Positive Vibes in the United Kingdom

The process is far from over, but the interactive gambling industry's initial response to the new the U.K. Gambling Bill making its way through Parliament has been very positive.

"It is just a matter of time before monopolies and restraints of trade are done away with."

- Tom Kavanagh
Gaming Board for Great Britain

The bill would liberalize England's gambling industry and open the market up to new operators, including companies offering service on the Internet, interactive television and mobile phones. It would also phase out the country's gaming board and replace it with a gaming commission that regulates all types of gambling.

Officials with the racing industry, Betfair.com, trade associations and other gaming interests have testified within the last month before a joint scrutiny committee. Most agree that final bill will likely not please everyone in the gambling industry, but a large segment of the industry is confident the initiative is heading in the right direction.

Tom Kavanagh, secretary of the Gaming Board for Great Britain, said the bill comes at a time when other nations, and the European Union, are realizing gambling can be regulated properly without the onslaught of social negatives that many of the industry's opponents predict.

"It is just a matter of time before monopolies and restraints of trade are done away with," he said. "Governments might think they can prohibit forms of gaming, especially Internet gaming, and they might be able to do so effectively right now, but that won't be the case for much longer."

Mark Davies, Betfair's communication director, said the joint scrutiny committee is doing a commendable job.

"We are very pleased that we were able to go before them and answer a lot of their questions directly," he said. "They had a lot of basic questions just on the philosophy of betting exchanges, and it was good to be able to address though directly and not through second-hand information."

Many feel the steps being taken in Parliament could have a direct effect on E.U. initiatives toward the gambling industry.

Most European member states support gambling monopolies and have rejected the notion of opening up the gambling markets because

Cross-border gambling is not welcome in these jurisdictions, but Kavanagh and others feel that electronic borders will be broken down.

"I just don't see how you can have cross-border gaming and monopolies existing in the same climate," Kavanagh said. "Anyone who thinks (he/she) can stop cross-border gaming on the Internet has unrealistic goals."

"There needs to be a movement to formulate a set of international standards, even if they are minimal standards."

- Martin Sychold
Swiss Institute of Comparative Law

Martin Sychold, an attorney with the Swiss Institute of Comparative Law, agrees and feels there is an answer.

"There needs to be a movement to formulate a set of international standards, even if they are minimal standards," he said. "There needs to be a combination of domestic, regional and international law along with licensing criteria, player protection considerations and money laundering standards. Once those are in place the process can begin to move forward."

Sychold also said the British initiative to open up the markets could have a domino effect on other jurisdictions licensing and regulating online gambling.

No clear timetable is in place for the new bill, although the Department for Culture, Media and Sports is hoping to have Las Vegas-style casinos up in running in England by 2006.

That time can't come fast enough for Betfair and other online operators who are either operating offshore or involved in daily battles for their rights to operate in England.

Many in the racing world challenge the P2P (betting exchange) business plan, which allows punters to lay bets without paying bookmaking taxes. Traditional bookmakers and exchanges have battled for two years over how much levy exchanges should pay, but Davies expects the passage of the new bill to put much of those arguments to rest.

"I am sure it will be an ongoing process for us," Davies said, "but once the bill is passed I would suspect that about 80 percent to 90 percent of our headaches will go away."

Spread betting firms, meanwhile, are on the outside looking in. Despite the massive overhauls for the gambling industry, spread betting firms will remain under the jurisdiction of the Financial Services Committee instead of the new Gambling Commission.

Spread betting was originally geared toward the financial markets, but with more and more of their customers betting on sports, operators feel the activity should be regulated as such.

Although spread betting still falls under the FSA in the draft version of the Gambling Bill, Kavanagh said there is still time to update language in it.

"It is way too early to say this is all set in stone," he said. "We have gotten a lot of input, and that is one area we have had a lot of requests to look into."