Online Gambling Licensing in the UK
Regulation
All online gambling activities in the United Kingdom of Great Britain are regulated by The Gambling Act 2005 elaborated by the UK Gambling Commission. Betting (whether on sport events or any other happening), gaming, and lotteries can be made available from an online gambling website located on the territory of UK if the appropriate remote gambling license is held.
The Gambling Act 2005 maintains the distinctions between gaming, betting, and the participation in a lottery and in certain aspects continues to regulate each of them differently. It starts from a principle that all commercial gambling is illegal unless provided by operators who hold the relevant operating licenses. The Act 2005 incorporates the principle that both terrestrial and online gambling will, so far as possible, be regulated in parallel. It, therefore, provides a structure for the regulation of online gambling, which is defined as gambling in which people participate by using ‘remote communication’.
UK gambling law incorporates ‘licensing objectives’, and the Gambling Commission must, therefore, always have in mind as its paramount consideration:
- preventing online gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime;
- ensuring online gambling business is conducted in a fair and open way;
- protecting underage and vulnerable persons from being harmed or exploited by online gambling.
Licensing
To operate an online casino in the UK, the business holder requires one of the following as appropriate:
- a casino operating license;
- a bingo operating license;
- a general betting operation license;
- a pool betting operation license;
- a betting intermediary operation license;
- a lottery operation license.
A license permitting remote gambling will not also permit terrestrial operation. A license may permit more than one of the activities listed above, i.e. online gaming business operator that offers both casino games and betting would need only one remote gambling license covering both aspects.
Specific provisions in the 2005 Act relate to the provision of ‘gambling software’, which is defined as computer software for use in connection with remote gambling. To provide such software, the supplier will need a gambling software license.
The process under which an applicant applies for a remote operating license is detailed and thorough. As a preliminary, the applicant must:
- Identify the activity which he intends to be authorized by the license;
- Specify an address in the UK at which the documents can be served on them;
- State whether the applicant or their relevant principles have been convicted of an offence.
Any potential applicant must carefully consider, and seek legal advice on, the application process, the forms they must complete, and the detail they must supply. In considering the application, the Gambling Commission is directed by the 2005 Act to carry out the three licensing objectives listed above. The commission must also take into account the applicant’s suitability to carry on the business, as well as the suitability of the equipment which is to be used. The commission must also have regard to the integrity of the applicant and of other people relevant to the application, as well as the competence of the applicant to carry on the licensed activities in a manner consistent with the three licensing objectives. The commission must be satisfied with the financial (and other) circumstances of the applicant (and other people relevant to the application). These issues are addressed in a Statement of Principles for Licensing and Regulation, which the Gambling Commission Applies. All the needed documents needed to apply to receiving a license can be found at the official website of the Gambling Commission www.gamblingcomission.gov.uk.
Personal Licenses
The 2005 Act states that before the holder of an online gambling license can start its legal business conduct, those individuals who hold a so called ‘specified managed office’ in connection with the provision of the facilities for gambling must hold personal licenses. This means those who are responsible for the following functions, whatever their actual job title, unless exempt under the small-scale operator exemption:
- overall strategy and delivery of gambling operations;
- financial planning, control, and budgeting;
- marketing and commercial development;
- regulatory compliance;
- gambling-related IT provision and security;
- any function influencing the outcome of the gambling;
- any function relating to receiving or paying money.
Individuals who occupy more than one of these management positions at the same time only need to hold one personal license.
Examples of those who need a personal license include the chief executive officer, managing director, executive chairmen, chief operating officer, financial director, Marketing director, IT director, etc.
The procedures by which personal licenses are issued have been specified by the Gambling Commission and the application forms are also available at www.gamblingcomission.gov.uk. Once granted, a personal license will remain in force indefinitely unless it is surrendered or lapses or is forfeited or reviews in the same way as the operating license itself. No individual can hold more than one personal license. although that license may authorize to perform more than one function.
Related Fees and Taxation
Initial and annual fees are payable for online gambling operating licenses and personal licenses are regularly updated. Currently the Gambling Commission stated the following fees in accordance to the categorization by annual gross gambling yield and license types.
Online casinos, Bingo, and Betting are categorized in accordance with the table below.
| Category F | Category G | Category H | Category I | Category J |
|---|---|---|---|---|
| Up to £5 million | £5 million - £100 million |
£100 million – £200 million |
£200 million – £500 million |
Over £500 million |
Betting intermediaries (trading rooms only) are judged on annual gross gambling yield in the following categories:
| Category F | Category G | Category H |
|---|---|---|
| Under £0,5 million | £0,5 million – £6 million |
Over £6 million |
Gambling software license fee categories are all determined by the value of annual gross sales:
| Category F | Category G | Category H |
|---|---|---|
| Up to £ 500,000 | £500,000 or greater, up to and including £6 million |
Greater than £6million |
Annual processes determine the fee categories for remote lottery operators:
| Lottery Operating License | Category F | Category G | Category H |
|---|---|---|---|
| Lottery operating (external manager) license | Up to £500,000 | £500,000 – £6 million |
Over £6 million |
| Lottery operating (society) license | Up to £100,000 | £100,00 – £500,000 |
Over £500,000 |
Relevant Fees for the main categories of remote operating licenses are:
| Operating License Type | Application Fee (£) | ||||
|---|---|---|---|---|---|
| Category | F | G | H | I | J |
| New Casino | 6,860 | 13,703 | 20,580 | 30,148 | 39,569 |
| Existing casino | - | - | - | - | - |
| Bingo | 3,430 | 7, 546 | 17,130 | 20,580 | 30,148 |
| General Betting | 3,430 | 7,546 | 17,130 | 20,580 | 30,148 |
| Pool betting | 685 | 1,713 | 5,139 | 5,139 | 5,139 |
| Betting Intermediary | 6,680 | 13,703 | 17,130 | 20,580 | 30,148 |
| Operating License Type | Annual Fee (£) | ||||
|---|---|---|---|---|---|
| Category | F | G | H | I | J |
| New Casino | 12,733 | 35,885 | 69,658 | 110,820 | 146,282 |
| Existing casino | 12,733 | 35,885 | 69,658 | 110,820 | 146,282 |
| Bingo | 12,733 | 35,885 | 69,658 | 110,820 | 146,282 |
| General Betting | 1,500 | 69,658 | 110,820 | 146,282 | |
| Pool betting | 1,500 | 35,885 | 69,658 | 110,820 | 146,282 |
| Betting Intermediary | 12,733 | 35,885 | 69,658 | 110,820 | 146,282 |
Taxation
In addition to any payroll tax and to the relevant property taxes which are payable on a UK operation, there are specific taxes applicable to online gambling. For remote betting the General Betting Duty is 15% of the operator’s gross profit and for remote gaming a newly introduced Remote Gaming Duty is payable at, effectively, the same rate. For a betting exchange or a pool/pari-mutuel betting operator the rate is 15% of the operator’s commission.
Thus, in all online gambling the tax, in addition to other mainstream UK taxes, is effectively 15% of the operator’s revenue.
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