Peter Howitt gives evidence on behalf of the GBGA re Point of Consumption to the Gambling (Licensing and Advertising) Bill Public Bill Committee at the House of Commons on Tuesday 12th November.
“The [proposed] regulatory regime does not have a precedent in terms of how it is intended to operate and how the UK will effectively exercise regulatory control over its licence holders, who may be based anywhere in the world. As you may know, in financial services there is a good regime that works well in an area of sensitive economic activity that is often cross-border. That is the passporting regime, and I believe that the FCA will be here later today. The regime requires and relies on the fact that you have to have some nexus with the person you license and regulate—not just license—to be able to interrogate them. I do not mean that in a harsh way, but in the sense of being able to understand exactly what you are controlling and supervising. We think that the proposals you have put forward are a very poor way of achieving the objectives.
There are three main things that we expect to happen. The first is an increase in unlicensed and unregulated supplies to UK consumers, which cannot be the objective of the Bill.
The combined effect of increased and, to some extent, duplicative licensing costs for people who are already very well regulated, as well as taxation, however that is introduced, mean that you are going to make it very attractive for UK consumers to go elsewhere, particularly if the costs are too high on both sides. As we have said, you can try to introduce as many enforcement measures as you wish, but if America could not do that when it was trying to restrict online gambling, it is difficult to see why the UK believes it will have a better result.
The second thing that we think the proposal will lead to is licensed but poorly regulated operators, because you are not going to be relying on a “home state, host state” approach, which works very well in financial services and is largely how it works at the moment. You are then putting a lot of emphasis on the UK Gambling Commission and its ability to exercise control in foreign territories, where there is no legal basis for it to do so. We do not understand why you would move to that model when a brief analysis of other forms of economic activity, such as financial services, shows that it would be a terrible way to regulate. It is entirely unprecedented for a major country to seek to regulate people who can be anywhere in the world, with no ability to deal with those people, to manage them and know them.
..The third thing…is that there could be an unusual unintended consequence. There may be operators around the world who have few transactions in the UK who will be required to get a UK licence on slender premises. The definition of whether you will need a UK licence under this Bill will mean that nearly anyone who provides gambling services could justifiably say, ‘I need a UK licence, because it may be available to UK consumers and I can’t properly block them.’ Those people will now have what you might call a flag of convenience—they will have a kitemark that they can show to the world, which says, ‘I am regulated by the UK.’ Consumers in other territories are entitled not to be regulatory experts and would expect that that meant something.
Full transcript of the Committee hearing can be found here:
- UK Court rules that the Point of Consumption Licensing Regime is lawful - 10th of October, 2014
- EC Recommendation is good for online gambling market - 16th of July, 2014
- “Unlawful’” Gambling Law Poses “New Danger” for Consumers - 18th of June, 2014