The new Gaming Law 2021 guide covers 32 jurisdictions. The guide provides the latest legal information on land-based and online gambling; B2C and B2B licences; application requirements; affiliates; white labels; responsible gambling; AML legislation; restrictions on advertising; acquisitions and changes of control; trends in social gaming, esports, fantasy sports and blockchain; and taxation.
Last Updated: November 25, 2021
A Political Football Still Being Kicked Around
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. That is taken from the previous introduction to this guide, and it remains as true today indeed as it always has done.
I previously explored the origins of gambling and its use and abuse by politicians, variously using it as a taxation tool, or imposing controls and bans when seeking to adopt a paternalistic moral high ground. With the prospect of new, or revised, gambling legislation in Great Britain, where a gambling review has been commenced by the government, it is an opportune time to speculate on the direction in which the dice will fall on this occasion.
This is nothing new. As early as 1541, Henry VIII decided it was necessary to pass comprehensive legislation prohibiting the playing of dice and cards, amongst other activities, except at Christmas, although interestingly the ban was not applied to the aristocracy or gentry, but only to the lower classes. Not surprisingly, given the near impossibility of enforcement, the legislation was widely ignored. But Henry recognised that unlimited gaming might be undesirable in the hands of the irresponsible, as the lower classes would have been categorised: the “vulnerable” people of the time.
1968 to 2005: Restrictive to Liberal, or Vice Versa?
The reinvention of commercial gaming in the 1960s 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. It was, however, strictly controlled, with a ban on advertising so strict that casinos could not even be listed in a telephone directory, a membership requirement with a 48-hour “cooling off” period before a new member could play and the need to prove “existing unsatisfied demand” in the area, with only some 53 areas in Great Britain permitted for gaming.
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 to be 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.
Placing the 2005 Act in its historical perspective, the acknowledgement, initially by the Budd Committee, that social attitudes to gambling had changed since the 1960s, from a vice to be tolerated to a perfectly proper adult leisure activity, was to have been recognised in the policy of a free market approach, coupled with a requirement that gambling businesses operate legally, fairly and in a socially responsible manner. The combination of irresponsible opposition and government weakness detracted from what might have been regarded as a natural development, leaving the additional controls necessary to regulate a free market, but without the free market originally intended. Instead, we now have an even greater barrier to entry to the casino market than the old “demand” test imposed in the 1968 Act; no one is able to obtain a new casino licence.
The government sought to explain this “volte face” as follows: “The Government recognises, however, that the casino proposals in the Bill represent a significant change and we needed to take a cautious approach in order to assess whether their introduction leads to an increase in problem gambling. The Government has taken the view that the risk of an increase in problem gambling will be reduced if a limit is imposed on the number of casinos. We have therefore decided to settle an initial limit on the number of regional, large and small casinos of eight each.”
The reality can be more simply stated: the government was running scared. At a stroke it had thrown its entire policy out of the window in the face of uninformed opposition. Whilst referring to an intention to “assess” the effect of the new larger casinos during an experimental phase, no such assessment has ever been conducted, with the result that the industry is frozen in time. 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.
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.
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 perceived 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, protect the vulnerable 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.
Review of the Gambling Act 2005
It is therefore with some trepidation that we consider the prospects for legislative reform. The government published the Terms of Reference and Call for Evidence for its review of the Gambling Act 2005 (the “2005 Act”) on 8 December 2020 (the “Gambling Review”), stating that the review “is about using the evidence to assess whether we have the balance of regulation right”, that “it is essential that we prevent exploitation of vulnerable people and protect individuals, families and communities from the potentially life ruining effects of gambling-related harm” and that it needs to ensure its “regulatory and legislative systems continue to deliver on the original aims of the 2005 Act”.
To ensure its regulatory framework “can protect children and vulnerable people, prevent gambling related crime, and keep gambling fair and open in the digital age”, the government set out three objectives in the Gambling Review:
The government is currently considering submissions. A White Paper is expected in late 2021. Current estimates are that any resulting legislative changes are very unlikely to receive parliamentary scrutiny until 2022. Experience of the process that led to the passing of the 2005 Act tells us that it would be little more than idle speculation to predict the eventual outcome. Most of the concerns raised as part of the review could be addressed either under the existing legislation or through secondary legislation. However, there may be significant and unpredictable reform as the Gambling Review is debated in Parliament. Key areas of focus include football sponsorship, affordability, advertising, changes to the fees system to introduce flexibility and incentives for compliance, and consideration of the creation of a Gambling Ombudsman. It seems likely that measures affecting these areas will introduce further restrictions or even bans. The hope is that a more logical and fair basis for casino licensing and the opportunity for more such licences may be afforded serious consideration.
Increased Enforcement by the Gambling Commission
As in previous years, anti-money laundering, safer gambling and consumer protection are key areas for the Commission. The industry has seen a continuing escalation in the number of compliance assessments, regulatory investigations, licence reviews and regulatory sanctions. Concentration on consumer protection is leading to ever stricter provisions to protect players from themselves, placing the burden on operators to identify and interact with customers who are experiencing, who may be experiencing, or who may be at risk of experiencing, harm from their gambling.
In November 2020, the Commission confirmed that in the last financial year it had suspended five operating licences, revoked 11 licences and had imposed penalty packages or agreed regulatory settlements for a total of GBP30 million. An increased policy of holding personal management licence holders (including those employed in non-compliance roles; for example, CEOs) to account is also evident, with 49 personal licence reviews having been commenced in the last financial year.
The reach of the Commission has been extended partly by its own interpretation of those to be regarded as “vulnerable”. This category has been extended not merely to children or of insufficient capacity to make informed adult decisions, or who are problem gamblers, but to all those who may be at risk of suffering harm from gambling. Measures proposed by the Commission, particularly in relation to a requirement to prove “affordability”, in effect could lead to all gamblers being regarded as vulnerable, unless established otherwise.
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 2021, 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.
In 2020 and 2021 we have 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 in the industry. Aside from the acquisition by US major operators of companies established in the world of online gaming and betting to fuel the spread of the online industry in the US and elsewhere, the cost and complexity of compliance and operating in an increasingly difficult regulatory environment is further motivation for operators to come together.