Consultation Coordinator Gambling Commission Berkshire House 168-173 High Holborn London WC1V 7AA
Dear Consultation Coordinator:
The Interactive Gaming Council (“IGC”) is an international non-profit trade association comprising leading companies from around the globe involved with the interactive gaming industry.
Members are operators of Internet gaming sites, software suppliers, e-commerce providers, information-providers and other companies involved in the industry and includes high profile companies listed on the UK financial markets.
The IGC is an advocate for regulation of the remote gambling industry and comprises that portion of the industry that understands the necessity for regulation and licensing of this growth industry. To that end, the IGC commends the UK Gambling Commission on its efforts, including making available the opportunity for interested parties to participate in this important debate. Following, please find responses to the questions raised in the consultation document.
The IGC looks forward to further discussions and to participating in the development of a regulatory model for the remote gambling industry. The IGC would welcome the opportunity to meet with the UK Gambling Commission and is committed to working with regulators and government to advance the common cause of industry and governments. Please contact Mr. Rick Smith, Executive Director, at (604) 732-3833 or via email at
with any questions or for additional information.
Statement of Principles on Licensing and Regulation Consultation document
Questions for consultation:
1. Are there measures, in addition to those mentioned above, that the Commission should take to prevent crime?
The UK gambling regulators have historically been highly regarded worldwide, and the Gambling Act of 2005 is consistent with high standards of gambling regulation. The IGC would not propose any measures specific to a particular jurisdiction as we support the idea of global standards with regard to the regulation of online / remote gaming.
The foundation of rigorous screening of applicants is appropriate and vital to any regulatory regime. One area for further discussion is the global nature of businesses operating “remotely” (e.g. over the Internet), specifically remote gambling, and associated implications of utilizing this medium. It is the position of the IGC that the borderless nature of remote gambling and the implications of same are an important consideration for all potential and existing gaming jurisdictions and should continue as an important part of the debate. There are problems for remote gambling businesses which are not encountered in the traditional gambling businesses. Consideration will also need to be given to the decentralized (internationally) structure of many remote gambling businesses. For example, a remote gambling licensee may have its primary server in the UK but ancillary services in other jurisdiction(s).
2. Is the Commission right to give priority to the areas specified in the draft Statement?
The priorities listed are an excellent first step. While the paper rightfully references crime, mostly focused on cheating, from a player perspective, it is our contention that remote gambling regulation will need to focus on the potentially different challenges for licensed operators, for example Denial of Service issues, which are not specifically unique to remote gambling but which can apply to any form of eCommerce. It is an underlying assumption that applicable data protection and privacy policies are given due consideration.
3. What principles should determine the boundaries between the roles of the Commission, operators, police and sports regulators?
With regard to remote gambling, and the borderless nature of the Internet, the roles of the Commission, operators, police and regulators may overlap in ways never before experienced in traditional gambling regulation. In a perfect world all interested parties would be able to share responsibility for player protections, etc. In practical terms, it will likely be challenging to provide a clear distinction between each entities’ overall role in the regulatory regime. While the operators responsibility is clearly the obligation to be competent and honest, the potential roles of regulators and law enforcement authorities should be clearly defined as not to be duplicative. Communication and information exchange among regulatory and law enforcement stakeholders, domestically and internationally, should be paramount. Further, there needs to be a clear distinction between the regulation of remote gambling and sports regulation, for example sporting bodies controlling their own sports.
4. Are additional safeguards needed to reduce the opportunities for disposing of the proceeds of crime in particular types of gambling? If so, what should they be?
The following is list of considerations with regard to protecting against the disposal of criminal proceeds via remote gambling:
• Anti-money laundering procedures / principles apply equally as in other potentially vulnerable businesses. • Compliance with applicable cash transaction and suspicious activity reporting requirements, not the least of which is compliance with Financial Action Task Force recommendations. • Mutual recognition with regard to licensing and information sharing both domestically and internationally. • Financial viability and source of funding for remote gambling businesses.
“Online gambling invites money laundering.” These initial claims, made in United States Congressional hearings and reports of the U.S. State Department were that remote gambling could be used to launder tainted funds, such as narcotics proceeds. These statements have never been substantiated, and are simply not correct, from our prospective.
The obvious consideration, stated in simplistic terms, is that money laundering, inherently, depends upon stealth. However, remote gambling is one of the most watched and monitored forms of business – by licensing jurisdictions, financial institutions and various others – not to mention that, unlike land-based gaming, cash is not used in transactions.
In its Consultation Paper on money laundering (CP46), the UK’s FSA (Financial Services Authority (“FSA”) as enshrined in the Financial Services and Markets Bill), recognized that a comprehensive, regular and effective training program is vital in the fight against money laundering. This clearly is the role that the IGC expects to play with its membership and in conjunction with appropriate regulatory and law enforcement bodies.
An emphasis should continue to include “Know Your Customer” (KYC) requirements. Remote gambling operators, like other eCommerce businesses including online financial institutions (e.g. stock trading), do not have the benefit of face-to-face transactions, relying instead on the technology and pragmatic solution to overcome this impediment. Moreover, most operators, partly in response to regulatory requirements in their respective jurisdiction, require their licensees, during the registration process, to obtain information from customers that can be used to verify their identity - name, address, date and place of birth, telephone number and email address, etc. This information can be cross-referenced with credit card registration information, wire instruction and other similar information. The confirmation information plays an important role with the release of unusually large refunds or deposits.
Furthermore, financial institutions and other payment facilitators that contribute to the deposit cycle contribute to the verification process with their at-source checklist. These include credit card issuers, financial institutions that maintain the customer’s bank accounts from which wires are transacted and emerging e-cash intermediaries.
Technology will continue to provide the tools to identify suspicious transactions and the record keeping to account and report these transactions and suspicious transactions.
Proper regulatory oversight and compliance will incorporate laws and procedures to ensure the suitability of owners, managers and others involved in gambling activities.
5. Are there other measures that the Commission should take to prevent gambling being a source of disorder? If so, please set out what they are.
As a trade association focused on the interactive / remote industry, there would be more appropriate bodies to provide advice.
6. Should the Commission give guidance to local authorities on requirements for door supervision in the interests of consistency and dissemination of best practice?
As a trade association focused on the interactive / remote industry, there would be more appropriate bodies to provide advice.
7. Are the measures described above the right ones to promote the second licensing objective?
As a trade association focused on the interactive / remote industry, there would be more appropriate bodies to provide advice.
8. Should the Commission be considering other measures? If so, what should they be?
The Commission may want to consider different levels of licensing for parties other than operators, specifically any party that can impact game integrity. The issue of game testing, auditing and evaluation also needs to be addressed in terms of reciprocity, e.g. a game that is evaluated could comprise the nucleus for several differently named games but using the same determination software – licensees should not have to pay multiple times for approval of the same game. Also, if a game is approved in a recognized jurisdiction there should not be a duplicative or restrictive cost to the operator having to seek approval again.
9. What practical measures can gambling operators take to ensure that children and young persons are prevented from gambling?
Points for consideration include:
• Should bets be permitted on events in which minors participate e.g. swimming, gymnastics? • Age controls needed for play for fun and not just real money games. • Develop an age / identity minimum criteria list in terms of a list of approved providers of verification system(s). The IGC has a draft document that may be of interest.
The IGC takes seriously the issue of minors gambling and urges all responsible remote gambling operators to ensure this does not occur. Further, the IGC supports that protection of children would be better accomplished through a robust program of licensing and regulation, specifically as proposed by the Commission. Underage betting can best be resolved through a combination of up-to-date technology, proper internal controls and regulatory oversight.
Many tools, including data cross checks and age verification software, are currently available to exclude minors from participating in gambling online. The IGC contends that stringent computerized screening mechanisms implemented by remote gambling operators, and monitored by regulators, will be as effective as any measures in preventing most minors from gambling.
10. Are there measures that others (e.g. banks in relation to credit and debit cards) could take to restrict the opportunity that children have to access remote sites?
While responsible practices in regard to age controls applicable to credit and debit cards would be beneficial in terms of access to any “adult” product by minors, financial institutions should not become the Internet police e.g. in regard to remote gambling. In so saying, the remote industry relies upon the robust controls in the financial sector to supplement its own controls in preventing access by minors. Similarly, mobile content providers will need to ensure appropriate levels of age verification and identity of users are utilized.
The IGC argues that the best strategy is a combination of social and educational interventions, technology-based tools and legal and regulatory approaches. That being said, with new technologies there is the need for a stringent registration process for players wishing to participate in interactive gambling. Coupled with this should be equally stringent verification procedures for each time a person wishes to participate in any form of gambling. New technologies actually provide regulators with tools not previously available in most traditional forms of gambling, including the ability to provide an audit trail for each transaction, to limit players to total or individual amounts bet, and to block participation by specified players.
11. Satisfactory age and identity verification may be more difficult to achieve for overseas players (because of different approaches to record keeping and information sharing): would a different standard of checks be defensible for them?
While age identity software and controls only work well if the proper (full, accurate and regularly updated) data bases are utilized, the IGC would recommend that the age and identity verification requirements should remain consistent for all players, otherwise a double standard is developed that potentially opens up a regulatory jurisdiction to unnecessary criticism. Again the global nature of the Internet needs to continue to be part of the regulatory debate. A strict and consistent registration process should apply to all players. However, the reality is that this will be very difficult to achieve given the varying quality of information available in different countries.
12. What, if any, role should the Commission have in educating children about gambling?
The IGC believes that education is vital to confronting underage gambling, based on the prevention better than cure argument. The Commission is referred to the report “Young People Gambling and the Internet” (Young People: Gambling & the Internet) published by the Australian Council of Social Service, ISBN 0 85871 2687, in particular to the segment entitled Overview of Conclusions. To quote from the report “… it is questionable whether new delivery mechanisms themselves will significantly effect that popular culture (the culture of gambling is deeply embedded in the Australian psyche) …”. The report goes on to state that while youth may have greater exposure, they are already currently heavily exposed to gambling through the immediate family and close family friends. The strongest correlations of those suffering are with “poor education and employment opportunities, some psychological factors and socio-economic disadvantage in general.”
The Commission may want to consider a gambling awareness curriculum for youth. For example in Queensland, Australia gambling education components are being introduced into educational curriculums - http://www.responsiblegambling.qld.gov.au/education-services/index.shtml
In addition, the Commission should make every effort to take away any financial incentive of underage gambling. Any winnings / losses by minors should be forfeited and not returned to operators but donated to reputable charities that can further the education of minors with regard to gambling.
The Commission’s role with regard to education / prevention should be an advisory role.
13. Children are permitted to gamble on Category D gaming machines and young persons may buy lottery tickets and enter football pools. Should the Commission adopt any special measures to prevent “harm or exploitation” in these sectors?
The Commission should assure that harm minimization policies are consistent across all forms of gambling. A consistent policy will distract from any perception that “soft gaming” is the entry level for people who then move on and up to other betting activities. Consideration may also want to be given to controls over access by minors to play for free games.
14. Are there other groups of people that the Commission should regard as “vulnerable”?
Any betting on the outcome of an event in which a person or group of persons is involved or has a vested interest should be specifically banned.
15. Can excessive gambling be defined in general terms or does it depend on the circumstances and the individual?
Obviously, individual circumstances are determinative. A wealthy person might easily absorb a gambling loss that would devastate a person of lesser means. Even the amount of time spent gambling is not a universal guide to assessing what is “excessive.”
In Australia, the national, state and territory governments are working on a national definition of “Problem Gambling and Harm” -- http://www.gamblingresearch.org.au/CA256902000FE154/Lookup/GRA_Reports_Files1/$file/FinalReportPrinter.pdf
The following definition of problem gambling by the (U.S.) National Council on Problem Gambling, http://www.ncpgambling.org/, reflects a view common in North America:
“Problem gambling is gambling behavior which causes disruptions in any major area of life: psychological, physical, social or vocational. The term ’Problem Gambling’ includes, but is not limited to, the condition known as ’Pathological’, or ’Compulsive’ Gambling, a progressive addiction characterized by increasing preoccupation with gambling, a need to bet more money more frequently, restlessness or irritability when attempting to stop, ’chasing’ losses, and loss of control manifested by continuation of the gambling behavior in spite of mounting, serious, negative consequences.”
No responsible gambling operator wants to see a life ruined by excessive gambling. To encourage or acquiesce in such a tragedy is morally wrong and is also bad for business, because a person who gets into such difficulty will no longer be a customer.
16. Should the Commission require operators to train staff to intervene if customers appear to have a problem? If so, should this apply to all gambling sectors?
All employees in all gambling sectors who interact with customers, even remotely, should be required to undergo training in the indicators of problem gambling. It may not be practical to train all employees in intervention skills, however. The higher level of training required for intervention skills might reasonably be required of shift managers and their assistants, for example. Such people with advanced training could be alerted by the regular staff that an intervention may be advisable.
Gambling operators need to be alert for indicators of serious problems, and should be expected to do more than simply post links to third-party assistance. One question for the Commission to consider is to what extent gambling operators should be expected to respond to expressions of concern by affected third parties such as family, friends or co-workers of a customer whom they believe has a gambling problem. This could produce delicate situations. If the gambling operator attempts an intervention, the operator and its employees should be immune from potential legal repercussions.
17. What practical measures should operators be required to take to protect vulnerable people?
The Commission must identify specific measures that operators should take in the case of excluded persons – whether self-excluded or excluded by the operator – who continually attempt to gamble at the facility/site, that is to say, “repeat offenders.”
Players who are blocked from one remote game with one operator should be blocked from all games of all UK-licensed remote operators. An independent party with an excluded player list for operators of remote gambling could be useful, although we recognize there would be issues with data protection and privacy. If such a system is devised, players who believe they were unfairly placed on an excluded list should have a means of appeal.
Additional measures are elucidated in the IGC’s Responsible Gambling Principles, http://www.igcouncil.org/aboutus_readmore.php?id=97. These measures include identifying problem gamblers and taking appropriate steps, providing for “cooling off” periods, supporting self-exclusion and betting limits, prohibiting gambling on credit, posting and enforcing age restrictions, and avoiding advertising in media that predominantly caters to minors.
18. What issues should the Commission take into account in considering measures to protect people who have a mental impairment?
Beyond responding to indicators of problem gambling, discussed above, it is not practical for the gambling industry to try to assess mental impairment. No one expects that of other industries, such as retail. For example, society does not expect a sales clerk to refuse to sell an item to someone who appears to be mentally impaired. This would be especially impractical in remote gambling, where the casino has no face-to-face interaction with the customer. Mental impairment is a broader issue for society’s health care system to handle.
19. What further principles or criteria could the Commission adopt to assess the acceptability of inducements/incentives?
The Commission should monitor promotions to ensure that the rules for promotions are clearly displayed to customers, and that customers are not unfairly misled by “small print” conditions. In remote gambling, the offering of bonuses is a common competitive tool. The Commission needs to be aware that, in addition to operators who have sometimes failed to honor bonuses they have offered to customers, there have been instances of customers who cheat by attempting to claim bonuses to which they are not entitled.
Care should be taken that restrictions on promotions are not unduly burdensome. The Commission needs to remember that its licensees will be competing against remote gambling operators based in unregulated or lightly regulated jurisdictions.
20. Are there other principles that the Commission should take into account in determining its approach to its functions under the Act?
The Better Regulation Task Force and the Hampton Review on regulatory inspections and enforcements have arrived at very good principles.
Provisions for identifying and responding to problem gambling, and other issues, need to address the borderless nature of remote gambling. If UK licensees are obtaining revenue from offshore customers, then they are also potentially exporting social problems offshore. The Commission cannot ignore these problems. The same applies to disputes between operators and players; they cannot be ignored because the players are offshore. Ideally, the Commission would have a working group that would interact with regulators in other jurisdictions.
The cost of compliance for licensees needs to be minimized. Again, the Commission’s licensees will be competing against operators whose compliance costs may be as low as zero.
21. What is the most effective means of engaging with licensing authorities and getting feedback from them?
As a trade association focused on the interactive / remote industry, there would be more appropriate bodies to provide advice.
22. Are the current liaison arrangements with the gambling industry satisfactory? How could these be improved?
The IGC would like more cooperation with international trade groups such as our own. Remote gambling is borderless, with issues affecting all and not just UK licensees. To reinvent wheels only for UK licensees would miss a great opportunity internationally to raise the caliber of remote gambling regulation, to move towards consistency and mutual recognition across jurisdictions, and to generally increase the probity and public respect for this form of gambling.
23. Should the Commission do more to seek the views of the public – including gamblers, gambling staff and others with an interest? How can this be achieved cost effectively?
There is a need for balanced input, remembering that critics cry the loudest. The use of the Commission’s Web site for public comment is healthy. The IGC believes that the Commission should focus on experts, people whose training and background provide context for their opinions and conclusions, and representatives of other groups with a vested interest in the particular topic. In particular we applaud the Commission’s intention to consult with groups such as Gordon House and GamCare. With more of the world’s universities and colleges establishing programs to study gambling and its effects, we would also recommend consultations with relevant academic experts.
24. What principles should the Commission take into account in determining who should need personal licences?
The Commission is referred to established regimes internationally; e.g. Australia, New Zealand, North America, as well as to principles relied upon by the Gaming Board. In the case of remote gambling, jurisdictions such as Alderney, Kahnawake, Antigua, Isle of Man, Malta, Gibraltar, etc. have among them extensive experience in regulation, and could provide valuable advice. That being stated, the focus should be on those who can impact integrity and greater risk areas.
Mutual recognition of licences from other respected jurisdictions would be efficient and proper if minimum criteria are satisfied and costs minimized – perhaps in the context of a provisional licence pending final approval.
25. Are there other regulatory standards that certain operators already have to meet to which the Commission should have regard, rather than impose a separate test?
External expertise and recognition of third-party regulatory standards should be considered. Remote gambling offers a different environment from bricks and mortar. The testing of software, for example, is critical to remote gambling. There are internationally recognized gaming testing and auditing companies that have expertise in testing and/or auditing software and these would need accreditation. There are also internal quality assurance processes, including standards against which the internal business processes of the licensee are assessed, and this should also be taken into consideration in terms of a risk based approach.
26. For what categories of applicant, if any, should the Commission assume integrity?
One example could be where a licence is already held or regulatory requirements satisfied as attested to by a recognized party (licensing authority).
Mutual recognition is important for business expediency and reduced red tape. This can also save time and expense for the Commission and would seem consistent with the intentions of the Better Regulation Task Force and the Hampton Review on regulatory inspections and enforcements principles. Again, the Commission is referred to other licensing regimes and its own previous experience.
27. What should be the criteria for determining whether personal interviews are necessary properly to assess the suitability of particular applicants or classes of applicant for the different categories of licence?
In most cases, we’re not convinced that personal interviews are necessary for all potential licensees. Extensive research into applicants’ backgrounds, including criminal checks, should be sufficient for most applicants.
28. What should the Commission do to promote the development of training and qualifications throughout the gambling industry?
The Commission could provide support as and where needed, especially in the area of regulatory compliance. Independent training bodies – as well as universities and colleges -- should be suitably qualified to provide appropriate training. Support this initiative with regard to training programs in different categories of employment.
If the Commission is going to consider training experience of third-party institutions when the Commission is making licensing decisions, it should satisfy itself that the referenced third-party institutions are in fact providing proper training. Ultimately, this could lead to the Commission, or another appropriately qualified body, “certifying” training bodies or schools that meet its standards, particularly in training in regulatory compliance. This may go beyond the Commission’s mission, but it would help the industry, and assist public policy goals, by alerting licensees and applicants for licenses to the sources of worthwhile training programs. The role of the Commission should be an advisory one.
29. Should the Commission actively encourage the development of accredited training and a qualification framework? If so, is that relevant in all gambling sectors?
Yes and Yes.
30. What information should be included in the public register of operating licences and personal licences?
We believe that public trust in the integrity of any gambling operation and in the efficacy of its regulation requires maximum transparency. There should be a presumption that all Commission records and proceedings are open to public inspection, except where the Commission deems that secrecy is essential or where privacy is required under applicable statute. For example, there should be a procedure for applicants and licensees to try to persuade the Commission that disclosure of specified technical or marketing information could provide unfair advantage to an applicant’s or licensee’s competitors. The Commission could reasonably conclude that certain personnel information should not be made public, especially in light of strict privacy laws throughout the world.
31. How should the Commission validate the register on an ongoing basis?
The Commission could contact all licence holders, personal as well as corporate, annually with instructions to update/correct any information within 30 days, at the risk of having the license suspended. Other changes may be flagged via the use of monitoring systems of other regulatory and law enforcement entities (e.g. Police records).
32. Should there be a periodic fee for personal licences or should the costs of maintaining the lists be an overhead cost for operating licences?
There should be such a periodic fee, but the Commission should permit the company that employs the personal licence holder to pay the fee, or at least to reimburse the person for the cost of the fee. Any fees charged should be based on cost recovery and not used to generate revenue.
33. If appropriate, what period should such a fee cover?
As a trade association focused on the interactive / remote industry, there would be more appropriate bodies to provide advice.
