Gambling Update - May 2009


European news concerning the Gambling Sector

Over the past few months there have been promising signs of liberalisation of the gambling sector within the EU both as a result of the European Commission's latest round of proceedings against EU Member States (which continue to limit licensed gambling operators' ability to offer their services) and in legal challenges brought by operators seeking to protect their commercial rights in the national courts. Many will have been disappointed that the European Parliament has voted in support of a non-binding report on the integrity of internet betting which effectively upholds Member States' rights to control gambling and sports betting. On a more positive note the Commission has recently indicated that it considers the US is in breach of international trade agreements by bringing enforcement action against EU based gambling operators.
Click here to read the full article

Reasons for cautious optimism in the US?

The global economic crisis might just be the best thing to have happened in a long time to online gambling operators hoping for a re-opening of the US market. Against the backdrop of increasingly large federal and state deficits, the billions of dollars of tax revenues promised by the regulation and taxation of online gambling must appear increasingly appetising. Add to that the decline in prohibitionist Republican influence in Washington, imminent new proposals for legislative reform from Barney Frank, and the threat of another World Trade Organisation ("WTO") complaint by the EU, and you might just have a recipe for encroaching liberalisation.
Click here to read the full article

Internet Gambling in the United States - Recent Developments

Since our last issue, there have been significant developments in three major Internet gambling cases in the United States. The first was a decision by the Court of Appeals in the Commonwealth of Kentucky, reversing the decision of the Circuit Court holding that 141 domain names were illegal gambling devices subject to forfeiture. The second was a plea agreement entered into by the United States Attorney's Office in the Eastern District of Missouri and David Carruthers, the former CEO of BetOnSports. The third was the settlement agreement entered into by the United States Attorney's Office in the Southern District of New York and PartyGaming.
Click here to read the full article

Levy set to continue indefinitely as further one year extension agreed?

In our last update we reported on the agreement reached between the bookmakers and the Levy Board for the previous year's Levy Scheme (the 48th) to continue for a further year from 1 April 2009 to 21 March 2010. Agreement has now been reached - 6 months ahead of schedule - for the same scheme to continue for a further one year period until 31 March 2011. In addition, a Government review is looking at whether offshore gambling operators should also contribute to the Levy Scheme in the future.
Click here to read the full article

Financial spread betting firms caught up in the regulatory whirlwind

Although the "Turner Review - A regulatory response to the global banking crisis" published by the FSA in March focuses on the regulation of banks (and "shadow banks"), it and the growing international consensus for stronger regulation will impact all financial services firms including financial spread betting firms. At the least they will potentially suffer "collateral damage" as regulators de-risk the financial markets and become more intrusive in their style of regulation. In its discussion paper, issued with the Turner Review, the FSA stated that "the new model of supervision is designed to deliver a more intrusive and direct regulatory style than the FSA has previously adopted...". Already the FSA has dropped the epithet of "not being an enforcement-led regulator" and more recently the strap-line of "principles-based regulation" has been replaced.
Click here to read the full article

Spread betting firms not precluded from looking offshore

While the regulatory burden both in the shape of new rules and emboldened regulators increases, including for financial spread betting firms, what scope is there for mitigating the effects of more aggressive regulation by moving offshore? Usually the primary consideration for a company in any prospective move offshore is tax. However geopolitically these are very uncertain times and work by the G20, the Organisation for Economic Cooperation and Development (OECD) and the European Community is progressively seeking to limit the appeal of offshore "tax havens".
Click here to read the full article

Tax consequences of house raffles

Following on from the article on the legality of house "raffle" schemes in our December 2008 update, this article considers some of the tax issues involved.
Click here to read the full article

Applicability of the E-Commerce Directive to betting chatrooms: Seamus Mulvaney v Betfair

Since its inception in 2000, the Electronic Commerce Directive 2000/31/EC has generated much debate on the liability of businesses providing internet based forum or "chatroom" facilities.
Click here to read the full article

Increased focus on the integrity of betting

A Gambling Commission policy position paper and recent press reports on a Government-appointed task force show an increasing focus on the integrity of betting amid concerns over cheating and corruption in sport linked to suspicious gambling activity.
Click here to read the full article

Potential licence loophole closure and Budget likely to adversely impact bingo industry

Reports suggest that the future of many bingo halls could be in doubt if the Gambling Commission closes a "legislative loophole" in the Gambling Act 2005 ("Act") which bingo operators have allegedly been using to increase the number of high jackpot slot machines they can offer. Many bingo operators were dealt a further blow in the Budget, with the Government's amendments to the bingo tax regime likely to cause further financial worries.
Click here to read the full article

A statutory levy for problem gambling moves ever closer

The Government has announced plans to introduce a compulsory statutory levy on the gambling industry to fund the research, education and treatment of problem gambling - and operators licensed overseas may also be required to contribute.
Click here to read the full article

Gambling Commission/DCMS

The Gambling Commission has appointed a British panel of experts to advise on future research into high-stake, high-prize gaming machines. The British panel's role will be to review evidence and advice given by the existing international panel and ensure that it is relevant from a British perspective.
Click here to read the full article