Major changes ahead for the UK online gambling sector

The timelines set for Britain’s change to a new point-of-consumption online gambling licensing, regulation and taxation regime are converging swiftly, with unofficial comments from insiders suggesting that some operators are already planning to regionalise their offers by closing some sites and transferring players to alternative online venues appropriate for other jurisdictions.

The idea of additional licensing costs, strict advertising control, more ownership and jurisdictional transparency and the reported 15 percent tax rate will perhaps dissuade some operators with healthy player bases elsewhere from operating in the United Kingdom, but there will clearly be many major and reputable online operators who opt to comply with the new requirements and continue to service the British punter.

Last week the head of the UK Gambling Commission, Jenny Williams, told a business conference that the Commission has already received a number of applications for licensing, and that the regulator expects up to 150 more will be made.

There will of course be less reputable operators who will try to circumvent the new system and illegally offer their services to British online gamblers, and that will test the enforcement powers and determination of both the government and the regulator.

Just a few of the weapons of choice deployed by other governments against illegal operators include disrupting financial transactions, blacklisting, ISP blocking and active prosecution of offenders, although these measures have not always been as effective as may have been desired.

Nevertheless, the British market is significant, well established and efficient, serviced by sophisticated marketing, communications and technology infrastructures, and continues to be a tempting sector for any operator.

For players, it will inevitably see the departure of some operators, but the majors will probably remain…and one of the most oft-requested player requirements – publication of game RTPs – will at last have to be met.

The segregation of player funds from operational funds by operators is also provided for, and will undoubtedly be better policed than has been the case in some jurisdictions in the past.

And there will be an active player complaint facility that actually responds to players.

Players should feel safer, too – from January 1st next year operators will have to use software from suppliers who are themselves accredited and licensed by the Commission and who have satisfied its requirements, according to FAQ’s published here by the Commission:

http://www.gamblingcommission.gov.uk…AQs%20July.pdf

There has been some confusion over the various deadline dates as the new regime comes into being, so to summarise:

September 16 2014 is the deadline for applications for licensing.

October 1st 2014 is the implementation date for the new regulations, when operators must be licensed to market to UK punters and offer gambling services.

December 1st 2014 is the date on which the new tax regime kicks in.

January 31st 2015 is the date by which operators will have to use software from providers licensed in the UK.

Sports sponsorship is one area that is likely to create problems for operators who are not interested in UK licensing, but it appears that the Commission is comfortable with some flexibility.

Sports sponsoring – particularly in the UK football sector – has become an important promotional activity for many international companies, and last Friday the Commission addressed the issue in an update to its FAQs, observing that online gambling operators who blocked UK punters from wagering would be allowed to maintain their sports betting partnerships with British sports entities.

The Commission acknowledged that only the courts can provide a definitive view on the legality of such a scheme, noting that “…the position on non-remote advertising is arguable both in terms of the law and the facts of any particular case.”

Operators will presumably by now have made their strategic decisions on whether to remain in the UK market and comply with the new requirements, or to move on.

Those that do decide to depart will be looking for solutions in regard to their British player bases, possibly doing deals to transfer them to UK-compliant operators, and software providers may have a role here in facilitating such exchanges.

Those that stay in the market will possibly be looking to consolidate their UK players on selected UK-oriented websites.

But in all of these corporate manoeuvres it is important that both operators and software providers remember to communicate and explain what is happening to the very important audience that puts the bread of the table for everyone….the players.

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