A Guide to the United Kingdom Gambling Commission

An Introduction to the UKGC

The United Kingdom Gambling Commission is a non-departmental public body (NDPD) of the Government of the United Kingdom. It is responsible for regulating gambling and supervising gaming law in Great Britain. The UKGC covers a number of gambling products, including arcades, sports betting, bingo, casinos, slot machines and lotteries. In addition, it also covers regulations on remote gambling, but not spread betting.

The UKGC was first founded under the “Gambling Act 2005”. It exists to safeguard players and the wider public by ensuring gambling is safe and fair. The UKGC covers many aspects of gambling, including the UK National Lottery. It protects players and the public from the harms of online and off-line gambling and issues licenses to online operators. The licenses from the UKGC are incredibly difficult to acquire and require the highest standards for operators to abide by. It fines any operators that fail to meet the expectations and requirements of obtaining a UKGC license. Before we dive more into the United Kingdom Gambling Commission, we take a look at its history and how it has become arguably the most important gambling regulatory body in the world.

History and the Formation of United Kingdom Gambling Commission

The UKGC was established under the Gambling Act 2005. However, it was only two years later that it assumed full powers in 2007. The Gambling Commission replaced the Gaming Board for Great Britain. It covers a range of gambling types including:

• Arcades
• Betting
• Bingo
• Casinos
• Gaming machine providers
• Gambling software providers
• Lottery operators
• Remote gambling that uses British-based equipment
• The National Lottery

The Commission belongs to a non-departmental public body, sponsored by the Department for Culture, Media and Sport. From the time that the Gambling Commission was formed, it’s three main priorities are to ensure that gambling is not associated with crime, to guarantee player fairness and safety and to prevent youth and vulnerable people from being negatively impacted from gambling.

On the 1^st of October 2013, the UKGC began regulating the National Lottery. It absorbed the former National Lottery Commission as lottery betting became part of the Gambling Commission. It also is responsible for remote gambling, which essentially covers online betting. In 2014, the UKGC became a stronger figure of online gaming in the United Kingdom, ensuring that any operator without a UKGC license could not legally operate in the United Kingdom. The Gambling Commission has certain roles to prevent such as crime in gambling, money-laundering, terrorist financing and so on.

The Gambling Commission’s Powers and Responsibilities

The UKGC has a number of responsibilities and powers that it can employ on operators and gambling institutions. As mentioned before, one of its priorities is to ensure fairness and safety for players. The Commission has imposed strict rules for practicing fair play, anti-money laundering and responsible gaming since the 2005 Act. Unlike other jurisdictions, the regulatory body is well-regulated and open.

One of the many requirements from the Commission is to ensure players a safe and secure environment. That is why it is incredibly difficult for casino and gambling providers to obtain a gaming license. Furthermore, if the operators break the rules of the license, they will face potential penalties and a total expulsion from the United Kingdom online casino market.

Due to the strict rules, any players that join a casino or play a game from a provider with a UKGC license can rest assured they are in a safe space. The very best casinos and providers are happy to abide by the strict codes set out by the Commission and to continue to support the UK gambling market.

The 2014 Gambling Act

In the 2005 Act, the Commission took over the responsibilities of online casinos. However, in 2014, new rules were created to ensure a safer remote gambling space. The new rules stated that only operators that have a United Kingdom Gambling Commission license could operate legally in the market. Previously, operators outside of Great Britain could legally advertise and provide their services, provided they were based in the EEA or in one of the whitelisted jurisdictions. That included Alderney, the Isle of Man and Tasmania.

Due to the new legislation in 2014, licensing requirements were adjusted. The Commission made it mandatory for operators to hold one or more licenses from the Commission in order to advertise or operate in the United Kingdom. The new law also imposed a gambling duty of 15% of gross gambling profits from UK residents.

United Kingdom Gambling Commission Licenses

The United Kingdom gambling market is arguably the most popular in the world. Many operators strive to obtain a UKGC license because of the benefits of catering to the UK market. In total, the United Kingdom is home to 2,439 licensed gambling operators, 599 of which offer online services.

There are a variety of different licenses that are issued by the Gambling Commission. However, after obtaining the license, operators must still comply with the strict rules and legislation set out by the UKGC. The regulatory body is tasked to monitor operators that possess a license.

One of the requirements for operators based in the United Kingdom, or offering services to British customers, are required to obtain one or more local licenses. The UKGC issues many different licenses, which we will see below. On average, a license takes about 16 weeks to acquire.

• Remote Casino Operating License – a permit that allows operators to offer casino games remotely – for instance, via a website. This covers online slots, poker, table games and live casino games.
• Remote General Betting Standard Virtual Events License – a permit that allows operators to offer fixed-odds betting services on virtual events (such as virtual horse racing). Betting on real events is not permitted with this license.
• Remote Bingo Operating License– a permit that allows operators to offer online bingo games.
• Remote General Betting Standard Real Events License– a permit that allows operators to offer fixed-odds betting services on real events (such as sports). This does not cover any virtual sports.
• Remote Pool Betting License– a permit that allows operators to offer pool betting services. This covers any bets that are from a group of people, with each winner taking a portion of the winnings.

How to Obtain a UKGC License

In order to acquire a UKGC license, operators and game providers will be evaluated on two main criteria: the business’ intention and ability to uphold the licensing objectives and suitability to carry out the allowed activities.

To pass the suitability assessment, the business must share all of its past and present financial circumstances on individuals, integrity (criminal records evaluation) and competence. Thus, obtaining a UKGC license requires mountains of documentation.

The license requirements may vary depending on the entity applying for the permit. A sole trader would only need to provide their identity documents. A company, on the other hand, would have to provide an ownership structure diagram and a management structure. That way, the Commission will be able to identify all persons involved in the corporation.

There are many online operators that have UKGC licenses but are not based in the United Kingdom. For any offshore entity, a full credit report and local gambling license from another jurisdiction is required.

Furthermore, the entity must also provide a detailed description of the license that it is hoping to acquire. For instance, if an entity wants a remote license, it must provide documentation regarding remote-specific policies and procedures, the software and gambling software and the operational model.

In any case, obtaining a license from the UKGC can take up to 16 weeks. However, sole traders or entities must provide lots of documents and essentially become transparent in the eyes of the Commission before a license will be granted.

The Importance of a United Kingdom Gambling License

The UK gambling online market is the largest in the world. Between April and September 2020, the industry’s total gross gambling yield amounted to £5.9 billion over the six-month span. Of the total, £3.1 billion (52.3%) came from the remote sector. The gross gambling yield increased to £6.9 billion by the end of the 2020-2021 fiscal year. It showed a growth of 18.4% over the first semester. Over £4 billion of that was generated by online casinos.

During the lockdown, online gambling became even more popular in the UK market. Due to the closure of brick-and-mortar casinos, the online gambling market grew in figures. The United Kingdom’s closest European rival during 2020 was Italy. The Italian online gambling market recorded €2.47 billion in gross gaming revenue. That total is less than a third of the United Kingdom’s. Thus, it is easy to see why the United Kingdom gambling market is as popular as it is. Holding a license from the United Kingdom Gambling Commission gives the right to operators to utilize the UK gambling market.

Compliance and Obligations for UK Gambling License Holders

Obtaining a license from the Commission is hard enough, but even after meeting the requirements, operators must comply with a strict book of rules. Known as the LCCP, licensees are bound to an extensive document that they must follow vigilantly. The requirements for the operators are strict – particularly when comparing it to the requirements of other jurisdictions. However, the benefit of a UKGC license is the ability to cater to the UK gambling market and a prestigious permit that appeals to many players worldwide.

The Commission is incredibly stern when it comes to its legislation regarding know-your-customer (KYC) and anti-money laundering (AML). It is constantly monitoring license holders to evaluate their commitment to the cause. The LCCP documentation consists of many important parts. Below, we have included several requirements outlined by the document:

• Technical standard and equipment specifications
• Protection of customer details and funds
• Banking
• Transparency in games and commitment to fairness
• Game types and rules
• AML provisions
• Verification of every active customer
• Responsible placement of digital ads
• Financial requirements
• Protection of vulnerable players and expulsion of underage players
• Marketing
• Complaints and disputes

The Negatives of the UK Gambling Market

For all of the benefits that the Commission brings to the online gambling world, there are also a few downsides. The biggest limitation is the lack of cryptocurrency-based services. The UKGC does not ban cryptocurrencies as a payment method. However, the anonymity of cryptocurrencies does not appeal to the Commission. Thus, it has made it almost impossible for operators to accept them without breaking any AML rules set out in the LCCP. For any UK players that use cryptocurrencies, it does not look likely that the Gambling Commission will change its rules regarding cryptocurrencies just yet.

The UKGC’s Enforcement Actions

The Commission values player safety above all. One of its most controversial, yet bold actions, was to drastically reduce the maximum stake offered at fixed-odds betting terminals. According to the Commission, players in Britain were losing almost £2 billion a year collectively on games such as roulette and blackjack. The Commission reduced the maximum stake from £100 to £2.

Likewise, the UKGC has proven already that it is ready to clamp down on any operators that do not comply with the obligations set out in the LCCP. If operators fail to comply, they are hit with a hefty financial penalty.

Camelot Group were one of the first to feel to wrath of the Commission. In 2009, the UK National Lottery operator failed to identify a fraudulent National Lottery ticket. In December 2016, they were hit with a £3 million fine from the Commission. After a police investigation, the authorities found a Camelot employee in the fraud department had conspired with a member of public to claim a £2.5 million jackpot.

William Hill – another popular UK remote operator – was fined by the Commission in February 2018. The operator was warranted a £6.2 million fine for a series of failures to prevent money laundering.

In June 2018, the Commission had fined 32Red £2 million for not keeping tabs on a customer who was a vulnerable gambler. The customer had spent over £758,000 over the course of two years but had a net income of only £2,150 per month.

The Commission also branded a £5.9 million penalty to Ladbrokes Coral for failing to meet its anti-money laundering and social responsibilities. After an investigation, it was revealed that the company failed to safeguard problem gamblers and money laundering requirements between November 2014 and October 2017.

What the Future Holds

The UKGC is the strictest regulatory body in the world but also has flaws. It was first created in the Gambling Act of 2005, but further modified in the 2014. The most recent measures were conducted in 2021, but as cryptocurrency and virtual gambling is becoming more widespread, it is assumed that new rules are due in the coming years.