Today, Casino Guardian introduces you to an interesting interlocutor with years of professional experience in Gaming Law – Mr. Tom Grant from the London-based boutique law firm Grant Legal.
We contacted Mr. Grant, asking him to share his opinion on some of the hottest topics related to the UK gambling legislation, current and upcoming regulatory changes, and possible effects BREXIT could have on the country’s gambling regulation.
First things first. Please, introduce yourself to the readers of Casino Guardian.
I’m Tom Grant and I’m a general commercial lawyer with a special interest in gaming law. Having spent nearly 20 years both in private practice and in-house, I have recently decided to set up my own law firm called Grant Legal. The aim is to work with a range of clients who want commercially-minded legal advice at reasonable rates.
Your areas of practice include mainly Commercial Law, Gaming Law and Property Law, is that right? What made you interested in Gaming Law?
Yes, that’s right – the practice itself is not purely gaming-focussed but, of course, I’ve spent the last 11 years in the gaming industry and have built up a wide network of friends and colleagues within the industry. So, naturally, many of my clients are from the gaming sector. Like so many of these things, I fell into Gaming Law. In 2006, I was working for a law firm in the City when an in-house role with Rank Group plc came up. I knew little about gaming law at the time but quickly discovered that it was something that really interested me. It has an interesting blend of innovation, commercial dynamism and, of course, regulation.
Currently, the gaming market is undoubtedly one of the most dynamic ones on a global scale. We presume that makes the legislation and licensing procedures pretty dynamic, too. Is that so and why?
Yes, to a certain extent that’s true but, equally, the gaming market is highly innovative and fast-moving, perhaps more so than any other regulated industry. The challenge regulators are presented with is that they often find themselves having to play catch-up and are not always able to move at the same pace. Whilst the licensing regime in the UK, for example, is arguably the most robust of its type in the world, it often has to be reactive as well as proactive.
Up to date, the UK is known as one of the countries where the gaming market is well-regulated. Why is it so important for the competent authorities to make gaming companies apply for operating licences?
Keeping gambling fair and safe is the cornerstone of the Gambling Commission’s statutory responsibilities. In my view, effective regulation is wholly reliant on accountability. If there isn’t a regulatory regime which requires gaming companies to obtain operating licences, then regulation becomes toothless. In that scenario, the market would become flooded with operators who would be free to do as they please. The first casualty of an unregulated market is player protection. Its critical, therefore, that gaming regulators ensure that the entry requirements provides consumers with strong protection.
Are the licensing procedures for getting a gambling licence really that tough? Why?
Not unduly so. I would say that the licensing regime in Great Britain strikes the right balance. There are other licensing regimes that do seem overly intrusive, particularly when it comes to probing the personal details of key employees and investors. The application process in Britain rightly includes an appropriate level of probity checks to ensure that applicants are fit and proper. As importantly, it is also designed to ensure that successful applicants are properly prepared to adhere to their Licensing Conditions and Code of Conduct once they receive their licence. All licensees need to have the requisite procedures in place and so the correct approach is to ensure that these form part of the application process. In my experience, applicants can save themselves a lot of time and money by front-loading the work on their application to ensure that their application proceeds smoothly. An incomplete or under-prepared application will only incur delay down the line.
Is there a way to make the licensing requirements and procedures more favourable to operators? Will such an action be legally and economically justified?
I don’t think it’s a question of what is “favourable”. In their recently published Business Plan for 2017/2018, the Gambling Commission acknowledged that they will continue to “evolve” to ensure that licensing applications are dealt with swiftly. In terms of the requirements placed on licence holders, the Gambling Commission’s key focus continues to be to ensure that licensees meet their regulatory obligations and provide consumers with strong protections. There is a balancing act here: it is not the intended role of the Gambling Commission to restrict growth or innovation – it is not a case of regulation for regulation’s sake – but, equally, they must ensure that requirements and procedures are respected and observed. The Gambling Commission understandably want to ensure that licensees should not consider the act of obtaining their licence as a tick-box exercise but rather that they must understand that their ongoing regulatory obligations are properly applied at an operational level. To that end, I don’t anticipate any relaxation of licensing requirements and procedures.
BREXIT literally shook the news agencies, due to the serious consequences it is expected to inflict on both the EU and the UK. Could Britain’s exit from the EU lead to any legislation and regulatory changes?
The starting point is that the UK, including Gibraltar, has not yet left the EU and EU law will continue to apply in the territories of the UK and Gibraltar until Brexit is a reality. At this stage, it’s not clear what the terms of Brexit will be and we are still only at the outset of the negotiations period. The reason why we may not see any direct regulatory impact is that there is no system of mutual recognition of gaming licences in the EU gaming sector. Contrast that with the financial services sector where national licences are effectively passported to other EU Member States. A gambling operator that is licensed in one EU Member State will not automatically be permitted to provide the same services in other EU Member States. To that end, the likelihood of any meaningful regulatory change is slim but, of course, those negotiations remain a watching brief.
What do you think, would BREXIT have an impact on British Overseas Territories, such as Gibraltar, and Crown Dependencies, such as the Isle of Man and Alderney, in terms of gambling legislation and licensing procedures? And if yes, in what way?
The impact of Brexit on the gaming industry in Gibraltar is complex and largely hinges on the appetite of Spain to use Brexit as a vehicle to regain some sovereignty over the territory. The doomsday scenario is that the borders are closed, as they were for nearly 16 years until they were re-opened in 1985. The majority of Gibraltar’s 3,000 strong gaming workforce commute daily across the border. If this were to happen, then its 30 or so licensees will need to review whether it continues to be economically viable and, if not, then Gibraltar’s loss could be Malta’s gain. The Gibraltarian government is more upbeat and believes that the free-flowing border is essential to the prosperity of Andalusian towns such as La Linea and makes the prospect of closed borders unlikely.
The impact on Crown Dependencies is interesting because they are not part of the European Union or the UK and so did not vote in the 2016 referendum. The House of Lords EU Committee has published a report on Brexit, calling on Westminster to ensure the Crown Dependencies are fully involved and engaged in the UK’s Brexit negotiations with the EU. One important consideration here is the ability of the Crown Dependencies to continue to attract EU citizens to live and work there. Internet gaming represents about 8% of the Isle of Man’s GDP; if Brexit inadvertently makes the Isle of Man less attractive as a regulatory jurisdiction, then the Isle of Man becomes vulnerable to viability assessments by its existing roster of licensees.
What are the ongoing trends in the UK gambling legislation and gaming licensing procedures?
Social responsibility and anti-money laundering should continue to be an area of discussion between the Gambling Commission and its remote operator licensees. Amongst operators, particularly smaller organisations, there is still great uncertainty as to what can reasonably be expected of them in order to properly discharge their social responsibility and AML obligations. For example, how can remote operators carry out proper real-time checks on a player who might be wagering large amounts of money in the middle of the night, especially when there are no visible signs to suggest that the player may be a problem gambler. Also of interest is the forthcoming changes to the tax treatment of freeplays or bonusing in remote gaming duty. It will be interesting to assess what impact this will have on marketing strategies and how operators will seek to keep new and existing customers incentivised in an ever-competitive climate.
In your opinion, what would be the future of the UK’s gambling legislation and gaming licensing requirements and procedures?
Whilst I don’t expect to see any major changes in UK gambling legislation, certainly not so far as remote operators are concerned, there are a multitude of other areas that are likely to be central to gambling regulation over the next 12 to 18 months. Whilst the legislation itself is relatively robust, what I expect to see is continued evolution of the licensing conditions and code of practice. As I said, neither the Gambling Commission nor the operators have really nailed down the approach to social responsibility for internet gaming. However, operators should be mindful that the Gambling Commission are likely to take a dim view of any operators who disregard their responsibilities. What will be really interesting is the outcome and impact of the investigation by the Competition and Markets Authority into unfair terms and practices and how they must comply with consumer law. The clarity and fairness of Terms and Conditions are central to the CMA’s investigation and I would expect their findings to be reflected in more onerous licensing conditions.
Another one to watch out for is how the UK’s Advertising Standards Authority look to crack down on misleading advertising and it’s likely that affiliate marketing could come under particular scrutiny. Between the Gambling Commission, the CMA and the ASA, the gambling industry (and particularly its marketing strategies) is likely to come under intense pressure to up their game and do not be surprised if someone somewhere is made an example of.