SBC News UK Gambling Bill to Raise Costs, Cause Advertising & IT Headaches

UK Gambling Bill to Raise Costs, Cause Advertising & IT Headaches

AGBrief2The UK is set to introduce new gambling legislation that may create major compliance issues and raise costs for Asian operators, especially those counting on accessing millions of Asian sports fans through sports sponsorship and other advertising. Global gaming expert Steve Donoughue, Senior Associate of E-gamingexperts.com, and Dr Peter Chadha -CEO of DrPete Inc – examine the implications.

The UK Gambling (Licensing and Advertising) Bill is aimed at moving Britain to a system of national licensing. The bill had its second reading at the House of Lords on December 17 and will pass through the committee stage on January 14, 2014. There are then two more stages before any amendments are considered and it passes into law

The core tenets of the bill are simple. An operator will need a license from the UK Gambling Commission if its gambling facilities are used in Great Britain, even if no equipment is located there. This will make the operator liable for remote gambling duty and they will have to pay 15 percent of gross gaming revenue on gambling transactions placed in Great Britain.

Companies advertising in the UK, even if they are not taking any bets from UK residents, may also need a license. The consequences of noncompliance with the rules, which are expected to come into force next year, include fines, withdrawal of the license and even a prison sentence of up to seven years.

The need to pay a license fee, together with the added tax, is expected to have a disproportionate impact on smaller players and may force many out of the market. The license fee will vary according to the gross gambling yield, however, it tends to be more cost effective for larger players than for small.The current fees are published on the Gambling Commission’s Website

Gibraltar is considering seeking a Judicial Review to overturn the bill, which it sees as simply a way for the UK Treasury to raise revenue rather than increase consumer protection as the government is claiming. And Gibraltar is not alone, because the new law would also affect operators based in Alderney, Malta and, of particular interest to Asian operators, the Isle of Man.

The latter has become the ideal base for Asian gambling groups, offering a high quality licensed jurisdiction close to the UK mainland, but still independent, which enables them to apply relatively easily for a UK operating license should they wish to target the British market.

On the positive side, for Asian operators not seeking to take bets from UK residents, the tax impact is likely to be minimal, says Ray Davies, the Isle of Man Government’s head of eGaming development in the Department of Economic Development. The Isle of Man has become a popular destination for Asian gaming groups, but most of them are still targeting business in Asia.

For these operations the biggest impact is likely to come from the need to apply for a license if they wish to advertise in the UK

William Mummery, executive director of Celton Manx, said companies have been increasingly using the UK’s premiership soccer matches and other sporting events, to target Asian consumers at home and not the British, or Asian expats in the UK Over the last five years, Asian brands have been a strong part of both shirt sponsorship and digital pitch side boards.

Football accounts for around 43 percent of the global sports industry, while the English Premier League is the richest and most watched football league in the world, with a total TV audience of 4.7 billion last season. Broadcasting rights totaled 5.5 billion GBP ($9 billion), with a large part of that market in Asia, while many top UK clubs have Asian owners

“The Asian expat market in UK is relatively small – the focus is on using the Premier League as a vehicle to market the brand across Asia where all matches are shown live,” he said. “It is expensive but it absolutely works and is especially significant in driving ‘in play’ propositions and betting,” he said. The new bill may also pose significant headaches from an IT perspective, with a serious impact on the actual delivery of gambling services.

Operators, whether domestic or offshore, will have to inform the Gambling Commission when they move equipment from one location to another and allow enforcement officers access to the equipment, or premises. They will need to ensure all gambling software is sourced from licensed providers,along with further technical amendments being required to poker networks, payments and player accounts.

Most important of all, any gambling software used in the UK will need to be compliant with UK technical regulations which, for Asian operators, may be significantly different from those of their licensed jurisdiction. For standalone operators, or those that are part of a joint venture with a UK operator, these IT issues will need to be addressed very quickly.

While IT due diligence is critical in merger and acquisition activities, thorough assessments are now essential before IT changes are implemented at any time, even in well established operations where IT systems are considered compliant.

The worldwide digital expansion continues, with billions of gamers accessing gambling websites on mobile technology such as tablets and smartphones. Traditional gaming operators are having to change their approach and the barriers between social casino games and real money online gambling are rapidly disappearing.

All of this means a need for responsive gaming software, larger servers and data storage operations and a rise in cross border gambling activity. Without doubt, this presents major compliance issues for those Asian companies operating, or planning to operate, in highly regulated markets such as the UK.

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Content Provided by Asia Gambling Brief – AGBrief.com

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