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Online Gaming Regulations

United Kingdom

The British law known as the Gambling Act 2005 is an act of Parliament of the United Kingdom, and applies mainly to England, Wales and Scotland. It controls all forms of gambling. In effect it transfers authority for the granting of gambling licenses from the Magistrates' Courts to the local authorities, specifically unitary authorities, and the councils of metropolitan borough, non-metropolitan district and London boroughs, or to Scottish licensing boards.

The Act states its objectives as:

"(a) Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,
(b) Ensuring that gambling is conducted in a fair and open way, and
(c) Protecting children and other vulnerable persons from being harmed or exploited by gambling."

There are provisions of the bill which faced controversy, particularly in its original form, where it would have allowed large numbers of so-called "super casinos" to have been set up.

With the Parliamentary session drawing to a close, a compromise was agreed to reduce this to one. The Act also specifically regulates internet gambling for the first time.

The bill is wide-ranging and those in the promotions industry note that it will make a significant impact.

In particular, its regulation of what have come to be known as “illegal lotteries” is likely to have some interesting effects. The now familiar "no purchase necessary" clause, which is so beloved on on-product promotions and semi-legal competitions will disappear and be replaced with the so-called "New Zealand Model" where purchase may be a requirement - if the purchase is at the "normal selling price". It remains to be seen whether this condition is enforceable in practice.

What is potentially more serious is that this provision in the legislation will enable a new category of premium-rate “lottery” promotion - where entry to the lottery is conditional on the purchase of a product of dubious value, and where the purchase is the justification for participation in a high-prize lottery.