GB: POC Bill – new FAQs issued by the Commission as the Bill reaches its final stages of the Parliamentary process

The Gambling (Licencing and Advertising) Bill (“Bill“) receives its Third Reading in the House of Lords, the upper chamber of the British Parliament today. It has always been envisaged that following the Third Reading, the passage of the Bill through to Royal Assent (the final stage of the British parliamentary process) would be fairly swift. As such, the clock may begin to tick shortly, counting down to when British remote gambling regulation moves to a point-of-consumption system.

In preparation for the pending changes, the Gambling Commission (“Commission“), yesterday, published updated guidance to the industry in which they answer a variety of questions that both we, and the industry generally, have been asking.

The updated FAQs can be found here. It is important to read the whole document, not just the summary below.

The following summarises the pertinent clarifications/updates published by the Commission yesterday:

1. Timing

As mentioned above, the Bill is now in the final stages of the parliamentary process and the Commission has stated that the legislative changes will take effect “as early as late July”. It is likely, given the suggested implementation timetable (as we understand it), that this will mean licence applications for transitional/continuation licences will be capable of being lodged as in June. The exact timetable will become clear once the Statutory Instrument is published around the time of Royal Assent when the Government will confirm how the transitional process will operate.

2. Application information

You can access all the application forms here.

The Commission’s website states that only those questions that are highlighted on the application forms need be completed by those seeking transitional licences. There was confusion as to when (or indeed, if) the rest of the application form was to be completed.

The Commission has now clarified the position and stated that any “remaining application information” needs to be submitted “at the latest, 14 days after submitting the initial application online”.

As such, applicants will need to focus on the entire application form during the preparation process as all required information is going to be needed to be lodged in any event. Of course, if operators are in the position to include full details in their initial application, then they can do so.

All applicants will need to lodge a business plan, which is causing concern, not only about the contents thereof, but how best to express issues regarding jurisdictional risk rationales and the operation of wider international .com businesses (see below).

3. Vetting of key individuals

One source of constant enquiries has been the personal management licence (“PML“) requirement which sees anyone with “overall responsibility” for a number of areas (such as overall strategy, financial planning, marketing, regulatory compliance, and IT), being required to apply for and maintain a PML.

To the extent you wish to discuss your own operational structure or organisational structure for the purposes of assessing who requires a PML, please do let us know.

We would draw your attention to section 7 of the published FAQs which contains some updated information as to the requirements for PML applications.

4. Updating the Licence Conditions and Codes of Practices (“LCCP”)

The LCCP has been the subject of two consultations (towards the end of 2013) when a number of compliance related issues were assessed by the Commission and discussed with the industry at some length. We await the final publication of the updated LCCP but have been told, within the FAQs, a bit more about the likely timetables.

  • Many of the LCCP’s changes will be published at the end of this month (March 2014) and come into effect three months later, ahead of the Bill taking effect. This will include changes required for the protection of customer funds.
  • A smaller number of amendments will come into force later in 2014 and we will receive further details on that timetable in the coming months.
  • One particularly important LCCP requirement is for Commission-licensed operators to obtain “gambling software” from holders of a Gambling Software Operating Licence issued by the Commission. This will be a licensing condition imposed on operators.
  • The Commission has confirmed that there will be a transitional period for this particular licencing condition to apply, such that suppliers of gambling software to Commission-licensed operators will have until 1 January 2015 to obtain such licences.
  • We understand there are further consultations coming down the line regarding certain changes to the remote technical standards and certain changes to the testing strategy.

5. What is gambling software?

This question seems to have generated possibly the most number of questions for us, as it is not only pertinent to gambling software suppliers themselves, but also to the operators that they supply (as mentioned above). We understand that the Commission is “currently updating its advice on the circumstances in which a gambling software licence is likely to be needed”.

However, the Commission does point out that suppliers will continue to need to obtain legal advice and, on the basis of the draft guidance that we have seen, there will remain a degree of uncertainty in the industry as to what exactly constitutes gambling software.

6. Jurisdictional risk-rationales

As part of the business plan required to be lodged by all applicants, they need to explain to the Commission their rationales for taking business from jurisdictions in which they do not possess a licence.

As such, a number of operators and suppliers are working with us to assess their legal position in key markets to ensure that they have taken the requisite advice to determine whether or not coherent arguments exist to support their ongoing trade. The Commission has made it clear that they expect operators “to conduct their own due diligence and put controls in place to ensure that they meet legal requirements in other jurisdictions”.

The Commission has said that they will not issue a list of jurisdictions in which they consider it inappropriate for operators to trade. The onus lies with the applicants to determine the legality of their wider operations.

7. “Umbrella” licencing

For organisations that find themselves with a number of entities within their wider group that, in theory, all require Commission licences, there appears to be a process open to them. The Commission has published a note detailing how applicants can work with the Commission to ascertain whether or not one company within their group can, in effect, apply for licences on behalf of other companies, insofar as they all act in an agency capacity for the applicant.

The Commission have issued some specific guidance on this particular point which can be read here.

A number of operators and supplier groups of companies may well benefit from such a process, but, a number of hurdles need to be overcome in order to do so and, on our understanding of how the industry works, it is unlikely that many organisations will be able to take the benefit of this, given the stringent conditions.

The Commission has published the information note which explains how gambling software-related groups of companies can utilise this process, but, as far as operators applying for the transitional licences are concerned, they have been told to “await confirmation of the final transitional arrangements” to see how it would benefit them.

8. Next steps

We are watching what happens in Parliament today and in the aftermath of the Third Reading. It is likely that Royal Assent will follow shortly thereafter with the publication of the eagerly-awaited Statutory Instrument which will set out in detail how the transitional arrangements will actually operate. We will update our clients in due course.
If you wish to obtain any information on any of the issues raised above, or in the application process generally, please contact stephen.ketteley@dlapiper.com or ashley.averill@dlapiper.com.

For those wishing to work with us during this period, our ROLL platform will go live shortly. ROLL is a dedicated microsite containing all documentation, information and guidance needed to complete application forms and provides clients with a facility to upload draft application for us to review and comment on, prior to your submission to the Commission. If you are interested is using the service, contact roll@dlapiper.com.