The new Gaming Law 2022 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 24, 2022
What Next for Gambling Regulation?
Harris Hagan is again pleased to introduce the Chambers Global Practice Guide to Gaming Law. Gaming Law 2022, while not an exhaustive text on gambling law, is a guide to the licensing and regulatory regimes in many of the major global jurisdictions. We hope that its geographical coverage and information on the regulatory frameworks in them will be a helpful guide to lawyers, gambling businesses and others.
There is no doubt that gambling has a very long and colourful history in societies and cultures, dating back as far as the history of humanity in ancient China and Rome. But as we reach the end of 2022, what comes next?
Technology is growing rapidly and touches almost every aspect of our lives in some shape or form. It is changing the way we live, work, play, learn and gamble. Technology is changing society, from the globalised economy to the proliferation of the internet and the ability to work from home.
Without a doubt, online gambling has metamorphosed since its infancy. With people spending a third of their waking time on their mobile phones, the global mobile gambling industry is booming with growing demand in the USA in the wake of the overturning of the Professional and Amateur Sports Protection Act (PASPA), with a market report in May 2022 forecasting growth of USD142 billion by 2026.
Even in the 17 years since the Gambling Act 2005 was passed in the UK, gambling has changed enormously with smartphones giving opportunities to gamble online almost anywhere and at any time. Sir Alan Budd, who was the government-appointed economist asked to review the gambling laws in 2000 recently conceded in a House of Lords inquiry that “no one had even thought about the possibility that someone might be holding something in his or her hand and be allowed to gamble freely”.
Nearly 20 years later, in the UK, and indeed in many other mature or emerging markets, live studios are commonplace, community-style online gambling products are growing and metaverse (a world combining the metaphysical with reality) gambling is in its infancy.
Navigating new markets
Although regulatory and political pressure has been mounting in the UK (see below), and in European markets that are maturing, huge excitement is growing across the Atlantic with:
North and Latin America have become key strategic emerging markets as gambling businesses target growth and partnership opportunities whilst these markets are in their infancy, and their regulators and lawmakers are keen to attract international businesses. It is yet to be seen whether lessons from the UK and Europe, such as the proliferation of advertising, gamblification of sports and clearly unaffordable gambling, will be borne in mind as these markets expand.
The UK Gambling Review
Two years have elapsed since the UK government published, on 8 December 2020, Terms of Reference and its Call for Evidence for its review of the Gambling Act 2005 (the “Gambling Review”). The Terms of Reference stated that the Gambling Review “is about using evidence to assess whether we have the balance of regulation right”. This can be understood as respecting that gambling is a fun leisure activity for nearly half of the adult population in the UK and respecting individuals’ freedom to choose how they spend their money, against the harm gambling can cause to some individuals, families and communities, which in some cases tragically leads to suicide. Most would probably acknowledge that the UK regulatory framework, as opposed to the legislation, needs some change. The tension arises in considering what, and how much change, is necessary. A powerful anti-gambling lobby has grown in recent years, supported by politicians from across party lines and the press, with a prohibitionist agenda. However, it is the apparent attitude (and indeed competence) of the regulator, the Gambling Commission, that is the most concerning. For a number of years now, the Gambling Commission has not been able to bring itself to say anything positive, or indeed anything not overtly negative, about the industry it regulates. Earlier this year, through freedom of information requests, an industry commentator uncovered that Public Health England had made a fundamental “mistake” in its analysis of suicide prevalence in gambling. Most distressing, the Gambling Commission used the suicide statistic knowing it was “unreliable” and, therefore, knowingly misled the government on the public health risks of gambling.
The Call for Evidence closed on 31 March 2021 and received an incredible 16,000 responses. However, 20 months later the responses have not been published nor has the White Paper, which is expected to set out the government’s vision for change and options for reform. An unconfirmed version of the White Paper was leaked in July 2022, although it is yet to be seen whether that version or a different version will be published.
Uncertainty remains as the White Paper is still awaited. The UK is now on its fifth Prime Minister in six years and the third to have overseen the Gambling Review which remains a hugely controversial and contested issue. Whichever side of the debate one sits on, this perpetual state of limbo is not good for anyone, including gambling businesses and players, and important questions need to be asked, including:
Increased enforcement and regulatory challenge
Anti-money laundering, responsible gambling and consumer protection have been continuing areas of key focus across international gambling sectors in recent years, as reflected in high-profile enforcement action, and this is not set to change. This has been coupled, in the UK, with an increased focus on the accountability of personal licence holders (including CEOs), as reflected in various high-profile enforcement cases. Licence reviews can often take many months, even years, leaving gambling businesses in a prolonged state of uncertainty. The continued escalation in compliance assessments and licence reviews has resulted in significant financial penalty packages, with a record penalty package of GBP17 million issued to Entain Group in August 2022. The UK gambling industry has also witnessed a shift away from negotiated regulatory settlements, with the Gambling Commission instead preferring to impose financial penalties and other sanctions. We are beginning to see licensees exercising the same preference given the unpredictability and unreasonableness of the Gambling Commission, which is also leading to some of the brave challenging the regulator by way of judicial review.
Beyond the UK, in November 2022, the Victorian Gambling and Casino Control Commission took enforcement action against the Crown casino in Melbourne, totally AUD120 million (approximately GBP67 million), for breaching responsible gambling requirements. In October 2022, the New South Wales Independent Casino Commission suspended and fined The Star AUD100 million (approximately GBP56 million) following its investigation into serious failures and misconduct at the casino.
Consolidation driven by the increasing cost of regulation and diminishing profits, along with the liberalisation of gambling laws in some jurisdictions, particularly the USA, has had a significant impact on mergers and acquisitions that involve businesses licensed to provide gambling facilities in Great Britain. Despite the present uncertainty of the British market caused by the ongoing Gambling Review, buyers and investors are attracted to the maturity and reputation of the market, which remains the largest regulated online market in the world with GBP14 billion in gross gambling yield (GGY) generated annually. Online operators, suppliers and brands with proven experience and understanding of operating in a regulated market are an attractive prospect for businesses with limited experience of the same. Recent economic changes, such as the weak pound against the dollar (as at the time of writing in November 2022), is expected to encourage further M&A activity, particularly as US operators prepare themselves for deployment in their home market.