Gaming Kiosks Create a Stir in London

12 July 2004

A company supplying Internet kiosks at a London arcade has found itself in a standoff with the U.K. Gaming Board.

The kiosks enable users to transfer money into "e-cash" accounts, and the problem arose when one of the units was used fund an account at an offshore gambling site.

Cliff Young, who is in charge of the Gaming Board's lottery and machine games division, said the regularity authority is concerned that illegal gaming activities are being conducted at the arcade.

"The board is of the view that the operation of this machine involves the organizing and management of gaming and that gaming is taking place on the premises," Young said in a prepared statement.

Young said the kiosks, by enabling access to online gambling sites, are in violation of the 1968 Gambling Act. He said the board will not pursue the matter if the situation is rectified, but added that the board will "consider what action it needs to take" if the kiosks are not removed.

Meanwhile, officials with Contented, the company supplying the kiosks, say their product is in complete compliance with relevant gambling laws. The group conducted a thorough investigation of various regulatory issues before the units were sent to market to ensure it was a legal system. It even sought legal advice from one of the leading gambling law experts from the Queen's Counsel in Kevin de Haan.

In a statement released to the media, Contented said that de Haan is of the opinion that the kiosks are not gaming machines as described by the 1968 Gaming Act.

Contented further argues that the Department of Culture Media and Sport has gone on the record as saying that Internet gambling happens at the location of the server and not where the customer resides.

Contented also said in its statement that even if the Gaming Board found it necessary to take jurisdiction over Internet gaming, the kiosks should not be classified as Internet gaming devices.

The company stated: "It is counsel's view that there are powerful arguments that under the proposed arrangements between Contented and the occupiers of premises, whose terminals provide access to a variety of internet-based e-commerce services, gaming is not brought onshore and, as such, Part 1 of the Gaming Act does not apply and no offenses are committed."

The situation is similar to an ongoing dispute between bookmakers and the board over fixed-odds betting terminals (FOBTs), which have seen an enormous growth throughout England over the last couple of years. The units feature games ranging from video roulette wheels to video bingo, and the board in 2002 challenged their introduction British into betting shops. The courts ruled in favor of the bookmakers, but the Gaming Board continues to battle the existence of the machines in betting shops through various legal channels.

Officials with the Contented are confident their case will yield a similar verdict.

"With FOBTs, the Gaming Board has agreed to a code of practice but continues to maintain that they are in their essence illegal," Contented said in its statement. "It is the view of our advisors that Contented's legal position is no less strong than that of the FOBT suppliers."

Neither Young nor officials from Contented commented on what they thought the next step for the Gaming Board would be. Contented appears committed to keeping the kiosks in the arcade, but it is unclear whether the company will move forward with plans to install them in other arcades throughout the United Kingdom.

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