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Online Casino Laws: The Complete Guide

Gambling brings with it potential dangers. Strict online casino rules and regulations are vital to protect the player who wants to have a flutter online. The risk of being conned by a less than honest casino operator is one factor. But it is also important to have laws in place to protect the punter from themselves. In the UK alone, it is estimated that around 350,000 people suffer from a gambling addiction. Because of this, the UK government set up the Gambling Act in 2005, which has a broad scope designed to control all forms of gambling in the country. Read on to learn about online casino laws in the UK, and the context in which they reside.

Are Online Casinos Legal in the UK?

Gambling is outlawed in many parts of the world, but UK-based players have legal access to a thriving market replete with hundreds of casino sites. With the dawn of the internet, it quickly became clear that vast new regulation was necessary to control a pastime which was exploding in popularity, and had the potential to impact lives. Throughout the years, the government has sought to have a tight control on an industry that was traditionally associated with organised crime and unhealthy addiction.

Infographic with a timeline of UK gambling and laws

The Gambling Act of 2005 gave local authorities access to greater means of control in dealing with criminal behaviour related to gambling. It helped improve the standards of security and encryption on casino and betting websites, and it aided the prevention of exploitation of minors or vulnerable persons. The bill also gave birth to the United Kingdom Gambling Commission (UKGC), which has since become a widely-respected executive non-departmental public body of the government. The UKGC issues licences to suitors wishing to commence gambling operations, and by offering the ability to search for a UKGC licence it’s a good way for punters to verify the authenticity of a gambling website.

Who Regulates the Industry Then?

The UKGC took over duties from the Gaming Board for Great Britain in regulating lotteries, bingo, gaming machines and casinos. Since 2007, it also assumed responsibility for regulating betting and remote gambling, as well as protecting children and vulnerable people. The establishment of the UKGC meant the end for various other regulatory bodies.

And the concentration of authority has generally been regarded as a positive step. It’s sponsored by the Department for Digital, Culture, Media & Sport. Planning permission for high street bookmakers is handled by local authorities in England, Scotland and Wales, while spread betting is regulated by the Financial Conduct Authority.

What Are the Punishments for Breaking the Law?

Providing gambling facilities without a licence can result in a £5,000 fine and/or up to a year in prison. The same goes for illegally supplying online gambling software, inviting someone to participate in a chain-gift scheme or using premises to provide gambling facilities without a licence.

Cheating or facilitating cheating at gambling carries the same penalties, but it can also result in a two-year indictment. These are the maximum penalties set out in the 2005 Gambling Act, and the UKGC acts as the prosecuting authority.

Permitting children to gamble, or even employing minors in the gambling industry generally results in the same punishment, unless that person is a minor themselves, in which case the fine is £1,000. Breaking laws related to permits and licences (personal, operational and premises) normally result in a £500 fine. Exceptions include, when you fail to comply with a permit forfeiture order, or when you don’t act within the terms and conditions of a personal licence, which can both result in a £1,000 fine and/or up to a year in jail.

At the same time, punishments for breaches of advertising regulations have the same consequences. Meanwhile, if you don’t cooperate with a police officer you might get a fine of £1,000. Anyone holding or applying for a gambling licence is expected to inform themselves of the online casino laws or they run the risk of getting into trouble.

How Does UK Casino Law Affect Me?

UK residents over the age of 18 benefit from one of the best regulated online gambling markets in the world. The laws in place are designed to keep you safe, first and foremost. They exist to ensure transparency and to make it easier for you to find secure websites or apps on which to have a punt. The comprehensive framework of regulation has aided the growth of various organisations that support those with a compulsive gambling addiction, such as Gamble Aware.

Online casinos are encouraged to provide clear information regarding promotions and bonuses, and they are penalised if they veer from this path. Once a casino site has been identified as fraudulent, it will lose its licence and it will have no means to continue its operations.

In addition, the money you win from gambling is not considered as taxable income, meaning you get what you see on the tin. Bonus.

Why Do I Need to Verify My Identity?

Upon opening an account in an online casino, you will be asked to verify who you are. It can cause concern for some people, having to hand over personal information right from the start. But it’s extremely important and necessary. The company needs to check to see if you are old enough to gamble, whether you have self-excluded from gambling, and it needs to confirm your identity.

It’s possible to self-exclude from a gambling website as this was a measure introduced to help people with a gambling addiction. Meanwhile, identity checks are done to ensure you are not using criminal proceeds to gamble. The links between gambling and money laundering are well known. Casinos can face stern punishments for not reporting information that facilitates compliance under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations Act of June 2017.

In some online casinos, it’s possible touse Bitcoin, which enables the player to protect his/her anonymity. It is growing in popularity but also attracts a fair deal of controversy because it is considered an easy way to launder money.

Online Casino Rules: What’s the Deal?

Not all the online casino rules that you’ll find in the terms and conditions will be applied or enforced by the UKGC. Each operator has its own set of restrictions that a player must comply with. Terms relating to welcome bonuses and promotions will be scrutinised by the UKGC, but they vary from operator to operator. There is no specified restriction on the contents of a welcome bonus or promotion, besides the fact they must contain honest and contain comprehensive descriptions of the contents.

Terms of use will be clearly mentioned on the website of any reputable operator and these tend to contain pages and pages of restrictions designed to protect the casino. Some of the restrictions are legal requirements but many are implemented in case of unforeseen circumstances. For example, in the case of faulty software, a casino often states that it reserves the right to refuse the payment of winnings, as was the case with poor old Bruno Venturi in 2009.

Taxation: An Online Casino Legal Guide

Image of Victor ChandlerVictor Chandler – the first to recognise the importance of off-shore bookmaking.

UK-based players do not get taxed on their gambling winnings. Since 2001, they haven’t needed to be declared in a tax return. Previously, Betting Duty was at 6.75%, but Gordon Brown abolished it to dissuade bookmakers from moving overseas. This was replaced by a 15% Point of Consumption Tax on gross profits for gambling providers and bookmakers, and a Remote Gaming Duty, which means that providers must pay 15% duty on any UK-based bets, no matter where the providers themselves are located. It’s particularly poignant because many providers are based overseas in territories that apply low corporate tax rates such as Gibraltar and Malta. In practice, it means that betting and gambling companies shoulder the tax issues so that players do not have to worry about it. Victor Chandler, the man behind BetVictor, is credited with being the first gambling CEO to realise the benefits of moving his company off-shore in order to take on the burden of – albeit very low – gambling taxes in order to provide customers with tax-free winnings. The rest is kind of history, and the practice is almost universal in the UK gambling industry today.

Advertising Gambling Products in the UK

The advertising of gambling is also subject to strict regulations. The UKGC is able to harshly penalise operators who don’t advertise in a socially responsible manner. Operators also require a licence before promoting their products to British consumers. Outlawed are such things as exploiting the susceptibilities of children, suggesting gambling as a means to resolve financial troubles or linking gambling to seduction or sexuality. Nobody under the age of 25 can feature in gambling advertisements currently, and nothing related to youth culture can be portrayed. The permitting of gambling advertising, although regulated, is a controversial topic in the UK, and there is a growing pressure on the UKGC to do more and banish gambling adverts entirely.

Who Influences UK Gambling Law?

The UKGC is the regulatory body that deals with almost all UK Gambling laws, but, as mentioned, it is sponsored by the government’s Department for Digital, Culture, Media & Sport. Since it came into full power in September 2007, the UKGC has made use of its powers, and in 2014 its influence was massively increased to handle the remote gaming industry more comprehensively. All online operators in the UK suddenly had to obtain a licence from the UKGC to conduct their business.

There are many accounts suggesting that lobbying still exists in the gambling industry, including a war between land-based casinos and online gambling companies who are keen to exert their influence. Sheldon Adelson, chairman and CEO of one of the largest land-based casinos, the Las Vegas Sands, reputedly wants to bring about the end of internet gambling, while lobbying in the UK is nothing new.

What’s in Store for UK Gambling Law in the Future?

Image of GibraltarGibraltar.

With the UK set to leave the European Union, its gambling market could become a closed shop. Foreign gambling companies may have little to no access to the market. Their access is already very limited, but Brexit could see them struggle to get a UKGC licence. It’s mandatory to be licenced and taxed by the UKGC to operate in the UK gaming market.

The biggest impact of Brexit may be on Gibraltar. Over 30 major gambling companies with UKGC licences are based there, including 32Red, 888, and William Hill. Over 10% of Gibraltar’s workforce are employed in the gambling industry. Gibraltar wants to stay in the EU and remain in the single market. Leaving the EU would lose the Mediterranean outcrop its tax advantages. The UK would have the right to impose domestic tax on Gibraltar because for the purposes of the freedom to provide services, Gibraltar and the UK would be treated as one entity.

How Does UK Law Compare to Other Countries?

Every country has a different set of online casino laws and a different history associated with gambling. Even though much of Europe is to some extent governed by the legislation that the European Union passes, each country is still responsible for passing its own laws, and especially in the gaming industry. Consequently, understanding the complexities of gambling legislation around Europe is a challenging process.

In the UK, online gambling is legal and well regulated. UK punters can gamble with operators that have a UKGC licence, whether they operate inside or outside UK borders. It means the country is an attractive prospect for operators. But, this is far from the case in some other territories, as you’ll see in this online casino legal guide.

The United States

Image of a Las Vegas casinoAre online casinos legal in the US? The legality of different casino and betting operations varies from state to state. Gambling laws in the US are at best confusing. Since the 2006 Unlawful Internet Gambling Enforcement Act was passed, casino sites stopped permitting US-based players. However, it wasn’t the case with all operators, with some arguing they could still provide gambling services to US customers if they operated from another country. In addition, many US punters took the hunt and stayed away from gambling sites, but many more continued to play.

Poland

Image of a Polish casinoAfter a corrupt pro-gambling lobby within the government was uncovered in 2009, the then-Prime Minister Donald Tusk waged a war against online casinos. Poland had for many years taken a relaxed attitude towards gambling until the scandal involving Sports Minister Miroslaw Drzewiecki surfaced. Tusk drafted a law that would have seen all forms of online gambling outlawed. Gambling Acts were passed in 2009 and 2011 that made all forms of online gambling illegal apart from sports betting. Nevertheless, authorities rarely enforce the laws, and the severe penalties are seldom issued while the online gambling industry in Poland is worth around a massive £1 billion.

Monaco

Image of a casino in Monaco The principality of Monaco is the second smallest country in the world, and it is renowned for being the playground of the rich and famous, as well as for having some of the most luxurious casinos in the world. However, if you happen to be from Monaco, you aren’t allowed to gamble in these high-stakes casinos. You can’t even enter the premises. It’s been the case since the late 1800s, and it was a plan devised by Charles III, Prince of Monaco to bring foreign money into the country. To allow citizens of Monaco to spend cash there would be counter-productive, and the money from the bourgeoisie of Europe began to flood in.

Monaco’s citizens are free to gamble online, despite the initial plans to ban them from gambling on foreign websites.

China and Macau

Image of a Macau casino Macau is the richest casino destination in the world, generating $45 billion in gross gambling wins in 2013. The 33 casinos handle more money than every casino in the USA combined. As a special administrative region of China, it is flanked by the country with the world’s largest population, where gambling is outlawed. Additionally, the Chinese are known to be fond of gambling, and the first lottery betting slips were found there from around 200 BC.

In addition to the land-based action, online gambling is entirely permitted, although Macau does not licence operations. Gambling tourism makes up around half of the economy, by far its biggest source of revenue.

Legal Guide to Online Casinos: Conclusion

While it is fine to gamble online for real money in the UK you need to be careful when you travel abroad. If you take your laptop and you are logged into your online casino account, you might get into trouble. Many parts of the world take a strong anti-gambling stance. For instance, all Islamic countries ban the activity because it is mentioned in the Quran as a sin. Are online casinos legal where you are headed? Just be sure to do your research before you take a trip.

The future of online casino laws may have more dramatic twists and turns yet. It will be interesting to see how lawmakers view the impact of virtual reality casinos, and the influence of other technologies further down the road.