When is a licence required?
Whether a licence is needed comes down to what constitutes the activities of manufacture, supply, installation and adaptation of gambling software.
Performance of any one of these functions will require a company to hold a gambling software licence. There will be businesses that conduct all or a number of those activities and in complex and extended supply chains businesses that may undertake one or more of those activities.
Supplying gambling software
We do not expect to require a business to hold a gambling software licence if the extent of its involvement in the supply chain is that it purchases or otherwise acquires gambling software from a person and sells or otherwise supplies it to a third party without any involvement itself in its manufacture, adaptation or installation.
The exception is that the final supplier to a Commission licensed operator will require a gambling software licence as set out in Licence condition 2.2.1, even if they actually perform no development/manufacturing, adaptation or installation activity. The Commission considers a licence to be required by such an entity simply by virtue of it entering into a supply contract with a Commission licensed operator.
However, there are circumstances where the final ‘supplier’ is a company (IP holding company) whose only function is to hold the intellectual property rights subsisting in software developed by another company in its wider group (that is, it has no tangible assets and does not adapt or install software). Such a group’s software development company (developer) which manufactures the software product may supply the product to the IP holding company through an intra-group arrangement, the IP holding company then selling or licensing the software to a Commission licensed operator.
In such circumstances, where the developer and the IP holding company are under common ownership, management and control, we may consider it appropriate to issue the developer with an ‘umbrella’ licence covering supply through the agency of the IP holding company subject to the arrangement meeting our information note on ‘umbrella’ licensing.
In circumstances where an umbrella licence is not appropriate both the developer and IP holding company will require their own gambling software licence.
Installing gambling software
The Commission considers that any person that installs gambling software on the system of a Commission licensed operator must do so in reliance on a gambling software licence issued by the Commission.
If you already hold, or intend to apply for, a remote gambling operating licence with the Commission (for example, remote casino licence) but also want to install software updates or otherwise manufacture, supply or adapt gambling software that is used in your own gambling business, you will require a gambling software licence but may in certain circumstances apply for a supplementary or ‘linked’ gambling software licence.
Manufacturing and adapting gambling software
The activities of manufacturing and adapting are similar and relatively straight forward in that both activities involve developing gambling software to produce a finalised (or almost finalised) product. However this activity is also one of the more complex areas as multiple parties may be involved in the overall development project, each developing a piece of gambling software that, in aggregate, create the ultimate gambling product. There may be various contractual arrangements in place to facilitate manufacture of such software and that govern the various relationships between the parties.
In such complex cases the Commission, when considering which parties require a gambling software licence, is interested in where the ultimate control of the development of the product sits. At a high-level the Commission understands that not all circumstances in which a third party is contracted to assist with software development are the same. Ultimately, we will be looking to determine whether the contract between the parties in essence involves purchase of a product or merely payment for time and expertise.
In circumstances where a business is purchasing a product and the overall control, design and development of the product sits with the third party (the development company) then the development company needs a gambling software licence.
This is in contrast to circumstances where a business (company Y) is purchasing time and/or skills and company Y retains control over the design and content of the product and the contracted third party is working to specific parameters, then company Y requires the gambling software licence and the contracted third party does not.
The Commission when determining where control sits (and therefore who needs a licence) will want to understand:
- which company is responsible for the design and functionality of the software?
- which company is responsible for approving design changes?
- which company is responsible for the functionality and acceptance testing?
- which company is responsible for the quality assurance/regulatory compliance testing of the product?
- which company retains the IP for the product4
- what the contract says in terms of responsibilities and liabilities.
Where the third party is only providing part of a game, such as artwork, under the control and design specifications of Company Y, then this indicates Company Y is in control and is the entity to hold a gambling software licence whereas the third party does not.
We would expect information about the respective indicators will be contained within a commercial contract. Operators are recommended to review their existing contracts to ensure this is the case and, where this is not the case, should consider how they would satisfy the Commission in the absence of such contract terms.
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Do gambling software businesses require additional remote operating licences?
Last updated: 27 November 2023
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