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UK Online Gambling Law, European Commission And Gibraltar

By: Ryan Alders, Sunday April 7th 2013
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The mandatory stand still period according to the European Commission regulations has ended in respect of the proposed revisions to the United Kingdom online gambling law. However, the legal battle has not yet begun, with affected gambling jurisdictions getting their arsenal ready.

When the United Kingdom wanted to make material changes to their online gambling laws they were obliged to notify the European Commission and provide a draft law. In such cases a stand still period is enforced during which the proposed legislation cannot be enacted. In this case there were complaints received from affected jurisdictions like Gibraltar and Malta and therefore the stand still period was extended. Now that extended period is also over. Hence, the United Kingdom government can proceed with the implementation of secondary licensing and point-of-consumption tax on online and mobile gambling operators accessing the British gambling market. Any operator that does not comply will have its services blocked. The proposal also envisages restrictions on marketing and advertising.

Some four years ago, several leading British online gambling operators had relocated to offshore jurisdictions like Gibraltar and Malta. These jurisdictions levied considerably lower taxes that the United Kingdom and thus enabled the operators to compete with the foreign offshore operators who were also servicing the British online gambling market. The United Kingdom government began to lose revenue on a large scale and the new laws are meant to plug this leak. Over four years the loss has been estimated at over £1 billion. Once this new law is enacted, it would become counterproductive for the British operators to function from offshore jurisdictions and pay double taxes. Also the new laws would set right the earlier competitive imbalance. Hence now jurisdictions like Malta and Gibraltar fear an exodus. Hence these two jurisdictions have been opposing the proposed British law.

The stand still period being over does not mean that these affected jurisdictions or even the European Commission cannot continue to object to act against the United Kingdom government’s Draft Gambling (Licensing & Advertising) Bill. Gibraltar-based online gambling operators have vocally averred that they are prepared to contest the issue in court on the basis of European Union law. They have come together under the umbrella organization, the Gibraltar Betting and Gaming Association (GBGA). The GBGA has raised a fighting fund of £500,000 to institute judicial review proceedings to challenge the United Kingdom measures. It is believed that two QCs have been commissioned to prepare a legal challenge. The basis is that Britain’s plans are in contravention of European Union law because they would offer an unfair advantage to online gambling operators physically located in the United Kingdom.

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