I-Gaming Industry Reacts to Passage of UK Gambling Bil

The I-gaming industry is applauding the final passage of the U.K. Gambling Bill, but the exact implications won't be known for sometime.

The bill, which revamps the country's gambling laws, was given Royal Assent on Thursday, although it isn't likely to take its full effect until 2007. It will make the United Kingdom the world's first major jurisdiction to open up its markets to Internet casinos as well as other types of virtual gambling operations. That could lead to an influx of operators that are currently basing their Internet gambling businesses offshore, but only if the newly formed Gambling Commission hashes out an attractive taxation scheme.

Hilary Stewart-Jones, an attorney with British law firm Berwin Leighton Paisner, said that I-gaming companies will feel an impact as soon as the bill goes into effect.

"The bill will impact on almost all gambling-related entities present in the U.K.," Stewart-Jones said. "Given the intention was to address the remote gambling industry, the impact on them may be the most marked. Like all legislation, issues of interpretation and intention will be critical but the starting premise now, unlike the current anomalous position, is that all remote gambling operators and some suppliers based in the U.K. will need to be licensed."

Many are happy to see a major jurisdiction lead the way as a regulator of the industry.

"Finally a First World government--one that has successfully regulated terrestrial gambling for years--is taking responsibility for the regulation of this rapidly growing form of gambling," Rick Smith, executive director of the Interactive Gaming Council, explained. "Rather than fighting it, as is the U.S. approach, or pretending it will go away, the British are stepping up to the challenge of regulation."

Andrew Tottenham of the Interactive Gaming and Betting Association (IGGBA) said the United Kingdom will immediately contend as a leading jurisdiction for operators.

"It means a First World jurisdiction will be legalizing and regulating remote gambling," Tottenham said. "It will have enormous implications for the industry worldwide. Now the hard work begins for IGGBA in helping the Gambling Commission in establishing the regulatory framework."

Suppliers to the industry are thrilled as well.

"This new law marks a key milestone for online gaming," CryptoLogic's president and CEO, Lewis Rose, said, "and we welcome the decision of the U.K. government to shine the light on the industry to allow it to thrive in a regulated and licensed environment."

What Happens Next?

Considerable work remains before the I-gaming industry can thrive in England. The process will begin immediately with the assemblage of the new Gambling Commission, which will draft the rules and regulatory framework governing online gaming. The first licensing applications will likely become available in 2006, and the first licenses are expected to be granted in 2007.

The Gambling Commission will have sweeping powers over the industry, and licensed operators will abide by a code of conduct constructed by the Gambling Commission. The commission will also ensure that criminal activity, such as money laundering, is prevented and that players are protected by harm minimization measures.

I-gaming operators will begin their lobbying efforts in earnest in an effort to get a tax scheme that is acceptable.

The Treasury is expected to set the tax rate for interactive casino and poker services before the end of the year. It is speculated that the rate could be set as low as 2 percent.