Memorandum from Alderney Gambling Control
Commission (DGB 18)
1. INTRODUCTION
1.1 The Alderney Gambling Control Commission
was established three years ago by the States of Aldemey to regulate
remote gambling. The Commission is an independent and non-political
body, consisting of a Chairman and three members, with extensive
international experience of gaming, regulation licensing and finance.
Three members of the Commission are based in the UK. A short CV
of the members of the Commission is set out in Appendix A. The
activities of the Commission are supported by its own Inspectorate,
directed by the CEO of the Commission. Details of the activities
of the Commission can be found in the attached Annual Report for
2002.
1.2 On the basis of the legislation enacted
by the States of Aldemey, the Commission has positioned itself
to offer a regulatory environment that is likely to attract those
operators who seek a comprehensive and tightly controlled regime.
This is not what is typically offered elsewhere in the world.
There are currently about 2,000 internet gambling sites operated
by approximately 350 operators from jurisdictions other than Alderney,
of which only a handful are regulated in any meaningful way.
1.3 The Commission currently regulates 10
licensees. Most are probably known to the Committee. They are
subsidiaries of well known and reputable land-based gambling operators
and include companies such as the Ritz, Rank, SkyBet and Attheraces,
which are based in the UK, PadiyPower, which is based in Ireland
as well as The Venetian, WagerWorks and Harrali's, based in the
USA.
1.4 The Commission is a member of the International
Association of Gambling Regulators (IAGR), the International Masters
of Gambling Law (1MGL) and the Gambling Regulators European Forum
(GREF), where it participates with the Isle of Man as an associate
of the Gaming Board for Great Britain.
1.5 It is relevant to mention that at the
last meeting of JAGR, the Alderney Commission was asked to take
the lead in establishing a Working Group on remote gambling, which
will identify and comment on regulatory issues. We anticipate
that the Gaming Board for Great Britain will join this group.
2. PROPOSED REMOTE
GAMBLING POLICIES
FOR THE
UK
2.1 After three years of experience of regulating
remote gambling, the Commission welcomes the decision by the UK
Government to allow regulated remote gambling and also endorses
the proposals contained in both the draft Bill and The Policy
underlying the draft Bill, which were published in November 2003.
2.2 In particular, we support the following
principles, which are substantially incorporated in our own regulatory
framework:
— the regulation rather than prohibition
of both the operation and playing of remote gambling games;
— proteclion of customers against operators
who may be subject to less stringent regulation;
— the introduction of measures to prevent
children gaining access to gambling sites;
— the introduction of licence conditions
to protect the vulnerable;
— agreeing standards with other jurisdictions
to facilitate cross-border gambling; and
— maintaining high standards in respect
of remote gambling systems, processes and operations.
2.3 We note that the draft Bill and The
Policy do not make specific provision for the approval of system
and software providers. This seems to be a material omission.
The providers of software in the remote gambling industry can
best be compared with the manufacturers and suppliers of gambling
machines of terrestrial casinos. The significant difference is
that a gaming machine only affects a small part of the casino
operation, while remote gambling software in effect constitutes
the whole casino. It is the software providers who develop and
maintain software which ensures the games are fair and that the
systems are secure and auditable. Furthermore, it is common practice
in the remote gambling industry for casino operators to contract
with software providers to operate their casinos on a revenue
sharing basis.
Therefore, although we recognise the intention
of the UK Government to test the software that will be used in
remotely operated casinos, we suggest that consideration should
also be given to the licensing of software and system providers
to ensure that they are "fit and proper".
3. ADVERTISING
BY REMOTE
GAMBLING OPERATORS
OUTSIDE THE
UK
3.1 Although the draft Bill and The Policy
do not contain any specific provisions indicating the final position
of the UK Government in respect of advertising by operators based
outside the UK, we understand from discussions with DCMS that
consideration is being given to the possible prohibition of advertising
by operators outside the EEA.
3.2 From our discussions with DCMS it seems
that the most important consideration for introducing such a prohibition
relates to the protection of UK residents from remote gambling
operators that are subject to less stringent regulation.
3.3 We fully support the principles of both
the proper regulation of remote gambling and the protection of
UK residents. However, we respectfully request that in finalising
the UK policy and legislation on advertising by non-European operators,
consideration be given to the following:
— Alderney, as is the case with the
other Channel Islands, is not a member of the European Union.
Its relationship with the European Union is governed by Protocol
3 to the UK's Act of Accession, which relates principally to trade
in goods;
— Alderney has over the last three
years established itself as a "first tier" remote gambling
jurisdiction. This is evident from both the status it enjoys within
the international regulatory community and the quality of companies
that have already sought and obtained licences in Alderney, and
— Alderney is actively engaged in the
regulation of remote gambling on the basis of principles which
are very similar to those which are proposed for the UK.
4. If invited to do so, the Commission will
be glad to provide oral evidence to the Committee on any of the
matters referred to in this memorandum. Indeed, we would welcome
the opportunity to share in more detail our experiences in regulating
the remote gambling industry.
December 2003
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