History of UK and EU Regulation in relation to eGaming in Jersey
The 1990s saw the creation of a number of regulatory bodies, but a significant development occurred when the UK passed the Gambling Act 2005, leading to the creation of the UK Gambling Commission in 2007. The UK was the first major Western country to create such a Commission to regulate this industry. Continental Europe has been slower to respond, but partly as a result of the 2008 global financial crisis, EU states have recognised the opportunity to create their own legislation, increase the transparency of and properly regulate the industry. Using this framework, tax authorities have been able to collect revenues from these activities.
Initially, the UK did not impose a gambling tax for non-resident online gambling businesses that advertise and sell their services to UK residents, but rather saw their role in monitoring the jurisdictions, and the businesses in those jurisdictions providing this service. This was achieved through section 331 of the Gambling Act 2005. This provision prohibited any countries outside of the EEA, the UK and Gibraltar from marketing gambling services in the UK, unless the jurisdiction obtained specific approval, after which the jurisdiction was added to a “White List”, which included the Isle of Man and Alderney.
In 2009, some irregularities arose as to one of the existing White List jurisdictions, and Jersey’s pending application for inclusion was suspended. This coincided with a change in the UK Government, and the White List remained closed pending further assessment. As a result of this, and despite efforts on the part of the Jersey government and industry, Jersey was not included on the White List. Hence, no businesses licensed in Jersey would be able to advertise or sell services into the UK, which at the time was the largest regulated market in the world.
As other EU states began to impose gambling taxes, the UK also turned its attention towards how it could realize taxation revenues from the industry. In March 2012, the Offshore Gambling Bill was published proposing a new point of consumption tax of 15% to be effective from 1st December 2014. The Bill received Royal Assent on the 14th May 2014 and became the Gambling (Licensing and Advertising) Act 2014. The result is that all existing businesses advertising and selling to UK residents must now be registered with the UK Gambling Commission under a Remote Operating Licence and pay a 15% gambling levy.
For Jersey, this has levelled the playing field with competitor jurisdictions, removing the historic disadvantage of non-inclusion on the White List. Consequently Jersey’s already inherently attractive regime for eGaming can now be considered a real alternative as a jurisdiction for delivering an eGaming proposition.
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