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Understanding the UK White List...By Hartley Henderson
Over the last week numerous articles have been written about how disappointed the jurisdictions of Kahnawake and Antigua are that they have been left off the UK white list and how pleased that Alderney, the Isle of Man and Tasmania are that they have been put on the list. For most in North America, this decision by the UK department for culture, media and sport means little. In fact it's highly unlikely that many in North America even know what the UK white list is or what difference it makes to offshore gambling establishments whether or not they are included on the white list. In this article I will try to explain what the white list is, why it was established and I'll offer some commentary about the UK's decision to leave Kahnawake, Antigua and the Netherland Antilles off the list.
In 2005 the United Kingdom decided to alter its gambling act. The previous act which was written years prior did not foresee online gambling or offshore tax free wagering being offered to British citizens. Consequently, the UK has tried to update its laws, but in the process wants to ensure that only safe and viable companies are allowed to cater to the UK market. Because of an EU agreement, all countries in the EEC (all EU countries along with Norway, Iceland and Lichtenstein) are automatically included on the list, but countries outside the EEC have to prove their worthiness to be included. While the UK really has no basis to block gambling from offshore jurisdictions to the UK (for the same reason the US lost its attempt in the WTO), the UK has decided its next best option is to try and block advertising from countries whose regulations don't meet its "code of conduct" as published at the following URL:
In so doing the British government is hoping that its citizens will not see advertising or sponsorships for companies from jurisdictions not on the white list and hence will not wager with them. In essence, the white list is a group of companies from countries which the UK government approves of.
In determining whether companies based in a specific country have the right to advertise, the UK set out guidelines based on the following concepts:
- That countries on the white list aim to prevent gambling from being a source of crime or being used to support crime
- That countries on the white list ensure that all gambling in their jurisdiction is conducted in a fair and open manner
- That the regulatory requirements of the countries on the white list ensure that minors and those with problems are not exploited by gambling
The act also specifically mentions that the countries on the list must have a fair tax system and must employ regulatory schemes that prevent money laundering or funding terrorism. The act states that all gambling debts are legally enforceable and disputes are resolved by an independent arbiter. As well, the act requires that an independent regulatory body has the right to inspect the countries' gambling regulations and that if the country(s) fails to meet the requirements at any time that their privilege to advertise is taken away.
The department for culture, ministry and sport provided licenses to Alderney and the Isle of Man almost immediately since those jurisdictions are in the British Isles. Tasmania was rejected at first, but later given a license after it amended its tax rules. The countries of Antigua and the Netherland Antilles and the Indian reserve at Kahnawake, Canada were rejected. Costa Rica and Belize did not apply to be on the white list, so they were automatically banned.
While the UK has painted its decisions as ones based solely on the safety of British gamblers, one has to question whether that is necessarily true since by all accounts the UK never really had issue with the regulatory rules of any of the countries in question. In fact Antigua's regulatory rules are almost identical to the Isle of Man's, which as mentioned was approved almost immediately. Similarly, Kahnawake has rules regarding money laundering, underage and problem gaming and fairness of games and the Netherland Antilles demonstrated that every single regulatory concern the UK had was addressed. Yet all those countries were still declined. If there are any other concerns, each of the three jurisdictions are more than willing to allow an independent body to arbitrate. As such, one has to wonder why they were declined. It appears there is no purpose in denying those countries from being on the white list when looking at the announcements issued by the UK, because there was no explanation included with the decision about which countries to include and which to reject. To make matters worse the countries which were declined were ordered not to reveal the reasons for being rejected to the public, so one can only speculate.
When considering the logic for the UK's blocking all countries outside of the EEC from advertising (except Tasmania, which is likely the token strategic outsider), four possibilities come to mind: distance, lack of confidence in the countries systems or operators, protectionism and/or a fear and distrust of the United States. Distance is certainly a concern, and possibly a valid one. If a British citizen has a dispute with a company in say Antigua, he/she can't simply hop in his/her car and try to collect. But the Isle of Man and Alderney, those jurisdictions are just a short trip away. The issue of distance, of course, can be addressed if an independent dispute mechanism is put in place and the money in dispute is put in a separate account specifically designed for resolution. In that instance the money is readily available to be paid to the British citizen if they prevail during arbitration. Besides that, the UK expects that companies like Betfair and Ladbrokes can advertise in other countries as far away as Australia or Canada, so if distance is a concern it is a hypocritical and an unfounded concern.
The second possibility is that the UK doesn't trust the systems or operators set up in other countries. If that is indeed a concern, the UK isn't admitting it. The Absolute Poker debacle no doubt hurt Kahnawake's claim, and in the past there were several companies which simply closed shop and left town in other jurisdictions, eg. Ace's Gold. The UK has seen similar problems in the past with its licensees and this act is designed ensure it will never happen again. But if that is indeed a concern then the UK should admit as much. Again, this issue could be resolved by simply making sure that all companies keep post up funds in a separate account so that if there is any foul play or if a company tries to skip town, the bettors are assured that their post up funds are safe.
That brings the last two possibilities to the forefront, which are likely the real reasons that the UK has disallowed the countries in question - protectionism and distrust of the United States. Gambling is a huge money maker for the UK. The country would prefer that British citizens keep their money in the country if at all possible, and that was proven the last 2 years when the UK tried to entice companies to move from Gibraltar, Alderney and the Isle of Man back to the mainland by offering them incentives to set up in UK proper. As such, this could very well be a ploy by the UK to try and convince companies which have set up offshore to move to the UK (or at least the EEC) if catering to the British market is one of their ultimate goals. If nothing else, blocking places like Antigua and Kahnawake from advertising almost certainly ensures that British money will not flow to those countries and will stay close at hand.
The last possibility is a concern about the United States. Some companies on the white list do offer betting to the U.S. (eg. Poker Stars), but for the most part companies in jurisdictions on the white list ban Americans from betting with them. On the other hand, companies in Antigua, Kahnawake, the Netherland Antilles, Costa Rica and Belize cater mostly to U.S. citizens. Admitting a fear of the United States in the United Kingdom would be political suicide, but without question the UK must be concerned about the United States. America has demonstrated on numerous occasions that it will not be stopped in its crusade against offshore gambling. Its decision to ignore WTO rules and rewrite its commitments was the most recent example. But more revealing and concerning than that to the UK has to be the ease by which the United States was able to confiscate $50 million in EFT transactions from NETeller, a company based in the British Isles and traded on the AIM. Combine that fact with the arrest of British citizens like David Carruthers, and the UK likely wants to stay as far away from the U.S. as possible; and the easiest way to achieve that is by blocking all countries which specifically target U.S. customers.
It should be noted that while being left off the white list was a disappointment to the three jurisdictions in question, it isn't going to destroy them. The truth is that the British Isles were likely never going to be a huge source of revenue for any of the companies in Antigua, Kahnawake or the Netherland Antilles. However, being on the list would have provided conformation that the regulatory regimes of those countries were up to standards, if nothing else.
The white list is an excellent idea and will ensure that British citizens are betting with companies that meet strict regulatory requirements. However, Britain should be honest with offshore countries and with bettors who wager in those countries and provide the real reasons why they did not qualify to be on the list. As it stands now, the white list reeks of protectionism and fear.
I'd still like to know what reasons the declined countries were given.. I wonder what the incentive is to keep them from revealing the reasons?
Now that I understand better the ins and outs of "white listing" your thoughts and speculations on the real reason seems extremely logical to me.
Thanks once again for laying it out in easy to understand format here, Hartley.
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