Alderney: More Licenses than Requests

3 January 2002

In August, island of Alderney had sold three out of a possible nine online bookmaking licenses, to Sportingbet, Surrey Sports and International Sports Betting Ltd. The cash from the licenses provided an extra source of income to the island's economy, which is largely reliant on tourism dollars. At the time, wealth glimmered for every Alderney inhabitant.

Now, in January 2002, just one of the licenses is operational. The ever-active chief executive of the Alderney Gambling Control Commission, Moran Chapman, said, "At present only two electronic betting center licenses are in issue. One to Sportingbet (Alderney) Ltd. is fully operative. The other to Bonne Terre Ltd. as Surrey Sports International is not being operated at present."

Edward Bennett of Surrey Sports' marketing department said the company was based in Alderney for two years before the abolition of the betting tax in the United Kingdom.

"On the ninth of October, 2001, we moved Surrey Sports International back to the U.K. to our Harrogate-based office," he said.

Alderney, the most Nordic isle of the Channel Islands, together with Guernsey, Herm, Sark and various tiny islets form the Bailiwick of Guernsey. The Bailiwick of Guernsey lies just off the coast of France, close to Normandy, in the English Channel.

With 2,200 inhabitants, Alderney is a self-governing, democratic territory. The island is outside the European Union and is also a British offshore finance center to the larger islands. The Channel Islands have never been subject to the British Parliament and have always been self-governing units under the direct rule of the Crown acting through the Privy Council. According to constitutional custom, the Crown does not interfere in island politics, save when some vital constitutional change is necessary, and never intervenes in local affairs.

The United Kingdom looks after the Channel Islands in the fields of foreign affairs, defense, and the islands' association with the EU. Light tax and death duties make Alderney a popular tax haven. The States of Alderney, the legislature, consists of a president and ten states members, all unpaid. Alderney has two seats with voting rights at all meetings of Guernsey's States of Deliberation. There are double taxation treaties with the United Kingdom and Jersey, but they only apply to resident individuals and companies. Exempt companies pay a tax exemption fee of £500 ($800 US).

In 1997 Alderney led the field with the implementation of legislation to permit electronic betting, using the Internet, e-mail, telephone and fax. The licenses were specifically for betting and sports book business and were called "The Gambling (Betting) (Alderney) Ordinance 1997" and "The Gambling (Betting) (Amendment) (Alderney) Ordinance, 1999."

In July 2001 legislation was enacted to permit Internet gambling. The maximum number of licenses is fixed at six and each license holder is entitled to employ a maximum of ten staff based on the island. Licenses are issued for a three-year period and are subject to an annual fee of £75,000 ($108,281.74 US).

In May 2000 the states of Alderney established an independent, non-political, commission, the Alderney Gambling Control Commission, to take over the regulation of the licensed businesses from the island's Policy and Finance Committee. The commission has built upon and developed the policy of ensuring its regulatory and supervisory approach meets the very highest international standards.

The commission is also engaged in regular dialogue with other regulatory bodies at an international level. It participates in the Gaming Regulators European Forum (GREF) and the International Association of Gaming Regulators (IAGR). The commission works closely with other agencies, particularly in the prevention of financial crime.

Interested persons are advised that the technical and operational requirements coming forth from proposed legislation will be detailed and require high levels of integrity and technical management to ensure ongoing compliance. The states of Alderney have resolved that the Australian Regulatory Model is to be considered as a basis for its regulations. However, the concept of risk and demonstrable due diligence are introduced rather than absolute pass or fail status with requirements that may not apply in all cases.

With the end of the British betting tax, it seems the economic forces of supply and demand also apply to Internet gambling licenses from offshore locales such as Alderney, Isle of Man, Malta, Cyprus and Gibraltar. The situation shows once again that free market rules are global, even when the product is offshore betting licenses. Will the fees go down?

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.