(iii) The Internet is Posing Challenges for the Regulators.
With the advent of the internet some problems have arisen because the current law was not suited to deal with the way in which the internet works. “From a public policy perspective, the potential of the Internet to offer unregulated, unlicensed and low or no tax gambling has been causing concerns to many…for some time.”
The position relating to bookmakers is relatively simple. Bookmakers have been able to accept telephone bets for many years, therefore bets via e-mail or a website would not be prevented.
It would be illegal for Casinos or other gaming operations to set up a website in the UK. This is because under s.9 of the Gaming Act 1968, gaming must take place on licensed or registered premises and under s.12(1)(a) “no person shall participate in the gaming if he is not present on the premises at the time when the gaming takes place there.”
There is no legislation in the UK that makes it illegal or prevents residents of the UK from gambling on the internet from their own home. It is perfectly legal for a UK resident to gamble money on an online casino operating outside of the UK.
Many of the familiar high street names such as William Hill or Stanley’s have set up offshore websites offering gaming to the UK public. The Gaming Board feels that “such complexities and inconsistencies in legislation are unsatisfactory, raise difficulties for regulation and regulators and puzzle and perplex the licensed gambling industry.”
The Gambling Review Body also came to this conclusion and the “Government supports…that the prohibition of online gambling by British customers would be an entirely unrealistic objective, even if it were thought to be desirable.”
This situation of companies not being able to establish websites for gaming is very similar to when bookmakers at the end of the twentieth century moved their betting businesses to offshore locations. This allowed them to offer betting free of general betting duty (even the Government run Tote set up a base in Malta, allowing tax free bets).
At first the Government tried to put down the severity of the exodus but soon realised that they were losing a large chunk of revenue. In late 2001 the general betting duty, which imposed a tax on individual betting transactions, was abolished and a 15% tax on gross win profit was introduced.
This was exactly what the bookmakers had wanted and shows the bargaining strength that they had. Coming back onshore was what the bookmakers wanted as they were unable to advertise their offshore businesses in the UK and operating from these less regulated jurisdictions meant a loss of regulatory certainty that the UK can offer.