Isle of Man: An Introduction To The Isle Of Man’s Online Gambling Industry

Last Updated: 14 June 2012
Article by Appleby  

The Isle of Man Gambling Supervision Commission ("GSC") is an independent statutory board established in 1962, responsible for the regulation of all forms of gambling (other than the National Lottery) in the Isle of Man, including both land based and online operations. The GSC has a duty to protect the reputation of the Isle of Man but must also, where possible, ensure that the Island's online gambling companies can compete effectively throughout the world.

The Isle of Man's Department of Economic Development is responsible for the promotion and development of online gambling on the Island and offers supplementary help and support regarding the establishment of any online gambling business on the Island.

World Class IT Infrastructure

Conducting online gambling business in any jurisdiction requires an excellent source of advisers and service providers, so it is reassuring to potential online gambling companies that the Isle of Man is a tier one jurisdiction with excellent legal, accountancy and fiduciary firms available. The Island's IT infrastructure is world-class with leading-edge fixed and mobile telecoms networks, numerous disaster recovery and hosting facilities and highly-resilient bandwidth connectivity. Furthermore, it offers a number of economic benefits, from a zero percent tax regime to structured financial assistance for relocating businesses. For 2010/2011 the corporate tax rate for non banking and non property related companies in the Isle of Man (including online gambling companies) is zero percent (although duty is payable for online gambling companies). There is no capital gains tax, no stamp duty, and no inheritance or succession tax on the Island. In addition, despite economic turmoil in the world, the Island has retained its triple-A rating from Moody's.

The Isle of Man remains one of the countries named in the "white list" under the UK's Gambling Act 2005 and therefore Isle of Man operators are entitled to advertise their services in the UK. This means that the Isle of Man gambling jurisdiction meets the UK Government's regulatory requirements regarding the openness, fairness and security of the licensed online gambling operators.

The Isle of Man Government and the private sector have worked hard to ensure that the Island has a world class infrastructure and full range of support services in place for the gambling industry. The Island is innovative in the field of online gambling and is ahead of the European Union when it comes to online gambling, licensing and regulation. The primary legislation regulating the online gambling industry in the Isle of Man is the Online Gambling Regulation Act 2001 ("OGRA").

OGRA covers all online games, betting and lotteries that:

  • use telecommunications (phones, internet, servers, etc.);
  • involve players betting money (or money's worth); and
  • incorporate any element of randomness or chance.

In addition to compliance with OGRA, operators who intend to establish in the Isle of Man must satisfy the following criteria:

  • they must establish a Manx company;
  • they must have at least two local directors, who must be individuals and not corporate entities;
  • they must appoint at least one resident designated official, or where the designated official cannot reside in the Isle of Man, an operations manager;
  • they must register players in the Isle of Man and their servers, where the bet is struck, must also be on the Island; and
  • gambling and trading accounts should be with a bank in the Isle of Man.

The GSC recognises the importance of having a clear licensing framework and clarity in relation to its law. Accordingly, in February 2010, new regulations were put in place which set out explicitly what actions amounted to licensable activity. OGRA excludes certain established activities from its scope despite their possible connection with telecommunicationrelated gambling activity.

The Online Gambling (Exclusions) Regulations 2010 make it legal for online gambling companies to locate their non-gambling related activities (such as marketing, administration, software downloads, customer support, and relay servers) on the Island without the need for an OGRA licence.

Operators that are not licensed in the Isle of Man can also make use of the Island's premier IT infrastructure in relation to disaster recovery services under the terms of the Online Gambling (Disaster Recovery) (No. 2) Regulations 2007.

A business undertaking licensable activities for the purposes of OGRA will need an OGRA licence, this permits the full spectrum of gambling activities outlined in OGRA to be undertaken and comes with a set of conditions and other requirements, most of which are generic, some of which may be specific.

A sub-licence can be obtained if the applicant wishes to operate exclusively with a technology provider with a full OGRA licence regulated by the GSC.

First Mover Advantage

The Isle of Man Government was one of the first jurisdictions in the world to introduce legislation specifically designed to regulate online gambling. Following further recent changes, the licensing and regulatory controls are now more responsive to the needs of the gambling and online gambling industries.

The Online Gambling Regulations (Amendment) (Network Services) Regulations 2011, which came into effect in July 2011, introduced a further type of activity that can be conducted under licences granted by the GSC as they allow the operation of network gambling on Isle of Man infrastructure.

The Isle of Man's online gambling system is now in three tiers: network services licence; standard licence; and sublicence. The level of licence required is dictated by the type of business to business relationships a company intends to pursue and covers all gambling activities.

The Isle of Man's online gambling offering is an important element of the gaming services provided in the three Crown Dependencies including the Bailiwick of Guernsey (particularly Alderney) and, more recently Jersey.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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