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Chapter 4
International regulatory environment—forms of liberalisation
4.1
International jurisdictions use a variety of regulatory responses to
online gambling, from prohibition to a liberalised and regulated market. This
chapter will outline some of the approaches taken by jurisdictions which
operate a liberalised model of online gambling regulation. It is important to
note that online gambling regulation is a changing area and some countries are
currently reviewing their legislation. Therefore some of the details contained
in this chapter may have changed by the time the report is published.
The trend towards liberalisation
4.2
Submitters suggested that there is a trend internationally towards
increasing liberalisation, with many countries, particularly within Europe,
moving towards a liberalised form of online gambling with stringent
regulations. The Department of Broadband, Communications and the Digital
Economy (DBCDE) outlined this trend in its discussion paper which is part of
the government review of the Interactive Gambling Act 2001 (IGA):
There is a general trend amongst European countries towards
regulated access to online gambling including to services prohibited under the
IGA. A number of countries including the UK, France, Italy, Malta and Sweden,
have legalised online gambling with gambling websites being subject to
stringent regulatory requirements.[1]
4.3
Sportsbet said that regulation had been 'particularly successful in
Europe'.[2]
4.4
Countries that have a form of liberalised online gambling include, but
are not limited to, the United Kingdom (UK), Alderney and France. These regulatory
approaches are detailed below.
United Kingdom
4.5
In 2005, the UK introduced the Gambling Act 2005 (the Act) which covers
all forms of gambling in the UK including online gambling (called remote
gambling).
4.6
The Act provides for the legal licensing of 'remote gambling' where
individuals participate in gambling via remote communication including
internet, telephone, television, radio and other electronic or communication
technology.[3]
4.7
Forms of remote gambling that are permitted under the Act include gaming
and games of chance, casino gambling, equal chance gaming,[4]
betting (including spread bets[5]
and competition prizes), pool betting and lotteries. iBus Media Limited
outlined the all-encompassing nature of the Act:
The Gambling Act
2005 (UK Act) is a comprehensive piece of legislation dealing with
all forms of gambling. It is both technology neutral and product neutral in
that it provides licences for all types of gambling products (betting, casino,
bingo, poker etc.).[6]
4.8
The Act established an independent regulatory authority, the UK Gambling
Commission (the Commission), which is responsible for the regulation and
licensing of all commercial gambling in the UK except spread betting and the
National Lottery.[7] The Commission provided a submission to the inquiry[8]
and most of the information below is drawn from this.
The roles and functions of the Commission
4.9
Formally established in October 2005, the Commission is responsible for
regulating all commercial gambling, including remote gambling, offered in the
UK.[9]
It licenses all remote gambling providers with equipment based in the UK and
its licensing objectives are:
- preventing gambling from being a source of crime or disorder,
being associated with crime or disorder or being used to support crime;
- ensuring that gambling is conducted in a fair and open way; and
- protecting children and other vulnerable persons from being
harmed or exploited by gambling.[10]
4.10
The Act provides the Commission with the power to grant and determine
the conditions for operating and personal gambling licences, assess
applications and current licence holders' compliance with conditions and codes
of practice, and take regulatory action against an operating or personal licence
holder who breaches these conditions. The Commission also possesses the power
to void bets and investigate and prosecute offences committed under the Act.[11]
The white list
4.11
Online gambling operators regulated in the European Economic Area (EEA)
are permitted by the Act to provide online gambling services and advertise within
the UK without a licence, provided they meet regulation requirements specified
by the Commission. The Act also establishes provisions for a white list of
operators based outside the EEA, extending the same rights and responsibilities
to them that are provided to operators within the EEA. While the Commission
does not formally license or regulate operators within these areas, good
practice agreements have been established with regulators.[12]F This practice has been used
by major online poker operators worldwide:
Despite the availability of a licence, no major poker site
has sought a licence in the UK. One of the reasons for this is that the British
legislation is fully EU compatible, to the extent that an operator having a
licence in the European Union or in a white listed territory (which includes
Tasmania), is allowed to advertise its services in the UK as if it had a local
licence.[13]
Review of the white list
4.12
In July 2011, the UK Government announced a policy proposal to regulate
gambling at the 'point of consumption', requiring all remote gambling operators
providing services to the UK market to obtain a licence from the Gambling
Commission. This would effectively phase out the current white list and EEA State
arrangements. The proposed policy would provide a 'level playing field' and
ensure stronger protections for consumers:
These proposals are an important measure to help address
concerns about problem gambling and to bridge a regulatory gap, by ensuring
that British consumers will enjoy consistent standards of protection, no matter
which online gambling site they visit.[14]
4.13
The proposal followed a review of the white list and a consultation process
which began in April 2009. It would require all offshore operators wishing to
provide services to the UK market to gain a licence from the Commission, pay 15
per cent tax on gross profits and to inform the Commission of suspicious
betting patterns.[15]
4.14
The proposed policy has been questioned by some who believe that the tax
may negatively affect UK-based providers and deter offshore providers from seeking
a licence in the UK:
In itself, a 15% tax on gross profits, while high, remains workable
(and even seems generous when compared to a number of the turnover taxes proposed
in the recent spate of EU market openings). Problems principally arise when it
is coupled with the UK’s main corporation tax rate of 28%, substantial
application and annual licence fees, and the typically high business costs of a
UK location. As a result, while some have opted into this system due to the
overriding convenience of a UK licence, a number of licensees have relocated
offshore, while a greater number of would-be licensees have elected to licence
elsewhere.[16]
4.15
Others argue that the new system would not achieve its consumer
protection goal:
In the absence of any sanctions, it is reasonable to assume
that unscrupulous operators will advertise their services to the UK market with
impunity. As a result, the burden of any national licensing system will fall
exclusively on the operators that play by the rules, while industry 'cowboys'
will remain free of any requirement to offer fair gambling and to protect the
vulnerable.[17]
4.16
While there is no specific timeline in place for the implementation of the
proposed policy, the UK Government will be working with the Commission and
other stakeholders on the details of the new licensing system which will
require amendments to the Gambling Act.[18]
Providing remote gambling to other
countries
4.17
The Act prohibits gambling operators based in the UK from offering
remote gambling services to countries where online gambling is prohibited:
(1) A person commits an
offence if he does anything in Great Britain, or uses remote gambling equipment
situated in Great Britain, for the purpose of inviting or enabling a person in
a prohibited territory to participate in remote gambling.
(2) In
subsection (1) "prohibited territory" means a country or place
designated for the purpose of this section by order made by the Secretary of
State.[19]
Harm minimisation measures
4.18
Harm minimisation measures are set out under section two of the Licence
Conditions and Codes of Practice (the codes and conditions). These outline the
Commission's principle codes of practice which are established under section 24
of the Gambling Act 2005.
4.19
iBus Media summarised the Codes of Practice:
The Codes of Practice are either:
- ordinary code provisions, which generally describe best practice
measures and, whilst compliance is not mandatory, failure to take these
provisions into account may be used as evidence in civil or criminal
proceedings; or
- social responsibility code provisions, with which a licence
holder must comply and which have the same status as licence conditions...[20]
4.20
The ordinary and social responsibility code provisions cover matters including
harm minimisation and responsible gambling measures and player protection.
These include access to minors, responsible gambling information, customer
interaction and self-exclusion procedures.[21]
Access by minors
4.21
Online gambling operators are required to have in place and to monitor
the effectiveness of procedures designed to prevent access and use by underage players.
iBus Media outlined specific requirements under the social responsibility code
provisions which include, but are not limited to, the following:
- operators must provide customers with warnings that underage
gambling is an offence and require all customers to affirm they are old enough
to legally gamble;
- operators must regularly review age verification systems and
implement all reasonable improvements resulting from technological advancements
and increases in information;
- operators must ensure all relevant staff have appropriate age
verification training;
- websites must allow adults to use filtering software to restrict
access (by parents and schools etc.); and
- operators must follow specific age verification strategies
depending on the country the player resides in.[22]
4.22
In the event that a customer's age is not verified within 72 hours, the
account will be frozen and further gambling will not be available until age
verification is complete. If the user is found to be underage, the operator is
required to return any money paid by the player for the use of the gambling
facilities and no winnings are to be paid to the player.[23]
Responsible gambling information
4.23
All operators must provide information to customers on responsible
gambling and avenues to gain help for problem gambling. This information must
cover any features offered to players that enable them to control their
gambling, including: the ability to limit their playing time or spend; warning
messages that are available on the site; self-exclusion options; and the
availability of help and advice.[24]
This information must be provided to all customers, regardless of whether an
operator offers specific information targeted at customers who may demonstrate
problem gambling behaviour.[25]
4.24
The ordinary code provisions or 'best practice provisions' also state operators
should make this information available in any foreign language in which they market
their services.[26]
Customer interaction
4.25
All operators must have in place procedures and policies for interaction
with players who may be demonstrating behaviour indicating problem gambling.
These procedures must identify the appropriate level of management to initiate
interaction with customers regarding problem gambling and training of staff so
that they are aware of the procedures and who is designated to implement them.[27]
In addition to these measures, policies must identify what behaviours
constitute problem gambling and will result in customer interaction, and under what
circumstances refusal of service to customers should be considered.[28]
Self-exclusion procedures
4.26
All operators are required to implement specific self-exclusion
procedures, which include:
- preventing any marketing material being sent to a customer who
has self-excluded. Operators must take steps to remove contact details from any
marketing databases within two days of receiving the self-exclusion application;
- customer accounts must be closed and any funds contained in those
accounts must be returned to the customer. The provisions specify that 'it is
not sufficient to merely prevent an individual from withdrawing funds from
their customer account while still accepting wagers from them';
and
- procedures must be put in place to prevent self-excluded
individuals participating in gambling, including maintaining a register of
details and card numbers of individual who are excluded and training staff to
ensure they are able to operate and enforce the systems.[29]
4.27
A minimum self-exclusion period of six months is specified in the
ordinary code provision which states that operators should take reasonable
steps to provide customers with the option to extend to a total of five years.
These provisions also specify methods by which customers may apply for self-exclusion
and a cooling off period of one day after players actively select to begin
gambling again.[30]
As compliance with these measures is not mandatory in order to gain a licence,
they remain best practice and are not enforced.[31]
Accreditation of online gambling
providers - eCOGRA
4.28
Submitters pointed out that there are organisations overseas which
accredit online gambling websites such as eCOGRA (E-commerce and Online Gaming
Regulation and Assurance). Its website reports:
eCOGRA is an independent London-based player protection and
standards organisation that provides an international framework for best
operational practice requirements, with particular emphasis on fair and
responsible gambling.[32]
4.29
Clubs Australia reported that eCOGRA 'provides certification to sites
that offer responsible and honest gambling practices such as prompt payment,
random games, accurate advertising claims, fair trading practices and privacy
protections'. However, it added:
...the list of “safe and fair” approved sites contains the names
of only thirty casinos. The online industry is unwilling to self-regulate.[33]
4.30
Wesley Mission argued that self regulation by organisations such as
eCOGRA is 'dubious, as their standards are pretty low and they lack an
effective independent audit process'.[34]
It emphasised:
Our concern with all of these certification programs is that
they are businesses that rely on being paid by the companies they certify as “responsible”.
The concept of ‘responsible gambling’ is often described as an oxymoron, and
responsible gambling programs vary from worthless tokenism to programs that
genuinely endeavour to restrict the incidence of problem gambling.[35]
Committee view
4.31
The committee notes that while accrediting organisations such as eCOGRA support
self-regulation, compliance is voluntary. However, these measures would provide
some encouragement for online gambling providers to offer harm minimisation
measures.
Advertising
4.32
In addition to adopting a managed approach to online gambling
regulation, the UK permits advertising by remote gambling operators licensed
under the Act or those that are on the white list, provided they meet the UK's advertising
regulatory requirements.[36]
Advertisements to the UK market must comply with three codes of practice:
- The British Code of Advertising, Sales Promotion and Direct
Marketing[37];
- The UK Code of Broadcast Advertising[38];
and
- Gambling Industry Code for Socially Responsible Advertising.[39]
4.33
The codes of conduct outline responsible advertising processes including
not targeting minors, exploiting vulnerable people in relation to gambling
activity or being misleading.[40]
Effect of the Act on online
gambling participation and problem gambling
4.34
Comparison of the 2007 British Gambling Prevalence Survey (the 2007
survey) conducted before the Act came into full effect, and the 2010 British
Gambling Prevalence Survey (the 2010 survey), shows a small increase in online
gambling. The 2007 survey showed the prevalence of online gambling was six per
cent. This is significantly lower than the 2010 figure of 14 per cent. However,
the difference between the 2007 and 2010 figures can be explained by the
inclusion of the National Lottery in the 2010 survey results:
The 2007 survey used
a more conservative definition of online gambling, which only included those who
bet online, used a betting exchange or gambled online on poker, bingo, slot
machine style games or casino games as internet gamblers. Using this comparable
definition, in 2010, 7% of adults (10% of men and 5% of women) gambled online
on these activities...[41]
4.35
Using the same definition of gambling online for the 2007 and 2010
surveys, there was a one per cent increase in the level of participation in
online gambling following the introduction of the Act.[42]
4.36
The Commission noted that the problem gambling prevalence rates observed
in the UK showed a slight increase in 2010 when compared to the statistics in
the 2007 survey. Using DSM-IV[43]
and PGSI[44]
measurements, the prevalence of problem gambling for all forms of gambling
increased in 2010 by approximately 0.3% (DSM-IV) and 0.2% (PSGI).[45]
4.37
The Commission noted that problem gambling prevalence rates in the UK were
similar to other European countries, and 'lower than countries like the USA,
Australia and South Africa' and lower than in Northern Ireland where remote
gambling is prohibited.[46]
France
4.38
France has a different approach to online gambling regulation than that
of the UK, regulating domestic providers and blocking unlicensed international
providers. The Department of Broadband, Communications and the Digital Economy
(DBCDE) outlined the French approach:
France has a slightly more complicated model, which allows
the licensing of some domestic services and then attempts to block. In a sense,
they work both sides: to block the overseas based services but provide for
regulation of domestic French provision of the services to French consumers.[47]
4.39
France liberalised online gambling laws in May 2010 with the
introduction of Law No. 2010-476 and Decree No. 2010-482 and 2010-518. The laws
permit the provision of online poker, sports betting and wagering on horse
racing; however, all other forms of online gambling are prohibited.[48]
Licences are provided to online gambling operators who meet licensing and harm
minimisation requirements established in the French laws and decrees. iBus
Media indicated that provision of other 'greater risk' online games such as
casino games may be permitted in the future.[49]
4.40
The Australian Racing Board stated that the aim of the French legislation
was to open their market to regulated online gambling consistent with State
policy of:
- Preventing gambling addiction and protecting minors;
- Ensuring the integrity, reliability and transparency of gambling
activities;
- Preventing fraudulent or criminal activities undermining the
ethics of sports competitions and preventing money laundering;
- Ensuring equitable and balanced development of different types of
gambling to avoid destabilization of the economic sectors concerned.[50]
4.41
Online gambling service operators are licensed and regulated in France
by the Online Gaming Regulatory Authority (ARJEL) which was established in
2010. [51] The ARJEL is responsible
for regulating and licensing online poker, sports betting and horse racing in
France.
4.42
Operators applying for a licence must meet stringent harm minimisation
requirements and measures to ensure integrity in sport:
To obtain a licence, applicants must satisfy a number of
criteria, including a requirement that they have sophisticated systems for
identifying players at risk of addiction and protecting them. Operators wishing
to conduct sports betting must also sign trade agreements with the organizers
of sporting events...[52]
Harm minimisation requirements
4.43
Licensed operators are required by the legislation and decrees to
provide a number of harm minimisation measures in an effort to prevent and combat
problem gambling. To gain a licence, all operators are required to provide:
- mandatory pre-commitment;
- self-exclusion;
- rigorous age and identity verification checks; and
- play tracking and statements of wins, losses, promotions and
financial transactions.[53]
Pre-commitment
4.44
Players must set an individual deposit and playing limit. The limit may
be changed at any time; however, increases will not come into effect for two
days. No transactions or play can take place until a limit has been set. [54]
Self-exclusion
4.45
Players must be provided with the ability to self-exclude at any time.
Players may determine the length of exclusion; however, the minimum period must
not be less than seven days. In addition, players can apply to the ARJEL to add
their name to the blacklist. Service operators cannot offer online gambling
services to individuals on the blacklist and are required to check each new
account against the list. [55]
Player identification and age
verification
4.46
When opening an account, players are provided with a temporary account
until identity and age have been verified. This requires the provision of
identification documentation and supporting bank account information.[56]
Temporary accounts cannot be withdrawn from and are closed after one month if a
player has not provided the required documentation.[57]
Bets resulting in debit
4.47
Licensed online poker operators must not accept any bet that would put
the player into debit. Prior to games or tournaments, information must be
accessible to players which outlines the amount of money required to place
bets. Operators are also required to provide players with a system capable of
notifying them of total wins or losses at any time as well as a 12 month play
history outlining all wins, losses, bets, financial transactions and
promotional offers.[58]
Advertising
4.48
Advertising of online gambling in France is regulated under Decree No.
2010-624 of 8 June 2010. The decree concerns the regulation of commercial
communications for operators of gambling and for the information of the players
about the risks associated with gambling. All commercial communications for a
gambling operator must be accompanied by warning messages and phone numbers for
responsible gambling help lines. The decree sets out specific locations and
wording for such warnings depending on the medium of communication.[59]
4.49
The decree also prohibits online gambling operators advertising in
publications for youth, which are defined in Act No. 49-956. The decree further
prohibits advertisements online 'which by their nature, their presentation or
object, appear as primarily intended for minors'.[60]
ISP blocking
4.50
French legislation provides the ARJEL with a number of disciplinary
sanctions which it may utilise when dealing with non-compliance by licensed and
unlicensed online gambling providers. The Australian Racing Board outlined
these options in its submission:
The legislation also provides ARJEL with a set of measures to
deal with operators that operate without a French licence. The organisation of
unlicensed internet gambling will be punished by three years of imprisonment
and a €45,000 fine
for each individual offence. The connection to these sites, as well as
financial transactions between the illegal operators and players, will be
blocked.[61]
4.51
The application of ISP blocking was explained by the Victorian
InterChurch Gambling Taskforce in its submission:
In August 2010, the French Tribunal de Grande Instance de Paris
ordered ISPs to block ready access to unlicensed online gambling sites or face
a daily fine of €10,000.[62]
Other
4.52
However, French legislation has received criticism from some in the
online gambling industry for the low rate of return to player set within the
legislation and the limited number of authorised gambling
activities:[63]
The problem is the cap rate of return to players imposed by
French law. Today, we cannot distribute more than 85% of money [to players].
Everywhere in Europe, but also in France if you did not license, you
redistribute 96%. We did not imagine how disappointing this would be for French
players, who know that [on other non-licensed sites] distribution rates are
much higher.[64]
4.53
Revised rates of return to player are under consideration.[65]
Alderney
4.54
Online gambling regulation in Alderney was presented to the committee as
an example of one of the more successful regulatory approaches.[66]
4.55
eGambling is regulated in Alderney by three pieces of legislation: the
Gambling Law (Alderney) 1999, the Alderney eGambling Ordinance 2009, and the
Alderney eGambling Regulations 2009. The Alderney Gambling Control Commission
(AGCC) was established in 2000 and is responsible for regulating and licensing
eGambling in Alderney.[67]
The AGCC provided a submission to the inquiry.[68]
4.56
While the AGCC was established under Alderney law, the majority of
organisations licensed in Alderney are located in Guernsey. The AGCC attributes
this to the 'world-class telecommunication infrastructure' and the Alderney
eGambling (Operations in Guernsey) Ordinance 2006.[69]
4.57
At the end of 2010, there were 51 organisations licensed to operate in
Alderney 'holding approximately 80 different licences'.[70]
Licensing operations in Alderney generated an estimated AUD$5.8 million in
2010.[71]
AGCC objectives
4.58
The AGCC aims to provide a regulatory environment which offers 'robust,
enlightened, active regulation while also being responsive to the needs of a
changing industry':[72]
The objectives of the Commission are to protect the
reputation of Alderney as a first tier eGambling jurisdiction by seeking to
ensure that:
- all electronic gambling on Alderney is conducted honestly and
fairly;
- the funding, management and operation of electronic gambling on
Alderney remains free from criminal influence; and
- electronic gambling is regulated and monitored so as to protect
the interests of licensees', customers as well as the young and vulnerable.[73]
Licensing
4.59
The Alderney eGambling Regulations provide for three types of gambling
licences:
- Category 1 eGambling licences permit licensees to 'contract with
customers to organise and prepare the customer for gambling'. This includes
entering into agreements, registering and verifying customers' identity,
managing customers' funds and promoting and offering services to customers. A Category
1 eGambling licence can only be held by an Alderney company.[74]
- Category 2 eGambling licences permit licensees to 'effect gambling
transactions'. This includes striking a bet, operating software or hardware
which is used to conduct a gambling transaction and recording the outcome of
gambling transactions. A Category 2 eGambling licence can only be held by an
Alderney company.[75]
- Temporary eGambling licences permit a foreign company to act as
both a Category 1 and Category 2 eGambling licensee for a limited period of
time. Temporary licences are 'primarily designed for temporary use by foreign
company licensees whilst their usual gambling operations are interrupted'. A
Temporary eGambling licence cannot be held by an Alderney Company.[76]
4.60
Before an eGambling licence is approved, all applicants are 'carefully and
rigorously scrutinised to confirm that the individual or organisation applying for
approval is likely to run a highly regulated business within both the spirit
and the letter of the Commission’s regulations'.[77]
4.61
While each licence type has specific general conditions, all licences
are required to adhere to a set of operational requirements. These include
control systems and equipment standards, requirements surrounding financial
accounts and reporting, monitoring and investigation of gambling activity, and
strong harm minimisation and player protection measures.
Harm minimisation and player
protection
4.62
All operators licensed in Alderney are required to adhere to stringent
harm minimisation and consumer protection measures as a requirement of licence.
These measures focus on registration of customers, marketing, identification of
problem gambling, availability of responsible gambling information for
customers and the ability for customers to place limits on their gambling.[78]
The AGCC regulations also:
...provide extensively for rigorous customer verification;
the protection of customer funds; customer complaints; the identification of
problem gambling activity and self exclusion mechanisms.[79]
4.63
All Category 1 eGambling licensees are required to register customers
prior to accepting bets. Registration must include a risk assessment of the
player and stringent age and identity verification checks.[80]
A regular review of any risk assessments must be carried out by licensees to
ensure they are up to date.[81]
No licensees are permitted to set up anonymous accounts and are required to
provide players with information about the rules and requirements of each game
being wagered on, including the expected return to player for each game.[82]
4.64
All licensees are required to 'establish and maintain procedures...to
identify customers who are, or appear to be at risk of becoming, problem
gamblers'.[83]
The regulations require licensees to provide information to players exhibiting
problem gambling behaviours and if necessary prevent customers from continuing
to gamble.[84]
4.65
In addition to providing responsible gambling information, licensees are
required to offer customers the ability to impose limits on their gambling.[85]
A customer may apply in writing to the licensee to place specific limitations
on their gambling activity. These may include limits on:
- total spend;
- total time played;
- the number of wagers made; and
- deposits made.[86]
4.66
Each limitation may apply to a single transaction or extended period of
time.[87]
Players may elect to set a limit of zero, effectively self-excluding themselves
from the activity.[88]
4.67
Upon receiving written notification from a player of their requested
limit, a licensee must not encourage a player to increase or remove their
limit. Where a customer has set a limit of zero, a licensee is prohibited from
'directly marketing or otherwise publicising its gambling services to that
customer whilst the customer's limit continues at zero'.[89]
A customer may, by written notice to the licensee, increase or remove their
limit; however, this will not take effect for 24 hours. Any notification from a
player to reduce their limit will come into effect immediately.[90]
Advertising requirements
4.68
In addition to player protection measures, providers licensed in
Alderney are required to adhere to various advertising requirements when
promoting services to customers. Advertisements must be truthful, not be
distasteful and must not promote gambling to persons under 18 years of
age. In addition, advertisements must not link gambling success to personal
status, should not encourage or 'dare' individuals to gamble and must not bring
into disrepute the island of Alderney or the AGCC. All advertisements must also
comply with any regulations in the jurisdiction in which they appear.[91]
Non-compliance
4.69
The AGCC has a number of disciplinary sanctions which may be enforced if
licensees do not adhere to licensing regulations and requirements.[92]
These sanctions were outlined by the AGCC in its 2010 Annual Report:
The AGCC has a range of sanctions at its disposal, including
financial penalties and, for the most serious regulatory breach, suspension or
revocation of a licence or certificate. The Commission can also issue a “direction to rectify” – in other words, instructions that the regulatory breach
must be rectified within a specified time.[93]
Taxation
4.70
In contrast to many other jurisdictions, Alderney does not require eGambling
providers to pay tax on gambling-related activities if they are licensed in
reputable overseas jurisdictions. This enables operators licensed and paying
tax in other jurisdictions to avoid paying tax for the same activity twice:
Alderney's unique approach allows the services of platforms,
on which all manner of approved and certified games are deployed, to be offered
to operators licensed in other reputable jurisdictions without the need for
them to acquire a local license and thereby avoid double taxation and/or double
license fees.[94]
4.71
As only Alderney companies can be licensed by the AGCC, companies
established by eGambling providers who are licensed overseas for the sole
purpose of gaining an eGambling licence in Alderney may qualify for an
exemption where they are not required to pay income tax, instead paying a fixed
annual fee. [95]
4.72
In a 2008 study, the European Parliament observed that 'European
offshore' jurisdictions or 'rock jurisdictions' offer tax advantages such as
the zero per cent gambling tax in Alderney as an attempt to attract and retain
online gambling operators and compete with other jurisdictions such as the UK.[96]
Effectiveness of regulation in
Alderney
4.73
Regulation in Alderney has been regarded as quite successful in
providing high quality regulation of eGambling combined with strong harm
minimisation and consumer protection measures. Dr Gainsbury and Professor Blaszczynski
argued that the AGCC provides an example of a 'successful regulatory framework
for Internet gambling and has a 'highly regard[ed] reputation within the
Internet casino industry'.[97]
4.74
The AGCC stated that regulation in some offshore jurisdictions such as
Alderney is of a similar standard to other reputable online gambling
jurisdictions and that the purpose of regulation was not to increase profits,
but to provide a safe online gambling environment:
...there is no evidence to suggest that the
standards applicable in these off-shore jurisdictions are any lower than those
applicable in the UK or in some of the new remote gambling jurisdictions in the
EEA. It could be argued that the recent flurry of remote gambling laws in
Europe and elsewhere in the world has often been motivated by revenue
generation rather than attempts to improve player protection. In Alderney, the
intention was never to maximise revenue at the cost of regulation but rather to
provide a regulatory environment which offers robust, enlightened and active
regulation while being responsive to the needs of the industry.[98]
4.75
Success of regulation in Alderney has been attributed to the rigorous
testing of online gambling licence applicants' business processes, equipment
and overall product prior to approval and ongoing compliance checks following
licensing. Dr Gainsbury and Professor Blaszczynski offered Alderney as an
example that could be used to guide the creation of an Australian online
gambling regulatory framework which could be refined through consultation with
stakeholders and researchers.[99]
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