The new 2020 Gaming Law guide covers 33 jurisdictions. The latest guide discusses the types, availability and duration of licences; application fees; premises licensing; affiliates; white labels; B2B and B2C licences; responsible gambling requirements; gambling management tools; AML; advertising; enforcement; and tax.
Last Updated: November 24, 2020
Gambling is an emotive word, conjuring many differing reactions, not only for those who seek to legislate for or against it, but those who regulate it and the general population. It provokes legal, moral, religious, political and social issues, yet it has been a constant in human society for as long as human activity has been recorded.
From ancient times in China, Egypt and Rome, it has been present as a pastime, affording enjoyment for many, corrupting some and harming not a few. Plato tells us that dice and gaming originated with a demon called Theuth, although the Greeks generally ascribed the invention of dice to one named Palamedes, a remarkable genius who is also credited with the invention of weights and measures. Like so many Greek pastimes, the Romans adopted gaming enthusiastically; Cicero was a dice player, the Emperor Augustus was passionate about the game and Nero played at 400,000 sesterces, which would certainly have earned him top VIP status in any modern casino. Emperor Caligula, after a long spell of ill luck in which he lost all his money, rushed into the streets, had two innocent Roman knights seized and ordered their goods to be confiscated, whereupon he returned to his game remarking that this had been the luckiest throw he had enjoyed for a long time. Claudius had his carriages arranged for dicing convenience and, academic that he was, wrote a book on the subject. Nor was cheating unknown: Aristotle knew of a way by which the dice could be made to fall as the player wished them.
Not surprisingly, it was the Romans who introduced dice to England and cards came to England from China in the 14th century. Many human activities involve an element of risk, and gambling reflects the innate need for risk in the form of gambling games with the possibility of winning a reward.
Politicians' Control of Gambling Has Always Been a Taxing Issue
Whilst politicians have variously sought to eradicate gambling, limit or control it, they have throughout history also used it; not least as a tax generator. From Roman emperors, through Tudor monarchs to modern democracies, all have used the propensity of those whom they govern to take a chance in the hope of winning a prize, in order to raise tax revenue. Gambling remains an emotive subject, tossed about in the shifting sands of public opinion and subject to the whims of politicians keen to jump aboard any passing bandwagon. When I began to practise in this area of law and regulation in the early 1980s, the governing law was the Gaming Act 1968. When, in 1962, John Aspinall opened the Clermont Club in London’s Mayfair, he reinvented commercial gambling in England and provided the spark that, albeit indirectly, ignited the popularity of gaming that eventually led to the legal framework of the 1968 Gaming Act.
The Clermont was not the first legal casino to open; in February of the same year in which the Clermont Club opened its doors, the proprietor of the then Colony Club, in Berkeley Square, George Raft, was deported, not because of his fame as a Hollywood film star, ironically often playing gangster roles, or even for operating a casino, but rather his alleged links to the Mafia. Nevertheless, it was Aspinall whom the press, or some would say Aspinall himself, dubbed "the father of British gaming". There was some justification for this; Aspinall was one of those, and many others were to follow, who forced government to recognise that commercial gambling, though regarded as a vice, could no longer be effectively prohibited and would have to be regulated; a concept that was novel at the time.
Outside Great Britain, casino gambling was much more restricted. In the United States of America, it was largely limited to Nevada and later New Jersey, and in Europe to a few fashionable locations. Now, the biggest centres include Macau and Singapore, outstripping even Nevada in revenue terms. The march of globalisation, the reach of the internet and smart telephony and the development of sophisticated electronic technology have transformed the industry. Many foresaw a brave new world – where the hubs of regulated online gambling, such as Alderney, Gibraltar, the Isle of Man, Malta and others like them – would regulate this new gambling industry in place of national regulatory systems.
By the end of the century, the British government decided that the somewhat paternalistic approach of the 1968 Act was outmoded, and no longer reflected modern attitudes to gambling; the law was to be reformed to treat gambling as an adult form of entertainment. The old restrictions, designed to keep casinos, in particular, under the radar – such as the need to prove existing demand for a new licence, the ban on advertising and the membership requirement – were abolished and, as an initial experiment to test the legislation, 17 new, larger casinos were to be permitted in selected areas. The old prescriptive regulatory regime was to be replaced with a risk-based system; in short, instead of telling operators how they should be compliant, they were instead to decide for themselves, within guidelines set by the regulator.
Meanwhile, throughout Europe, with the exception of Great Britain and Malta, countries opted not for pan-European licences, but instead for national licensing. This move – led by France, Italy, Spain and Denmark – became the standard in Europe and in 2014 Britain followed suit, requiring all those operating in or advertising to those in Britain to be licensed here. In some European member states, national monopolies remain with no, or limited, opportunities for outside operators.
Anti-gambling Lobby Finds a Surprising Ally
With the advent and regulation of online gaming, in addition to the political arguments over the new legislation and the furore in some sections of the press over the perceived liberalisation, some in the industry foresaw the dangers inherent in opening up the Pandora’s Box of overall gambling law reform, enabling the press to reawaken or create an "anti-gambling lobby". This is precisely what happened, and its effects continue. The pot of gold that some predicted for the industry with the freedom to advertise, the ability for casinos to be much more visible, without being hamstrung by the old rules designed to keep them in the shadows, and the exponential growth of online gambling in reality turned out to be fool’s gold. As so often happens in many fields, the seemingly unstoppable march of liberalisation has been met by a backlash against the industry, led by the press and the anti-gambling lobby. To this group must now be added numerous politicians from across party lines. Most distressing, however, is the apparent anti-gambling attitude of the regulator, the Gambling Commission, which seems now not to be able to bring itself to say anything positive, or indeed anything not overtly negative, about the industry it regulates.
In the main, this has had two consequences: the first is that any hope of the tentative measures to create a free market in casinos in Great Britain has, in my view for the foreseeable future, dissipated. We are now in the extraordinary situation that it is impossible in Great Britain to obtain a new land-based casino licence. Even under the 1968 Act, anyone found suitable could apply for a licence in one of the permitted areas, which would be granted, provided that sufficient unmet demand could be demonstrated. Furthermore, the number of betting shops has been drastically reduced by new staking limits on some machine types.
The second consequence is ever stricter regulation, as regulators seek to reduce perceived harm caused, or more importantly that may be caused, and to satisfy the increasing clamour from the press and politicians to curb the evils of gambling. When the 1968 Act was passed, one of the prime needs was to create a legitimate industry to keep crime out of gambling and ensure that customers were provided with games that were fair. These objectives remain a constant in legislation, not only in Great Britain, but in most jurisdictions around the world. However, there has been a noticeable shift; the emphasis now is on the consumer. Regulation, certainly in Great Britain and increasingly in many other jurisdictions, is not through the lens of the propriety of the operator, but focused on the effects on the consumer.
Operators Tested by Stringent Consumer Protection Requirements
Again, we see a shift in the perceived issue of the times. Henry VIII’s ban on gaming houses was provoked by a concern that they were distracting knights from the archery practice needed for war preparation. The scourge of gambling in the late 17th and early 18th centuries was cheating; card sharps would fleece unsuspecting gamblers in the coffee houses where it was enjoyed, provoking a move into private clubs – the original purpose, along with political affiliations, of the gentlemen’s clubs of London – many of which, such as White’s and Brooks’s, survive in London today. In the 1960s it was crime. Now, the focus is on consumer protection.
This is leading to ever stricter provisions to protect players from themselves, placing the burden on operators to identify and interact with customers who may be experiencing or risking problems with their gambling, to question not merely whether they are playing with money legitimately acquired, but to look at the issue of affordability. Many see this as a step too far, straying as it may do into becoming a paternalistic intervention into private matters, and seeking to restrict, or at least interfere in, the choices adults make. It opens the question as to whether adults should be free to spend their money as they choose, whether wisely or not. And, if applied to gambling, why not to other leisure activities, or vices? Will these inquiries into spend spread to the sale of alcohol, tobacco, and fast and sweet foods? Ironically, with the treatment of gambling as a vice that cannot be prevented, but that should therefore be permitted, subject to strict controls, the mores of the 1960s may be returning; we may have come full circle, and within a relatively short period.
Unfortunately, whilst regulators internationally seem able to co-operate, as they always have done, in the exchange of information, there remains little progress in their approach to approvals and application methods. Where they and their governments do excel, however, is in adopting new regulatory methods. We have seen the spread of the British regulators' mantra to “raise standards” for consumers, and the advertising ban that started in Italy is also gaining traction. All in all, it is becoming ever more difficult to be compliant as an operator, and this is obviously reflected adversely in profit margins, already battered by increased and increasing taxes on the industry.
COVID-19 Increases Likelihood of Continuing Industry Consolidation
I always hesitate to predict the future in this volatile world, but some things are inevitable. There would be no prizes for getting right a prediction that the current increase in the burden of regulation and compliance will continue. The industry needs to meet that by putting the same effort and proportionate investment, both in terms of money and people, into compliance and also into research, so as to counter the often inadequate surveys upon which new strictures are based.
Those who do not address these issues will reap the regulatory whirlwind. To survive in a form that is capable of both remaining compliant and profitable, I believe we will see continuing consolidation in the industry. Gambling has long been a global business in the land-based industry. For the online industry, the days of the buccaneers are coming to an end and this industry will see the survival of the fittest – and biggest.
For the regulators, too, there is a potential danger. It is not only online where consumers can shop around for the best deals. Every jurisdiction has its share of illegal gambling establishments, and these will always serve those who feel unable or are unwilling to fulfil the strict requirements to enter licensed premises. If consumers feel that the very measures designed to protect them are becoming too prescriptive, invasive or patronising, they may choose an unregulated environment. And, in a digital world, consumers will always find an alternative. There is a fine line between protection and alienation.
Gaming Law 2020, while not an exhaustive text on gambling law, is a guide to the regulatory regimes in many of the major global jurisdictions. We hope that its geographical spread and information on the regulatory frameworks in them will be a helpful guide to lawyers, operators and others.
2020 has seen the most devastating event, in the form of COVID-19, to affect the industry, and, of course, many others, since its modern incarnation. It will survive, but many aspects will change for ever. How long the recovery will take can only be guessed at present, when we do not even know how long the pandemic will endure. Many operators will suffer to the extent of permanent closures. For the rest, it remains to be seen what the long-term effects will be on consumer habits. What I do believe to be likely, however, is further consolidation will inevitably follow.