The New Isle of Man

Months after the Isle of Man's demise as a premier I-gaming center, the jurisdiction has made numerous changes to return to being a desirable tier-one destination. The revamp has also included the welcoming of IT and entertainment businesses outside the I-gaming space.

"What we're looking at eventually is a one stop shop, where you can have everything on the island from the island." - John Gilmore IOM Department of Trade and Industry

Status Check

The Isle of Man last appeared on the I-gaming radar screen in September 2003 when Littlewoods' left the island to relocate in Curacao. In September 2001, Littlewoods was among the first three operators to receive licenses to operate online casinos in the jurisdiction, but just two years later it was the last of five to shut down or relocate.

The Isle had sought to create a respectable tier-one regulatory environment, but inevitably its requirements were too expensive and time consuming for its operators.

Persisting and Adapting

After the loss of Littlewoods, the Isle of Man's government declared that it wished to continue pursuing I-gaming licensees and would remain a tier-one jurisdiction. Regulatory changes began taking place immediately. The first such change was the appointment of an e-gaming "ambassador" to investigate how the Isle could best meet the needs of the industry and work to develop and promote the Isle as a leading e-commerce and I-gaming environment. The Department of Trade and Industry chose former Rank Interactive director John Gilmore, who has over 30 years of experience in the global gambling sector, to fill the role.

Since his appointment five months ago, Gilmore has advised the Isle of Man's government to make some key regulatory adjustments that should make the jurisdiction a more favorable destination for operators.

The Isle previously prohibited some its operators from offering poker and progressive jackpots--two of the largest money-makers in the business. Gilmore's first major action was to convince the Isle's regulatory authorities to permit poker and progressive slots by proving to them that anti-collusion and anti-fraud software had improved significantly enough in the last few years to minimize the threat of cheating.

Gilmore also simplified what used to be a very tedious and costly certification process. The government no longer requires the inspection of every site adjustment before the operator may initiate a change. Now certified software no longer needs approval for changes unless those changes are made to the random number generator or the rules and regulations of games.

Another crucial change that Gilmore helped implement was the removal of a hefty $2 million dollar surety bond that operators were required to have in place for protection against players with outstanding money. Now an insurance bond, the price of which is negotiable, serves as valid protection, making the Isle a much more approachable place for smaller operators.

Yet despite the changes, the Isle still has no online casino operators and no immediate prospects.

"It would be wrong for me to say that they are clamoring because we are fighting from behind the line on this one, and we're only at the moment telling people how we've changed and how we've made it a lot easier," Gilmore said. "So that's what we're trying to do at the moment--redress that sort of exodus and that bad publicity we had up until September last year. But we're trying."

The recent transfer of e-gaming from the governance of the Department of Home Affairs to the Department of Trade and Industry should help the Isle promote itself.

"The Department of Home Affairs is a regulatory body," Gilmore explained. "They license people and they regulate. So there is no way that they could promote and develop. So I managed to take that away and stick it into the Department of Trade and Industry, which is the commercial arm of the government, where we can do the developing, promoting and advertising and go out and seek people, which has made it a lot easier. It gives a lot more opportunity to do what we want to do and to sort of shout about it as well."

An E-Commerce Mega-Center

Setting online casinos and their disastrous past aside, the Isle seems well on its way to becoming a burgeoning e-commerce capital, due largely to its very low tax regime. By 2006, there will be absolutely no corporate tax on businesses on the Isle.

Two Irish sports books, Paddy Power and Chronicle, have launched from the Isle within the last few weeks. The bookmakers pay a 1.5 percent tax on their gross gaming yield on all bets outside of the United Kingdom. They must pay a 15 percent duty on bets to the United Kingdom because of an agreement with U.K. Customs that allows the operators to advertise and do business with U.K .citizens as long as they pay an equal tax rate. Paddy Power and Chronicle are the only bookmakers on the Isle, but Gilmore said there are already a couple of other potential licensees in negotiation stages.

Gilmore said the low tax rates are also beginning to attract software and alternative payment solution providers as well as several multimedia firms. Payment solution provider Debit Direct and KYCOS, a company that out-sources "know your customer" due diligence, have already established themselves on the Isle.

"What we're looking at eventually is a one stop shop," Gilmore explained, "where you can have everything on the island from the island."

The Isle of Man already has a blossoming multimedia industry. Computer games company IncaGold migrated to the Isle in November, and since then the company's CEO, Richard Holmes, has brought two more of his businesses: LudiArena, a mobile phone gaming portal that allows world-wide gaming over current generation mobiles, and Rainbowkidz, an online educational community for younger children. Holmes has also pledged to help the Isle convince other businesses to establish headquarters on the Isle. One such company is a Scandinavian firm that is planning an animated movie/game project. The island already has a film studio, where another animation company called Lough House operates. Lough House is developing two games with IncaGold.

Brian Hammond, the Isle of Man's development manager for inward investment specializing in business, sees a huge potential in this area.

"All these businesses are locating around the film studio, so we're hoping to have a media village there," Hammond explained. "And we're hoping to build on to that. We will be attending the E3 Expo in Las Angeles alongside IncaGold later this year, and we're going to be putting out the message that if you want to come from the States and market into Europe, then the Isle of Man is an excellent place because you have all the benefits of an offshore jurisdiction, but you've got free trade with the European union. By the end of the year we hope to have a nice nucleus of multimedia skills."