Report broken down by state on expanding models for online gambling, lotteries, and sports betting; reserved exclusively for readers of Gambling Analytics
Contents
UK Regulated Gambling
English law considers many activities gambling. It encompasses risk-based entertainment. Gambling is one of many activities, including financial transactions, contracts, pure entertainment, sports, and others. Below, we discuss how these activities interact. English law distinguishes between betting, gaming, and lotteries. Over the centuries, these terms have been defined by statute rather than common law. The Gambling Act 2005 (GA) defines all gambling. For instance, gaming and betting are defined, but game and bet are not. This allows judges to categorise new products and schemes, as stated. Terms are summarised below.
Gaming is playing a chance or skill-based game for a prize. Gaming excludes sport, which is not defined. The test’s chance requirement is undefined. The court decides if a game is chance. As in some legal systems, there is no formal de minimis level and no balancing act to determine which factor prevails. Any significant chance in the game meets the definition. However, small amounts of chance in a skillful activity, such as tossing a coin to start a chess game, are discounted.
Prizes can mean almost anything of value. However, gaming machines may award a player an extended playing experience that is not enough to be considered a prize. Social gaming, which is not regulated as gambling, requires this consideration.
Even if the player pays for the chance to win them and they are allocated by chance, in-game prizes or “loot boxes” are not gaming if the enhanced experience cannot be converted into real-world value (for example, by selling the items to other players). Casino games like roulette, blackjack, poker, dice, slot machines, and bingo are considered gaming.
Betting is the risking of value on a future uncertain event or a past unknown event or fact. – English law distinguishes various bets. First, there is pool betting, also known as pari-mutuel betting, in which the organiser collects stakes from participants and then returns a portion of the pool to winners and keeps the rest as a profit. Pool betting includes non-monetary prizes. Fixed-odds betting is where the operator (bookmaker) offers odds to potential customers that are calculated to deliver a ‘over round’ profit and are adjusted as volumes of bets on a particular outcome are received.
Two other forms of betting that were legalised under the GA. The first is betting prize competitions,9 which covers fantasy league contests and involves some form of prediction of an event within the meaning of Section 9 of the GA, but without a stake. Skill-based prize contest operators may struggle with Section 9’s scope and uncertainty. Second, betting intermediary. – A betting intermediary organises a peer-to-peer betting network where two parties directly bet. The intermediary operator organises the bids and offers marketplace, holds the stakes, and pays out the winnings (minus a small commission). The statutory definition of intermediary is broad enough to include betting agents and brokers. This can cause uncertainty in syndicates and advertisers where third parties help place bets. Finally, spread betting is convenient to discuss. Spread betting is not betting. It meets the definition under Section 9 GA, but Section 10 GA excludes it because spread betting is a financial regulated activity. Spread bets on sports or financial indexes are contracts for difference. The bookmaker predicts a spread of event outcomes. The participant chooses whether the result will be above or below the spread’s upper or lower limit. The staked amount is multiplied by the spread’s deviation to determine the win or loss. Spread betting advertising is restricted because it is riskier for bookmakers and players. However, the protective regime that applies to gambling operators does not apply to spread betting operators, creating an unsatisfactory regulatory position that puts vulnerable people at greater risk from spread betting than gambling.
Participants pay for the chance to win a lottery prize. Pre-determined lotteries, like scratch cards, and post-drawn lotteries, where all tickets are sold, are included. Public terms include raffle. Raffle is undefined legally. In practise, it refers to a lottery in which each participant buys a unique ticket and one is drawn to determine a winner. This differs from lotteries where players choose their own numbers, making it a matter of chance whether the numbers drawn match none, one, or more of the participants.
Lottery-style schemes that do not require payment or that rely heavily on skill do not fall under English gambling law. Skill contests or free prize draws. Thus, many marketing incentive consumer contests avoid lottery classification. For clarity, paying full price for goods to win a prize is not a lottery payment. – The ‘normal’ price is the price at which goods or services are sold, without an identifiable uplift for gambling.
Some activities fall under multiple statutory definitions, and the legislation has several more tests to classify them. – Roulette is a form of gaming that resembles a bet on a future uncertain event and a chance-based prize distribution, but these rules of disambiguation classify it as gaming.
Prize competitions are not gambling, but they may be regulated under contract law and consumer protection laws.
Gambling Law
Britain has long had gambling. Many forms of gambling were heavily regulated by location or participant type in the past. Gambling and lotteries have long been used by governments to raise funds. Great Britain has the largest gambling market in Europe (€16 billion) and has liberalised its gambling market over the past 60 years.
Casinos, adult gaming centres, high-street bookmakers, bingo halls, and gaming machines in alcohol-serving clubs are allowed under current law. British charities benefit from the National Lottery and other private lotteries. The current law allows remote gambling (online, by phone, etc.) by licenced and taxed foreign operators to British citizens. In summary, almost all forms of gambling are legal for those over 18, and some (lotteries and some small prize amusement machines) are legal for those over 16. Since 2005, gambling contracts (e.g., bets, gaming contracts, and credit for gambling) are legally binding.
Gambling should be allowed as a normal adult leisure activity as long as there are adequate checks to ensure that those who operate gambling are fit and proper and operate in a way that ensures fairness for the public and protections for the vulnerable and children.
State-owned Businesses
Private enterprise and free competition govern UK gambling. Private citizens and companies (UK-based or foreign) can apply for a gambling licence, and the number of licences is not limited as long as the operator meets the legislation’s fitness and propriety requirements and the regulator’s approval. The National Lottery is the exception to free competition. Although regulated by the Gambling Commission, this was founded in 1993 and has its own laws. The legislation requires a competitive tender to select a single National Lottery licensee. The licensee has a 10-year monopoly that was recently extended to 14 years and can sub-license some parts of the scheme. Due to its unique status, government backing, and prize limits in private lotteries, the National Lottery is protected from competition. UK licensees cannot bet on the National Lottery or EuroMillions. EuroMillions is not a pan-European lottery because no law allows it. Instead, it is a collaboration of several national lotteries based on a single draw number and a virtual pooling of proceeds. The Gambling Commission managed the 2022 National Lottery licence tender. Allwyn overthrew Camelot. Naturally, Camelot challenged the decision in court, which was resolved in autumn 2022 by Allwyn’s acquisition of Camelot. Thus, Allwyn will operate the National Lottery from 2024, starting a new era in English lottery law.
Land Disputes
English lawyers often misunderstand the British Isles and its legal subdivisions. The British Isles include England, the Republic of Ireland, Northern Ireland, Scotland, Wales, and the Channel Islands of Guernsey, Jersey, Sark, and Alderney, as well as the Isle of Man. Jersey, Alderney, and the Isle of Man are crown dependencies with distinct gambling laws. Gibraltar too.
The United Kingdom, with England, Wales, Scotland, and Northern Ireland, descends. Gambling laws differ in Southern Ireland. England, Wales, and Northern Ireland share many laws, but gambling law is different. Northern Ireland directly applies GA Sections 43 and 340. The Betting, Gaming, Lotteries, and Amusements (Northern Ireland) Order, as amended last year, contains the rest of Northern Ireland’s gambling law.24 Section VII discusses the new Northern Ireland regime.
‘Great Britain’, which includes only England, Wales, and Scotland, is the next level. The GA applies to this territory, but Scottish offences and procedures have different language and penalties.25
In England, Wales and Scotland, there are no special divisions or territories that affect gambling law, but local authorities and local licencing committees (which also licence alcohol and late-night entertainment establishments) set gambling premises licencing policy. Gambling rules apply to vessels, aircraft, and vehicles in Great Britain’s airspace and territorial waters.
Gambling Abroad
Before the 2005 GA, English law did not apply to gambling outside Great Britain. The English courts could not adjudicate crimes like unlicensed gambling unless the last act in the actus reus took place outside Great Britain. Someone offering unlicensed online gambling services from London would commit an offence, but someone offering gambling services to British citizens from abroad would not. Gambling advertising, which was complete when published or available to British citizens, was the only offence that could be tried in English courts.
The 2005 Gambling Act legalised online gambling in Britain. Thus, would the new law criminalise foreign gambling operators targeting British citizens? The first decade of the new regime saw a generous compromise. First, in accordance with European Treaty principles of freedom of movement of services and freedom of establishment of businesses, the legislation allowed operators established in the European Economic Area to advertise and offer services in Great Britain. White-listed states could also advertise and offer services. Operators in other states could still provide gambling services but could not advertise them (based on the approach to criminal justiciability discussed above and that had remained fundamentally unchanged, gambling would be outside the English criminal jurisdiction).
2014 amended the regime. By then, EU case law had established that Member States could restrict gambling services to licenced providers (French and Italian law are examples of this more conservative approach). British operators argued that the current approach disadvantaged them fiscally compared to white-listed states. GLAA changed the law. This required operators with gambling equipment in the UK or who knew or ought to know that British citizens were using their services (wherever their equipment was) to obtain an operating license and pay gambling duty on profits from business in Great Britain. Thus, operators with equipment in or targeting the UK market must obtain an operating licence and pay UK gambling duty for business with UK citizens. The new laws made advertising foreign gambling obsolete, so it was repealed.
How many foreign operators still serve British customers is unknown. The British Gambling Commission (the Commission) believes the new regime is being enforced. Since gambling offences are not severe enough to warrant extradition, the only obvious way the authorities can compel compliance is by asking banks and internet service providers to bar or refuse service to violators. For clarity, UK citizens can gamble with foreign operators even if they are not licenced. However, as UK gambling regulation tightens and penalties for noncompliance increase, the black market is more likely to target UK consumers.
The Commission recently required British licensees to demonstrate on objective grounds (presumably a legal opinion from a specialist lawyer) that their operations are legal in all states where they do significant business. However, the Secretary of State has the power to ban British licenced operators from doing business in any jurisdiction.
The law
Law and justice
The GA (as amended) and the National Lottery etc. Act 1993 govern gambling in Britain. The annual Finance Act amends the Betting and Gaming Duties Act 1981 to tax gambling. Over 70 statutory instruments detail the GA’s basic regime.
The regulator
The Commission regulates all gambling, including the National Lottery, under the GA. Birmingham-based Commission is a statutory corporation. Commissioners oversee the regulator’s daily operations, assisted by enforcement and licencing officers. The FCA oversees spread betting.
Land-based and remote gambling
The GA distinguishes remote and non-remote gambling. – Remote gambling includes any form of remote communication (telephone, internet, etc.) but not postal gambling (e.g., lottery tickets). Non-remote gambling is usually limited to licenced premises like betting shops, racecourses, casinos, and adult gaming centres, which must also be licenced by the local authority. Temporary licences for sports arenas allow gambling on a limited number of days per year. A combined licence lets an operator offer remote and non-remote gambling. A large bookmaker may offer betting through a chain of betting shops, telephone betting with those shops, and a website that offers betting and gaming. It would need a betting operating licence (non-remote and remote), a gaming licence (remote only) and a premises licence for each shop. Telephone betting may be covered by a full remote licence or an ancillary or linked licence allowing some remote gambling as part of a non-remote general betting licence.
Land-based gambling
The GA allows gambling in several locations, depending on the type of gambling and premises licencing requirements. The number of gambling establishments of a certain type is unlimited.
Casinos primarily offer table games, slot machines, ring games like poker, betting, and bingo. Table games and floor space determine casino size. Almost entirely due to the economic impact of COVID-19, Great Britain has 144 casinos, down nearly 10% from 2020.
Betting shops (sometimes called licenced bookmaking offices) can offer fixed-odds and pool betting and install a certain number of gaming machines (usually fixed-odds betting terminals). Racecourses offer sports betting in addition to bookmakers. Britain has about 8,000 such establishments, down from just over 10,000 a decade ago.
Bingo halls can offer bingo and gaming machines. The UK has about 4 million regular bingo players, despite the decline in organised bingo since the smoking ban.
In addition to the above gambling establishments, some locations allow gaming machines or equal chance gaming. These are:
- adult gaming centres (a form of ‘mini casino’ but offering only machine gaming rather than table games);
- licensed family entertainment centres (which provide amusements like ‘toy grabbers’ and ‘penny pushers’ mostly of interest to children but that may include some very low-value machine gaming);
- venues licensed for the sale of alcohol on the premises without food (essentially pubs); and
- private members’ clubs and travelling fairs.
Local planning authorities, not the Commission, grant and manage premises licences for clubs, theatres, pubs, restaurants, cinemas, nightclubs, and gambling venues. The application process is outside the scope of this summary of the law, but it is similar to alcohol licencing, taking into account neighbourhood characteristics, proximity to schools and churches, potential for public nuisance, and so on.
Remote Betting
Britain allows remote gambling. That means a Commission-licensed operator can offer gambling services to UK citizens via all forms of remote communication and using UK or foreign equipment. A Commission-licensed remote operator can provide gambling services to customers in any country using UK equipment. The Act allows remote and non-remote licences for gambling (betting, gaming, etc.). One licence typically allows remote or non-remote gambling. Ancillary licences allow non-remote operators to offer some remote services, such as a bookmaker’s telephone betting service, without a remote operating licence.
With widespread server deployment, it’s important to know what equipment is in the UK and whether it requires a licence.
The legislative rules for remote and non-remote operators are generally the same, but there are differences that take into account issues like fairness of random number generators, protection against underage gambling, and social responsibility issues that arise more acutely in remote gambling because the operator cannot physically oversee the players.
Other issues
This subsection lists other activities that the law licences in addition to operators.
Personal licences
First, there is the personal licence, which applies to individuals in gambling organisations who perform a management or practical function (e.g., croupier or pit boss). Personal licences ensure that operators’ trusted employees are fit and proper and personally accountable to the Commission for reporting key events. A personal licence gives the Commission “eyes and ears” inside an organisation and is a sign of quality. Personal licence applications are similar to operating licence applications, but the Commission’s due diligence is more limited.
Game maker
The GA recognises that those who make, repair, or install gaming machines have a high level of responsibility because they can influence gaming outcomes, even if they are not the premises operators. Thus, those who make, sell, or repair gaming machines must apply for an operator licence and ensure that all machines meet Commission technical standards.
The programme
Gambling software licencing is tricky. UK-based gambling software producers and suppliers must be licenced by the Commission. Gambling software is limited to remote gambling software, but its scope is broad. It can be difficult to determine whether a software provider—particularly one that provides third-party operators with access to equipment on which the software is hosted—has become so involved in the gambling process that it should be reclassified as a full operator. Back-office accounting software, for example, may not need licencing. The Commission added a subcategory of software licences for providers who host the software.
Illegal gambling
Finally, some common gambling does not require a licence. Lottery tickets can be sold in stores or on the street under premise-controlled gambling. Pools coupons can be purchased at newsagents, and private betting and gaming are allowed on private property without a licence. Betting activity, including acting as an intermediary, is exempt from both the primary offences under the Act (providing facilities for gambling or using premises for gambling) and can therefore be done without a licence.
Payment systems
Gambling accepts cash, bank transfers, debit cards, and other payment methods. Electronic money issuers can also sell a “code” or token for gambling. Except for lottery tickets, credit cards cannot be used for gambling. The Gambling Commission does not ban cryptoassets, but it has strict money laundering and source of funds policies. This makes it difficult for operators to use cryptocurrencies for payment or funding.
Licence application
Applications are accepted.
The Commission’s online e-filing system accepts gambling licence applications. The application asks about an applicant’s identity, beneficial ownership, suitability and expertise to hold a licence, source of funds, business plan, financial projections, and compliance with policies and procedures. All officers and owners with more than 3% beneficial entitlement (full checks for those with 10% ownership or more) are verified.
Some applications breeze through the 15–20-week process. Experience shows that most applications take months to process. The Commission conducts individual investigations and due diligence. In complex cases, the Commission’s Regulatory Panel, which includes several commissioners and executive members, may make the final decision.
The Commission will evaluate the application based on statutory criteria but with considerable discretion regarding suitability and likely compliance with licencing objectives. The Commission may grant, refuse, or conditionally grant the licence at the end. Certain licence conditions are imposed directly by statute, another group by the Licence Conditions and Codes of Practice, and a third by licensees individually.
Licences are perpetual but require annual fees. The Commission can review a license and revoke it if it finds a violation. Based on complexity and business turnover, each licence has a different application fee. By notifying the Commission, licensees can surrender or change their scope. The new owners of a licence holder must be investigated and approved if corporate control changes. If not, the licence is surrendered.
Non-compliance penalties
GA Sections 33–37 list the main sanctions. These state that unlicensed gambling facilities are criminal. Thus, operating without a licence or in violation of its conditions is the GA’s primary offence, punishable by up to 51 weeks in prison, a £5,000 fine, and licence revocation. Cheating at gambling, which carries a two-year sentence, is the GA’s most serious offence. Other offences include inviting minors to gamble, advertising gambling, and promoting an unlicensed lottery. The Commission or CPS can prosecute. Criminal prosecutions are reserved for serious crimes, such as unlicensed gambling. Although GA fines are limited, practitioners should be aware that a successful prosecution could result in an application under the Proceeds of Crime Act 2002 (or related legislation) for the confiscation of assets gained through unlawful conduct, such as illegal gambling proceeds.
The Commission can issue a warning letter, a financial penalty, licence conditions, or revoke the licence in addition to criminal sanctions.
Besides operators, those who fund or advertise gambling can commit ancillary offences. The Commission is unlikely to prosecute these or related inchoate offences unless a licensee is a clearer target.
Doing Wrong
Three licencing objectives underpin the GA. These include fair and suitable gambling, protections for children and the vulnerable, and crime-free gambling. Investigating officers can enter and inspect premises and investigate suspected wrongdoing for the Commission. Falsifying Commission information is a crime.
The Commission has prioritised money laundering and customer protection in recent years. Although the Commission can initiate prosecutions, it normally restricts its investigatory powers to receiving and distributing information for the benefit of sporting organisations (in betting integrity matters) and the police or National Crime Agency (in criminal matters like money laundering or dealings in the proceeds of crime).
Paying Taxes
Gambling is a profession. Thus, bookmakers and casinos will pay normal corporation tax. Sole traders pay income tax.
Gambling services are subject to gambling duty, which is generally 15% on net profits, except for remote gambling duty, which is 21% since April 2019. The duty applies to all operating licence profits from transactions with UK citizens (or all transactions if the operator is based in the UK). Betting, gaming, and amusement machine duties are calculated differently. Betting exchanges and intermediaries pay the same rate based on operator commission.
The National Lottery is the only lottery that must pay lottery duty, as all lotteries must use at least 20% of their proceeds for good causes.
Gambling services are usually exempt from value added tax (VAT), making operators liable for input VAT but unable to offset it against most of their output services.
Finally, distinguish operators from customers. Gambling winnings are usually tax-free for customers. The philosophy behind such a policy is that most customers will be net losers, so taxing winnings could lead to arguments that gambling losses were tax-deductible by parity of reasoning. In the modern gambling environment of online gambling, professional poker players, and betting exchanges, it can be difficult to distinguish a customer from an operator, so careful tax liability assessments must be made based on whether the gambler exhibits the “badges of trade.” However, case law generally holds that winnings are not taxable unless gambling is a business.
Ads and Marketing
Gambling advertising and marketing is often misunderstood. Britain allows gambling advertising. Advertising unlicensed gambling services is illegal68. ‘It is an offence to advertise remote gambling services capable of being used by British citizens or where the relevant equipment is located in Britain and where no relevant licence is held’.
That offence does not prevent UK gambling advertising if the services are not available to UK citizens. This has been controversial because many foreign operators found it commercially useful to advertise gambling services on the shirts of football teams whose matches were widely viewed on television (e.g., across Asia) and could therefore penetrate markets where such advertising (and gambling in general) was explicitly banned. The legislative regime does not specifically prohibit such advertising, provided that the operators effectively prohibit British citizens from using their services, and it is possible to obtain a UK licence that permits advertising, even though the British public is not heavily targeted. The Commission has strongly advised relevant sporting bodies not to accept sponsorship from unlicensed operators, even though there is no legal ban on unlicensed advertising in the UK.
All operators follow voluntary codes that regulate advertising content and style. The first is a voluntary code for gambling operators, but the Commission on Advertising Practise and the Advertising Standards Authority (ASA) set general and industry-specific rules for advertising in broadcast and non-broadcast media.71 Gambling should not be appealing to under-18s or considered a serious activity. All licences now require ASA compliance.
Yearly review
2022 saw economic conflict. After the 2020 and 2021 lockdowns and social restrictions on entertainment venues and sports, the UK’s entertainment and gambling economy has recovered. The pandemic’s rising inflation and interest rates, supply chain disruptions, and energy price increases have dampened that resurgence. The UK Gambling Commission reported that the market shrank by 16% in 2021. As it rebounded in 2022, gambling has shifted from land-based to online, with approximately twice as many land-based players as online players in 2019 to approximately parity in 2022. Online slot machine revenues almost doubled between 2015 and 2021, boosting sector growth.
2022 was a disappointing regulatory fallow. The Gambling Commission made some minor changes to the Licence Conditions and Codes of Practise (the first since 2020) requiring operators to interact with customers, but that was it. The government’s Gambling Act white paper was lost in politics for months, which was surprising and disappointing. Five Department for Digital, Culture, Media, and Sport ministers promised publication after a December 2020 call for evidence. Finally, on 27 April 2023.
Gambling regulation improved in other UK nations. The Betting, Gaming, Lotteries, and Amusements (Amendment) Act (Northern Ireland) 2022 amended 1985 legislation in April. – This was only the first step in modernising Northern Ireland’s gambling laws to accommodate remote gambling, but it did change opening hours and free prize draw rules to match the rest of the UK. Northern Ireland introduces a gambling cheating offence and court-enforceable gambling contracts. In a curious move, society lotteries differ from the rest of the UK in that rather than having a minimum contribution to good causes of 20%, this number is the maximum amount that can be attributed to expenses, making it almost impossible for an external lottery manager to operate in that jurisdiction.
In 2021, the Commission reported that problem gambling remains stable at 0.3% of participants.
In 2022, Alwyn, a consortium led by European lottery operator Saska Group, took over the National Lottery from Camelot, which had held the licence since 1993. Judicial review followed the decision. The challenge seemed to centre on the UK Gambling Commission’s scoring of the competing bids, though the details were not disclosed. Between March and September 2022, Camelot withdrew its challenge, almost simultaneously with Allwyn’s announcement that it was buying all of Camelot’s assets, suggesting that lottery operators are more aware of probability and risk than most. Allwyn will acquire the National Lottery licence in 2024.