurisdiction impose other restrictions on the conduct of quasi-gambling activity, including restrictions on advertising, age of participation, limitations on prizes, etc?

All activities whether gambling or otherwise should comply with the advertising codes of practice issued by the Committee of Advertising Practice. This includes a section that deals with promotion marketing and includes provisions for competitions with prizes, including how prizes should be awarded.

Litigation

Recent cases

What, if any, significant litigation involving the gambling or quasi-gambling sectors has your jurisdiction seen in recent years?

The Supreme Court ruled in the case of Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] that a professional gambler, Mr Phil Ivey, cheated in a game of Punto Banco using a technique known as ‘edge sorting’, which meant that his claim for winnings from the casino failed. Mr Ivey claimed that the casino had no right to withhold his winnings because he did not believe his actions had been dishonest. The ruling means that a person can be guilty of cheating at gambling simply by interfering with the process of a game, without any knowingly dishonest intention to deceive.

The classification of ‘spot-the-ball’ competitions was clarified from a gaming duty perspective in the case of IFX Investment Company and Others v Commissioners for Her Majesty’s Revenue and Customs [2016]. A spot-the-ball competition was held to be a form of gambling, specifically a ‘game of chance’ under tax legislation. The decision has been criticised and notably it does not correspond with information provided by the Gambling Commission on the legal classification of such competitions.

The Commission has investigated a number of unlicensed eSports operators, which led to the criminal prosecution of one eSports operator in February 2017. The two individual directors of the company that operated FutGalaxy.com were found guilty of offences under the 2005 Act, which were aggravated by the fact that children had been gambling on the unlicensed website.

In the case of Ehrentreu v IG Index Ltd (Rev 1) [2018] a customer claimed against a spread betting company for failing to close out the customer’s bets when it first had the option to do so under the customer agreement terms. Instead, the company left the bets open at the customer’s request. When the bets were eventually closed, the customer’s losses were higher than they would have been had the bets been closed earlier. The Court of Appeal held that very clear, express words would be required to create a contractual obligation to protect a customer from deliberately inflicting economic harm on itself.

The author would like to acknowledge the contribution of Duane Morris, who assisted with the questions on IP and employment law.

Update and trends

Recent developments

Highlight any noteworthy developments or trends in the gambling or quasi-gambling sectors (legal or business) and their potential implications.

No updates at this time.