Gambling Comparative Guide -

1 History of and overall attitudes to gambling

1.1 How prevalent are different types of gambling in your jurisdiction? For example, does the current law reflect: (a) Religious or moral objections to gambling? (b) A permissive approach which also seeks to address the social consequences of gambling? and (c) The promotion of gambling as an ‘export' industry?

Gambling has a long history in Great Britain. In past centuries, many forms of gambling were heavily controlled by reference to the places where they could take place or the nature of the participants. However, gambling has never been the subject of an outright ban and gaming houses and betting on horse racing was a common feature of aristocratic entertainment in the 18th century. Indeed, lotteries have an even longer history as tools to raise funds. The Crown used a lottery to fund part of the defence of Britain from the Spanish Armada; and in the 1720s, Parliament used the proceeds from a lottery to purchase the land required to house the collection which now forms the British Museum.

Gambling has often been frowned on by religious leaders. Protestant Christianity in the 16th and 17th centuries regarded it as an immoral activity, and those sentiments continued in the general disapproval found in the temperance groups and Wesleyan and Methodist movements in the 19th and 20th centuries. Religious objections to gambling, however, have never manifested themselves in legal bans and overall, tolerance of gambling as an activity has been widespread for centuries. It is of note that the current legislation, the Gambling Act 2005, repealed a number of previous statutory provisions, the earliest of which dated back to 1710.

Over the past 50 years, Great Britain experienced a significant modernisation of its gambling market. In the 1960s and 1970s, legislation such as the Betting Gaming and Lotteries Act 1963, the Gaming Act 1968 and the Lotteries and Amusements Act 1976 formed a stable if somewhat restrictive regime, controlling land-based gambling. The core principle of that legislation was the tight control of premises at which gambling could take place. Those who wished to gamble should be entitled to have access to such facilities, but nothing should be done to stimulate new demand for expansion of the marketplace. Control also extended to the visibility of gambling, with heavy restrictions on advertising and even the physical frosting of windows for gambling premises.

This repressive philosophy began to be eroded in the 1990s, when the Conservative government under Prime Minister John Major developed the idea of a National Lottery, designed as a way of funding additional spending on the arts, culture and sport. With government explicitly sponsoring and promoting gambling, it was not long before the industry moved to demand greater liberalisation of the wider gambling market – a matter which found legislative voice in the Gambling Act 2005. Promoted by the Labour government under Prime Minister Tony Blair, the Gambling Act 2005 signalled a significant shift in approach. Gambling was considered to be a morally neutral activity forming a normal part of the adult entertainment market. This change of philosophy found its most direct expression in Section 22 of the Gambling Act 2005, which spelled out that the Gambling Commission's role was to uphold and protect the three licensing objectives but, to the extent that those objectives were met, it should to permit the gambling market to expand to its natural economic limits. In short, artificial control over the number of gambling opportunities was removed.

The new legislation catered for online gambling as well as gambling at premises and liberalised the regime relating to advertising. Control of gambling premises was removed from the Gaming Board for Great Britain and the criminal courts and placed instead in the hands of a new regulator, the Gambling Commission, responsible for controlling all forms of gambling. The task of granting and supervising premises licences was placed in the hands of local authorities which also dealt with entertainment and alcohol licences, with each authority being entitled to determine its own policy in relation to casinos.

The following decade saw a gradual but sustained increase in the presence of gambling opportunities in the United Kingdom. Online gambling increased substantially and the United Kingdom became the largest gambling market in Europe. Changes in 2014 altered the liberality of the regime from a jurisdictional point of view, with all foreign operators being obliged to obtain a licence from the Gambling Commission in order to be able to offer services to British citizens.

Over time, as gambling and the perceived harms caused by gambling became more prevalent, the public mood began to shift and the commission embarked on a concerted programme of auditing, investigating, rebuking and often punishing gambling operators for perceived failures in their social responsibility policies. The gambling industry has largely reacted earnestly to this change and, over the last five years, there has been a marked improvement in standards relating to:

customer care;
fairness of terms and conditions;
rights of the public to complain; and
the need for interventions by operators where customers appear to be gambling in a harmful way, or beyond their means.

Recorded levels of problem gambling have reduced substantially as a result and are now at historically low levels.

In 2020, the government announced that it would undertake a comprehensive review of the Gambling Act. However, following a formal call for evidence, the process has become subject to significant delays, mostly due to the COVID-19 pandemic diverting the whole political agenda. At the time of writing, it was said that a white paper was about to be published, but that process has also been delayed by the resignation of Prime Minister Boris Johnson. It now seems unlikely that publication will take place before Autumn 2022. Indeed, there are rumours that the review will be shelved by the new administration under Prime Minister Liz Truss.

The current legislation permits the existence of casinos, adult gaming centres, high-street bookmakers and bingo halls, as well as the location of gaming machines in venues licensed to serve alcohol. It also permits the full range of online/remote gambling. The National Lottery has become established as a national institution – albeit that this year has seen the appointment of a new licensee, with Allwyn taking over from Camelot.

In short summary, almost all forms of gambling are permitted for those of 18 years and over; and currently some forms of gambling (lotteries and some small prize amusement machines) are even permitted for those over 16.

2 Legal and regulatory framework

2.1 Which legislative and regulatory provisions govern gambling in your jurisdiction?

The law on gambling is set out primarily in Gambling Act 2005 (as amended) and, for the National Lottery, in the National Lottery etc Act 1993. There are more than 70 statutory instruments that inform the detailed implementation of the basic regime set out in the Gambling Act. The Act applies fully in England and Wales. It also applies in large measure in Scotland (subject only to some minor modifications which reflect Scotland's different licensing structure for liquor at premises). Two sections of the act apply in Northern Ireland (a minor repeal and an offence relating to chain gift schemes); apart from those provisions, the law on gambling in Northern Ireland is currently reflected in its own legislation (the Betting Gaming, Lotteries and Amusements Order 1985, as substantially amended by the Betting Gaming Lotteries and Amusements Act 2022).

Taxation of gambling is dealt with under the annual Finance Act, which makes amendments to the Betting and Gaming Duties Act 1981.

2.2 Which bodies are responsible for regulating and enforcing the applicable laws and regulations? What powers do they have?

The Gambling Act 2005 created a single regulator for all forms of gambling (now including the National Lottery) in the form of the Gambling Commission. The commission is a statutory corporation with its offices in Birmingham. The main officers of the commission are the commissioners, aided by a staff of licensing officers and enforcement officers responsible for dealing with the day-to-day functions of the regulator.

The Gambling Commission is responsible for, non-exhaustively:

upholding the licensing objectives (Section 1 of the Gambling Act 2005);
issuing operating and personal licences (Part 5 of the Gambling Act 2005);
regulating licence holders and their activities (Sections 99–120 of the Gambling Act 2005);
issuing policies, advice and codes of practice (Sections 23–24 of the Gambling Act 2005); and
investigating and prosecuting gambling offences.

The cornerstones of the Gambling Act 2005 are its three licensing objectives (Section 1 of the Gambling Act 2005) – which are:

to ensure that gambling is conducted fairly and only by those that are suitable to provide such services;
to protect minors and the vulnerable from gambling harm; and
to keep gambling free of crime.

The Gambling Commission has a team of investigating officers with powers to enter and inspect premises and investigate suspected wrongdoing (Part 15 of the Gambling Act 2005). It is a criminal offence to supply false information to the commission (Section 342 of the Gambling Act 2005).

The advertising of gambling is regulated by the Advertising Standards Authority (ASA), which promulgates and polices its own code on the advertising of gambling and the use of prize draws and competitions as sales promotions. Adherence to the code is also a condition of operator licences and so capable of being regulated both by the commission and by the ASA.

Finally, the Financial Conduct Authority retains control of spread betting and binary betting, which are both forms of gambling but which are also essentially forms of financial speculation, and are therefore now considered more suitable to be regulated as financial services.

2.3 What is the regulators' general approach in regulating the gambling sector?

The guiding principle of gambling regulation is that individuals should have the freedom to partake in gambling as part of normal adult leisure activity. Gambling should be permitted provided that the offering of those services does not endanger the licensing objectives. As mentioned above, the Gambling Commission has become increasingly interventionist in the last decade, imposing strict standards and performing regular and detailed audits and investigations of operators. These investigations have led to a large number of substantial fines and financial settlements (eg, including against the operator of the National Lottery) which have proved to be an effective, if somewhat blunt, instrument in driving compliance and higher standards.

The Gambling Commission has a power to prosecute offences committed under the Gambling Act 2005 (and to be clear, operating gambling outside the terms of one's licence constitutes a criminal offence); but generally speaking, the commission reserves its powers of prosecution for those that seek to operate without a licence, while using its powers of review, imposition of financial penalties or licensing conditions and ultimately suspension or revocation of licences to regulate operators. The focus in recent years has been on taking action against licence holders rather than those that seek to operate gambling illegally – in part at least because the process of information gathering and the coercive power of the Gambling Commission is much more easily exercised against operators than the cost and risk of public criminal legal proceedings against those that have no licence.

3 Definitions and scope of gambling

3.1 How is ‘gambling' defined in your jurisdiction?

‘Gambling', as a general description, can be said to cover various forms of entertainment involving gain and loss based on risk. As such, gambling forms part of a wider landscape of activities, including financial transactions, contracts, pure entertainment, sports and other activities. However, at its simplest, English law distinguishes between three forms of regulated gambling: betting, gaming and lotteries.

3.2 What different types of activities are defined in the gambling legislation and what specific requirements apply to each? Please consider: (a) Betting (fixed odds/pool and spread)/betting on lotteries; (b) Gaming (house and ring games); (c) Lotteries/scratch cards and (d) The interface with financial products (if relevant).

(a) Betting (pool / fixed odds/ spread betting)

‘Betting' can be summarised as the making of a bet (normally considered to be the hazarding of value on a future uncertain event or a past event or fact that is not generally known) (Section 9 of the Gambling Act 2005). Various species of bet are distinguished under English law.

Pool betting: ‘Pool betting' (also known as ‘pari-mutuel betting') involves the organiser (‘pool promoter') taking in the stakes from the participants and then, from that ‘pool' of moneys, returning a portion of those funds to those who make a successful prediction, while keeping a proportion of the pool as profit (Section 12 of the Gambling Act 2005). Pool betting also covers betting where the prize is non-monetary or not fixed by reference to the stakes of the players.

Fixed-odds betting: ‘Fixed-odds' betting occurs where the operator (often referred to as a ‘bookmaker') offers odds to potential customers, expressed as a multiple of the stake which the customer will win if their prediction is successful. The bookmaker realises a profit by offering odds to reflect an overround profit (ie, that the mathematical fractional odds, when combined, add up to more than certainty), and which are subsequently adjusted as volumes of bets on a particular outcome are received.

Spread betting: ‘Spread betting' is defined (Section 10 of the Gambling Act 2005) as arising where a bookmaker offers bookmaker offers a ‘spread' of results on a particular index (eg, a cricket score), and the customer decides whether the actual result will be above the upper limit or below the lower limit of the spread. The amount to be won (or lost) is a multiple of the staked amount, depending upon the extent to which the actual result exceeds the spread. Such betting carries with it greater risk to both the bookmaker and the participant, since either party can theoretically lose or win an unbounded multiple of the original stake. The advertising of spread betting is therefore subject to stricter controls.

Betting prize competitions: ‘Betting prize competitions' are defined in Section 11 of the Gambling Act 2005. This new category of betting was primarily designed to cover the playing of ‘fantasy league' contests, which have an entry fee rather than a stake, and involve some form of prediction of an event within the meaning of Section 9. However, the definition is open textured enough to cover other forms of prediction-based skill competition.

Betting intermediaries: A ‘betting intermediary' (defined in Section 13 of the Gambling Act 2005) is someone who organises peer-to-peer betting, in which the bet is struck directly between two end parties, with the operator organising the marketplace of ‘bids and offers', holding the stakes and paying out the winnings (having deducted a small commission). However, the statutory definition is sufficiently broad also to encompass betting agents and brokers. The breadth and uncertainty of the definition can cause not only difficulties for the operators of skill-based prize contests, but also uncertainty in a variety of fields from syndicates to advertisers where a bet is placed as a result of the activities or assistance of third parties.

(b) Gaming (house and ring games)

‘Gaming' is the playing of a game (ie, a game of pure chance or a game that combines skill and chance) for a prize. ‘Sport' is specifically excluded from the definition of gaming (the concept of sport not being further defined in the legislation). In practical terms, ‘gaming' includes casino games such as roulette, blackjack and poker, dice games, slot machines and games such as bingo.

As to the balance of skill or chance, the amount of chance required to fulfil the test is not defined. There is no formal de minimis level, and certainly not a ‘balancing act' to see which of the two factors predominates in the outcome (as is the case in some legal systems). Consequently, any material amount of chance in the game will satisfy the definition. That said, tiny amounts of chance in an otherwise fully skilful activity (eg, the toss of a coin to see who will start a game of chess) are not considered to have the necessary impact on the result and are consequently ignored.

Following a decision in the Court of Appeal (IFX Investment Company Limited and Os v Her Majesty's revenue and Customs [2016] EWCA Civ 436), some have questioned whether certain games which were previously considered to be determined by skill alone (eg, ‘spot the ball') were in fact games of chance. When viewed correctly, however, the limit of the Court of Appeal's decision in that case was to determine that it was possible for the tribunal below to find as a matter of fact that the particular way in which a game was played or judged actually meant that it became a matter of chance and not skill. The test remains a question of fact to be judged in each case. But as a general principle, it is submitted that the proper test lies in determining not whether the ‘average player' can exercise determine the result by skill, but rather by whether there is inherent in the game some external randomising factor which is designed to render the chances in the game more equal between the participants, because that factor simply cannot be predicted. In short, it is not for a court to say that, simply because most players will not have sufficient skill to guarantee winning (or some players will not have sufficient skill to improve their guesses beyond a certain point), the game thereby becomes a matter of chance. That position has a long pedigree in English law, reaching back as far as Hall v Cox [1899] 1 QB 198.

In the context of video games, the winning of ‘in-game' prizes or ‘loot boxes' by chance is outside the definition of ‘gaming', even if the player pays for the opportunity to win them, provided that the resulting enhanced experience is not tradable for real-world value.

(c) Lotteries, raffles and scratch cards

A ‘lottery' is a division of prizes based on a chance event, where the participants pay for the chance to win the prize. Its full definition is found in Section 14 of the Gambling Act 2005. The definition includes both pre-determined lotteries (eg, the purchase of a pre-printed scratch cards) and post-drawn lotteries where there is a draw after all the tickets have been sold. One other term that is frequently used by the public is ‘raffle'. Technically, the term has no legal meaning. However, practically speaking, it is used to describe a species of lottery in which each participant purchases a unique ticket, one half of which is retained by the player and the other half of which is entered in a random draw. The draw therefore ensures a single winner. This may be distinguished from those lotteries in which players may choose their own numbers, and in which it is therefore a matter of chance as to whether the numbers drawn match the selection of none, one, or several of the participants.

Lottery-style schemes that do not include the element of payment (see Schedule 2 of the Gambling Act 2005), or that rely to a substantial extent on skill (Section 14(5) of the Gambling Act 2005), fall outside the statutory definition and are therefore not regulated as a form of gambling. They may either be considered ‘free prize draws' or ‘skill-based contests'. There are countless consumer contests operated as marketing incentives that avoid illegality by these means. For the avoidance of doubt, a requirement to pay for goods at their normal price in order to obtain a chance of winning a prize does not constitute a payment for the purposes of the definition of a lottery (Schedule 2, paragraph 2(c) of the Gambling Act 2005). It might be added that, as a matter of current practice, many abuse the rules relating to the amount of skill that is required to avoid being a lottery or indeed operate schemes of doubtful legality having regard to payment to enter; but enforcement of the rules is currently very lax and so such schemes have grown in popularity.

(d) The interface with financial products (if relevant)

Some forms of speculative investment, contracts for difference or insurance are outwith the strict definition of ‘gambling', but are nonetheless regulated under financial services legislation. Futher, spread betting and binary betting are both forms of betting, but are regulated by the Financial Conduct Authority and not the Gambling Commission.

If an activity fits within the definition of two or more of the categories above (eg, where it is both a form of betting and a form of gaming), there are rules – contained in Sections 16–18 of the Gambling Act – which seek to triage and categorise those activities as a specific form of gambling.

3.3 What are the main mechanisms and features of the control of gambling in your jurisdiction? What are the consequences of breach of the regulations, both for operators and for players?

The fundamental mechanism to ensure that gambling operators obtain a licence is set out in Sections 33–36 of the Gambling Act 2005. The act states that those that provide ‘facilities for gambling' will commit a criminal offence unless they are properly licensed. The offence carries a maximum sentence of 51 weeks' imprisonment and a fine of up to £5,000, as well as the revocation of the licence. The most serious offence under the Gambling Act 2005, however, is that of cheating at gambling (Section 42 of the Gambling Act 2005), which carries a sentence of up to two years' imprisonment. There are a host of other offences including, for example:

inviting someone underage to gamble (Section 46);
illegal advertising of gambling (Section 330); and
promoting an unlicensed lottery (Section 258).

Prosecutions may be brought either by the police or by the Gambling Commission itself.

In addition to criminal sanctions, the commission has a range of regulatory penalties for operators that include:

a written warning (known as an ‘advice as to conduct' letter);
a financial penalty (Section 121 of the Gambling Act 2005);
the imposition of further conditions on the licence; and
ultimately, revocation of the licence (Section 119).

Apart from operators, it is technically possible for those that provide funds for gambling or advertise gambling to commit some of the ancillary offences. However, in practice, it is unlikely that the Gambling Commission would initiate a prosecution against such a third party in relation to these or related inchoate offences where it was possible to identify a licensee as a clearer target for prosecution.

4 Issues of jurisdiction

4.1 What approach do the courts take to the issue of jurisdiction? Where an operator which is physically outside the jurisdiction offers services to individuals within the jurisdiction, is such gambling treated as taking place offshore and outside the control of the authorities? If not, what triggers establish when such gambling is subject to the laws and control of your jurisdiction?

Generally speaking, matters of criminal law are justiciable by the courts of England Wales and Scotland if (and only if) the last act in the actus reus of the crime takes place within the jurisdiction. So, until 2005, a foreign operator could legitimately offer gambling services to citizens of Great Britain without fear of criminal prosecution, because the gambling activity was taking place outside the jurisdiction of the courts of England, Wales or Scotland. However, the Gambling Act 2005 made the offering of gambling services from outside the jurisdiction illegal by extending the territorial scope of main offence contained in Section 33 by the operation of Section 36. There were specific carve-outs for those licensed on a so-called ‘whitelist' of approved jurisdictions or within EU member states.

The concept of ‘long-arm jurisdiction' was further expanded by the Gambling (Licensing and Advertising) Act 2014, which provided that any operator which had equipment in, or which targeted the UK market, or which knew or ought to know that UK citizens were using its services (wherever that equipment is located), must obtain an appropriate operating licence from the Gambling Commission and pay UK gambling duty in relation its business with UK citizens. The old offence of ‘advertising foreign gambling' was repealed, because the strictures of the new regime rendered it otiose.

It is uncertain how many operators from overseas continue to take business from UK citizens. The Gambling Commission has indicated that it believes that the new regime is being complied with and policed effectively. However, the author is not aware of any proceedings or enforcement actions that have been brought since the change in the law and, since gambling offences are not of a type or severity that permit a claim for extradition, it is difficult to see in practical terms how such enforcement could be effected in relation to an operator that ignored the law, but did not have a presence or assets within Great Britain. For the avoidance of doubt, it is not an offence for a UK citizen to gamble with a foreign operator, even if that operator is not licensed under the Gambling Act 2005.

4.2 Can foreign operators provide remote gambling services in your jurisdiction without obtaining a licence? Can licensed domestic operators provide services overseas?

Foreign operators may not provide remote gambling services in the United Kingdom without a licence, as per the answer to question 4.1 above.

For domestically licensed operators, the Gambling Commission has recently imposed, as part of the licensing criteria, an obligation that licensees must be able to demonstrate on objective grounds (in practice, usually a legal opinion from a specialist lawyer) that their operations are legal in all the states in which they do a significant amount of business. Apart from that protection, however, there is no explicit prohibition or control on a British licensed operator from taking business in any jurisdiction in the world, although the power to create such a ban remains in the hands of the secretary of state under Section 44 of the Gambling Act 2005.

5 Remote versus non-remote gambling

5.1 Does the gambling regime in your jurisdiction distinguish between remote and non-remote gambling? If so, how are these defined?

The Gambling Act 2005 distinguishes between remote gambling and non-remote gambling (Section 4 of the Gambling Act 2005). Each form of operating licence under the legislation comes in two forms – remote and non-remote.

Remote gambling: ‘Remote gambling' includes gambling through any form of remote communication (telephone, internet), but not gambling conducted through postal services (eg, the sale of lottery tickets).

Non-remote gambling: Non-remote gambling is generally confined to specific licensed premises, such as betting shops, race courses, casinos or adult gaming centres (and requires a further licence covering the premises themselves, which is issued by the local authority responsible for the area in which the premises are located). There are provisions for temporary licences, which can be obtained for certain premises such as sports arenas which allow gambling to be conducted for a limited number of days each year.

Combined licence: An operator may provide both remote and non-remote gambling under a ‘combined licence'. To give a practical example, a large bookmaker may offer betting through a chain of betting shops, through telephone betting with those shops and through a website that might offer both betting and gaming products. In such circumstances, it would require a betting operating licence (non-remote and remote), a gaming licence (remote only) and a premises licence for each of the shops. As far as telephone betting is concerned, this would be covered either by a full remote licence or, in some circumstances, through an ancillary or linked licence permitting certain remote gambling as part of a non-remote general betting licence.

5.2 Are there any restrictions on the media through which gambling can be provided (eg, internet/mobile telephony)?

An operator that is licensed by the Gambling Commission may provide gambling services to UK citizens via all forms of remote communication (and using equipment that may be located in the United Kingdom or abroad). Equally, a remote operator may be licensed by the commission to offer gambling services to citizens in any jurisdiction in the world using equipment located in the United Kingdom.

6 Licensing

6.1 What types of licences are available? Please consider: (a) Operators; (b) Activities (if relevant); (c) Premises; (d) Key individuals (if relevant) and (e) Equipment (if relevant).

The Gambling Act 2005 controls gambling by reference to three basic points of control:

licences that permit a particular form of activity (operator licences; see Section 65 of the Gambling Act 2005);
licences that relate to specific premises where the public can go to receive gambling services (premises licences); and
people who occupy specific positions of responsibility (personal management and personal functional licences).

(a) Operator licences

The main categories of operator licence are as follows:

a licence to operate a casino (basically to provide all forms of game of chance);
a licence to provide facilities for bingo (a type of game, but traditionally licensed in a different way);
a general betting operating licence (for all forms of betting except pool betting);
a pool betting operating licence;
a licence to act as a betting intermediary;
a licence to make gamine machines available in an adult gaming centre or family entertainment centre);
a licence to manufacture, install or repair gaming machines;
a licence to manufacture or distribute gambling software;
a licence to operate a lottery (large or small society lottery operating licence); and
a licence to operate lotteries as a manager on behalf of such societies (‘external lottery manager').

There are also ‘ancillary licences' that permit non-remote operators to offer a modicum of remote services (eg, permitting a bookmaker to offer a telephone betting service) without the full requirements of a remote operating licence.

(b) Premises licences

The Gambling Act 2005 defines a number of different locations in which forms of gambling can take place, with different restrictions based upon the type of gambling to be performed and conditions imposed by a premises licensing regime (Section 37 of the Gambling Act 2005). There is no upper limit on the number of gambling premises of a particular type that can be granted.

Casinos: Casinos (defined in Section 7 of the Gambling Act 2005) are designed primarily for gaming, in the form of table games and slot machines; but they are also permitted to offer ring games such as poker, as well as betting and bingo. Different sizes of casino are defined by the number of table games and the floor area. There are currently 156 casinos in Great Britain. Some of these are new casinos licensed under the current legislative regime, but a large number operate on what are essentially conversions of old licences granted under the previous legislation (the Gaming Act 1968).

Betting shops: Betting shops (sometimes referred to as ‘licensed bookmaking offices') are entitled to offer fixed-odds and pool betting, and to install a certain number of gaming machines (including, usually, certain ‘fixed-odds betting terminals'). Apart from bookmaker premises, betting is also offered on tracks and at courses during sporting events. In total, there are about 8,000 such establishments in Britain.

Bingo halls: Bingo halls are entitled to offer bingo (main stage and cash-prize mechanised bingo), as well as some forms of gaming machines. Although the playing of organised bingo has diminished over recent years (especially following the introduction of the ban on smoking in public places), there is still a large number of regular attendees at bingo halls in the United Kingdom.

Adult gaming centres and family entertainment centres: There are two different licences for premises which offer machine gaming only – adult gaming centres and family entertainment centres. The former are frequently seen on high streets and offer some higher-stakes gaming machines, while the latter tend to be found at seaside resorts and holiday camps, and are more focused on lower-stakes machines and amusements with prizes.

Miscellaneous: In addition to the above forms of gambling establishment, there are a number of locations where the installation of gaming machines is automatically permitted as a result of an alcohol licence (eg, public houses) or where an application can be made for such machines (in members' clubs and miners' welfare institutes). Furthermore, private members clubs and pubs are also entitled to offer what is known as ‘equal chance gaming' (eg, poker) where the winnings are apportioned between the players rather than there being a house edge (and subject to strict limits on the prize pots available). Some minor forms of gaming are also permitted at travelling fairs.

Premises licensing process: Part 8 of the Gambling Act 2005 places the grant and administration of a premises licence in the hands of local planning authorities rather than the criminal magistrates (it being thought that it should be a matter of local policy where venues such as clubs, theatres, pubs, restaurants, cinemas, nightclubs and gambling premises are located and their opening hours). The details of the application process are outside the scope of the present summary, but it has considerable similarity to the process for alcohol licensing – having regard to issues such as:

the nature of the neighbourhood;
the proximity of schools and churches; and
the potential for public nuisance.

(c) Key individuals

Part 6 of the Gambling Act 2005 sets out a regime for the granting of personal licences for those occupying certain posts in the gambling industry. There are two types:

licences for those who perform a particular management function (eg, finance directors), which are known as personal management licences (PMLs); and
licences for those performing particular technical function (eg, being a croupier), which are known as personal functional licences.

Each form of personal licence is subject to a similar application process as for operating licences, mutatis mutandis (Section of 128 Gambling Act 2005). The licence process is designed to create a guarantee that those occupying a position of trust within a gambling operator are fit and proper individuals, having regard to their honesty and integrity, background history, financial solvency and technical training.

PML holders have a responsibility to report in relation to ‘key events' of which they become aware. As such, the PML process not only represents a badge of trust and quality, but also gives the Gambling Commission ‘eyes and ears' within each operator. Personal licences, as the name suggests, remain personal to the individual.

(d) Equipment

Machinery and hardware: The Gambling Act 2005 recognises that those that make, repair or install gaming machines have a high level of responsibility because the integrity of those machines has a direct influence on the outcome of gambling. Consequently, those involved in the manufacture, repair, installation and maintenance of such machines must hold a form of operating licence, even though they are not the actual operators of the machines themselves (Section 65(2)(f) of the Gambling Act 2005). The rules provide that all machines made by an operator must confirm to certain technical standards imposed by the Gambling Commission, regarding the physical security of the machine, record keeping, random number generation and so on.

Software: In an equivalent regime for gaming machines, those that produce gambling software on equipment based in the United Kingdom require a licence (Section 65(2)(i) of the Gambling Act 2005). However, the scope of the requirement to be licensed has been widened for practical purposes by a condition inserted into all remote gambling operating licences that any software used in relation to gambling with UK citizens must be obtained from someone licensed by the Gambling Commission.

The definition of ‘gambling software' is limited to software for remote gambling, but otherwise the scope of the term is broad. There are sometimes difficulties in determining whether a provider of software (particularly one that provides third-party operators with access to equipment on which the software is hosted) has become so involved in the delivery of the overall gambling process that it should be reclassified as a full operator. There are also difficult distinctions as to whether software that is essentially ancillary to the gambling process (eg, back-office accounting) should require licensing at all.

Software licences come in remote and non-remote form, the distinction being based on whether the software is provided by physical means or remote transfer. In addition to the ‘standard' form of software licence, the Gambling Commission has created two further sub-categories of software licence. The first, known as a ‘host licence', is designed to cover situations where the software provider also hosts that software on its own servers during its operation – as is often the case with modern games which reside on a platform and to which access is granted. The second, known as an ‘umbrella licence', may be useful where software is provided by a group of companies (eg, with one involved in code development and another in marketing). In such cases, the company which has effective control may seek an umbrella licence rather than requiring each company to hold a separate permission.

6.2 Which bodies award and oversee such licences?

Operating and personal licences are the responsibility of the Gambling Commission. Premises licences are the responsibility of the local authority in which the premises are situated. The one exception to this general division of responsibility are small society lotteries which are managed by local authorities, notwithstanding that they are a form of operating licence.

6.3 What are the key features of such licences (eg, term/renewal/any limit on overall numbers/change of control)?

All forms of licence are granted for an indefinite period and are capable of lasting forever (Section 110 of the Gambling Act 2005), provided that the annual fees are paid (Section 100 of the Gambling Act 2005). An operator or premises licence holder may also surrender its licence at any point (Section 104 of the Gambling Act 2005).

The Gambling Commission has the power to review a licence (Section 116 of the Gambling Act 2005) and, if it finds that an operator has breached a licence condition, has the power to impose a range of sanctions (Section 117 of the Gambling Act 2005), including financial penalties and even revocation of the licence.

One important distinction between operating and premises licences is that the former are personal to the operator (and may not be transferred), while the latter effectively attach to the premises for which they are granted and therefore may be transferred with the premises themselves, provided that the intended recipient is the holder of an appropriate licence or has at least applied for such a licence.

An important feature of operator licences is that if the operator is subject to a change of control, an application for approval of the licence must be made to the Gambling Commission. ‘Change of control' is defined by reference to the test contained in Section 422 of the Financial Services and Markets Act 2000, broadly meaning that a change of 10% or more in the ownership or control of the entity will constitute such a change. Practitioners should be particularly careful with this test, since it may be triggered, for example, by a 9% shareholder purchasing merely 2% of the equity in an operator – an event which can, in publicly held stock, take place without much by way of formality or notice. Also note that control is defined not only by beneficial interest, but also by effective voting power or financial control.

So far as the process is concerned, Section 102 of the Gambling Act 2005 prescribes two potential paths – an operator must either:

seek prior approval for a change of control by an application to the Gambling Commission; or
seek approval within five weeks of completion of the transaction concerned.

Failure to make an application within the prescribed time limit will lead to the automatic surrender of the licence.

The application is made by form and with a bundle of accompanying documents. These require the operator to demonstrate three key matters:

the identity of the new ultimate beneficial owners;
the integrity and probity of those owners; and
any changes to the policies, business plan or approach of the operator arising from the change of control.

The Gambling Commission will review the application and seek to assess whether it would have granted a licence to the new owner, as it did to the old. The progress of such an application will depend to a large extent on the simplicity and transparency of the ownership structure. For example, if the ownership structure is opaque and involves offshore companies or trusts, one can expect that such matters will require detailed disclosure. By contrast, if an incoming controller is already known to the commission as a licensee, one can expect the process to be more curtailed. In recent years, change of control applications have become much slower and more time consuming. Although the commission's own targets are to deal with such applications within 12 weeks, some are now taking a year or more to complete.

6.4 What are the substantive requirements to obtain a licence (eg, company established in the jurisdiction/physical presence/capitalisation?)

The process of obtaining an operating licence is detailed and complex, but in fact there are few absolute restrictions. An applicant may be an individual, partnership or corporation established anywhere in the world. The only true requirement is that the applicant have an address in the United Kingdom where documentation can be served (Section 69 of the Gambling Act 2005).

The Gambling Commission will consider the application based upon statutory criteria set out in Section 70 of the Gambling Act 2005, but with a large degree of discretion as to the suitability of the applicant and likely compliance with the licensing objectives. The commission will seek to decide whether granting the licence is likely to prejudice or threaten the licensing objectives. In coming to that decision, the commission will have regard to the following types of questions:

Are the ultimate beneficial owners and controllers fit and proper people to own a gambling business?
Is the source of funds used for acquiring and operating the business legitimate?
Do the proposed management possess the financial resources, skills and training to discharge their functions?
Are the policies of the business sound and likely to provide adequate protection for the public?

At the end of the process, the commission may grant the licence, refuse the licence or grant it subject to conditions that are attached to the licence (Section 74 of the Gambling Act 2005) Certain licence conditions are imposed directly by statute (Sections 89–100 of the Gambling Act 2005) and another group are contained in the standard Licence Conditions and Codes of Practice (issued pursuant to Section 24 of the Gambling Act 2005). A third set of conditions may be imposed individually on licensees in the discretion of the commission.

6.5 What are the formal and documentary requirements to obtain a licence?

Applications for gambling licences are made online through the Gambling Commission's e-filing system. The application consists of a series of questions seeking information on the applicant in order to verify:

its identity and beneficial ownership;
its suitability and expertise to hold a licence;
the source of funds for the business;
a business plan and financial projections; and
details of how the applicant will comply with the various policies and procedures relating to customer identification, anti-money laundering, social responsibility, underage gambling and so on.

Checks extend to understanding the identity of all officers as well as owners with more than a 3% beneficial entitlement (full checks in the form of what is known as ‘Annex A disclosure' take place for those with 10% ownership or more).

6.6 What is the typical timetable for obtaining a licence?

Some applications pass through the process (normally intended to take between 15 and 20 weeks) without difficulty. However, most applications can be expected to take longer – in some cases many months.

The process usually involves a degree of individual investigation and due diligence by the Gambling Commission. Sometimes the decision will be taken by a licensing officer, but in complex cases the decision-making powers of the Regulatory Panel and the commissioners themselves may be utilised.

6.7 What costs are typically incurred in obtaining a licence?

An application for each form of licence requires the payment of an application fee based on:

the complexity of the application; and
the likely turnover of the business in question.

The Gambling Commission provides a free fee calculator. Although the forms themselves are not complicated, potential applicants should seek professional advice in obtaining a licence, if only because the business plans and policies which will need to accompany the application requite a good deal of detailed consideration. Professional costs in preparing the application often substantially outweigh the costs of the licence itself.

7 Ongoing compliance

7.1 What are the operator's rights and obligations under the licence?

Operators granted a licence have the legal right to offer gambling of the type specified in the licence. The principal obligations on a licence holder are to:

operate its business in a fit and proper way, with adequate staff and appropriate policies, and in line with the Licence Conditions and Codes of Practice;
pay the annual fees for the licence;
provide a quarterly return to the Gambling Commission setting out its activities under the licence;
pay gambling duty in relation to its activities; and
report key events to the commission.

7.2 Can licences be transferred? If so, how? What restrictions apply?

Licences are not transferable. The process in relation to change of control of an operator is set out at question 6.3.

7.3 What requirements and restrictions apply to the different types of gambling facilities in your jurisdiction?

In general terms, the requirements for a licensee are formed by a combination of obligations under the general law, as set out in Gambling Act 2005 and the Licence Conditions and Codes of Practice which apply to the licence. Premises licences also carry specific conditions set out in each licence.

8 Penalties and sanctions

8.1 What penalties and sanctions are available to the authorities for breach of the gambling legislation?

Criminal sanctions: The principal offences under the Gambling Act 2005 are out in Sections 33–36 of the Gambling Act 2005. In summary, those that provide ‘facilities for gambling' will commit a criminal offence unless they are properly licensed and operate within the terms of that licence. The offence carries a maximum sentence of 51 weeks' imprisonment and a fine of up to £5,000, as well as the revocation of any licence. There is an equivalent offence in relation to promoting an illegal lottery, under Section 258 of the act, as well as making a gaming machines available for use (Section 242). Finally, there is an offence of advertising of unlawful gambling (Section 330).

A second category of offences are designed to protect minors from gambling. Examples include the offence of inviting a minor to gamble or employing a minor in the gambling industry (Sections 46–47 and 56).

Finally, there are other offences directed at specific behaviour, such as providing false information to the Gambling Commission (Section 342). The most serious offence under the Gambling Act, however, is that of ‘cheating' at gambling, which carries a sentence of up to two years' imprisonment.

Prosecutions may be brought either by the police or by the commission itself; and where an offence has been committed by a company with the knowledge or connivance of its directors, liability can extend to those individuals (Section 341). Criminal prosecutions are generally reserved for circumstances where gambling has taken place without a licence rather than simply in breach of its terms.

Apart from operators, it is technically possible for those that provide funds for gambling or advertise gambling to commit some of the ancillary offences. However, in practice, it is unlikely that the commission would initiate a prosecution in relation to these or related inchoate offences where a licensee was identifiable as a clearer target for prosecution.

In addition to criminal sanctions, the commission has a range of regulatory penalties that include:

a simple warning letter;
a financial penalty (Section 121 of the Gambling Act 2005);
the imposition of further conditions on the licence; and
ultimately, the revocation of the licence.

9 Advertising and marketing of gambling

9.1 What requirements and restrictions apply to the advertising and marketing of physical and remote gambling in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?

Law and offences: The advertising of gambling is dealt with under Part 17 of the Gambling Act 2005. This contains a very broad definition of ‘advertising' (Section 327) – meaning essentially anything which is designed to raise public awareness of a gambling operator or its brand, whether through normal advertising channels, sponsorship or otherwise.

There is a specific offence which relates to the advertising of illegal gambling under Section 330 of the Gambling Act 2005 (eg, which will apply to advertisements for gambling services that are not correctly licensed in the United Kingdom). The offence is committed by the advertiser (which could mean either the operator or, theoretically, the publisher of such an advertisement). There used to be a second offence covering the advertising of ‘foreign gambling' (Section 331), but this was repealed by the 2014 Gambling (Licensing and Advertising) Act, since it was now rendered otiose because of the stricter test of legality created by the requirement for all operators accessing the UK market to hold a UK operator licence.

Technically speaking, the current system does not prevent a foreign operator from advertising its services through advertisements located in the United Kingdom but aimed at those outside. In this regard, a number of foreign operators sought to use the opportunity provided by English football being broadcast around the world to advertise their services to those outside the United Kingdom who might see the advertisements as part of the broadcast (eg, on football shirts and perimeter boards). However, despite the lack of clear legal impediment, the Gambling Commission has suggested that it believes that only those with an operator licence may advertise their services in the United Kingdom and has made strong representations to relevant sporting bodies not to accept sponsorship from unlicensed operators, in order to try to prevent them from exploiting the ‘loophole'.

Regulatory regime: As far as advertising of legal gambling is concerned, the approach adopted is to permit advertising in all media but make it subject to regulation set by the Office of Communications, which in turn has delegated its powers to the Advertising Standards Authority (ASA). The ASA draws up and polices the Codes of Advertising Practice for broadcast and non-broadcast media (known as the BCAP and CAP respectively).

The ASA is a non-statutory body which is funded by the media industry and provides informal guidance on advertising copy and formal rulings on advertising complaints. Its decisions are not legally binding and carry no direct legal weight or sanction. Nevertheless, its codes must be taken seriously by operators – not only because breach of the codes can lead to bad publicity, but more importantly because the Licence Conditions and Codes of Practice which apply to all licences provide that compliance with their provisions is mandatory, and a breach could in theory provoke the full range of sanctions from the Gambling Commission.

The CAP and BCAP codes contain general rules about advertising – basically that advertising should be legal, decent, honest and truthful – but also specific rules relating to advertising of gambling products. These closely resemble the rules relating to the advertising of alcohol. The codes, for example, ban advertisements which are socially irresponsible by:

promoting unwise behaviour;
exploiting public credulity;
suggesting that gambling can provide a solution to financial problems or enhance self-image; or
showing individuals gambling who are or who look under the age of 25.

The overall position is well summarised in Gambling Commission guidance. The rules seek to prevent gambling from being attractive to those under 18 or being seen as more than an entertaining pastime.

The gambling codes have been clarified and highlighted in various ASA decisions (to be found on the ASA website (https://www.asa.org.uk/)). It is fair to say that interpretation of the rules has been both cautious and strict, with several well-known gambling operators having been found to have advertised in ways which break the rules.

In addition to the CAP and BCAP, there is a voluntary code for the industry which contains many of the same restrictions and enshrines the use of ‘BeGambleAware' style warning messages in all ads. It also contains the agreed rules on a watershed for advertising at 9:00 pm. Gambling Commission rules also seek to hold operators accountable for the activities of their marketing affiliates in performing marketing in their behalf and compel operators to display their licensed status.

10 Consumer protection

10.1 What social responsibility obligations apply to land-based and remote gambling operators in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?

All operators are obliged to consider the impact which their activities may have, and to draw up and implement appropriate social responsibility policies. The process relies upon a risk-based assessment of the nature of the business, focusing on the type of gambling and its propensity to give rise to unsafe gambling. For example, the level of risk of inappropriate gambling behaviour – such as gambling too much or too quickly, or chasing losses – is generally considered to be much higher in relation to fast-paced gaming machines than the equivalent risks in relation to the purchase of a low-value lottery ticket. The risks of a person gambling while intoxicated are easier to manage and supervise in a land-based casino than they are online, when the player may be at home. The risks of money laundering or fraud through a bookmaker taking cash sums are potentially higher (or at least different) than those for betting using debit cards. Operators also need to consider the type of clientele which they serve: the risks associated with running a Mayfair-based casino, patronised by wealthy foreign ‘high rollers', are very different from those at a betting shop in small provincial town. The former may need to take care about gambling with politically exposed persons and the potential for money laundering, while the latter may have more concerns over affordability issues.

Having performed its risk assessment, each operator will draw up policies in relation to at least the following topics:

money laundering and financial crime/fraud (including the steps needed and timing of know-your-customer and anti-money laundering checks);
social responsibility and protection of the vulnerable;
combating underage gambling;
bribery and corruption;
customer complaints;
information security;
privacy and data protection; and
marketing.

10.2 What other general consumer protection requirements are of relevance for gambling operators in your jurisdiction?

One of the novel features of the Gambling Act 2005 was to make gambling contracts enforceable for the first time in English law. Until 2005, English law considered ‘wagers' and gaming contracts as a ‘mere spes' (ie, a ‘hope') and therefore too flippant an arrangement to trouble the courts. Indeed, the unenforceability of gambling contracts remains a feature of the law of most other jurisdictions.

However, Section 335 of the Gambling Act 2005 permits the enforcement of gambling contracts and case law has subsequently confirmed that such contracts are to be treated like any other consumer contract, in which the customer is given the legal protections of consumer protection legislation. Consequently (albeit slowly at first), we have now seen a number of cases go before the courts in which customers seek to enforce winning gambles against operators that have been reluctant to pay. In Spreadex Ltd v Cochrane [2012] EWHC 1290, Mr Cochrane was engaged in spread betting and it was found, as a matter of fact, that while away from his computer, his girlfriend's son had placed losing bets through his account. Spreadex sought to enforce the losses by a summary judgment and, in the course of that application, the judge examined the nature of the contract and whether the terms of the contract had been sufficiently drawn to the customer's attention and whether those clauses upon which Spreadex sought to were unfair within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999. The judge held that they were unfair in that case.

In Green v Betfred [2021] EWHC 842 (QB), the claimant had played online slot machines offered by the defendant and won a substantial sum (more than £1.7 million). When he sought to recover those winnings, the matter was investigated and it was found that the wins had been caused by a software error. The operator, Betfred, sought to withhold payment of the winnings, relying upon an exclusion clause in the customer terms and conditions. The case was a classic example of a defendant seeking to rely on an exclusion clause which had not really been properly drawn to the attention of a consumer and was being applied to seek to exclude essentially the very purpose of the contract itself. Justice Foster held that the relevant terms, construed in the way that Betfred sought, were unfair within the meaning of the Consumer Protection Act 2015 and held that the claimant should be entitled to recover the sums due.

Recently, Longley v PPB Entertainment [2022] EWHC 977 (QB) examined the test for unilateral mistake. The case involved a Paddy Power employee taking a telephone bet on a horse race for a stake 10 times larger than appears to have been intended by either party. The case's conclusion (ie, that the test for unilateral mistake required actual rather than simply constructive knowledge) is less important than the general principle that gambling contracts are now treated by courts as falling squarely within the ambit of the normal principles of English consumer contracts.

It might be added that court decisions relating to exclusions are not the only encouragement for gambling operators to make their terms and conditions fair and plain to consumers. An investigation of operator terms and conditions performed by the Competition and Markets Authority in 2016 led betting operators voluntarily to agree to simplify and clarify terms and conditions (particularly in relation to bonus arrangements) in order to ensure that they were fair under the Consumer Protection from Unfair Trading Regulations 2008 and Part 2 of the Consumer Rights Act 2015. Finally, the Licence Conditions and Codes of Practice (7.1.1) provide that operators are under an obligation to ensure that their terms and conditions are fair within the meaning of the Consumer Rights Act 2015.

Consumer contract law is not the only field in which cases have been brought. Calvert v William Hill Credit Ltd [2008] EWCA Civ 1427 examined whether a bookmaker owed its customers a duty of care (particularly with regard to the issue of enforcing self-exclusion). In that case, Mr Calvert, a pathological gambler, made significant losses over a period of months and sought to claim that, had it not been for William Hill's negligence in failing to enforce a self-exclusion request which he had made, the losses would never have been sustained. The judge concluded that a duty of care did exist, but refused to find a sufficient causal link between the breach and the claimant's losses, swayed by evidence that, had Calvert been prevented from betting with William Hill, he would have simply lost an equivalent amount through other bookmakers. So, while the courts have generally been favourable towards the protection of consumer rights, there are also limits on that tendency.

11 Financial crime

11.1 How does the gambling regime interface with money laundering/terrorist financing/proceeds of crime legislation in your jurisdiction?

Gambling operators have an obligation to take steps to reduce the risk of financial crime and money laundering, it being recognised that gambling provides opportunities for criminals to launder the proceeds of their crimes. Over the last decade, there has been an increasing focus on issues of money laundering and betting integrity issues. Although the Gambling Commission has the power to initiate prosecutions, it will normally restrict its investigatory powers to receiving and distributing information for the benefit both of sporting organisations (in the case of betting integrity matters) and the police or National Crime Agency in the case of criminal matters such as money laundering or dealings in the proceeds of crime.

Cheating: Financial crime can take a variety of forms. One point which is often overlooked is the prevention, where possible, of cheating by players using unfair techniques. This is specifically an offence under Section 42 of the Gambling Act 2005. The most celebrated example of cheating (and a case which gave rise to a full analysis of the legal principles) occurred when professional poker player Phil Ivey used a technique known as ‘edge sorting' to make very significant wins in a session of baccarat played at London's Crockford's Club. Genting, the owners of Crockfords refused to pay out the £7 million in winnings made by Ivey, and he therefore instituted a civil claim for recovery of the sums. The case finally came before the Supreme Court, which held that Ivey had used a technique which involved cheating (even if it was accepted that he was not acting deceitfully and believed he was entitled to use to technique to exploit a weakness in the casino's management of the game).

Betting integrity: Another form of cheating is match fixing, where there is interference in the result of a sporting event on which bets are placed to obtain an unfair profit. Match fixing effectively is a form of cheating at gambling and will also probably constitute other offences such as fraud or obtaining a pecuniary advantage by deception. It is regarded as being more serious than other forms of cheating because it has an impact not only on the integrity of the betting industry, but also on sport itself – and is a crime where the bookmaker is, of course, the victim. The Gambling Commission has a specific duty (Section 30 of the Gambling Act 2005) to exchange information with sporting bodies in order to try to monitor potential match fixing. Tackling match fixing is not easy, but the existence of liquid and transparent online markets such as that operated by Betfair, as well as information sharing between bookmakers, has made it possible to see with much greater clarity the state of the overall market for a particular event and therefore to spot irregularities where large bets are being placed contrary to the prevailing market sentiment. Operators are required to share information where they believe match fixing has occurred (Licence Conditions and Codes of Practice 15.1). The Gambling Commission has the power under Section 336 of the Gambling Act 2005 to void any bet which it believes is ‘substantially unfair'.

Money laundering and dealing in the proceeds of crime: The central legislation relating to money laundering is the Proceeds of Crime Act 2002 (POCA). The fundamental mechanism of POCA is to make it a criminal offence for anyone to deal in moneys which are the proceeds of crime, but to provide a defence to those that, upon having a suspicion that the moneys form the proceeds of crime, make a relevant disclosure of that suspicion to the authorities or obtain clearance to perform the contemplated transaction. So POCA is designed to create a type of social contract by which communication of suspicions to the authorities is rewarded by a form of immunity from prosecution.

POCA (Sections 327–329) sets out three central offences of:

dealing in criminal property (by concealing, disguising, converting or transferring that property);
becoming concerned in an arrangement which he or she knows or suspects is a facilitation of the acquisition, retention use or control of criminal property; or
acquiring, using or having possession of criminal property.

Several of the offences may be triggered merely by suspicion, which case law has defined as a belief – that is, any suspicion which is more than merely fanciful.

Those that have such suspicions should notify the National Crime Agency (NCA) using a procedure known as a ‘suspicious activity report' (SAR). One may also seek a complete defence to a prosecution under POCA by application for what is known as a ‘defence against money laundering', in which specific prior permission is sought from the NCA for a particular transaction. POCA further requires that, where someone has a suspicion and makes a report in the form of a SAR, that person must also not do anything which might amount to ‘tipping off' the person concerned.

Money laundering is itself defined in Section 340 of POCA and refers to the three main offences mentioned above, as well as their complementary inchoate offences. However, in layman's terms, it can be described as a process by which criminals seek to hide the criminal source of money. In its classic definition, it consists of three processes:

the placement of money which has come from crime into the monetary system;
the co-mingling of the criminal proceeds with money from legitimate sources so that its origin can be obscured; and
the use of the proceeds of crime to buy legitimate assets which can be enjoyed.

Gambling businesses are prone to being targeted by money launderers, because they are services in which money changes hands (quite often in the form of large amounts of cash), and where sometimes high proportions of money originally paid as stakes are returned to the player in winnings. Gambling thus forms a convenient commercial mechanism for the depositing and withdrawal of large amounts of money (and often its transfer across international boundaries).

All gambling operators have a duty to try to combat money laundering by knowing the identity of their customers and putting in place measures to seek to prevent money laundering from taking place. Simple measures to prevent money laundering include:

limiting the size of stakes;
requiring winnings to be paid to the same account from which stakes came; and
seeking evidence of the source of funds used in gambling.

While all operators have an obligation to take steps to prevent money laundering, casinos are the only category which are subject to the Money Laundering Regulations 2019. The Gambling Commission has provided guidance on how casinos should discharge their responsibilities under these regulations, covering issues such as:

the performance of a risk assessment;
the appointment of a nominated officer to deal with money-laundering risk;
the levels at which enhanced due diligence should be performed; and
the record-keeping and reporting obligations in relation to suspicious activities.

It also obliges casino operators to take steps to identify players who may be politically exposed persons and who may, by such positions, be more vulnerable to corruption, blackmail or embezzlement.

12 Non-gambling activities/social gambling

12.1 What specific activities, if any, are exempted from the gambling regime in your jurisdiction (eg, prize contests/sweepstakes/free prize draws/e-sports)?

Several forms of entertainment fall outside the scope of regulated gambling, despite the fact that they can exhibit many of the features (and even some of the potential harms) which are associated with regulated gambling. The first are forms of gambling which are subject to a specific exemption. The two chief categories are those lotteries which are exempted from regulation under Schedule 11 of the Gambling Act 2005, and which include small-scale lotteries that take place among employees or at charity balls. A further important category of permitted gambling (and one which occurs very frequently but is hardly ever mentioned in legal texts), is ‘private' betting or gaming, which takes place in a residential or domestic setting or workplace (see Schedule 15 Gambling Act 2005), and which requires neither a premises licence nor an operating licence.

Asides from forms of gambling which are permitted without licence, there are a number of types of competitive entertainment or pastimes which are compendiously defined as ‘prize competitions' under Section 339 of the Gambling Act 2005. Prize competitions include any ‘competition or arrangement' which does not constitute either betting, gaming or a lottery. Such prize competitions avoid all regulation and may be operated freely, even for minors (albeit subject to the general principles of civil and criminal law). Two main types of prize competitions can be distinguished (although of course new variants are created all the time).

Free prize draws: A free prize draw is a distribution of prizes by chance, but where either:

there is no cost to enter; or
the cost of entry falls outside the definition of a ‘payment to enter' as a result of the operation of Schedule 2 of the Gambling Act 2005.

As such, free prize draws do not contain one of the essential elements of the definition of a ‘lottery' under Section 14. Examples of payments which are ignored include the payment of normal postage or telephone costs or payment for good or services at their normal price (ie, a price which does not include an uplift for payment to enter the draw). It might be said that there are many free prize draws currently being marketed which probably infringe those rules in one way or another and cross the line from a mere marketing incentive into being a form of commercial lottery, but which are currently not the subject of enforcement proceedings.

Skill-based contests: Skill-based contests are distributions of prizes where skill, and not chance, is the determining factor. The precise amount and type of skill involved will be crucial in determining whether a scheme will avoid the test of being a lottery under Schedule 14, betting under Section 11 or gaming under Section 6 – and it is this multiplicity of tests which can lead to difficulties.

Finally, we add that all forms of sport are specifically exempted from being gambling games under Section 6(2)(b) of the Gambling Act 2005. ‘Sport' is not further defined by the act, though there are clearly a number of definitions in statute which might assist in the interpretation of the word.

12.2 How is ‘social gambling' defined in your jurisdiction and how is it regulated (if at all)?

The term ‘social gambling' does not have a specific legal meaning, but instead generally refers to an industry category (and not one which is not itself clearly delineated). At one level, it can be said to be any activity in which people spend money playing entertainments, but which does not fall within the definition of regulated gambling. Within that general definition, one can distinguish:

video games (which fall outside gambling because the only prize is an extended play session or enhanced user experience);
games which operate on a ‘freemium' model, where players can purchase extended play or better in-game equipment, but where there are no prizes;
games with ‘loot boxes' (ie, where players seek to obtain better in-game experiences by paying for and winning in-game equipment (often distributed on a random chance basis) but – crucially – where those attributes cannot be trade for real-world value; and
casino games played with paid-for chips, but where there are no prizes.

Some of these types of entertainment certainly give rise to similar behaviours as gambling products, and some are subject to some forms of regulation (eg, the PEGI system for video games). But none are regulated forms of gambling.

13 Disputes and legal enforceability

13.1 Are gambling contracts enforceable as a matter of law?

Gambling contracts are enforceable as any other contract under English law pursuant to Section 335 of the Gambling Act 2005. The practical implications of this change as illuminated by case law are set out in question 11.

13.2 In which forums are gambling disputes typically heard in your jurisdiction? What issues do such disputes typically involve?

There are various forums in which gambling-related matters can be heard. One must distinguish between the types of matter which require determination.

For matters related to the decisions of the Gambling Commission itself (eg, the grant of licences, the refusal or revocation of licences, changes of policy, regulatory sanctions) the first tribunal is of course the commission itself. However, all such decisions are subject to a right of automatic appeal by way of rehearing to the Tribunal of the General Regulatory Chamber. Appeals must normally be filed within 28 days.

In addition, all decisions of the commission, as a public body, are potentially subject to judicial review. A summary of the rules of judicial review is outside the scope of this Q&A, but suffice it to say, for example, that the decision as to the award of the most recent licence to operate the National Lottery was subject to just such a procedure, and a previous decision to grant a licence to the Health Lottery was also the subject of a judicial review application by Camelot, the then incumbent licensee of the National Lottery.

For disputes relating to gambling debts, complaints about pay-outs and other disputes between customers and operators, there is always the possibility of court proceedings in the county court or High Court. However, there is also an important and more informal dispute resolution procedure operated by the Independent Betting Adjudication Service. This is not suitable for all forms of disputes, but does seek to resolve a large number of complaints.

13.3 Have there been any recent cases of note?

No answer submitted for this question.

14 Trends and predictions

14.1 How would you describe the current gambling landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The end of 2022 seems likely to be dominated by the review of the Gambling Act, with publication of a white paper expected in the autumn. The white paper has in fact been expected for many months but a combination of the COVID-19 pandemic and a change of leadership of the Conservative Party has led to repeated delays. The review has passed through the hands of no fewer than four ministers, and at the time of writing, is to be overseen by Michelle Donelan MP. Judging by the terms and scope of the original call for evidence, it seems likely that the following areas will be subject to scrutiny and recommendations for reform:

stake limits on certain classes of gambling machines (and also possibly on online slot machines);
potential reforms to block illegal lotteries currently masquerading as free prize draws, skill-based contests and reform in the area of loot boxes;
changes to the approach adopted by the regulator (focusing on some of the criticisms of the Gambling Commission's approach over the last few years);
some form of restrictions on advertising of gambling (most likely to be focused on the restriction of advertising in connection with sport); and
improvements in the ability of customers to make complaints about gambling operators (possibly in the form of an ombudsman).

It is, at this stage, impossible to predict the timing or form of the white paper and still less whether wider political developments will alter its course or possibly even prevent it from becoming legislation. However, it seems likely that there will be important reforms of gambling legislation in the next 24 months – albeit that the scale of the restrictions on operators originally predicted by certain commentators may have been overstated, and the extent of any reform is now likely to be moderate and manageable.

15 Tips and traps

15.1 What are your top tips for gambling operators in your jurisdiction and what potential sticking points would you highlight?

The United Kingdom has always had a lively and sophisticated gambling market. Indeed, the sector turns over a sum equivalent to that of the whole of the British agricultural industry. Although there are substantial critics of gambling and many people do not gamble at all, the majority of the population gambles from time to time; and for the vast majority of those who participate, it represents a normal and pleasurable activity, and a feature of their leisure spend over which they are in full control.

In the last few years, public attention has focused on the harms which arise from gambling, with some sectors of the press running campaigns which actively pursue stories that highlight only social harm and problem gambling. Political parties of all persuasions have reacted and urged a tightening of restrictions on gambling operators – a policy which is also seen as an easy vote winner and which has directly led to the currently anticipated white paper for the reform of gambling law. Throughout the last decade, the Gambling Commission has become an increasingly strident enforcer of gambling standards, with multimillion-pound fines a regular occurrence. In short, despite its ubiquity and popularity, gambling is rarely spoken about in a positive light.

It is instructive to compare this position with the other major ‘adult entertainment' industry in the United Kingdom: the sale of alcohol. There can be no question that the consumption of alcohol is very popular and no doubt that overuse of alcohol causes serious social issues – in terms of not only the negative impact on health, but also the amount of violence and crime which is associated with drunkenness. Yet the reaction of the public and politicians to the sale and consumption of alcohol is generally positive or neutral. While campaigning politicians are regularly seen pouring pints in pubs or offering incentives to ‘eat out to help out' after the COVID-19 pandemic, it is hard to imagine them posing for a photo opportunity in a casino or even admitting that they gamble themselves.

The coming months will mark an opportunity for the gambling industry to make its case in public view when the white paper on the proposed reforms to gambling law is published and debated. While it seems now as though some of the most drastic predicted restrictions on gambling will be diluted, the gambling industry will still have to fight its corner if it is to ensure that its ability to advertise and operate is not substantially curtailed, and that it can avoid the restrictions on stakes which some have advocated.

The gambling industry has not yet managed to find an effective sector champion which can put forward a balanced and positive view of its contribution to the entertainment sector (eg, as the Portman Group does in promoting alcohol). Yet there is no reason why the positive social aspects of gambling cannot be used to counterbalance the usual narrative of social harm. Lotteries have proved an incredibly important tool for charities during the COVID-19 pandemic – particularly since the ability to raise funds by other means (eg, street collections, sponsored mass events or charity dinners) was severely curtailed. Bingo still regularly attracts more than 4 million players in the United Kingdom and serves as a social hub for many (and in that respect is five times more popular than the country's churches). The betting sector makes a huge contribution to professional sport: professional horse racing would not exist in the United Kingdom in its current form were it not for the support of gambling operators, to say nothing of the significant amount of sponsorship of football, darts, snooker and other popular activities.

Of course, the gambling industry must continue to make efforts to control harm and be vigilant in protecting the young and vulnerable; and those that do not take this issue seriously, or that ignore the risks in pursuit of overaggressive policies or a lack of appropriate interventions, deserve to be punished by the regulator and shunned by others in the industry. A public focus on non-gambling activities which can give rise to very serious and even addictive harms – such as social media and videogames – is also long overdue.

But it is now time for two things to happen:

The gambling industry must make plain the steps that it has taken to reduce harm and the positive impact that it has on society; and
Those that regulate and legislate must recognise and applaud the steps that have been taken by the industry over the last decade, and provide the public with a fairer and more balanced picture of the gambling industry so that informed judgements can be made about the benefits and harms of a whole range of leisure activities.

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UK: Gambling Comparative Guide