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Gambling Commission Submission to the Australian Online Gambling Review

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Gambling Commission Submission to the Australian Online Gambling Review Gambling Commission submission to the Australian online gambling review Inquiry by Joint Select Committee on Gambling Reform into Interactive Gambling – Further Review of Internet Gaming and Wagering June 2011 Contents 1 Introduction 3 2 The Gambling Commission 3 3 The Gambling Act 2005 4 4 Remote gambling 5 5 The Gambling Act 2005: Definition of gambling 5 6 The Gambling Act 2005: Definition of remote gambling 5 7 Licence Conditions and Codes of Practice 5 8 Remote technical standards 6 9 Betting exchanges 7 10 Developments in remote gambling 7 11 Betting Integrity 10 12 Conclusion 14 2 1 Introduction 1.1 This document provides information in response to questions outlined in the 17 May 2011 annoucement by the Joint Select Committee on Gambling Reform on the further review of internet gaming and wagering. 1.2 The responses to the questions in the paper are covered throughout this document and the following highlights the sections in which the answers can be found: (a) the recent growth in interactive sports betting and the changes in online wagering due to new technologies – covered in section 10 (b) the development of new technologies, including mobile phone and interactive television, that increase the risk and incidence of problem gambling – covered in section 10 (c) the relative regulatory frameworks of online and non-online gambling – covered in sections 2 – 8 (d) inducements to bet on sporting events online – covered in section 7.3 (e) The risk of match-fixing in sports as a result of the types of bets available online, and whether certain types of bets should be prohibited, such as spot-betting in sports which may expose sports to corruption – covered in section 11 (f) the impact of betting exchanges, including the ability to bet on losing outcomes – covered in section 9 (g) the implication of betting on political events, particularly election outcomes – covered in section 11 (h) appropriate regulation, including codes of disclosure, for persons betting on events over which they have some participation or special knowledge, including match fixing of sporting events – covered in section 11 1.3 It is noted that the Interactive Gambling Act 2001 prohibits interactive gambling. The Gambling Act 2005 permited interactive gambling in Great Britain subject to regulation by the Gambling Commission (the Commission). 2 The Gambling Commission 2.1 The Commission was set up under the Gambling Act 2005 (the Act) and was formally established in October 2005. It has taken over the role previously played by the Gaming Board for Great Britain in regulating casinos, bingo, gaming machines and lotteries. 2.2 The Commission regulates all commercial gambling in Great Britain. It is not responsible for regulating spread betting or the National Lottery which are the responsibility of the Financial Services Authority and the National Lottery Commission, respectively. The Commission is also responsible for advising local and central government on issues related to gambling. 2.3 The Commission is a Non-Departmental Public Body, sponsored by the Department for Culture, Media and Sport. It operates at arm's length from government and its advice is independent. Its work is funded by licence fees from the gambling industry. 3 3 The Gambling Act 2005 3.1 The Act which was passed by Parliament in April 2005 and which came fully into force on 1 September 2007 contains a new system to regulate the provision of all gambling in the UK. 3.2 In exercising its functions under the Act the Commission is under a duty to pursue, and wherever appropriate to have regard to, the licensing objectives, and permit gambling, in so far as the Commission thinks it reasonably consistent with pursuit of the licensing objectives. The licensing objectives are: preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime ensuring that gambling is conducted in a fair and open way, and protecting children and other vulnerable persons from being harmed or exploited by gambling. 3.3 The Commission’s functions in relation to licensing and regulation can broadly be categorised as those of licensing, compliance and enforcement. In particular, the Commission has the power to: determine applications for operating and personal licences, specify the (general and individual) conditions to be contained in such licences, limit the duration of such licences, and determine applications to vary or renew operating and personal licences. This is key in terms of ensuring that only suitable operators are involved in the provision of gambling. undertake activities for the purpose of assessing compliance with the Act and with any licence condition, code of practice or other provision made by or by virtue of the Act, and also for the purpose of assessing whether an offence is being committed under or by virtue of the Act (including the power to request information from operating and personal licence holders under section 122 of the Act, to commence reviews under section 116 of the Act, and to carry out inspections under Part 15 of the Act) take regulatory action against an operating or personal licence holder following a review under section 116 of the Act (including the power to issue a formal warning, to attach, remove or amend a licence condition, to suspend or revoke a licence, and to impose a financial penalty), to void a bet and require repayment of any money paid in relation to it, and to investigate and prosecute offences committed under the Act 3.4 The Commission issues operating licences for the following gambling activities, for which remote versions for those operators that locate remote gambling equipment in Britain are also available: Betting (including fixed odds betting, pool betting and betting exchanges); casino (including casino games and poker); bingo; lotteries and external lottery managers; and software developers 3.5 Remote versions of the above licences are issued to those operators that locate remote gambling equipment in Great Britain or provide gambling by remote means. Non-remote licences are issued to operators with premises based in Great Britain and also require a premises licence from the local authority. 3.6 The Act permits operators regulated in EEA States and in whitelisted jurisdictions to advertise and offer services to UK consumers. While the Commission does not regulate those operators we have worked to establish agreed good practice guidelines with other 4 regulators. Clearly it is in the interests of both gambling operators and their customers to have as much common standards and approaches to compliance and enforcement as individual countries’ domestic legislation and culture permits. The eGambling working group of the International Association of Gambling Regulators has shared good practice and published good practice guidelines for eGambling. These can be found at http://www.iagr.org/ 4 Remote gambling 4.1 The regulatory requirements for remote gaming come from: The Gambling Act 2005 Licence conditions and codes of practice Regulations made under the Act Remote technical standards, security requirements and testing strategy 5 The Gambling Act 2005: Definition of gambling 5.1 Section 3 of the Act defines gambling as i) gaming (a game of chance); ii) betting; and iii) participating in a lottery. 6 The Gambling Act 2005: Definition of remote gambling 6.1 The Act put in place for the first time a framework for regulating internet gaming (ie Casino and Poker). Previously only bookmakers were permitted to accept bets by remote communication as an extension of their premises based activity; remote gaming operators were not permitted to be based in Britain. 6.2 Remote gambling is defined in the Act (section 4) as gambling in which persons participate by the use of remote communication (ie internet, telephone, television, radio or other technology for facilitating communication). 6.3 There are no restrictions on the number of remote operating licences that the Commission can issue (with the exception of pool betting on horse racing which is restricted to one licensee) but applicants need to demonstrate that they are fit and proper to hold an operating licence. 7 Licence Conditions and Codes of Practice 7.1 The Commission has developed general licence conditions and codes of practice that govern how gambling facilities are provided and managed, and how gambling is conducted, with which the holders of all operating licences must comply. 7.2 The Commission’s Licence Conditions and Codes of practice (LCCP)1 set out the rules which operators must observe to meet the Commission’s three licensing objectives. Provisions within the conditions and codes cover issues including the promotion of responsible gambling, marketing and self exclusion. For example, the following provisions are relevant to all licensees, but this is not an exhaustive list: report suspicious betting activity to the relevant authorities; adhere to regulations for the prevention, detection and reporting of money laundering; employ stringent age verification checks and other key social responsibility measures; periodically report activity such as revenue, amount of customer funds held and other key gambling related information; 1 More information on the Gambling Commission’s Licence Conditions and Codes of Practice, October 2008, can be found at Gambling Commission - Licence conditions & codes of practice for the remote sector 5 report significant events and provide information about their business that enables the Commission to consider the ongoing suitability of licensees; comply with technical and information security requirements and undergo independent testing of gambling systems before they are released; and make contributions to research, education and treatment. 7.3 The LCCP code 4 on marketing also sets out requirements on marketing incentives/inducements on all licensees. The code aims to balance operators’ legitimate use of inducements and other marketing incentives to differentiate themselves from competitors and to attract customers against the risk that the inducements are frustrating the licensing objectives (for example, by encouraging loss-chasing).
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