UK Plans to Regulate Binary Options Betting as Financial Product Instead of Gambling Offering

The UK Gambling Commission announced that the British government plans to remove financial betting, also known as binary options betting, from under the UKGC’s regulation and licensing coverage. According to a UKGC spokesman, consultations will be conducted in carrying out the government’s plans to amend Regulated Activities Order 2001 of the Gambling Act 2005.

The proposal is to include binary options betting among the regulated financial products, and of removing the same, from out of regulated gambling. It is believed that doing so will align UK’s standards for financial markets fixed-odds betting with the customary practice observed in European markets.

The move therefore, will put binary options under the Financial Conduct Authority (FCA) and out of the Gambling Commission’s regulatory coverage. In view of the pending actions, the UKGC announced that for the time being, remote gambling operators that offer binary betting products do not have to submit application nor pay fees for such offerings as required under the new Gambling Act 2014. As it is, applications and the related fees currently required for binary betting offers could eventually prove to be irrelevant, and unnecessary, once the proposed amendment comes into effect this year.

The UKGC spokesperson further remarked that the proposed amendment that aims to transfer the regulation of binary options betting to the FCA will have very minimal, if no impact at all on the gambling industry. He added that binary options betting account for less than one percent (1%) of UK’s regulated online gambling market.

Currently, the UK treats binary options as bets instead of financial products. This is because Fixed-odds bets gain fixed sums if the option is exercised or expires; or otherwise earns nothing at all. The different European member states disagree on whether it would be best to consider such financial products as financial instruments. The UK Treasury proposes to consider binary option as a financial derivative similar to an investment product provided by an investment firm, or a financial institution that renders investment services and activities offered as a business profession.

Basics of Binary Options Betting

For the benefit of those who are not too familiar about gambling with binary options, the term binary refers to the two type of predictions presented as betting options. A bettor places bets on an investment asset, to which the betting choice is either “Call” or “Put.”

A “Call” option is based on the prediction that the price of the investment product will rise. The “Put” option is the exact opposite, the price of the investment asset will drop. Some of the most common assets available for binary betting options include Foreign Exchange combinations involving all major currencies, US$, EURO, GBP, AU$ and JPY, which is just to name a few. Another set of assets available for binary betting are stock indices at Dow Jones, FTSE, Nasdaq, Nikkei, et al.

Stocks of more than fifty of the largest, most lucrative and diverse companies from across the globe are also included in the list of  assets available for binary options betting. Not surprisingly, commodities like corn, coffee, gold, silver and the like, also qualify as objects of binary betting contracts.