The Gambling Act 2005 modernized regulations the UK gaming industry. It created the UK Gambling Commission, a regulatory body with the authority to license and regulate gambling. The Gambling Commission began accepting applications for licenses on January 2, 2006, and began awarding them in September 2007.
Online gaming in the UK is defined as gambling in which people participate by using "remote communication such as the Internet, telephone, television, radio and any other kind of electronic or other technology for facilitating communication." The UK’s objective with its licensing structure is to prevent problem gambling, ensure that online gambling is fair, and to protect children and other vulnerable people from the harms of gambling.
Operators may locate their facilities in the country and offer all types of online gaming including poker, sports and race betting, as well as casino games and online slots, abiding by the remote and gambling software technical standards as outlined by the Gambling Commission.
There are six types of online gambling operating licenses operators may apply for: a casino operating license, a bingo operating license, a general betting operating license, a pool betting operating license, a betting intermediary operating license, or a lottery operating license. Operators who wish to operate more than one typ need only apply for one betting license type.
To apply for an operating license, applicants must pay an application fee and an annual fee once the operating license is granted. Both the application fees and annual operating fees are based on the type of license and are on a sliding scale based on gross gambling yield.
According to the 2009/2010 Gambling Commission Industry Statistics, the number of licensed operators increased from 366 in 2009 to 432 in 2010. The Commission attributes the increase to society lottery operators obtaining licenses. The amount wagered on online gaming activities, excluding betting exchanges, was about £11,000 million.
The Gambling Act 2005 includes many conditions concerning problem gambling and requires online gambling licensees to establish policies for promoting socially responsible gambling. These policies must be published and explain how the operator will contribute to the research into the prevention and treatment of problem gambling, to public education on the risks and safety of gambling, and to identification of problem gamblers. Operators must also clearly state on their website where players may seek help for problem gambling. Employers of online gambling operators must ensure their employees are properly trained in identifying problem gambling and have procedures in place for addressing customers on this matter. Online gambling operators must also give their players the ability to exclude themselves from their services and advertisers must comply with the advertising codes of practice to not promote irresponsible gambling behavior, including underage gambling.
Under the 2005 Act, the promotion of international online gambling in the UK is an offense except for "whitelisted" countries including those in the European Economic Area (EEA) or any other country or place that has reached an agreement with the UK to offer its services to UK residents. At the time of this writing, the whitelisted countries outside the EEA include: Alderney, Antigua and Barbuda, Gibraltar, Isle of Man, and Tasmania.
Online gaming is taxed at a rate of 15% of the operator’s gross profit. For a betting exchange, poker site, or pool/pari-mutuel operator, the tax rate is 15% of the operator’s commission.
On December 3, 2012, the UK government published its Draft Gambling (Licensing & Advertising) Bill. If passed into law it proposes elemental changes in licensing, regulations, compliance and taxes from that of the 2005 Gambling Act including the end of the UK whitelist and the adoption of a point of consumption tax (the location of the bettor, not the operator, will determine the tax amount to be paid). The new draft does not specify a tax rate. Operators supplying British customers and advertising in Britain are to be licensed as well as applying to the provision of facilities for remote gambling if the facilities are “capable” of being used in Great Britain. This includes operators who do not have a UK-specific website or even an English-language website. As presently written in the draft, the only exemption is for operators who can ensure people located in Britain are specifically excluded from the site. The effect for operators based in Alderney, Gibraltar, the Isle of Man, and Malta will be increased costs primarily via the current 15 percent tax on all UK-based online revenue, in addition to the extra cost of regulation. For operators supplying the services from outside the UK, the licensing process will be more expensive. A period of transition for operators currently licensed in EEA jurisdictions and in current white-label jurisdictions will have an automatic provisional license awarded pending approval. The government’s intention is to have the bill become law and enforced by December 2014.
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