Online Gambling Laws in the UK

The United Kingdom of Great Britain and Northern Ireland is a sovereign state off the coast of Western Europe. The UK consists of England, Northern Ireland, Scotland, and Wales and has 14 overseas territories. A member of the European Union since 1973, the UK is also a member of NATO, the United Nations Security Council, and the Commonwealth of Nations.

Gambling has been popular in the UK for many years. The lottery was first regulated in the 1930s, and formal taxation laws for other types of gambling were instituted in the 1960s for casinos and betting shops. The Betting and Gaming Act of 1960 established laws pertaining to commercial bingo calls and allowed for the official licensing of membership based casinos, as well as the regulation of sports betting. The Gaming Act of 1968 then allowed larger, open commercial casinos and officially established the National Lottery.

In 2010, gambling contributed only .5 percent of the Gross Domestic Product but totaled a substantial £6 billion. The industry employs over 100,000 people and generates £700 million in taxes.

The Gambling Commission regulates the gaming industry in the UK under the Department for Culture, Media, and Sport (DCMS). Parliament approved this structure under the Gambling Act of 2005 to control all forms of gambling. The bill was effective in September of 2007. Licensing oversight was given to local authorities from the Magistrates’ Courts. in essence, the Act stated that gambling was to be conducted in a fair and open way while preventing children and others from being exploited or harmed, and keeping it from contributing to crime or criminal behaviors.

The Gambling Act also allowed for the establishment of larger, resort-style casinos in the UK and addressed lotteries by regulating those deemed illegal and instituted regulations on gaming machines. Internet poker was also included in the legislation, and remote gambling through electronic communication devices was legalized whether licensed by the Gambling Commission or any country in which gambling is legal.

Internet gambling grew each year after its legalization, and in 2010, surveys showed that more than 10 percent of adults gambled online regularly, an increase from the 7 percent figure given in 2006, though the majority of that number was comprised of lottery participants. Another report showed that the UK yielded £660 million between April 2010 and March 2011 from online gambling alone. The UK online gambling industry employed more than 6,000 employees in March 2011, though that number was down from nearly 9,000 in 2008.

The 2005 Gambling Act also established Gibraltar as an important part of UK gaming regulation, and the Gibraltar Regulatory Authority, which was established in 2000, was given the responsibility to officially begin operations in 2006 to regulate online gambling sites in its jurisdiction.

Some in the UK have felt that the Gambling Act of 2005 was outdated, and in February 2012, a bill was introduced to the House of Commons. The Offshore Gambling (Licensing) Bill is a reform of the earlier legislation and seeks to make licensing more stringent and revenue taxes clearer. Further, the legislation seeks to tax all companies that make money from British customers and restrict licensing to operators located in the UK, as approximately 90 percent of internet gambling is supplied from outside the UK borders. The new law would pertain to all forms of gambling, though sports betting and horse racing are foremost in current discussions. Said proposed bill is currently on hold.

The UK is the home of the Alderney Gambling Control Commission, through which most licenses are process and regulated.
In order to advertise in the UK, a gaming site must be white-listed. This means that the jurisdiction where the gaming site is hosted must meet regulatory requirements in the UK. Most gaming jurisdictions are white-listed with the notable exception of the Kahnawake Gaming Commission.
Gaming sites are also under the scrutiny of The Advertising Standards Authority (ASA). Gaming sites that advertise in the UK may be reprimanded by the ASA for misleading advertising. Popular betting exchange site Betfair has twice been reprimanded for misleading advertising.

UK Licenses

Remote Gambling Operative licenses will be issued to online gaming sites registered in the UK. Licensees must operate from within the boundaries of UK territory but can service customers around the world.

License holders must submit to strict financial auditing, as well as independent testing of the random number generators of poker rooms. Licensees are also required to pay out on bets, as they are held accountable to the UK government.

Licenses available in Gibraltar include bookmaker, betting intermediary, gaming operator, gaming machine, lottery promoter, pool promoter, or remote gambling entity.

UK Taxes

The Remote Gaming Tax is deducted from UK-based gambling site profits. The tax is currently five percent.

The UK demands a tax of 15 percent on the gross profits of online poker operators. This applies to all companies servicing customers in the UK, no matter where their servers are based.

The Gibraltar tax rate is one percent.