Legislative framework of gambling regulation
The Isle of Man gambling legislation is split between land-based activities, such as casinos, bookmaking and lotteries and gambling that takes place online.
The principal legislation is the Gaming Betting and Lotteries Act 1988 (GBLA), which sets out legal requirements and restrictions relating to:
Betting (including at racecourses)
Amusements with prizes (AWP).
Totalisator (that is, a computer that registers bets and divides the total amount of the bet among those who won).
The GBLA also gives power to the Gambling Supervision Commission (GSC) to make regulations. Regulations under the GBLA include:
Bingo Nights (Prescribed Conditions) Regulations 2010 which prescribe the conditions to be complied with where bingo is played as part of a fund-raising event.
Racing Nights (Prescribed Conditions) Regulations 2010 which prescribe the conditions to be complied with by a lottery forming part of a fund-raising event.
Gaming, Betting and Lotteries (Society Lottery Advertisements) Regulations 2011 which provide how a registered charity (as defined) may advertise its fund raising lotteries.
Other relevant legislation include the:
Pool Betting (Isle of Man) Act 1961.
Casino Act 1986.
National Lottery Act 1999.
Gaming (Amendment) Act 1984.
Online Gambling Regulation Act 2001.
Gaming, Betting and Lotteries (Amendment) Act 2001.
Gambling (Amendment) Act 2006.
Gambling Supervision Act 2010.
Casino (Amendment) Act 2012.
Section 11(2) of the Casino Act 1986 gives the GSC power to make regulations specifying which games may be played in casinos and which games are prohibited (see Question 4, Casinos).
The following regulations are currently in force under the Casino Act 1986:
Casino (Licence Application) Regulations 1986, which set out to whom an application for a casino licence should be made and matters which should be included in such a licence application.
Casino Regulations 2011, which, in addition to prescribing the games that may be played, also provides for the administration, operation, financial provision, and enforcement and licensing of casinos.
Casino (Temporary Premises) Regulations 2013, which describe the procedures and requirements in respect of temporary certificated premises.
Amusements or controlled machines
The keeping for use, and the sale and supply of amusement or controlled (or slot) machines is covered by the Gaming (Amendment) Act 1984 and the regulations made under it.
A controlled machine is one which is designed or adapted for the playing of a game of chance or skill, for which the player pays to play (section 1(1)). A controlled machine in respect of which a prize can be won is a prize machine (section 1(3)).
The National Lottery Act 1999 extends the UK National Lottery to the Isle of Man.
The regulation of online gambling is primarily covered by the Online Gambling Regulation Act 2001 (OGRA). OGRA also makes provision for regulations to be made under the Act by Treasury in relation to various matters, for example in respect of:
Principles and rules for the conduct of online gambling.
Advertising of online gambling.
Verifying the identity and age of participants.
Currently the following regulations are in force under OGRA:
Online Gambling Duty Regulations 2008.
Online Gambling (Advertising) Regulations 2007.
Online Gambling (Prescribed Descriptions) Regulations 2007.
Online Gambling (Systems Verification) (No. 2) Regulations 2007.
Online Gambling (Betting and Miscellaneous Provisions) Regulations 2007.
Online Gambling (Disaster Recovery) (No. 2) Regulations 2007.
Online Gambling (Registration and Accounts) Regulations 2008.
Online Gambling (Registration and Accounts) (Amendment) Regulations 2014.
Online Gambling (Licence Fees) Regulations 2009.
Online Gambling (Exclusions) Regulations 2010.
Online Gambling (Exclusions) (Amendment) Regulations 2014.
Online Gambling (Participants’ Money) Regulations 2010.
Online Gambling (Participants’ Money) (Amendment) Regulations 2014.
Online Gambling (Network Services) Regulations 2011.
Social games and skill games are not currently specifically regulated by statute. Links to the legislation and regulations can be found at www.gov.im/about-the-government/statutory-boards/gambling-supervision-commission/legislation/
Definitions of gambling
The Gambling Supervision Act 2010 defines gambling as (section 3):
Gaming (within the meaning of the Gaming, Betting and Lotteries Act 1988) (see below).
Making, negotiating and receiving bets and wagers.
Organising, managing, promoting or participating in a lottery.
Supplying or operating controlled machines (within the meaning of the Gaming (Amendment) Act 1984).
Gaming is defined in the Gaming, Betting and Lotteries Act 1988 as:
”the playing of a game of chance for winnings in money or money’s worth, whether or not any person playing the game is at risk of losing any money or money’s worth.”
A ”game of chance” does not include any athletic game or sport but includes a game of chance and skill combined.
The Online Gambling Regulation Act 2001 (OGRA) defines online gambling as:
Gaming, where a player enters the game, or takes any step in the game, by means of telecommunication (see below).
Betting that is negotiated or received by means of telecommunication.
Lotteries in which any participants acquire a chance by means of telecommunication.
The definition of online gambling is sufficiently wide to cover most forms of online gambling.
Conducting online gambling is:
Organising, managing or promoting gaming or a lottery.
Operating a betting business.
Maintaining any computer or other device through which the game or lottery is operated, or the bet is received.
Telecommunication is defined as a communication sent, transmitted or received by means of a telecommunication system (which has the same meaning as in the Telecommunications Act 1984).
Gambling Supervision Commission (GSC)
The Isle of Man regulator of all gambling activity is the GSC, an independent statutory board established in 1962. The GSC comprises the Inspectorate and the Commission.
The Inspectorate is a division of the Isle of Man Treasury and is managed by its Chief Executive.
The Commission, made up of five independent members of the public who are appointed by the Treasury usually sits once a month to consider regulatory matters and licence applications.
Online gambling licences are granted by the GSC for a period of five years. There are currently no restrictions on the number of online gambling licences that can be issued.
The Commissioners’ overall duty relating to online gambling is to ensure that it is fairly and properly conducted, and that all duties are paid (section 11, Online Gambling Regulation Act 2001).
Gambling Appeals Tribunal
The Gambling (Amendment) Act 2006 introduced the Gambling Appeals Tribunal with powers to challenge decisions of the Commissioners relating to both land-based and online gambling.
Under the Gaming Betting and Lotteries Act 1988 (GBLA), any activity which falls under the definition of gaming is subject to the general requirements and exceptions set out in Part 1 of the Act (sections 2 to 10). These include provisions relating to:
Fairness between players.
Charging for play.
Levies on stakes/winnings.
Location of games.
Specific games are subject to the provisions of Parts II to IV (see below).
It is an offence to use non-licensed premises for betting or to operate as a bookmaker without a permit. Permits may be cancelled by a court if the holder is convicted of an offence under the GBLA or of any offence punishable with custody.
Operators of race betting must hold a licence, the conditions of which are set out in regulations made under section 21(2) of the GBLA and/or specified by the Commission.
Pool betting can only be carried on at an approved racecourse and under the relevant permit.
The Commission may, if it thinks fit, grant to any person of good character and aged over 25 years a licence authorising him to set up, keep and operate a totalisator on an approved racecourse.
The Casino Act 1986 relates to casino games and the following games are prescribed and may be played in the gaming rooms of a casino:
Gambling on horse races shown on film or video.
Games of dice.
Playing on automatic machines.
Wheel of fortune.
Super Pan 9.
Games and activities other than these may not be played, offered or conducted without the written permission of the Commission.
Other aspects of casino games prescribed by the regulations include:
Approved games technology.
Anyone convicted of an offence under the Regulations is liable to a maximum fine of GB£5,000.
Amusements with prizes
The keeping of amusement machines which come under the control of the Gaming (Amendment) Act 1984 (see Question 1, Land-based gaming) is subject to the certification and registration requirements and procedures set out in Part II and in Schedules 1 and 2 of that Act.
Lotteries are subject to strict advertising restrictions (see Question 6). Part III of the Act distinguishes between public and private lotteries.
Procedures for obtaining both betting office and bookmakers’ licences from the Gambling Supervision Commission (GSC) are contained in Schedule 1 to the Gaming Betting and Lotteries Act 1988 (GBLA), along with grounds for refusal of licences.
A bookmaker must also hold a permit in addition to a betting office licence if he carries on business at premises other than a racecourse (section 14(1)).
Bookmaking or a pool betting carried on at a racecourse requires a licence in respect of the specified racecourse, provided that the occupier of the racecourse holds a racecourse licence.
The Commission may separately grant to any person of good character and aged 25 years or over a licence authorising him to set up, keep and operate a totalisator on an approved racecourse.
A maximum of two casino licences can currently be issued by the island’s Council of Ministers. The licences are subject to the conditions, which specifies that the holder must (section 3, Casino Act 1986):
Be a person of integrity.
Have adequate knowledge and financial means.
Be the sole occupier of the casino.
Show adequate security of tenure.
Intend to operate all the facilities and amenities.
The licence prescribes the types of games that can be played at the casino (see Question 4, Casino Games). The Island’s regulators have adopted a fairly flexible approach and new varieties of the traditional casino games have been trialled in the Island’s current sole casino.
Prize machines are subject to a licensing regime and low value jackpot slot machines in public houses must be licensed.
The National (UK) Lottery is available on the island and apart from small society lotteries this is the only legal lottery operating on the Island. A lottery that forms part of the National Lottery under the National Lottery etc. Act 1993 (UK Act of Parliament) is not an unlawful lottery if it is designated in an order made by the Treasury (for example, National Lottery (Designation) Order 2009).
The following are prohibited (sections 26 and 27, Gaming Betting and Lotteries Act 1988 (GBLA)):
Land-based betting transactions with a minor.
The incitement of betting transactions with a minor.
Employing a minor in any betting operation.
General restrictions on gaming include (sections 2 to 6, GBLA):
Betting in the street.
Charging for games.
Playing against the bank.
See Question 4.
The Casino Regulations 2011 set out restrictions relating to:
Who can be appointed director of a casino (regulation 6).
Opening hours (regulation 12).
Who can be employed (regulation 17(1)).
Participation by minors.
Anti-money laundering legislation
Operators are subject to the Anti-Money Laundering and Terrorist Financing Code 2015 and need to verify the identity their clients where the transaction or series of linked transactions exceeds EUR3,000.
With the exception of spread betting, all forms of online gambling are potentially licensable under the Online Gambling Regulation Act 2001 (OGRA). The following forms of gaming when conducted online require an OGRA licence:
Online casino games (for example, roulette, blackjack, slots).
Peer to peer games (for example, poker, bingo, backgammon, mah-jong).
Mobile phone betting.
Fantasy football (or similar).
Financial trading (but not spread betting).
Pari-mutuel and pool betting.
Certain spot-the-ball style games.
An OGRA licence is not required for:
Gambling which is covered by a Betting Office licence.
Gambling which is covered by a casino licence.
“Free play” games.
Other excluded activities are listed in the Online Gambling (Exclusions) Regulations 2010 and include:
Advertising and marketing of gambling services.
IT provision and maintenance.
Web and software design.
Purely administrative procedures.
The following licences are available:
OGRA licence. A business undertaking the prescribed activities will need a licence. Operators with a full licence can offer technology such as games, software and network access to sub-licensees.
A sub-licence. This is obtained where the applicant wishes to operate exclusively with a technology provider with a full OGRA licence regulated by the Gambling Supervision Commission (GSC).
A network services licence. This is obtained where the operator wishes to allow one or more foreign registered players onto its Isle of Man server without re- registering the player details.
An application for an online gambling licence must be made by a company incorporated in the Isle of Man (section 4(1)).
The application process is easily accessed and supported by comprehensive guidance notes (www.gov.im/categories/business-and-industries/gambling-and-e-gaming/application-forms-and-guidance-notes/). The application forms and supporting documentation are submitted to the GSC together with the application fee. After completion of a vetting process, the applicant is invited to a licensing hearing before the Commission. If successful, the applicant must pay the licence fee before going live. It typically takes ten to 12 weeks for the GSC to process the application.
Duration of licence and cost
Subject to section 8(2), a licence, unless it is cancelled or surrendered, remains in force for a period (specified in the licence) of up to five years. The licensee may surrender the licence by notice in writing to the Commissioners. The surrender or expiry of a licence does not affect liability for anything done or omitted under the licence.
Licensees can apply to the Commissioners for renewal of the licence at any time before the expiry date.
The current costs are as follows:
GB£5,000 administration fee with the initial application for a network services, full or a sub-licence.
GB£50,000 per annum thereafter and GB£5,000 for every foreign operator, for a network services licence.
GB£35,000 per annum thereafter, for a full licence.
GB£5,000 per annum thereafter, for a sub-licence.
A licence can be cancelled or suspended by the authorities where a holder:
Is convicted of an offence under the GBLA or any other indictable offence.
Fails to pay fees due.
For any other reason, ceases to be eligible.
Operators must not allow minors or people in a prescribed country or territory to participate in online gambling (section 2, Online Gambling Regulation Act 2001 (OGRA)).
Licensees must satisfy the Gambling Supervision Commission (GSC) of their financial eligibility and specifically notify any change in the beneficial ownership of more than 5% of share capital.
The GSC can apply for a High Court order in respect of the licensee company requiring a shareholder, director, other officer or other interested party to disclose the identity of the beneficial owner or owners of the shares (section 17, OGRA).
Typical standard licence conditions are found at www.gov.im/media/1349489/guidance-notes-for-making-an-online-gambling- application.pdf).
They include clauses relating to:
Security of software.
Transactions or play with other jurisdictions.
Security of players’ funds.
Anti-money laundering compliance.
Accounting and finance.
Scope of licence.
Contracts entered into between the Isle of Man network platform and foreign operators must include an appropriate commitment to game fairness, the exclusion of crime and the protection of young and vulnerable people.
Foreign operators must operate to Isle of Man standards of anti-money laundering in respect of any players they supply to the Isle of Man based network.
Anti-money laundering legislation
Online Gambling operators are subject to the Money Laundering and Terrorist Financing (Online Gambling) Code 2013. Under this code, operators must appoint a suitable reporting officer with independent and unimpeded access to the board or ownership of the operating company.
The Inspectorate will examine the operator’s anti money laundering procedures and staff handbook to ensure that appropriate staff are advised of their obligations under the Code (see Question 3, Gambling Supervision Commission (GSC)).
The anti-money laundering guidance notes can be found at www.gov.im/media/1349502/aml-cft-guidance-for-online-dec-2015.pdf .
B2B and B2C
There is no distinction in law between B2B and B2C operations where the B2B is a ”white label” provider and the players contract with the licensed operator. White labelling is where one party enters into an arrangement with another to provide and manage a service under the second party’s brand name.
The situation for B2B providers of gambling services is different. Such services are potentially licensable under section 1 of the Online Gambling Regulation Act 2001, but may fall into one of the many exclusions provided by the Online Gambling (Exclusions) Regulations 2010.
Mobile gambling and interactive gambling
Social gaming as such is not explicitly regulated in its own right, but the definition of online gambling within the Online Gambling Act 2001 is arguably sufficiently wide so as to include social gaming that is conducted for money or monies worth.
In this context, it is worth considering how the Gambling Supervision Commission (GSC) deals with the use of virtual currencies in online gambling as this may be relevant to social gaming. Currently, a player can only open an account with an operator through ”the deposit of money,” and in practice this usually means a credit or debit card payment. Virtual currencies such as Bitcoin are seen as property rather than currency, which means that a new player’s account cannot currently be opened using virtual currency.
In keeping with its policy of wanting to allow operators to accept virtual currency subject to safeguards on the protection of value and storage security, the GSC is proposing to change the regulations to facilitate the use of virtual currency (see Question 17, Online gambling). In practice this will be achieved by widening the interpretation of ”deposit of money” for the purposes of online gambling to include ”a deposit of money or the deposit of something which has a value in money or money’s worth.”
Isle of Man companies are subject to tax on their worldwide income. The standard rate of corporate income tax in the Isle of Man is 0%.
Online gambling is exempt from VAT which means that while no VAT is due on income, VAT is not recoverable on expenses and overheads. The current VAT rate is 20%.
Gambling duty is charged as a percentage of gross gaming yield or retained profit on online gambling, pool betting and betting. It is not charged on gambling on gaming machines, which are subject to machine games duty (see below, Machine games duty).
Gaming in a casino.
Bingo unless conducted online.
On-course betting or National Lottery games.
Gross gaming yield means the total amount of all bets or stakes made, and the price of all chances sold, less the value of all winnings and prizes due, in the course of gambling.
Gambling duty is generally charged on the gross gaming yield basis. The exceptions to this general rule are the following forms of gambling which are charged on retained profit basis:
Prize draws, prize competitions or lotteries.
Poker or other games where individual players play against one another using systems or facilities provided by the operator.
Sponsored pool betting and pari-mutuel betting which employs the use of a totalisator, or any form of pool betting.
A betting exchange.
Where the operator acts as a bet-broker.
The rates of Gambling Duty are as follows:
For gross gaming yield or retained profit not exceeding GB£20 million per annum: 1.5%.
For gross gaming yield or retained profit of more than GB£20 million per annum, but not exceeding £40 million per annum: 0.5%.
For gross gaming yield or retained profit exceeding GB£40 million per annum: 0.1%.
The prescribed proportion of gross gaming yield for pool betting is 15%.
Machine Games Duty
This is payable by any person or organisation that operates machine games. In general machine games are fixed odds betting terminals, slot machines and quiz machines, where the prize can be bigger than the stake.
The operator of the machine is required to register with Customs and Excise and account for the duty. Machine Games Duty is 15% of the net takings (profit) on an inclusive basis.
It is an offence for a person to issue or cause to be issued any advertisement which (section 7, Gaming Betting and Lotteries Act 1988):
Informs the public that gaming takes place on the premises.
Invites the public to participate in any such gaming.
Invites the public to subscribe money or money’s worth to be used in gaming on the Island or elsewhere.
Invites the public to apply for information about facilities for subscribing any money or monies worth.
This wide-ranging prohibition on the advertising of gaming is subject to an equally wide set of exemptions the key ones of which are as follows:
Casinos: a land-based casino can advertise itself and its games. The advertising is controlled and subject to specific casino advertising regulations.
Prize machines: controlled machines, more commonly known as slot machines, may be advertised.
Operators of online gambling sites must comply with the Online Gambling (Advertising) Regulations 2007. Advertising must be based on fact and is not allowed to be:
Indecent or offensive.
False, deceptive or misleading.
Directed at jurisdictions where online gambling is illegal.
Directed at under 18 year-olds.
The advertising of land-based bookmaking is also restricted and must comply with GSC guidelines.
The GSC has power to direct an operator to stop an advertisement from being published or shown or to change the advert to comply with the regulations. The penalty for non-compliance is a fine of up to GB£5,000.
Developments and reform
There has been little change in land based gambling laws, however proposed changes to the way casinos operate and are regulated have been published by the GSC.
The GSC has consulted on a number of secondary legislative changes which it refers to as the “Gambling Regulation Package 2016”. A copy of the consultation can be found at www.gov.im/lib/docs/gambling/egamingsectorconsultation.pdf .
The proposed changes include:
Allowing operators to accept virtual currencies such as Bitcoin.
Expanding the types of services that a sub-licensee can take from a full licensee.
Enabling GSC to unilaterally accept test certificates issued by another authority.
Giving players the ability to control their gambling more effectively.
Improving the system for the protection of winnings.
Allowing licensees to offset unused portions of licence fees against upgraded licences.
The regulatory authorities
The Gambling Supervision Commission
Description. The Commission licenses and regulates land-based and online gambling activities in the Isle of Man.
Isle of Man Government website gambling pages
Description. This website provides information about the Gambling Supervision Commission and other gambling resources in the Isle of Man, including a link to gaming legislation.
Isle of Man Legislation
Description. The Isle of Man official online legislation resource.