Alderney Teams Up With Guernsey

In an effort to stay competitive as the UK moves forward with an overhaul of its gambling laws and tries to lure offshore interactive gaming companies back, officials with the Alderney Gaming Control Commission announced a new partnership with the island of Guernsey.

The AGCC announced on Tuesday that regulations would be changed to allow for the commission to regulate e-gambling transactions that take place in Guernsey.

In an official release announcing the decision, the AGCC said that many current and future operators in Alderney expressed concern over the technological infrastructure of the island when compared to that of the rest of the UK.

The industry is expected to continue to grow with the new UK gambling laws in place. The growth will only drive up demand for the telecommunications foundation and bandwidth requirements throughout Alderney and other jurisdictions.

Currently, the Alderney operates off a microwave link that has proven fairly stable for the industry. But Guernsey is linked via multiple fiber optic cables to both France and the UK over an SDH (Sonnet) system, offering more reliable and quicker technology for licensed operators.

Not only will Guernsey offer more reliable linkage for operators, but the cabling bandwidth availability in the terabit range will exceed any that is currently offered in other online gambling jurisdictions, the AGCC said.

The partnership with Guernsey will also mean that the risk associated with a single telecommunication mast in Alderney can be addressed. By only having one microwave link the infrastructure has a single point of failure in the event of a major disaster, an issue that has long been a concern to e-gambling license holders in Alderney.

André Wilsenach, the CEO of the Alderney Gambling Control Commission, said the new agreement will create technical advantages for licensees, and could attract news ones, as they will now be able to host their servers in either or both locations.

Not only will licensees now have a choice of telecommunication and hosting providers, but it will allow for improved integration of e-gambling, e-banking and e-commerce, he said.

Although no other official decisions were made, the agreement with Guernsey could just be the tip of the iceberg for other changes in the AGCC's regulations.

Regulators are considering amending their code to do away with language that currently requires licensees to have a paid representative on the island.

Wilsenach said that licensees have long questioned the clause in the regulations and now that the UK is becoming a viable option for them the AGCC has to consider the ramifications.

"The industry is currently paying the price for something that is not making commercial sense," he said. "Investors have asked us why they need to employ people in the island who cannot physically and otherwise contribute to the business."

The idea of having a paid representative of the company on the island first was designed for the online sports betting industry out of necessity, Wilsenach said.

"The concept of nominees was included in the betting legislation and got transferred to the e-gaming legislation," he said. "It probably made sense in the betting legislation because of the number of staff the industry would have needed in the island, but it doesn't for e-gaming because the industry is remote-controlled."

Alderney has long been a mainstay jurisdiction for the online gambling industry. Last year the island was able to generate £767,794 in revenues off of licensing fees and other costs from the industry, in 2003 the island netted £535,502 from operators.

In December 2004, there were 14 online gambling companies licensed in Alderney including Ritz Interactive, SkyBet, Blue Square Gaming, Virgin Games and Cantor Casino. It is expected that more companies will apply during the course of this year.

But Wilsenach said that if the island wants to keep e-gaming revenues from decreasing it has to re-evaluate its approach with the industry.

"We need to try and develop both the regulatory and investment environments as much as possible if we wish to remain competitive with other offshore jurisdictions," he said. "I think Alderney has been successful in establishing a very good reputation for itself. We are a highly regarded e-gaming jurisdiction."

The UK Gambling Bill was approved earlier this year but it isn't expected to go into full effect until 2007-08 as regulations have to be put in place and technology synergies have to be met.

Even with a possible threat from the UK pending, Wilsenach is confident that Alderney can remain is a leading jurisdiction for the industry.

"There are still a number of uncertainties surrounding the UK legislation. The UK is now in a situation where it has to employ knowledgeable staff," he said. "They also have to introduce secondary legislation and nobody knows what the gaming taxes are going to be like and whether the UK will be able to compete with Alderney and other offshore jurisdictions."