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The Gaming Review Report – On-Line Gambling

13 August 2001

By Steven Philippsohn
The Gaming Review Report commissioned by the Government has opened the way for a major change in the gambling law in the UK.

Among its recommendations are that gambling debts become enforceable, that statutory membership of casinos and cooling off periods for new members of casinos are abolished. The Review also recommends that permitted area rules for casinos should be abolished which may mean an influx of new casinos in towns where they have never been seen before.

The most interesting area covered in the report concerns the approach to Internet and on-line gambling. The report recommends that the practice of on-line gambling should in fact be legalised (which on the most part it isn’t in the UK). It recommended that this be implemented through a system of licences which should only be issued to operators who at a very minimum meet the following 3 criteria: -

  • They are a company registered in Great Britain
  • The operator’s server is located in Great Britain
  • The web address should be based in the UK

Operators, if properly licensed, could then post a British kite mark on their sites, providing protection for the gambler.

Protection of the Gambler

The report recognises the fact that even if the provision of on-line gambling is banned in the UK, there is nothing to stop the determined gambler from using off shore sites and off shore bank accounts, making the gambler vulnerable to abuse. By legalising on line gambling and regulating the gambler is encouraged to use onshore sites and consequently the gambler is protected both by regulations and the greater come back he may have through the use of civil remedies.

The report makes a number of recommendations which will hopefully lead to more adequate protection of the on line gambler than currently exists. It recommends that gamblers should be made aware of all rules, terms and conditions before they are permitted to play on the sites. This is reminiscent of the new Distance Selling Regulations aimed at protecting consumers who purchase goods and services over the telephone or Internet.

The report recommends that on line gambling software should be tested and inspected by the Gambling Commission to ensure that random generators are in fact random.

Money Laundering

The report also considered the threat of money laundering over on line gambling sites and has made a series of recommendations with regard to payment of winnings and the origin of the funds. The report suggests that operators should only ever pay sums back into the (debit or credit) account through which the wager was paid or by a cheque to the gambler.

The report addresses the problem of anonymity, which again makes the money launderers life far easier. It suggests that all gamblers should be registered and identified before being permitted to gamble. The Gambling Commission should also provide guidelines for operators to follow to ensure that the identification requirements are similar to those followed by real casinos. This would also help to prevent use of the sites by underage gamblers.

Implementation and Effectiveness

If the recommendations are adopted by the government, it will be interesting to see how effective they are. Any regulations or laws are ineffectual if not backed up by resources or an adequate framework. It will mean that the Gambling Commission will need to be overhauled in order that it can cope with the technical impact of the regulations. They will need to be able to test complex software and formulate guidelines, which will require expert IT knowledge.

The anti money laundering provisions are again to be welcomed. However it remains to be seen how realistic recommendations regarding the identity of gamblers are, and how they will be implemented. Identity theft is already a relatively common crime over the Internet and the Gambling Commission will face a tough challenge in formulating guidelines to ensure that identification standards are comparable to real casinos.

The recommendations were made after taking into account the approach of countries such as Australia and the US to on-line gambling. Although Internet gambling is banned in much of the US, this has not prevented individuals from gambling offshore or offshore sites from accepting their wagers. There is still nothing to stop UK gamblers placing wagers on offshore sites and no recommendation to prevent them from doing so. It appears that the argument for regulation and legalisation stem partly from the assumption that gamblers will stick to regulated sites for their own protection. It remains to be seen whether this will be the case.

This aspect has clearly been considered by the report’s authors and they have followed the approach of some US states in regulating and licensing onshore operators. It would seem that it is increasingly favourable for the on-line gambler at least to have the option of using a regulated site rather than an offshore site, which may very well have links to criminal organisations.

At the moment, it is not known when and if these particular recommendations will be implemented. However, it is clear that particularly where on-line gambling is concerned, a great deal of work needs to be undertaken to formulate guidelines and software to deal with recommendations. The overhaul is substantial and already faces opposition from charities and religious organisations. However, the current legislation is seriously outdated and never conceived of the possibility of the Internet. This aspect has to be dealt with if for no other reason than to protect the public from unscrupulous operators and money launderers.

The Gaming Review Report – On-Line Gambling is republished from

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Landmark European Cases on Internet Gaming

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Steven Philippsohn
Steven Philippsohn