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Gibraltar Gaming Industry Must Accept New Regulatory Regime

In a landmark decision which promised to transform online gambling in the UK, the High Court has upheld Parliament’s right to exert greater regulatory control over the burgeoning gaming industry based in the overseas territory of Gibraltar.

The Gibraltar Betting and Gaming Association Limited, which represents a number of companies based on ‘the rock’ but which run gambling websites widely used in the UK, had mounted a ‘root and branch’ challenge to the radical new regime imposed by the Gambling (Licensing and Advertising) Act 2014.

Under the old system, the Gambling Commission ultimately regulated only 15-20 per cent of operators who supplied Internet gambling to customers in Britain. Many major gaming companies had re-located offshore, mainly to Gibraltar or Malta, and were responsible for about 55 per cent of all online gambling in the UK.

The Act involved a change in the system of regulation based upon place of supply to one based upon place of consumption. However, the Association argued that the new regime was ‘in its entirety unlawful’ on the basis that it had been adopted for an improper purpose and that its implementation would achieve no legitimate objective.

Amongst other things, it was submitted that the new rules were discriminatory, would create much unnecessary bureaucracy, and would involved duplication of regulatory burdens in that the gaming companies were already subject to stringent supervision in their primary places of operation.

In dismissing the judicial review challenge, however, the Court ruled that the Association had failed to establish that the new regime was unlawful under either domestic or EU law. There was nothing irrational about it and there was no reason to doubt Parliament’s judgment that the legislation would be reasonably effective and that it would not be discriminatory in its impact. Describing it as ‘a clear cut case’, the Court found that the Secretary of State for Culture, Media and Sport had explained the shift in policy in logical and rational terms.