Online gambling: What Gordon did get right

By Simon Collins
Sunday 23 October 2011 06:32

Did Gordon Brown fail to regulate a bunch of city bankers who we now know were turning sub-prime lead into AAA gold? Maybe and maybe not. Either way, I feel I should stand up for the PM. After all, the industry in which my own company operates has been given a flying start by the regulatory environment that New Labour established. One that the rest of the world is now trying to emulate.

The online gambling industry has no shortage of detractors. If you believe the press, our fledgling sector is responsible for almost everything wrong in the UK. From marital breakdown and money laundering, to addiction and moral bankruptcy.

Not surprisingly, the reality is very different. The UK market is, in fact, the most tightly and effectively regulated in the world. The Gambling Act of 2005, overseen by the draconian Gambling Commission, has ensured that only responsible, professional companies are able to operate.

Just compare this to the US, where a prohibition-style offensive on all online gambling has forced American citizens into the arms of "illegal" operators. These operators may well be nice guys running perfectly reasonable odds and fair games. However, the US Department of Justice views any company taking US play as criminal.

At least partly as a result of New Labour's progressive regulation, Britain has become the world centre of a thriving, technologically advanced, twenty-first century business. And how often do you hear that said in the UK?

Over the past few years, our industry has created plenty of opportunity for individuals and businesses on these shores. For instance, online bingo companies, just one part of the overall industry, spent over £7million on UK TV advertising in 2008, according to Nielsen Media Research. Or take the many online moderators we employ at Cashcade to help ensure standards of behaviour in our big games, Foxy Bingo, Getminted and Cheeky Bingo. Many of whom are working part-time and enjoy having a flexible, web-based job.

The only glitch in the regulatory process was the Government’s insistence on introducing a fifteen per cent tax on the activities of all online gambling operators. Sometimes known as "The Dacre Tax", following a Daily Mail led lobbying campaign, the levy has led to fewer funds arriving in the Treasury’s coffers, because most of the industry moved to nearby countries, such as Malta. However, this is no different from moves by FTSE-100 companies, including advertising giant WPP, which recently moved its head office to Ireland. Even Mr Dacre seems to have changed his tune. The newspaper recently launched its own Bingo site, and guess what? It's located off-shore in Gibraltar, via a partnership with Gtech.

The Internet has thrown up complex difficulties in almost every walk of business, not least the gambling industry. If you are interested, we keep a track on them at our blog Perfect Storm. But the UK Government was the first to tackle these issues head on. And now the rest of the world is following its lead. Spain, Italy, France and even President Obama all seem to be preparing regulation designed to entice online gambling operators to their countries.

So for once let's be pleased we were the first to get something right here in the UK.

Simon Collins is a director of Cashcade Ltd.

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