ONLINE GAMBLING LEGISLATION IN THE UNITED KINGDOM
Britain leads the way and gets the pay

by walter jefferson

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The uprising of the British public in reaction to Margaret Thatcher's unpopular Community Charge (infamously known as the Poll Tax) was a notable exception to the general trend of popular reaction to UK political economy changes in modern history. The British are well known to be conservative, but the historical evidence of the past century shows that dogged resistance to change is followed by rapid acceptance. The British will fight any change like Saint George fought the dragon, but once the change is in effect they tend to just get on with it as though things had always been thus. Cases in point include: universal sufferage, fighting Hitler, the introduction of the Welfare State, going decimal, joining the EU, television cameras in parliament, Sunday shopping, the national curriculum, the national lottery, pubs opening all day Sunday,and most recently the government's legalization of online gambling which marks the first significant change to UK gambling laws for almost forty years. Since those outdated laws were introduced, as the chairman of the British Casino Association Penny Cobham points out, man has landed on the moon.

The legislation referred to above is the 1968 Gaming Act, implemented under Labour Home Secretary Roy Jenkins, whose main aim was to restrict - not prohibit in any way - gambling on UK soil in order to prevent it from become the foundation of a criminal class or UK mafia. Serious gaming was subsequently only permitted in licensed proprietary clubs or registered members clubs subject to significant and stringent control by the courts, the Gaming Board, the local licensing authorities, and the Secretary of State. Furthermore, there were restrictions placed on the number of clubs which could be licensed for gaming as casinos under this legislation. The main aim of the recent gambling legislation is to deregulate gambling in the UK by removing the restrictions placed on the industry by this nineteen sixties law.

New British gaming laws applying specifically to the Internet were quite necessary since the attempts to apply these antiquated laws to the modern issue of online gambling was erratic and ineffective, just as the American Wire Act has proved so inappropriate with regards to the new Internet issue. In particular, the old UK gambling laws distinguished between betting and wagering and gaming, and these definitions became foggy with regards to the Internet. Also, the 1968 Gaming Act was specific about advertising (prohibiting offshore gambling companies from advertising on British soil), licensed locations, and the use of machines, and again these specifications which were made before the Internet was dreamed of by law-makers became confusing with the introduction of the new interactive technology and means of communication. In 2002, The Gaming Board of Great Britain issued a report on the subject of online gambling with respect to existing laws in the UK to the British Home Office. The Gaming Board came up with a number of conclusions, the most important from the online gamblers point of view being that, "There is nothing in [current] legislation which makes it illegal or seeks to prevent British residents gambling on the Internet from their own homes". In response, a spokesman of the British government on the subject of online gambling in the UK, Sir Alan Budd, said that "the prohibition of online gambling to British consumers would be an entirely unrealistic objective, even if it were thought to be desirable" and went on to state that the UK government indeed did not consider it desirable and in fact would move towards legalizing the provision of the full range of online gambling services by operators located in the UK, including gaming. Thus the way was paved for the latest UK gambling legislation and surprised many people in the industry such as IQ-Ludorum, an online Casino and Sportsbook software supplier. The report from the Gaming Board was conservative and perhaps designed not to annoy the government, whereas the government response was nothing short of radical, making the UK government the first G7 nation to openly encourage and regulate online gaming.

Unfortunately, due to a backlog of work caused by the new Asylum Bill, the introduction of the new online gambling legislation has had to be postponed by a year but the British government has said that it will be fully implemented within the 2004-2005 parliament session. The new online gambling legislation, being coordinated by UK Culture secretary Tessa Jowell, will have wide-ranging implications for all aspects of UK gambling, not only Internet gambling. However, although full-blown gambling legislation is still around the corner, changes have already taken place, the most notable of which was the tax changes implemented since 2002. These changes made by Labour chancellor Gorden Brown shifted the tax burden from the bettor to the provider, thus officially encouraging and legitimizing online providers of gambling to UK citizens. The effect was two-fold. Firstly, this act appeased the existing bookmakers who had been lobbying the government to take action to curb the tax-free advantage the new online companies had been using to erode their profit margins. And secondly, the legalization of online betting meant that non-offshore online gambling outfits could benefit from the old gambling laws prohibiting offshore gambling companies from advertising on British soil. The idea was that the advantage of advertising out-weighed the disadvantage of tax, and the subsequent return of several major players ( Coral, Ladbroke’s, Stanley Leisure and William Hill ) - although not all - to British soil bears out the wisdom of this approach. The government's motives of course are pure. Purely financial. Exchequer betting revenues are now well in excess of one billion pounds and with implementation of the pending legislation are expected to continue to rise.

As the United Kingdom, including UK offshore territories, continues to become the hub of global online gambling, this makes the United States look increasingly isolated in its attempts to criminalize online gamblers. Churchill was the first to mention the special relationship between the UK and the United States. Margaret Thatcher was also fond of the term and recently Prime Minister Tony Blair has reconfirmed this with his unpopular support of the second Iraq War. But it seems that this special arrangement has its limitations. It is probably true that when America sneezes, the UK catches a cold. Yet, while the United States government chokes on its inability to control online gambling, the United Kingdom is cashing in.