3.2 LEGISLATIVE MODELS APPLIED TO INTERACTIVE GAMBLING
3.2.2 Regulation of interactive gambling
This model focuses primarily on protecting the states citizens and their economy as well as controlling the interactive gambling operators.232 The main tool for implementing these regulations is the establishment of a licensing regime pursuant to which gambling provided either without a license or outside the scope of its terms will be illegal.233 States that regulate interactive gambling through this licensing regime are keen to submit that, ‗due to the very existence (and appropriate implementation) of such an instrument, the rights and interests of interactive gamblers are better protected as compared with remote, exotic and/or non- regulated jurisdictions‘. 234 Inherently, whenever a state regulates interactive gambling it clears the ambiguity that is caused by legislative inactivity by expressly including in its
229 Aronovitz et al 33.
230 Aronovitz et al 33.
231 Aronovitz et al 41.
232 Aronovitz et al 43.
233 Aronovitz et al 43.
234 Aronovitz et al 44.
46
legislation a prohibition against unlicensed interactive gambling.235 ―Licensing is the process by which a government decides on who will be permitted to operate in their interactive gambling industry in that particular state.‖236 A jurisdiction that opts for licensing may do so in one of these two systems: (a) Administrative authorisation, whereby the state fixes a list of requirements that the candidates must fulfil in order to be permitted to operate in the interactive gambling industry, once granted the license, the administration loses its discretionary power to prevent them from operating or; (b) Concessions, whereby in the initial stage, the licensing authority lists the applicants fulfilling the basic prerequisites required by law and secondly, the same (or another) authority— exercising its discretion—
elects one or several of the candidates.237 Several if not all states that have chosen to regulate interactive gambling would preferably apply the system of concession because states want to retain the final say in selecting who will be entitled to operate interactive gambling services within their jurisdictions and under which conditions thereof.238 Concessions go further than administrative authorisation by leaving the state greater discretionary power and affording unsuccessful candidates a very limited and sometimes non-judicial means to appeal.239
Completely liberal systems
Jurisdictions falling under this system are characterised by the fact that they expressly authorise interactive gambling and do not set any limitations concerning nationality, residence of players or the origin of an operator.240 If an operator is not licensed in such jurisdictions he does not face any legal or technical barriers for providing his services and local operators have no rules preventing them from operating outside of the country.241 This system portrays interactive gambling as a business that should be regulated by the market. An example of such a system, amongst others, would be the United Kingdom (UK) which has adopted this system.242 The UK has a large home market for interactive gambling (referred to as remote gambling) and their approach is based on the idea that players can choose probity and integrity rather than being based on prohibition and protectionist.243 The government of
235 Aronovitz et al 28.44.
236 A Cabot & M Balestra Internet Gambling report 6 ed (1997) 200.
237 Aronovitz et al 46/7.
238 Aronovitz et al 47.
239 Aronovitz et al 48.
240 Aronovitz et al 115.
241 Aronovitz et al 115.
242 Aronovitz et al 117.
243 Aronovitz et al 117.
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the UK commissioned the Gambling Review Body to undertake a study of the gambling situation in the UK.244 Mid 2001 the ―Budd report‖ (under Sir Alan Budd) was published, and as a response the government reported that the legislation would be brought before parliament in 2003/4.245 According to this report, prohibition would be impractical and costly to enforce, for this reason then, gambling activities will be permitted through the system of licensing under the authority of a special gambling commission.246 The government‘s response to the report in this regard was as follows: ―There is a potentially vast international market for which gambling operators based in this country will be encouraged to compete.
Consumers, both here and abroad, will be able to access a full range of gambling sites licensed and located here, safe in the knowledge that the probity and integrity of the gambling operators and the products they offer are assured by the Gambling Commission‖.247 In 2005 the Gambling Act was passed into British law.
Restrictive liberal systems
Jurisdictions in this system are essentially liberal systems with one important difference;
licensed operators are prohibited from operating in jurisdictions where gambling on foreign sites is not allowed.248 That is, operators in such jurisdictions may offer their services to anyone in and across borders where interactive gambling is not forbidden for foreign operators or in general.249 A practical example falling under this system is Australia. Section 15a of the Interactive Gambling Act of 2001250 ―prohibits the provision of Australian-based interactive gambling services to customers in ‗designated‘ countries.‖251 A ‗designated‘
country is a country whereby the government has made a request to the Australian Minister to make such declaration and possess legislation which mirrors the provisions of section 15 of the Act by prohibiting the provision of interactive gambling services to its residents internally.252 According to G. Neil of the Australian Federal Department of Communications, the reciprocity is not a requirement.253
244 Aronovitz et al 117.
245 Aronovitz et al 117.
246 Aronovitz et al 118.
247The U.S- Measures affecting the Cross-border supply of Gambling and betting services; dispute Settlement with Antigua and Barbuda (2005) (1), WT/DS285/AB/R, (First Submission of Antigua and Barbuda) 5.
248 Aronovitz et al 118.
249 Aronovitz et al 118.
250 Interactive Gambling Act 84 of 2001.
251 Aronovitz et al 118.
252 Aronovitz et al 121.
253 Aronovitz et al 121.
48 Liberal prohibitive systems
This system allows interactive gambling from their territory yet they prohibit it for local residents.254 The aim of such legislation is twofold: on the one hand, this prohibition guarantees the protection of law and order and public morality, while, on the other hand, the government may benefit from all the fiscal and commercial revenues which the gambling industry generates for the country.255 The system in Australia may also be described as liberal prohibitive as the Interactive Gambling Act of 2001256 prohibits Australian interactive gambling operators from providing services to Australian residents, however, anyone from outside the country may access these services.257 Moreover, the Interactive Gambling Act,258 with regard to the relation between Federal, Australian State or Territory laws, stipulates that
―it is not intended to exclude or limit the operation of a law of a state or territory to the extent that the law is capable of operating concurrently with the Act‖, that is, ―states can continue to license interactive gambling service providers‖ as long as the license under state law does not interfere with federal law.259 Building on this legislation, the industry has elaborated a code of conduct which aims at enabling internet users to filter out prohibited overseas gambling sites.260