Gambling software and online businesses: sector specific compliance
Gambling software is defined by the Gambling Act 2005 as computer software that is used in connection with remote gambling (including online gambling) but does not include anything for use solely in connection with a gaming machine.
What is gambling software? provides information on:
- the definition of gambling software
- when a licence will be required
- additional licences gambling software businesses may need
- technical standards.
If you are unsure whether the software you are manufacturing, supplying, installing, or adapting is gambling software, you should take legal advice to help make the assessment.
All gambling software (eg a slots game) must meet our remote gambling and software technical standards if it is made available to customers via for example, an online casino in reliance on a Gambling Commission operating licence. The gambling software must be tested in accordance with the testing strategy prior to the game being made available for use.
However, if the gambling software is only ever supplied to operators licensed in other jurisdictions it does not need to comply with our remote gambling and software technical standards. Instead it must meet the technical and testing requirements of the jurisdiction it will be made available to players from.
Jurisdictions into which gambling businesses may not provide services
We expect you to conduct your own due diligence and put controls in place to ensure you meet legal requirements in other jurisdictions.
We recognise that it is perfectly possible for different people to come to different views on the issue of the risks of providing facilities for gambling in a given jurisdiction. Our interest is to see that the views taken rest on reasonable assumptions and a coherent rationale.
There are two distinct aspects to our interest in the sources of revenue for gambling businesses:
- the implications for financial risk if a significant proportion of your business is with grey markets that could change our approach, for example, to enforcement and the implications for your probity/likelihood of responsible behaviour if you are knowingly or recklessly flouting the laws of another jurisdiction.
- deterring black market operators or suppliers from competing in the British market.
As part of the licence application process, we require:
- details of the markets that you provide gambling services or facilities to/accept players from
- details of any licences, permits or authorisations that you hold in those markets
- the revenue that each of those markets generates as a percentage of the overall revenue generated by your remote gambling activities.
Detailed information requirements for customer facing businesses
B2C businesses need to tell us about any market where they get 3% or more of their total revenue from players or, in the case of gambling businesses with total revenue of less than £5m per annum, any markets they are targeting where the revenue is more than 10% of their total revenue. The percentage applies to the entity seeking a licence.
For each of these markets, we ask why you think provision of gambling facilities is not illegal, either because you are licensed to operate in that jurisdiction or because you have satisfied yourself that it is not illegal for you to provide gambling facilities to those players.
If your business is relying on legal advice as part of evidence of responsible due diligence we will expect you to tell us who you have been advised by – we will not necessarily expect to see legal opinions, but we will want to understand the legal rationale.
In line with our aim to ensure probity and responsible behaviour we also want you to tell us about any additional markets (those with less than 3% or 10% revenue as appropriate) you are actively targeting in order to grow your business.
By actively targeting we mean, for example:
- the home page is directed towards a jurisdiction and is in that jurisdiction’s language
- that jurisdiction’s currency can be chosen
- payment methods available include those only available in that jurisdiction
- the homepage has a customer service for that jurisdiction
- available material is aimed at particular countries.
This tells us about any deliberate/active marketing to jurisdictions where it might be illegal to supply into the country or for the player to use the services not covered by the 3%/10% requirement.
As mentioned above, for licensing we are not asking, as a matter of course, B2C operators to give us any information about markets which they are not actively targeting and which provide less than 3%/10% thresholds.
However, we would expect a responsible operator to assess the consequences of their continuing to receive a noticeable stream of income from any jurisdiction where there are real doubts about the legality of their providing gambling services to its population.
We would not expect you to continue to supply those services without considering the applicability and enforceability of such laws to both your business and the player. Where no justifiable arguments exist to continue with such activities, we would expect you to make reasonable attempts to stop such access.
Clearly in such circumstances if you do not take reasonable steps to stop such access it may reflect on your integrity and therefore continuing suitability. We accept there will always be some players who deliberately flout domestic legislation but we expect responsible operators to take reasonable steps to discourage this.
The key for us, whether or not levels of business fall below the thresholds or an operator is actively targeting growth in that market, is that due care is undertaken.
We expect you to have a reasonably coherent rationale for what you are doing. You are expected to keep the licensing objectives in mind when making business decisions. It will not be acceptable to hide behind wilful ignorance or implausible assumptions or arguments at the application stage or subsequently, but at application stage we will only seek the assurances and information detailed above, unless of course, the responses raise concerns which need following up.
Business to business operators
As is the case with a B2C business, we have an interest in the financial risk of a B2B operator seeking a licence. Both in terms of ability to meet financial obligations and dependency on revenues derived from particular markets and in the probity of that business (including where a material proportion of revenue is likely to be from sources that we deem to be unacceptable).
B2B operators typically provide gambling software to one or more B2C businesses or other B2B operators. B2B operators may also provide facilities for gambling to one or more B2C as in the case of platform or network providers.
Some of the B2B and B2C operators contracting with the B2B operator applying for a licence will themselves provide facilities for gambling and/or gambling software to the British market. We have a strong interest in deterring those we license (either B2B or B2C) from supporting in any way those who compete illegally with licensed B2C operators servicing the British market.
B2B applicant must explain where revenue comes from by setting out approximately what proportion of revenue comes from:
- operators with point of consumption licences in jurisdictions other than Great Britain (such as France and Spain)
- Commission licensed operators
- other operators where the B2B applicant may be uncertain about the players’ locations.
We will ask how you decide with whom to deal (what process do you go through and what contractual constraints you impose on clients, for example, requiring operators to block players located in the US) and whether or not you implement any technological or other protections.
A licensing condition exists for all gambling software licences that the B2B operator undertakes to secure contractually with its B2C operator clients that any British based player accessing the network/platform does so via a Commission licensed B2C operator.
Any gambling software used by a remote operating licensee must be manufactured, supplied, installed or adapted by the holder of a gambling software licence.
We acknowledge that:
- some business models will not provide the B2B operator with the location of a player
- that technology tracking player location is not wholly effective, but the sort of licensing regime that a B2C operator is subject to may enable some inferences to be drawn. In such circumstances, there is also an increased importance placed on the B2B operator understanding the business of the B2C operator it supports.