Gambling Commission's approach will eliminate Asian sport sponsorship income

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

At least 15 of the 20 English Premier League clubs are sponsored by Asian gambling companies as well as several other football clubs and other sports. The Gambling Commission's approach to implementing the Gambling (Licensing and Advertising) Bill ("the Bill") will inevitably mean that this significant source of income will disappear.

The stated purpose of the Bill is to enhance UK consumer protection by ensuring that any gambling companies which take bets from or advertise to British customers will require a licence from the Gambling Commission. The Bill has passed through all of the Parliamentary stages and is expected to receive Royal Assent during May and will probably come into force three months later. A gambling operator based outside Great Britain will require a licence from the Gambling Commission if their "facilities for remote gambling … are used [in Great Britain] if the operator "knows or should know that the facilities are being used, or are likely to be used in Great Britain".

The principal reason for most of the Asian companies sponsoring British clubs and sports is not to attract UK customers but rather to market to Asian customers where Premier League football, in particular, is hugely popular both on TV and as a betting medium. Their sponsorship (whether on shorts, perimeter advertising or links to club websites) counts as advertising within the Gambling Act 2005 and, under the Act, this advertising is currently permitted since all of the operators are based and/or licensed in the EEA, Gibraltar or a "White List" territory - in fact, most of them are licensed in the Isle of Man.

Obtaining a Gambling Commission licence, as those operators will be obliged to do on commencement of the Bill in order to continue to advertise in the UK, will entail a significantly increased burden for the Asian operators in terms of regulatory compliance. In particular, they would be required to give details of each territory from which they obtain more than 3% of their income and the reasons why they think they are entitled to take bets from those territories. Given that the reason for their sponsorship is primarily to target Asian customers, it is likely that the Asian companies would be happy to block access to UK customers if that meant that they could continue to sponsor UK clubs and sports. And, given that the purpose of the Bill is to protect UK consumers, one would assume that the Gambling Commission would also be content with this. However, in response to questions as to whether the Gambling Commission would issue an "advertising only" licence (with regulatory requirements that reflect the fact that UK customers will not be able to transact with the operator), the Commission has said that they "will not normally license operators unless they have a British-facing business and either currently transact with British consumers or have a clear business plan for doing so in the future".

Not only do we not understand the logic for this, we do not believe it is supported by the wording of the Bill since if an operator takes proper steps to deny access to British customers, we do not see how they can be committing an offence.

Nevertheless, the Commission's stated position seems to assume that operators in this position would still require a licence but they will not issue one. This approach is likely to cost the clubs and sports involved many millions of pounds of sponsorship and advertising income.