Andrew Tait Consultant Solicitor
UK – Legal firm warns of risk to remote gambling licences
This article was first published in G3 Newswire, August 2017
Ince, a legal and professional services firm, is urging the British licensed remote gambling sector to prepare for the latest proposed changes to the Commission’s Licence Conditions and Codes of Practice (LCCP) or risk a licence review.
The proposed changes to reporting requirements under the LCCP will be implemented through revisions to licence condition 15.2.2 and are scheduled to come into force in April 2018. They will impact both B2C and B2B operators, including their group companies, in an extended effort to ‘keep crime out of gambling” and ensure that grey market revenue cannot be used to gain unfair competitive advantage in Great Britain by funding advertising and sponsorship.
The proposed changes, which follow a consultation on proposed changes to regulatory reporting, will require B2B and B2C operators to report details of the jurisdictions from which they derive 3% or more of their total group revenue Failure to report any relevant group company activity, in an attempt to avoid disclosure of revenue from grey markets will constitute a breach of revised Licence Condition 15.2.2 and is likely to lead to enforcement action by the Commission and potential licence reviews. The Commission has concluded, from the low level of reporting under the existing requirement, which is to report the fact that a group company advertises in a new jurisdiction for the first time, that many of its licensees are not complying with their current reporting obligations.
The Commission has now confirmed that White Label Operators (GB licensees who promote 3rd party brands under their licence as part of a brand marketing agreement) must perform sufficient due diligence on their contracted brand owners and associated companies, in order to protect their own licence. Those found to contract with or be associated with companies that have group operations in ‘grey’ markets, without assessing and being satisfied of the legality of those operations, risk a licence review. This review can result in a combination of any one or more of: a formal warning, substantial financial penalties, the addition of or amendments to licence conditions, the suspension of or revocation of the licence.
Ince urges all Commission licensed remote gambling operators to urgently review their group structure and activities in all markets to ensure that they will be fully compliant with the latest changes to the regulatory licensing regime.
Andrew Tait, Partner, Ince said: “The latest proposed changes by the Gambling Commission, confirmed by our clarification requests, highlight the need for all gambling operators to prepare for more rigorous scrutiny. In particular, operators need to ensure that they are not involved in the use of funds generated from markets where it is an explicit crime for companies they contract with, to provide (or through their group companies’ provide) facilities for gambling. Likewise they must ensure that they do not actively promote gambling without a licence in those jurisdictions where such a licence is required. As providing facilities for gambling in Great Britain without a licence is also a crime, the dual criminality test would also be satisfied and therefore a money laundering offence could also be committed under the Proceeds of Crime Act 2002.
“Companies found to generate revenue from grey or black markets and use it for competitive advantage in Great Britain will be seen to have an unfair advantage on firms raising funds from legitimate sources. Groups must be vigilant in their contractual relationships and reporting practices or risk facing catastrophic financial implications.”
“At Ince we pride ourselves as being experts in the gambling law industry and can provide clients with the intricate knowledge of the latest legislative changes. We believe that all operating firms should immediately ensure that they are compliant and seek the relevant advice to reach this point well before April 2018.”
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