Draft Gambling (Remote Gambling Disaster Recovery) (Jersey) Regulations 200-
REPORT
Background
On 1st March 2005, the States debated P.62/2004: Modernisation of Jersey’s Gambling Legislation. As a consequence of that debate, the States agreed in principle that legislation should be brought forward for approval by the States to allow on-line gambling. These Draft Regulations are the first legislative step to putting that States decision into effect.
As part of the same 2005 debate, the States also agreed that a Gambling Commission should be established in the Island and that the purpose of the Commission should be licensing, regulation, harm reduction/social responsibility and ensuring that gambling issues do not harm the Island’s international reputation. To this end, a Shadow Gambling Commission was established by the Minister in December 2006 and draft legislation is currently being drafted in order to give the Commission formal status.
The role of the Shadow Commissioners is to prepare for the transition to a statutory Gambling Commission and to advise the Minister for Economic Development on changes to the Island’s gambling laws. The Shadow Commissioners’ terms of reference are to ensure that –
● Jersey retains its excellent international reputation as a well regulated jurisdiction;
● Business growth and investment is encouraged; and
● Potential harm is minimised and programmes introduced to protect the young and the vulnerable.
This Report and Proposition is the first developed and submitted in conjunction with the Shadow Gambling Commission.
The effect of the Regulations
This Regulation would allow companies who are licensed to operate remote gambling services in other jurisdictions to place their disaster recovery (DR) or backup systems in Jersey. It will not allow them to operate from Jersey permanently. No company will be able to place equipment or systems in Jersey without the direct approval of the Minister and this will be subject to a strict licensing regime.
‘Disaster’ is defined in the Regulations, but is regarded as a major disruption that renders the gambling site inoperable from any legitimate cause but which vitally, creates an offence if the disaster has been caused deliberately by the operator. In this way it would not be possible for an operator to ‘invoke’ its DR provision if, for example, it was facing investigation in another jurisdiction or simply wanted to move for its own purposes.
The Regulation seeks to place two types of control upon companies wishing to have a DR presence in the Island. The first is a series of controls upon local companies that offer hosting facilities. These companies will have a number of duties and obligations placed upon them to show that they are ‘fit and proper’ and report gambling activity to the Minister to ensure that only licensed activity can take place. The hosting companies will need to be in possession of a ‘hosting facilities’ licence and in order to receive one will have to undergo a rigorous form of probity investigation. Typically, probity investigations concentrate on criminal and financial ‘health’ checks both at the company level and of its key staff, Directors and ultimate beneficiaries. In order to ensure that the Minister has full access to all relevant information, the Regulation provides for access to information relating both to the company applying for the licence and its linked or subsidiary companies. Probity is undertaken on a cost recovery basis and the fees are not refundable.
The second control is on the companies that want to have DR systems in Jersey. These controls are necessarily strong, to ensure that the Minister can have confidence that a licensee can only undertake sanctioned gambling activities. The same probity checks as for a hosting company apply, but the Minister will also have powers to add any other conditions to the licence as he sees fit. In this way an operator will have to comply not only with the conditions of their overseas gambling licence, but also with any additional conditions that the Minister may think are reasonable to ensure the highest standards of regulation and ensure that the Island’s international reputation is protected.
An overseas licensee will also have to incorporate locally in order to ensure that there is a local company presence that can be dealt with directly.
Once licensed, a gambling operator may invoke legitimate DR for 3 months. To ensure that the invocation is legitimate, the hosting provider must, within 8 hours, inform the Minister that gambling is taking place. Independently, the operator must also inform the Minister in writing that DR has taken place and provide documentary evidence that the invocation is legitimate. As soon as the Minister has been informed, staff of the department (and thereafter if approved by the States, the Gambling Commission) would attend the hosting provider facility and inspect and verify compliance with the Regulation. Once the legitimacy of the disaster has been verified, the Minister has authority to extend the length of the invocation to a maximum of 9 months.
When the gambling operator is ready to stop its Disaster Recovery operations in Jersey, they must inform the Minister before ceasing operations. The hosting provider must also inform the Minister once the gambling provider has ceased their Disaster Recovery operations in the Island. Failure to notify the Minister is a breach of the Regulations. This provision allows for a managed handover of responsibility from the Jersey regulator back to the original overseas licensing authority.
Benefits of
the Regulations
From an economic perspective, internet gambling has brought clear benefit to a number of jurisdictions, particularly the Isle of Man and Alderney, with no adverse effect upon their international reputation or commercial attractiveness. Indeed, the development of electronic gambling services has proven to be of great significance to Guernsey, which hosts the majority of the Alderney licensees, bringing gross value added of several millions of pounds. It has also had the effect of increasing the amount of bandwidth that Guernsey is able to use and, as a direct consequence, lowering the overall cost of data delivery. This is a clear economic benefit that Jersey should seek to achieve as it will benefit both business and consumers.
Jersey will also be keeping to its international commitments by enacting this Regulation. On 31st October 2006 at the International Summit on Remote Gambling held at Ascot, governments agreed that in enacting legislation or regulations in relation to remote gambling the principal and over-riding priorities should be –
· That remote gambling should be conducted responsibly and with safeguards necessary to protect children and vulnerable people;
· That remote gambling should be regulated in accordance with generally accepted international standards to prevent fraud, money laundering and other crime, and should not be permitted to be a source of crime;
· That, where offered, remote gambling should be verifiably fair to the consumer.
Governments also agreed to actively explore the scope for greater international cooperation in the regulation of remote gambling such as –
· Effective measures to protect children and vulnerable people;
· Sharing research and expertise on remote gambling and methods of preventing problem;
· Promoting public awareness of how to gamble responsibly;
· Developing effective licensing regimes;
· Working with the financial sector to secure these priorities.
The passing
of these Regulations will be the first step in putting these commitments into
effect.
Financial/manpower implications
These Draft
Regulations will be at neutral cost to the States in that they are to be met by
the prescribed fees. While the work will be undertaken by staff of the Economic
Development Department in consultation with the Shadow Gambling Commission, it
is anticipated that this responsibility will be passed to the Commission proper
once approved by the States. It will then be for the Commission to ascertain
and take responsibility for the costs involved in regulating this sector.
Explanatory Note
Part 1 consists of introductory provisions.
Regulation 1 sets out interpretative provisions.
“Foreign gambling corporation” is defined so as to refer to the foreign gambling corporation that may apply for a licence to be granted to a company that shall be established in Jersey.
“Jersey remote gambling licence” is defined to refer to licences that may be granted in the future, permitting internet gambling and related forms of “remote” gambling.
“Remote gambling operator’s licence” is a licence that permits its holder to conduct remote gambling from Jersey.
“Remote gambling facility provider’s licence” is a licence, issued to a person in respect of premises, which permits another person, who is the holder of a remote gambling operator’s licence, to conduct remote gambling from the premises.
Regulation 2 defines what constitutes the conduct of remote gambling for the purposes of these Regulations. Remote gambling is conducted if either a person in Jersey or a foreign corporation offers prizes for a person who conducts gambling from a site in Jersey by operating computer servers, or other devices, by means of which the gambling may be conducted.
Regulation 3 defines what constitutes an “activating disaster”. The definition is significant because remote gambling may only be conducted under a licence issued under these Regulations when an activating disaster has occurred.
Part 2 sets out the requirements of the Regulations that relate to the conduct of remote gambling from Jersey under a licence granted under these Regulations.
Regulation 4 makes lawful remote gambling by a person, or on behalf of a foreign gambling corporation, when there has been an activating disaster that prevents that person or corporation being able to continue to conduct remote gambling from Jersey or a country other than Jersey.
Regulation 5 sets out how an application may be made for a remote gambling operator’s licence.
Regulation 6 sets out the fees that are or may be payable in relation to an application for a licence. The fees consist of an initial fee of £5,000 and then a further investigation fee of £5,000 if the first fee does not cover the costs of investigating the application. As many further investigation fees as are necessary to cover the investigation costs may be charged.
Regulation 7 permits the Minister to grant a remote gambling operator’s licence and specifies that if a foreign gambling corporation applies for a licence, the licence may be granted to a corporation established in Jersey for the purposes of conducting remote gambling.
Regulation 8 sets out the matters as to which the Minister must be satisfied before granting a remote gambling operator’s licence. It also specifies that a licence grant fee of £5,000 shall be paid on grant of the licence.
Regulation 9 sets out the form of a remote gambling operator’s licence.
Regulation 10 sets out the annual fees payable by the holder of a remote gambling operator’s licence. The fee shall be £5,000.
Regulation 11 enables the Minister to impose conditions on a remote gambling operator’s licence.
Regulations 12 – 17 set out conditions that shall apply to each remote gambling operator’s licence. The conditions are that –
(a) the licensee shall only conduct remote gambling from premises specified in the licence;
(b) the licensee shall provide certain information to the Minister relating to the conduct of gambling from the premises, to the corporate structure of the holder of the licence, and any criminal investigations relating to the licensee or any foreign gambling corporation in relation to the person;
(c) the licensee shall comply with laws relating to money laundering, drug trafficking, data protection and terrorist financing;
(d) the licensee shall not permit host codes that are part of the electronic device from which remote gambling is being conducted to be hosted on the premises;
(e) Jersey shall be specified on the relevant gambling site to be the place from which disaster recovery operations relating to remote gambling shall be conducted.
Part 3 sets out the requirements of the Regulations that relate to the provision of facilities for the conduct of remote gambling from Jersey.
Regulation 18 sets out how an application may be made for a remote gambling facility provider’s licence. (The holder of such a licence provides the facilities in Jersey from which remote gambling may be conducted.)
Regulation 19 sets out the fees that are payable in relation to an application for a licence. The fees consist of an initial fee of £5,000 and then a further investigation fee of £5,000 if the first fee does not cover the costs of investigating the application. As many further investigation fees as are necessary to cover the investigation costs may be charged.
Regulation 20 permits the Minister to grant a remote gambling facility provider’s licence to a Jersey resident or a company established in Jersey, if the Minister is satisfied the person is a fit and proper person to hold a licence and the relevant fees have been paid. It also specifies that a licence grant fee of £5,000 shall be paid on grant of the licence.
Regulation 21 sets out the form of a remote gambling facility provider’s licence.
Regulation 22 enables the Minister to impose conditions on a remote gambling facility provider’s licence.
Regulations 23 – 27 set out conditions that shall apply to each holder of a remote gambling facility provider’s licence. The conditions are that –
(a) the licensee shall only permit remote gambling to be conducted from premises specified in the licence;
(b) the licensee shall provide certain information to the Minister relating to the conduct of gambling from the premises and to the corporate structure of the licensee;
(c) the licensee shall comply with laws relating to money laundering, drug trafficking, data protection and terrorist financing; and
(d) the licensee shall not permit host codes that are part of the electronic device from which remote gambling is being conducted to be hosted on the premises.
Part 4 relates to alterations of licences.
Regulations 28 – 29 specify how certain matters specified on licences, and conditions other than those specified in Regulations 12 – 17 or 23 – 27, may be altered, added to or revoked. A fee of £250 is charged for such an alteration.
Regulation 30 specifies that the Minister may only alter, add to, or revoke, a condition of his or her own motion if the licensee has been invited to show cause why the alteration, addition or revocation should not occur.
Part 5 relates to breaches of conditions and the suspension and revocation of licences.
Regulation 31 specifies that it is an offence to breach a condition of a licence, punishable by a fine of level 4 on the standard scale (£5,000).
Regulations 32 and 33 set out the circumstances in which licences may be suspended or revoked.
Regulation 33 also requires a court to revoke a licence granted under these Regulations to a person, if the person is convicted by the court of an offence by or under the Law.
The Minister is required to inform a facility provider of such a conviction in relation to any holder of a remote gambling operator’s licence who may use, to conduct remote gambling, the premises provided by the facility provider.
The Minister is also required to inform a remote gambling operator of such a conviction of any holder of a remote gambling facility provider who provides premises that the operator may use to conduct remote gambling.
Part 6 relates to the conduct of remote gambling under a remote gambling operator’s licence.
Regulation 34 requires the holder of a remote gambling operator’s licence to notify the Minister when, an activating disaster having occurred, the licensee has begun to conduct remote gambling under the licence. It is an offence to fail to do so, punishable by a fine of level 4 on the standard scale (£5,000).
A person may not, unless the period is extended under Regulation 37, conduct remote gambling under the licence for more than 3 months, or more than once in any calendar year. If a person does so, the person ceases to be conducting lawful gambling, and thereby commits an offence against the Law.
Regulation 35 requires the holder of a remote gambling facility provider’s licence to notify the Minister when, an activating disaster having occurred, the holder of a remote gambling operator’s licence has begun to conduct remote gambling on the facility provider’s premises. It is an offence to fail to do so, punishable by a fine of level 4 on the standard scale (£5,000).
Regulation 36 enables a daily operation fee to be charged for each day on which remote gambling is conducted under a licence granted under the Regulations. The fee is £250.
Regulation 37 enables the extension of a period during which remote gambling may be conducted under a remote gambling operator’s licence. No such period may be extended if the total period under which remote gambling may be conducted in Jersey under the licence would be more than 9 months.
Regulation 38 specifies that it is an offence for a person to conduct remote gambling under a licence granted under these Regulations, if the Jersey remote gambling licence, or the foreign authorization, in relation to the person, is suspended or revoked. The offence is punishable by a fine of level 4 on the standard scale (£5,000).
The Regulation also specifies that if notice is given by the Minister to a remote gambling operator of the suspension or revocation of the licence of the facility provider from whose premises the operator conducts gambling, it is an offence for the operator not to cease to conduct remote gambling from those premises for the duration of the suspension, or, in the case of revocation, permanently. The offence is punishable by a fine of level 4 on the standard scale (£5,000).
Similarly, if notice is given by the Minister to a remote gambling facility provider of the revocation of the licence of the remote gambling operator who may conduct remote gambling from the facility provider’s premises, it is an offence for the facility provider to permit remote gambling to be conducted from those premises by the operator for the duration of the suspension, or, in the case of revocation, permanently. The offence is punishable by a fine of level 4 on the standard scale (£5,000).
Regulation 39 requires a remote gambling operator to notify the Minister when he or she ceases to conduct remote gambling under his or her remote gambling operator’s licence. Failure to do so is an offence, punishable by a fine of level 4 on the standard scale (£5,000).
Regulation 40 requires a remote gambling facility provider to notify the Minister when remote gambling ceases to be conducted from the provider’s premises. It is an offence to fail to do so, punishable by a fine of level 4 on the standard scale (£5,000).
Part 7 deals with the regulation of remote gambling during the period in which remote gambling under a remote gambling operator’s licence is conducted from Jersey.
Regulation 41 places a duty on the Minister to supervise the conduct of remote gambling under licences granted under these Regulations, and to hear promptly, and conduct further investigations in relation to, any complaint received in relation to the conduct of such gambling.
Regulation 42 enables the Minister to issue compliance directions, being directions that require an action specified in the direction to be taken or not to be taken. It is an offence to fail to comply with such a direction, punishable by a fine of level 4 on the standard scale (£5,000).
Part 8 grants rights of appeal to the Royal Court against decisions of the Minister under the Regulations relating to the grant of licences and the issue of compliance directions to a person. A person may further appeal to the Court of Appeal against a decision of the Royal Court.
Part 9 contains
miscellaneous provisions
Regulation 46 makes it an offence to provide false or misleading information under these Regulations. The offence is punishable by a year’s imprisonment and a fine.
Regulation 47 specifies the name by which the Regulations may be cited and that they shall come into operation 7 days after they are made.
The Schedules set out the form of applications under the Regulations.
