January 8, 2010 2:00 am
Online gambling operators based abroad will have to win a government licence in order to take bets from punters and advertise in the UK under tougher measures aimed at curbing problem gambling and match-fixing scandals.
The proposed stricter licensing regime announced yesterday, which requires legislation, highlights the dominance of online gambling in the UK and the difficulty for regulators of tackling an invasion of foreign-based operators.
It is also further indication of the spread of betting to sports other than racing, with football, cricket and tennis among the markets providing growing revenues for online operators.
Gerry Sutcliffe, the sports minister, also wants foreign-based operators to contribute to the statutory horseracing levy, which is paid annually by British bookmakers to help keep the racing industry afloat.
Such a move would counter the offshore relocation last year of William Hill's and Ladbrokes' online businesses, which horrified the racing industry as it threatened to blow a large funding hole in the levy.
But in a sign Mr Sutcliffe's plans will face legal challenges, the proposal has been branded illegal by the online gambling industry.
The plans are in part a response to demands from several bodies for a tougher UK licensing regime to protect the integrity of their sports by demanding that betting operators pay more attention to suspicious betting.
Some sports bodies also want the government to set up a regime similar to the horseracing levy to ensure operators provide them with a "fair return" for the money they make out of their competitions.
The Sports Rights Owners Coalition, whose members include the Premier League, the Football Association and the England and Wales Cricket Board, said: "A regulatory regime that controls all betting means that the integrity of sports is upheld and the potential for a fair return for those sports is secured."
But the plans are also an acknowledgement by ministers that the once-vaunted laisser-faire gambling regime has become outmoded. Tobias Ellwood, the Conservative's gambling spokesman, while welcoming the plans, said the government had "lost control of online gambling".
Under the 2007 gambling act, ministers attempted to control the online gambling market by awarding so-called "white listings" to offshore operators whose activities were regulated by approved jurisdictions such as Alderney and Gibraltar.
But Mr Sutcliffe's proposals give much more power to the UK's Gambling Commission, which will be able to insist that all online operators abide by requirements to protect children, contribute to research on problem gambling and report suspicious betting patterns.
Other countries such as France have anticipated the rise of online gambling and moved faster than the UK to create licensing regimes to cover overseas operators.
Simon Holliday, of gambling consultants H2 Gambling Capital, said: "Given that in 2006 the government wanted to make the UK the world centre of internet gambling, the fact we are now net importers of betting and gaming is very disappointing."
Mr Sutcliffe said the proposals were about making sure overseas firms contributed their fair share towards regulatory costs and problem gambling treatment. The latter is paid for through a voluntary system.
Regarding the racing levy, he added that he was "committed to making sure" that all operators taking bets on British races should pay their share. His ministerial statement made no mention of gambling taxation, an issue that his department says is for the Treasury to determine.
But Warwick Bartlett of Global Betting and Gaming Consultants said he believed the proposals were linked to a government desire to increase the tax take from gambling. "This is a bad day for the gambling consumer," he said.
Online operators claim they contribute millions to sports in commercial deals. Clive Hawkswood of the Remote Gambling Association said that it was doubtful whether the racing levy was legally justifiable under state aid rules.
He added: "We have said to the government that if they want to apply the racing levy to other operators, someone will issue a legal challenge in Brussels."
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