Gambling

Written evidence submitted by the Isle of Man Government (GA 052)

Introduction

This document provides the Isle of Man Government’s response to the invitation extended by the Culture, Media and Sport Committee on 17 May 2011 to comment on gambling and in particular the implementation and operation of the UK’s Gambling Act 2005.

Whilst the Committee has invited views on a wide range of aspects, this response refers primarily to the impact of the proliferation of off-shore online gambling operators on the UK gambling sector and what effect the Act has had on this.

The scope of the Isle of Man Government’s response

As a self governing British Crown Dependency, the Isle of Man is a small, self-reliant country that believes in working hard and playing by the rules. Our independent spirit, enterprise and innovation have made the Island a successful centre for quality international business. We promote a thriving, diverse economy; which provides jobs for our people and revenue for our public services. We are also a democratic, responsible country with a reputation for supporting international action against financial crime and tax evasion and we play a positive role in the global economy.

The Isle of Man has its own legislative framework for online and terrestrial gambling, which is regulated by the Isle of Man Gambling Supervision Commission. In 2007 the Island was designated - "as a country to be treated as if it were an EEA state" under the provision of  Section 331 of the UK Gambling Act 2005. In the Isle of Man licensed operators are regulated by the Isle of Man Gambling Supervision Commission.

The Isle of Man Government’s policy is to provide a well regulated jurisdiction for those companies wanting to legitimise their online gambling businesses by complying with strict regulations to prevent crime and money laundering; protect the young and the vulnerable and create a safe and fair environment for those persons who wish to participate in on-line gambling.

This consultation response is therefore limited to commentary on the Isle of Man Government’s experience of the UK’s Gambling Act 2005, in legislating, regulating and overseeing operators supplying gambling services to the UK customers.

Response to the Committee’s specific questions:

· How effective the Act has been in its core objectives to:
- ensure that gambling is maintained crime-free and conducted in an open and fair manner,

- protect children and vulnerable people from the adverse effects of gambling,
- update the legislative framework with regards to online gambling;

The introduction of the UK Gambling Act 2005 which includes the provisions to specify a country or place to be treated as if it were an EEA state for the purposes of allowing gambling operators located in the designated country to advertise in the UK, ensures that the core objectives of the Act are fully reflected in the legislation of those countries successful in obtaining white-list status.

· the financial impact of the Act on the UK gambling industry;

The Isle of Man Government has no observation to make with regard to this specific question.

· the effectiveness of the Gambling Commission since its establishment, and whether it represents good value for money;

The Isle of Man Government has no observation to make with regard to this specific question.

· the impact of the proliferation of off-shore online gambling operators on the UK gambling sector and what effect the Act has had on this;

Under the UK’s Gambling Act 2005, the Department of Culture, Media and Sport (DCMS) has been able to designate particular jurisdictions as white-listed for the purposes of accessing the UK market. It is the view of the Isle of Man Government that through the UK Gambling Act, many of the off-shore operators that had proliferated during the infancy of internet gambling are now licensed in the UK or are licensed in jurisdictions which are white-listed by the UK, thus coming under the scrutiny of the UK and meeting UK consumer protection standards or higher.

The approval of the Isle of Man as a white listed jurisdiction effectively extended the UK consumer protection standards to UK consumers’ playing on sites located off-shore on the Island. Furthermore, the impact of the Act resulted in a number of operators in non-white listed jurisdictions migrating their operations into the UK and white listed jurisdictions where they are required to fully comply with the UK standards. This migration trend continues today allowing UK consumers to enjoy high standards of consumer protection as a result when operators established in the Island.

The approval of the Isle of Man as a white-listed jurisdiction effectively extended the UK consumer protection standards to UK consumers’ playing on sites located off-shore on the Island. Furthermore, the Act resulted in a number of operators in non-white-listed jurisdictions migrating their operations into the UK and white-listed jurisdictions where they are required to fully comply with the UK standards. This migration trend continues today ensuring UK consumers enjoy high standards of consumer protection as a result.

The Isle of Man has specific legislation and robust supervisory requirements for its online gambling sector and this framework provides a number of unique protections for all consumers, including those from the UK, over and above what are considered regulatory norms. This means that UK consumers, who may have previously given their custom to unregulated entities on the internet and who now give their custom to Isle of Man operators enjoy significantly higher levels of consumer protection than before the Act was introduced.

On Isle of Man licensed sites, amongst the protections that are offered to all players, are:

· Mandatory segregation and protection of player deposits and winnings;

· Mandatory annual problem-gambling levy on all operators, half of which has traditionally been remitted to RIGT/GREAT to assist with research and treatment of gambling addiction;

· Mandatory problem gambling functionality requirements to allow players to limit stakes or losses as well as to self-exclude and seek help with any emerging problems;

· Mandatory evaluation of every game by an independent software testing company to ensure compliance with regulations on fairness and data integrity;

· Intervention and resolution of disputes between players and operators;

· Implementing a rigorous compliance programme which checks operators’ compliance against a large body of detailed law and regulation, whilst thoroughly screening new applicants for integrity, competence and fitness of model. The current application process undertakes 114 discrete checks, a large majority of which cascade into substantial procedures themselves.

· why the Act has not resulted in any new licences for casinos or "super" casinos;

The Isle of Man Government has no observation to make with regard to this specific question.

· the effectiveness of the classification and regulation of gaming machines under the Act;

The Isle of Man Government has no observation to make with regard to this specific question.

· what impact the Act has had on levels of problem gambling?

The Isle of Man Government has no observation to make with regard to this specific question.

Summary

The Isle of Man Government believes the Act has been effective in ensuring the Island’s online gambling operators are providing a compliant and well regulated proposition to UK customers, which fully meet the obligations laid out in the Act.

The UK customers benefit from the increased competition and in the case of Isle of Man based operators, the innovative competitive behaviour has resulted in the customers receiving extra benefits, for example, through the mandatory segregation and protection of player deposits and winnings.

July 2011

Prepared 1st August 2011