Advertising online casinos will become more difficult in the United Kingdom and the United States if lawmakers in those countries have anything to say about it.
Last week British Secretary of State for Culture Media and Sport Tessa Jowell vowed to eliminate Internet casino advertisements that contain illegal inducements or incentives, such as free entry or sign-up bonuses. Law enforcement officials cannot target the operators because, being offshore, they are not subject to British law, but they can, according to Jowell go after the businesses responsible for producing and exhibiting the ads.
The tactic would be similar to the approach taken in the United States, where the U.S. Department of Justice began warning media outlets in 2003 that carrying advertisements for online gambling services might constitute aiding and abetting illegal activity. Online gambling portal Casino City has mounted a legal challenge to the U.S. crackdown on the basis that the warnings are threats to constitutionally guaranteed rights to commercial free speech. This, of course, begs the question: Could a similar challenge be mounted in the United Kingdom?
We asked the experts:
How does British law vary from U.S. law in terms of advertising for gambling services, and do British advertisers have grounds for mounting a challenge of their own?
Julian Harris: As I understand it, in the U.S., the Department of Justice is seeking to impose a blanket ban on the advertising of online casinos, irrespective of whether they are properly licensed in the jurisdiction where they are based. This is not preferable to any specific statute, but appears to be based on DOJ opinion, which I understand to be questionable.
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". . . The 1968 [Gaming] Act does not govern the provision of online gaming specifically, but at the time the Act was drafted, a distinction was made between casinos licensed in the U.K., and those licensed elsewhere."
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In the U.K., until the relevant provisions of the Gambling Act 2005 come into force, the advertising of all gaming remains governed by the Gaming Act 1968. Although there has been some liberalization in the last few years for the advertising of land-based casinos, the advertising regime remains extremely restrictive. Needless to say, the 1968 Act does not govern the provision of online gaming specifically, but at the time the Act was drafted, a distinction was made between casinos licensed in the U.K., and those licensed elsewhere. Part of the motivation for that legislation was to restrict gaming to those who already took part and not to enable much--if any--expansion of the number of casinos. A distinction was made between advertising casinos here--which is almost impossible--and advertising those overseas. This was partly because it would otherwise be extremely difficult even to include, for example, a hotel overseas that happens to have a casino in a travel brochure.
Therefore, casinos outside the U.K. can advertise in the U.K., provided that they do not invite the public to subscribe money to be used in gaming, or to apply for information about facilities to subscribe money for gaming. This may seem like unusual wording, and the distinction is a slim one between the relevant part of the statute, and the part that prevents any casino from inviting the public to take part in gaming in the U.K. It is not easy to assess precisely what distinction was intended, but it has always been understood by practitioners and by the regulators to mean that, whilst it is legal for overseas casinos to advertise their existence and the facilities which they provide to people in the U.K., they are not allowed to seek to persuade people to spend money, either by offering any inducement to them to do so or discounts.
It follows that because online casinos are licensed in other jurisdictions, the legislation applies to them, though it is fair to say that no action has been taken against those who breach the rules. This is because the former regulator, the Gaming Board, unlike the Gambling Commission, did not have the power itself to prosecute and was, therefore, dependent upon the Crown Prosecution Service, who would probably consider that they have better things to do with their time.
With over 20 years experience in gambling law, Harris Hagan co-founder Julian Harris has advised some of the world’s largest corporations and trade associations, such as the British Casino Association and the Casino Operators Association. He is recognized as an expert in both national and international Gaming and Licensing Law.
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". . . The [1968 Gaming Ac] contains some very curious provisions, and many lawyers here do not agree that its provisions in relation to advertising of off-shore gaming are what the Secretary of State says they are."
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Tony Coles: Firstly we have no written Constitution, so there is no written provision guaranteeing free speech. Our rights have been built up by common law over the centuries and, generally speaking, operate on the basis that we are free to do that which is not prohibited by law.
Although the Gambling Act 2005 is now law, most of it is not yet in force and will only be brought into force gradually over the next few years. The 2005 Act contains a new structure for advertising gambling, and a detailed regime will be introduced by the newly created Gambling Commission in conjunction with the regulators of U.K. broadcasting as well as the Advertising Standards Authority as the (non-governmental) guardian of proper advertising here. Detailed provisions under which this will be done are being worked on at the moment and have not been published.
Hence the activity of gaming (but not betting) continues to be governed by the Gaming Act 1968. This contains some very curious provisions, and many lawyers here do not agree that its provisions in relation to advertising of off-shore gaming are what the Secretary of State says they are. The relevant part of the 1968 Act makes no mention of "inducements etc.," but what it does prohibit is any advertisement in the U.K. "inviting the public to subscribe any money or monies worth to be used in gaming anywhere in the world or to apply for information about facilities for subscribing any money or monies worth to be so used". The precise meaning of those words has never been tested in the courts and, in my view, will only by tested if the Crown Prosecution Service (as the sole prosecuting authority in this regard--under the 1968 Act the old Gaming Board--could not prosecute) decides to take action.
If there is such a prosecution then in due course, once the case reaches the Appeal Courts, we will have a clear indication of what is and is not allowed and whether or not Tessa Jowell is accurate in what she says.
Meanwhile, because of the uncertainty which the old law has created, it is planned that the Gambling Commission will endeavor to agree with the relevant trade associations some guidelines under which advertising will be undertaken pending the 2005 Act coming fully into force. It is my understanding that no draft guidelines have yet been issued by the U.K. government, let alone agreed upon by the relevant trade associations. Of course, advertisers who are not members of any such trade association may choose to seek to disregard any guidelines which may be agreed but they will be faced with problems in placing advertisements with reputable journals here in the U.K. or using the services of reputable advertising agents.
The situation is far from straightforward!
Jeffrey Green Russell's senior partner, Tony Coles, is renowned in the leisure industry for his specialist knowledge of gaming and betting law. Coles has been advising on betting and gaming law since the mid 1960's and represents, amongst many other clients, a number of major corporations. As well as being a member of the International Masters of Gaming Law (IMGL), Coles is a member of the International Association of Gaming Attorneys (IAGA), the Society for the Study of Gambling and the European Association for the Study of Gambling. He sits on the Editorial Board of Gaming Law Review. He has contributed the United Kingdom segment to all editions of the highly acclaimed "Internet Gambling Report".
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"Certainly, Tessa Jowell's statement is intended to be a shot across the bows for those offshore operators who place gaming advertisements that cross the line legally."
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Peter Wilson: Certainly, Tessa Jowell's statement is intended to be a shot across the bows for those offshore operators who place gaming advertisements that cross the line legally. Quite right, where there are blatant and repeated breaches of the law. However, the law on advertising gaming in Britain is no longer clear cut.
There are two key reasons for this. First, it was passed in the 1960s and is, therefore, primarily directed at gambling operations run from premises in Britain. Applying it to the activities of an Internet operator often places a strained construction on it. Secondly, when the law was drafted it was intended to implement a policy that underpinned the whole of licensed gambling in the U.K., namely that gambling operators should only supply non-stimulated demand. This policy was turned on its head by none other than the government itself with the wholesale promotion of gambling by means of the National Lottery. It has now been officially abandoned as we run up to the implementation of the Gambling Act 2005 under which the Gambling Commission has a duty to permit gambling that meets the licensing objectives under the Act.
Since gambling businesses operate in a highly competitive marketplace, it is inevitable that they wish to promote their services as best they can within the constraints of the current law. It is likely that until the new regime is implemented under the 2005 Act, there will be many cases that hover in a grey and rather subjective zone with a wrestling match between the creative (but excluding mischievous) copywriters and the duty bound regulators. There can be no objection to the Commission taking action where the law has been broken. Equally, I have no doubt the Commission will be mindful of the changes in the social and policy climate since the 1968 Gaming Act was passed and only applies the considerable resources involved in undertaking a prosecution on those cases where there are blatant and/or repeated breaches of the law.
Peter Wilson, a partner at the Tarlo Lyons firm in London, is a specialist in the areas of gambling and licensing. He has been advising on gambling for over ten years. He has appeared before the Gaming Board of Great Britain on a number of occasions and a good proportion of his practice now involves advice on different types of internet gambling including bookmaking, betting exchanges, pool betting, casinos, lotteries and prize competitions. He recently wrote the chapter on Internet gambling for Sweet & Maxwell’s Encyclopedia of E Commerce Law.