Many new players are slightly concerned about the security and legitimacy of online casinos. A website may not conjure up the same feelings of security as a brick-and-mortar casino. According to the recently enforced Licensing and Advertising Act, every online and mobile casino that accepts a customer from the Great Britain is required to obtain a license from the UK Gambling Commission. The Commission’s regulations are so thorough – its licenses cover everything from cash management to social responsibility. Rest assured, British players are in very good hands!
Why do we bother with licenses?
It may seem like a lot of hassle, but licenses are the most valuable cogs in the machine! For players, a license is a trust mark that indicates that a casino is fair, safe and reliable. A casino operator goes to great lengths to obtain and maintain these licenses, as it establishes their reputation and increases business.
There are all sorts of risks in the gambling industry too, and law enforcement helps to mitigate these. First off, gambling is illegal for young people and addictive to others. Without licenses, regular folks could be easily victimised by fraudulent companies. There is a lot of money entering and leaving these casinos daily, making it a possible outlet for crime like money laundering and the financing of terrorism.
These issues become even more urgent in this digital era, as online and mobile casinos reach out to more people, more easily than ever before. And so, the government steps in to protect their people and businesses.
Our protector: The UK Gambling Commission
The UK gambling market is regulated by the Gambling Commission. The Commission was set up under the Gambling Act 2005 to regulate commercial gambling in Great Britain; its scope includes arcades, betting, bingo, casinos, gambling software, gaming machines, lotteries and remote gambling (online and mobile gambling sites.) The only exception is spread betting, which is the responsibility of the Financial Conduct Authority (FCA).
In all of its regulatory work, the Commission works towards ensuring:
- Gambling is crime free
- Gambling is conducted fairly and openly
- Children and vulnerable people are protected from being harmed or exploited by gambling
UKGC’s crackdown on online and mobile casinos
It was only very recently that the Commission stepped in to regulate remote gambling operators (online and mobile gambling sites). In November 2014, the Gambling Licensing and Advertising Act came into effect, requiring all gambling operators that provide facilities for remote gambling or advertise to consumers in Britan obtain a license. It was a sharp change in how things were done, as it meant that even offshore operators were under the watchful eye of our Commission. Before this, 85% of the domestic remote market is licensed by overseas licensing organisations such as Alderney, Gibraltar and Isle of Man. Although these were legal “white-listed” iGaming jurisdictions, the offshore operators avoided paying UK taxes.
Besides requiring licenses from all online and mobile casinos, the Gambling Commission also enforced the Point of Consumption Tax in December 1 2014. These rules means that all remote gambling operators with UK customers, no matter where in the world they are based, will pay UK gambling taxes. It is a harsh change that has led to many casinos’ closures and acquisitions, but one that benefits all residents of UK. We have written a separate article on the impact of POC tax to the real money gaming industry.
How are players protected?
The Commission issues casino licenses, on the basis that all license holders are required to comply with the License Conditions and Codes of Practice. This document governs every aspect of running a casino; from how it is staffed to how it accepts money from its customers. All of these terms and conditions are thoughtfully put together to align with the Commissions aims. You could broadly place these requirements into a few broad categories:
- Protection of player funds
Let’s start with the most important aspect that a player would consider. Before I deposit my money into a casino, I need to know if my money is safe, and if I can withdraw winnings later. The answer is slightly complicated. In the Commission’s own words, “people who use betting operators do so at their own risk.”
For starters, all casino operators must keep customer funds in a separate account. These customer funds include deposited funds, winnings and bonuses. However, there is no guarantee that a player will get his/ her money back if the casino company goes bust. The Commission only requires the casino to disclose the level of protection and the method by which this is achieved in the terms and conditions.
There are three levels of funds protection:
|Basic||Customer funds are kept in accounts separate from business accounts but they would form part of the assets of the business in the event of insolvency.|
|Medium||Customer funds are kept in accounts separate from business accounts; and arrangements have been made to ensure assets in the customer accounts are distributed to customers in the event of insolvency.|
|High||Customer funds are held in a formal trust account which is legally and in practice separate from the affairs of the company, and is verified by and subject to controls by an independent trustee or external auditor.|
The casino operator must assess themselves against these three categories and inform its customers about these. These self-assessments aren’t approved by the Commission, and are only assessed from time to time. Instead, the player is responsible for checking the terms and conditions when they choose which casino to play at. This is most important if you deposit large amounts of money at a single casino.
Besides, the Commission cannot predict or warn the public whether a company would go bust. This is because the Commission doesn’t oversee the daily operation of businesses or monitor their financial health. The Commission’s logic goes that it cannot undermine the reputation of a business by calling out weak casinos, as it’d only make them weaker and risk players’ funds more.
Another important warning: the Commission does not require its casinos pay its customers promptly! If speed of withdrawals is important to you, you should judge a casino by its player reviews and check their customer service policy beforehand. (For example, Guts Casino processes withdrawals within 2 hours!) It only becomes a regulatory matter when operators continue to take bets when they are unable to pay out.
- Player Identification
Any player would be familiar with this process – the long registration forms when you start playing at a new casino, the emails requesting photographic ID and proof of address, the confirmation text messages! These are annoying, yet totally necessary.
Every casino is required to install robust customer identification processes to ensure that all customers are over the legal age to gamble (18 for most forms of gambling, 16 for lotteries), and that the information that you have provided is correct. These identity checks are also important to prevent crime and money laundering. Most casinos carry out these identity checks before a player makes a withdrawal.
- Player protection and measures against problem gambling
Although only 0.5% of people are problem gamblers, the Commission takes player protection very, very seriously. It is part of protecting young and vulnerable people from the harms of gambling. The requirement is that the casino provides information on how to gamble responsibly; you’ll find links to gambleaware.co.uk, self-help tools and staff support. Casinos must also have a facility to set limits on deposits and wagers.
Besides throwing information in your face, every licensed casino is also required to make arrangements for identifying customers who are at risk from problem gambling, and to assess the effectiveness of these steps. Operators must also be able to answer: “Who is gambling? How often? How much are they spending?”
The Commission is adopting technological capabilities to advance these aims as well. In the latest update on the code of practice (February 2015), the Commission also requires that online operators provide time-out facilities so that players can take a break, and a timed on-screen check to help them review their spend.
- Fair gaming
The LCCP outlines technical standards and equipment specifications for every online and mobile casino. Why, the games that you play must be manufactured and installed by a licensed software operator. This new legislation will be enforced from March 2015 onwards. This entails independent testing of every game offered, in which an independent organisation audits the mathematical models and makes sure the games’ outcomes are truly random.
- Customer service and complaints handling
Every license holder must have robust procedures for handling customer complaints. Besides, they must arrange for disputes to be referred to an independent third party, and inform you of the outcome.
However, you should note that the Gambling Commission doesn’t resolve consumer complaints; so there is no point in contacting them about a late payment. The official advice on raising complaints is to direct all complaints to the casino operator, and to keep a full record of the complaint. If you require more assistance after doing this, you can also contact one of the problem gambling organisations. If you believe that an operator has acted illegally, you can contact the Gambling Commission.
- Honest marketing
Like any other industry, marketing and advertising employed by licensed casinos must not be misleading. For example, the casinos cannot lure you in with free cash, and alter the offer after you have signed up. Every casino must also publish the terms and conditions of each promotion clearly. The loophole for casinos is of course, that they can set very steep wagering requirements in very fine print. You will find that most £5 Free Cash Bonuses require that you wager £500 before you may withdraw any winnings.
- Cash handling
First of all, the Commission expects operators to employ payment providers that are legal and appropriate. These banking services must be authorised by the FCA, or by another regulator in the EEA jurisdiction. In fact, banks require that the casino presents a valid license when setting up a payment account.
There is a closed-loop policy whereby players must withdraw using the same payment method; or at least withdraw the same amount that they had deposited before they can request another payment method. For example, if you deposit £50 on a credit card and win £100, you must withdraw £50 using the same card before you can request to use another card or an e-wallet account. This is another step towards preventing money laundering.
- Casino ownership
What makes the license even more valuable, is that the Commission decides who is qualified to own and operate the casino. During the application process, the Commission looks into the company’s financial history and criminal record, as well as their competence. It takes funds, knowledge, expertise and integrity to run a casino; and the Commission leaves no stone unturned.
If the casino fails to comply with these regulations, the Gambling Commission may revoke licenses, and shut down companies. It also has the power to take action and withdraw the payment facilities (Mastercard, Visa and Paypal).
Did you know? The license application fee costs over £3000, up to around £20k for larger operators with gross gambling yield of £200-500m. There are annual fees too that a casino must pay too!
What about other License Providers?
The licenses issued by Malta, Gibraltar and other overseas regulatory bodies are equally legitimate, although these licenses aren’t legally recognised in the UK. These licenses cover the same ground, in the sense that all licenses requires a player verification process, segregated accounts for player funds and a support system for responsible gambling. However, each license applies different taxation and licensing costs. Different license providers also enforce licensing laws and technical standards with varying strengths.
For our non-UK readers, the general rule is that you can trust all licenses. It goes that Gibraltar issues the strictest licenses, with only twenty issued licenses at the moment. Malta is recognised in all countries in Europe, with the exception of regulated markets like UK. Alderney allows a “free market approach towards e-gambling”, enabling its licensees to accept bets from players in all countries including the United States.
As expected, regulation is an ongoing effort. The Commission is currently discussing other avenues of protection such as mandating best practices for casinos and creating a national self-exclusion scheme, so that the player can exclude himself from all casinos at one time. The Commission has also looked into social casino gaming (casinos where players purchase virtual chips with real money, but cannot withdraw); although they have decided not to impose additional gambling regulation on the social gaming sector at the moment. Lots of other organisations are involved too. The Commission works very closely with other regulators, the police, HM Revenue and Customs and the government to further its aims. My fellow writer, Martina, also wrote an entire article on the future development of online and mobile gambling regulations.
The Gambling Commission is working continuously to protect us players, but it cannot achieve its aims alone. Casino operators are best positioned to protect the industry. In fact, it is in the interest of the business and industry, these regulatory issues are dealt with. Despite all these efforts, players should also take extra steps to protect themselves:
- Compare casinos and look for reviews before playing.
- Look out for the Gambling Commission’s logo and license number on the casino website. If you’re extra careful, you can also check if your casino is licensed using the Gambling Commission’s directory.
- Check the terms and conditions before depositing or redeeming bonuses.
- Always gamble responsibly.
With so many measures in place, every aspect of gambling and real-money gaming feels really safe in the UK. I have yet to encounter any problems or malevolent casinos during my time, and it is safe to say that I will never.