Gibraltar Betting and Gaming Association to Take Legal Action vs. UK’s New Gambling Law

The association of Gibraltar-based remote gambling operators, known as the Gibraltar Betting and Gaming Association (GBGA), through the international law firm Olswang, has formally informed the British government of its intention to take legal action against the new gambling law that will take effect this coming December 2014.

In letters written by Olswang and addressed to Sajid Javid MP and Secretary of State for Culture, Media and Sport, to Dominic Grieve QC MP the Attorney General, and to the UK Gambling Commission, the law firm set out the basis for GBGA’s intended legal action and has asked the addressees to respond within 14 days before the GBGA continues with the legal proceedings.

The GBGA contends that the newly-enacted law is deemed unnecessary because the Gibraltar government is highly regarded in the international gambling industry, as having one of the most effective regulatory systems in the world. Olswang partner, Dan Tench, argued in behalf of the Gibraltar association that UK’s Gambling Licensing and Advertising Act 2014 (or the Act) is in violation of Article 56 of the Treaty on the Functioning of the European Union (TFEU) for interfering with the right to free movements and services as promulgated by European laws, which therefore renders the Act unlawful.

Mr. Tench commented that the Act is neither reasonable nor proportionate to the UK government’s goal of addressing concerns related to consumer protection. He explained that the 15pc Point of Consumption (POC) levy will likely create an impact that will drive UK punters to unregulated or shabbily regulated operators. UK punters will be enticed to use poorly supervised and unmonitored online products and services at better terms, since they do not need to contend with the 15pc POC tax imposed by the UK administration.

In the letter, the Olswang law firm further argued that UK’s imposition of the POC is likely to create a black market that is run by unlicensed operators located in hard to reach geographical regions. This would make it difficult for the UK Gaming Commission’s officials and regulators to ensure that there are no breaches in gambling laws, particularly those imposed as measures to prevent money laundering and other forms of criminal activities. Such conditions therefore only heighten the potential risks by which UK punters are exposed when taking their wagering and real-money gaming activities online.

The GBGA letter stated, “This is bad for UK consumers, bad for the regulated industry, bad for Gibraltar and is in breach of European law, but fantastic news for operators who choose to avoid proper regulation.”   For such reasons, the GBGA has sent the so-called “letters before action” as a means to arrive at an amicable solution without need for judicial actions. Otherwise, the association of Gibraltar-based online gambling operators will seek the court’s assistance in reviewing the legality of UK’s new gambling law.

Still, not all Gibraltar-licensed UK gambling operators who are members of the GBGA have given their support to the intended legal action against the UK government. William Hill and Ladbrokes are reportedly not among those backing the gambling law legal challenge.

In fact William Hill released an official statement about the company’s position regarding GBGA’s action. Although the bookmaker stated that their concerns remain the same, the UK bookmaker made an appeal to the British government to “strike the correct balance between overlapping regulation and enforcement by setting an appropriate tax rate, which encourages full compliance without damaging businesses.”