Ireland: the Regulatory Landscape


the lowdown on the regulatory environment for gambling and iGaming in Ireland.


Introduction

Irish law on gambling distinguishes between three forms of gambling activity: gaming, betting and lotteries. The legislation which regulates each of these forms of gambling was enacted long before the development of the online forms of gambling, with the result that the regulatory environment in Ireland for online gambling operators and : ustnesses servicing the online gambling mdustr>" is uncertain.

The unsatisfactory state of Ireland's gambling laws has been long since acknowledged, and a number of the preparatory steps required to update and reform Ireland's laws have been undertaken, with two key developments occurring shortly before the demise of the government which left office in March 2011.

In this overview of the Irish legal landscape, we provide a high level synopsis of the current regulatory regime, together with a sranmary of the legal developments which are coming down the track.

Irish law on gambling: the key points

Irish law on gambling distinguishes between three forms of gambling activity: gaming, betting and lotteries (including bingo).
Irish law on gaming and lotteries (including bingo) is set out in the Gaming and Lotteries Act, 1956 (the 1956 Act). Ireland also operates a state-run lottery, which was established pursuant to the National Lottery Act, 1986. Betting is regulated by a 1931 Act, which establishes a licensing regime for retail bookmakers.

Although none of this legislation specifically deals with online gambling, Irish law principles of statutory interpretation require that a "purposive" approach be adopted when construing legislation, and that allowances be made ::; ihanges in technology and social conditions. The result is that the restrictive rales and principles devised for land-rasec iterators in the 1931 and 1956 acts of parliament must be applied to online gambling activities.

Gaming

Section 4 of the 1956 Act prohibits the promotion or the provision of facilities for "unlawful gaming". The definition of unlawful gaming is extremely wide, and includes all games played for stakes, whether they are games of skill or games of chance, in which the chances of all players (including the banker) are not equal, or in which the promoter or banker profits from the stakes, otherwise than as winnings from the result of play. The result is that most (if not all) forms of casino gaming are prohibited. However, gaps in the legislation have facilitated the development of a number of 'loopholes' which have paved the way for the development of a number of land-based 'private members clubs' offering casino facilities in Ireland.

To date, the Irish authorities have tended to take the view that the provisions of the 1956 Act do not extend to online gambling services which are located and operated offshore, even where those services are received by Irish players. Furthermore, the authorities have not raised any significant issue or objection to the physical establishment in Ireland of support services and back office operations related to the provision of online gambling services, provided that the gambling website being supported is operated outside of Ireland. However, no official guidance on this point has been published.

Lotteries

Although the National Lottery has a monopoly on large prize draws, it is possible to apply to the District Court for a licence to run a lottery (including bingo) in which the total weekly prizes paid out do not exceed Ђ20,000. However, it is an express provision of a lottery licence issued pursuant to the 1956 Act that the lottery must be for some charitable or philanthropic purpose, and that the promoter must not derive a personal profit from it. On the face of it, this rules out the running of a commercial lottery or bingo operation in or from Ireland, whether on-land or online. That said, the lottery licensee is permitted under the legislation to apply up to 40 percent of the gross proceeds of the lottery towards the expense of running and promoting it, and that provides some scope for promoters to obtain a reasonable return from lotteries run in Ireland.

Betting

The starting position in relation to betting is that all betting in Ireland is prohibited, unless regulated pursuant to the Betting Act, 1931 (the 1931 Act). Although the 1931 Act has been amended more frequently than the 1956 Act, it still only regulates retail bookmakers, and does not expressly deal with online betting. Notably, section 33 of the 1931 Act as originally enacted prohibited betting with persons outside of Ireland. The effect of this section was that Irish punters could not legally place bets online with operators established outside Ireland. However, it was repealed in 2001.

Advertising gaming, betting and lotteries in Ireland

The 1931 Act prohibits the exhibition of certain signs outside a bookmaker's premises. It does not, however, impose restrictions on media advertising. In general, therefore, advertising of both onshore and offshore betting is permitted. One exception to this rule is Section 32 of the 1931 Act which deems advertisements which invite persons to bet on "football games" to be unlawful. This prohibition is rarely, if ever, enforced, but to stay within the confines of the law, advertisements which expressly promote football betting should not be published in Ireland.

In relation to advertising online gaming, there is a risk that online advertisements could amount to either unlawful promotion or assistance in promoting gaming. There are various technical arguments which can be put forward to counter this claim, and the risk of transgressing the law may also be tempered by reference to the aggressiveness of the advertising campaign in question; for example, it could be argued that an advertisement which simply provides basic information about online gambling, without encouraging gambling, is not captured by this restriction.

Advertisements in relation to lotteries (including bingo) face the same dilemma as gaming advertisements; the 1956 Act provides that no person shall "promote or assist in promoting a lottery". The section of the 1956 Act which deals with lotteries also prohibits all print and radio advertisements of lotteries (including bingo), with the exception of the National Lottery.

Long-term forecast: the DoJ paper on the options for regulating gambling in Ireland

Following a public consultation process conducted in 2009 which generated 70 submissions, the Department of Justice (DoJ) published its paper on the "Options for Regulating Gambling in Ireland" in December 2010. The paper is intended to provide a 'roadmap' for the Irish legislature in devising a modern system for the regulation of gambling, including online/remote gambling, in Ireland. The paper proposes that the existing 1931 and 1956 Acts be repealed and replaced with a single statute regulating all forms of gambling, including casino gaming, betting, gaming machines, lotteries and bingo, and their online versions.

When the paper was published in December 2010, it was criticised separately by Fine Gael and Labour, who subsequently formed the new coalition government Then Labour TD and current Minister for Communications, Energy and Natural Resources, Pat Rabbitte, described the DoJ paper as "a ham-fisted report without direction [or] conclusions, for a sector that has been awaiting regulation for a very long time". Then Fine Gael TD and current Minister for Justice, Equality and Law Reform, Alan Shatter, was quoted in the Irish Times on January 5, 2011, as saying that he deplored the government's failure "to take any meaningful position" on a range of issues discussed in the paper.

It remains to be seen what level of priority Ireland's new government will attach to overhauling Ireland's gambling laws. While comprehensive reform is clearly required, it is unclear at this stage how quickly the new government will take up the baton of reform, and whether it will endorse the DoJ paper, or seek to go another route.

Short-term outlook: a licensing and tax regime for online bookmakers and betting exchange operators?

Pending a complete overhaul of Ireland's gambling laws, the indications from the new government are that a licensing regime for online bookmakers and betting exchange operators will be introduced in the short-term.

Following the budget announcement in December 2010, that the government intends to extend the application of betting duty to all operators accepting bets from Irish customers, the promised taxation provisions were passed into law in January by Section 49 of the Finance Act, 2011. These include a licence fee for "remote bookmakers" and "remote betting intermediaries" (i.e. online betting exchange operators); the extension of Ireland's existing one percent turnover-based betting duty to remote bookmakers in respect of online bets accepted by them from Irish punters (regardless of where the online operator is located); and the introduction of a new form of duty payable on the commission earned by betting exchange operators on bets placed by Irish customers using their services. There has been some media speculation that the existing one percent rate may be increased to two percent.

Section 49 has not yet been commenced and, indeed, cannot be commenced until such time as a licensing regime for "remote bookmakers" and "remote betting intermediaries" is introduced. However, while introducing new taxes before developing the licensing regime which is required to collect those taxes is very much a 'horse before cart' approach, the introduction of a licensing regime for online betting operations would appear to be on the new government's immediate agenda. In April 2011, the new Fine Gael/ Labour government revealed its legislative programme, which included a "Betting (Amendment) Bill" in a list of twenty urgent Bills which are to be published by the end of the Summer Session (i.e. before July 21, 2011). The stated purpose of this Bill is to amend the Betting Act 1931 in order to bring remote betting (including betting exchanges) within the existing regulatory framework, i.e. to pave the way for the tax provisions in Section 49 to be commenced.

Concluding Remarks

Notwithstanding the criticism levelled by the political opposition at the DoJ policy paper late last year, it is clear that there is
a political consensus about the pressing need to update Ireland's gambling laws. Indeed, the Labour Party are on the record as advocates for a licensing system for online gambling following the publication of a policy paper entitled "Raising the Stakes" in January 2010.

Ireland is likely to take encouragement from other European jurisdictions, including Greece and Spain, and to introduce a licensing system whereby operators offering their services to Irish customers will require some form of Irish licence, regardless of where they are located. The key challenge in Ireland, as in other EU jurisdictions, will be to equip the regulators with effective enforcement tools to take action against operators who do not subscribe to the licensing/regulatory system.

Whatever Ireland ultimately decides to do, it will have to be mindful of the wider European context. In particular, Ireland needs to be conscious of adopting a consistent and systematic approach to regulating (and taxing) different forms of gambling. If Ireland takes steps to regulate online betting in isolation from online gaming, this may potentially be subject to challenge by online betting operators who seek to press a claim grounded on unfair or prejudicial treatment. Assuming Ireland does regulate online betting in the immediate future as planned, it also needs to look at introducing a licensing regime for gaming, sooner rather than later.
 
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