A review of the Proposed Legislation for Online Gaming Regulation in the United Kingdom

New Jersey,
16th April 2002
 

    Late in March 2002, the United Kingdom dropped a bombshell to the i-gaming community: they proposed to relax the laws for gaming and regulate online gambling in the United Kingdom.

    If approved, the UK will be the first G-7 nation to regulate online gambling. It would certainly make any form of prohibition from other governments more difficult.

    It was instigated by the "Budd Report." The report was generated by a commission to study all the financial aspects of gaming within the United Kingdom. "Unlike most reports generated by USA government appointed commissions, this was actually looked at and studied by the government," said I. Nelson Rose, Professor of Law at Whittier Law School. 
    "It was taken seriously and most of the suggestions of the Budd Report have been agreed to by the Treasury department. A very long detailed writ of proposed laws has been produced."
 

    According to Professor Rose, the most fundamental shift within the British Government is that the proposed laws will no longer view gambling as a "tolerated vice," but instead as a legitimate business, which would also require regulation. "It would still be regulated, using a code of practice," said Professor Rose. For example, no casino advertising would be allowed to target minors.
 

    In the Internet Gaming community, accolades to the British Government could be heard world-round. IQ-Ludorum, an online Casino and Sportsbook software supplier confided that the recent regulation changes in the UK were more far reaching than even the industry expected. "The UK government, recognizing the major tax revenues which can be gained from these changes, particularly acting as a global hub for online gambling, have taken the online gambling industry into a new era of growth. As worldwide operators evaluate whether operating under a clearly regulated jurisdiction such as the UK can benefit their future business, the number of opportunities for software suppliers such as IQ-Ludorum is expected to grow dramatically," said John Roberts, Vice President of Sales for the company.
 

    Anthony Dickson, Account executive at Global Interactive said, "We applaud the United Kingdom's embrace of online gaming and its understanding of the potential profitability involved. With our existing infrastructure, we feel we are in the perfect position to help those looking to gain access to an online casino & sportsbook gambling website business."
 

    The proposal does not expect the licensing fee to rise significantly. The British Government predicts that enactment would produce £500 million (approx USD $ 720 million) in revenue. 

    Herewith is a summary of the proposals (courtesy of Urbino.net):
 

• Casinos will be allowed to advertise
• No restrictions on members – no application process.
• Bingo halls will offer prizes that rollover.
• Online gambling regulated from UK based operations.

    On the regulation side, here is an abridged summary of what the standards should proposals (courtesy of Urbino.net): 
 

• Gambling should be crime-free, honest and conducted in accordance with regulation
• Players should know what to expect and be confident that they will get it and not be exploited 
• Adequate protection for children and vulnerable persons. 
• On-line operators will need to meet the same entry standards as those in other gambling sectors, and their operations will be subject to approval and monitoring by the Commission to ensure compliance with regulations. Effective safeguards will be required to prevent children using on-line gambling sites. There will be a separate review of prize and promotional competitions. 

    We also asked Professor Rose about the proposed law when it came to British online casinos accepting wagers from other nations (ex: Americans). He said, "The proposed law doesn’t resolve the question of taking bets from Americans. Like any country, they are concerned with their operators [within the UK], but they are still concerned that the operators do not do something illegal in another country." Bottom line: it wouldn’t be the UK government’s problem, but it is something they wouldn’t want to hear complaints from other governments about either.
 

Now add Mexico????......

    According to Frank Fantini (GamingInvestments.com), Mexico may very well come into the frey. According to his sources, "former U.S. Ambassador to Mexico Jim Jones said Tuesday that he thinks there is a 60 percent chance that gaming will be legalized South of the Border in the March-April legislative session. If not then, he gives gaming a 70 percent chance in the September session."

    Mr Fantini said, "if current legislation is enacted, it would go into effect immediately and the application process would open in 120 days. That could mean as early as September."

    He informed us that Mexico has two big motivations to legalize casinos:
 

• Government tax restructuring requires increasing tax revenue as a percentage of gross domestic product;
• An estimated 1,500 illegal gambling parlors now exist. Legalizing gaming would provide the impetus to close them down and capture lost revenue by moving gamblers to legal casinos.

Marc Lesnick runs StartCasino.com, an information site for gaming executives on starting a casino business and a directory of the online gaming industry. Mr. Lesnick both consults with gaming executives and speaks at numerous industry conferences.