Gambling

Written evidence submitted by and on behalf of the Jersey Gambling Commissioner (JGC) (GA 34)

The Commission is an independent statutory body entrusted with the licensing and regulation of gambling in the Bailiwick of Jersey.

This submission may be made public.

Key Points:

· The JGC wishes to specifically comment in respect of online gambling and social responsibility.

· The current inability of Jersey-based businesses to access the UK market because of whitelisting restrictions is seriously damaging the Island’s reputation and economy.

· The JGC strongly supports efforts by the (UK) Gambling Commission to enhance regulatory co-operation both at a bilateral and international level.

· The JGC is custodian of a Social Responsibility Fund that licensees are expected to contribute to. There is a mechanism for a compulsory levy if funding levels are not maintained. The purposes of the fund are education, treatment and research.

1) Jersey has spent a number of years updating its gambling legislation and the States Assembly approved a full online licensing regime in March of this year. In developing policy, the Insular Authorities took cognisance of the UK Act (as well as legislation in other first tier jurisdictions) and has developed a regime that broadly follows the key objectives. Jersey legislation and published Ministerial policy therefore mandates the JGC to follow the key guiding principles of keeping gambling crime free, promoting fair, transparent and responsible gambling and to ensure that the young and vulnerable are protected. The application of these key requirements in respect of e-gaming, including duties of suspicious activity reporting, software testing, age verification, self exclusion, technical standards and social responsibility requirements were all included within the new licensing regime. The key objectives in the Gambling Commission (Jersey) Law thus mirror those of the Gambling Act and show the close relationship between the objectives of the UK regulatory framework and our own.

2) These core licensing principles were incorporated into the articles of the Gambling Commission (Jersey) Law that the States approved in 2009. That law created an independent regulator fully separated from government along established international practice and which came into being in October 2010. It also created a Social Responsibility Fund for the provision of education, prevention of problem gambling and research. Any e-gambling company seeking to become licensed in Jersey will be expected to provide the Commission with a detailed plan of its social responsibility programme and how it intends to put it into effect. While the Gambling Commission (Jersey) Law provides for a social responsibility levy, it is expected that companies should voluntarily agree to make a donation to the Fund and the Commission will make review of this core licensing objective one of its premier tasks. The Commission receives advice on the use of the Fund from its Social Responsibility Panel, with representatives of the industry, together with health professionals and an independent Chair.

3) In developing this policy the Jersey Government was of course mindful that the Island’s regulatory regime had to be one that had equivalency with that in the UK in order to benefit from approval as a third country to advertise, the system generally known as ‘Whitelisting’. This was a cornerstone of Jersey Government policy in changing and updating the Island’s regulatory regime. The decision of the previous UK administration to reassess the operation of that policy and to effectively suspend applications to the Whitelist has been problematic, but the Insular Authorities understood that changes in policy needed to be considered. The present Government has continued this policy.

4) While recognising that the UK Government should have adequate time to reconsider policy, the drawn-out nature of change (now over two years) is placing Jersey at a distinct disadvantage compared to our neighbours in Alderney and the Isle of Man who were able to be whitelisted before the review. The current impasse now poses a risk for the Island as an internationally well-regarded regulatory centre. Given that the other Crown Dependencies have been accepted, if Jersey is not even allowed to apply for white listing, there is a growing risk that Jersey standards of governance and regulation will be perceived as inadequate. As the Island’s economy is in large measure dependent upon its international reputation for integrity and strong regulation, this risk is taken extremely seriously.

5) Although Whitelisting is only relevant for the UK market, it is nevertheless accepted as a standard by the international community and international business. It is a matter of public record that potential licensees have been dissuaded from applying for a Jersey licence because it was perceived not only that the Island was not whitelisted, but that the impasse regarding a change in policy in the UK was such that it was unlikely that this would change in any kind of timeframe acceptable to business. There is no doubt, therefore, that the current application of that part of the Act, or rather its non application, is causing the Island economic harm that runs into hundreds of thousands if not potentially millions of pounds of lost revenues from worldwide business.

6) The Insular Authorities would like to put on record that the Minister, the Rt Hon John Penrose, MP and his officials at the DCMS have been accommodating with their time and have engaged in a number of meetings with Jersey Ministers and officials. The Insular Authorities recognise that the way forward may take legislative change, but have offered as a means of meeting both jurisdictions objectives that Jersey could form part of a test bed for a new regime, given that the Island has not been influenced by past practice and does not have vested interests from seeking to retain existing operators.

7) Turning to international co-operation, the JGC has an excellent working relationship with the UK Commission and is party to a number of international bodies where both organisations participate. Both the UK Commission and the JGC are members of the Gaming Regulators European Forum, or GREF and participate in working groups on technical standards, e-gaming and problem gambling. This work is further developed at the international level in the International Association of Gaming Regulators where the UK Commission has chaired a remote gambling group that has made significant progress in developing common principles leading to common standards. Jersey has played a strong supporting role in this work and fully supports further development and integration of regulatory co-operation to mirror the international diversity of the industry we regulate.

8) Turning to social responsibility, Jersey has closely observed the licensing principles of the Act and the implementation of these by the Gambling Commission. Gambling in the UK is a mature industry and Jersey shares many of the same high street betting operators; it is evident that industry does take responsible gambling very seriously, conscious that not to do so would not only impact on regulatory compliance, but also operational reputation and integrity.  However, as in all sectors some firms are more conscientious than others and this does lead to certain unevenness in regard to funding. The Committee will be aware that major UK operators will all make large donations centrally to the GREaT Foundation and funds are then distributed to gambling charities.

9) The problem is the reliance on goodwill through donation rather than deploying a mandatory levy. We note that the Act makes provision for the drafting of regulations to create a levy and the mechanisms to exact a levy, but to date this has not been undertaken. Cognizant of the concerns raised by the Labour Administration on the shortfall in donations to a social responsibility fund, Jersey established a social responsibility levy through the Gambling Commission (Jersey) Law 2010 which can be exacted to 1% of gross win, and founded a Social Responsibility Panel in 2011 to manage the distribution of sums from the social responsibility fund.

10) Establishing a levy is by no means a panacea to securing greater donation. Exacting a levy on those operators who are already compliant could be interpreted as unfair, not only on fiscal grounds, as a percentage brings with it unevenness, but also damaging to the reputation of the industry. The fact that a levy had to be deployed suggests non-compliance across the sector. To date Jersey has not exacted a levy; instead it has requested donation based on market share, being premises across the betting estate. Conscious that some operators are struggling during the economic down turn, provision has been made to allow these firms to donate quarterly.  The Commission Law does, however, give flexibility in that the levy can be targeted on particular licence types, so while we may retain the donation route for one sector of the industry, we can focus a levy on other less compliant operations. 

11) In our opinion the UK Gambling Commission has made great strides in relation to responsible gambling, but it has to be proportionate to avoid charges of creating ‘cottage industries’ out of the funding for research, education and treatment of problem gambling.

June 2011

Prepared 29th July 2011