UK gambling regulations consist of strict AML policies and complex licensing procedures. Sumsub explains how gambling businesses can stay compliant and avoid fines in the UK.
The UK is the second-largest gambling market in Europe, with British gamblers spending approximately £14 billion ($18.9 billion) per year. Understandably, industry regulations are continuously updated to prevent criminal activity in this massive industry.
The Gambling Commission of Great Britain is the primary regulator of the UK gambling industry. It was established after the introduction of the Gambling Act in 2005 to issue and revoke operating and personal gambling licenses. It also investigates and prosecutes illegal gambling activities.
The Gambling Act 2005 (GA) is the primary gambling regulation in the UK. The Act defines various gambling terms, such as “betting,” “lottery,” and “prize.” It also provides a set of requirements for all types of gambling licenses and explains all the prohibitions and sanctions for gambling businesses.
The Act was created to fight crime (such as money laundering), protect children, and establish fair conditions in gambling. Accordingly, the Gambling Commission was formed to ensure that the industry meets the requirements set out by the Act.
According to the GA, the following activities and products fall under gambling regulations:
UK gambling licenses are separated into three types: 1) operating, 2) personal, and 3) premises. The Gambling Commission issues operating and personal licenses, while local authorities issue premises licenses.
Gambling businesses need an operating license to provide the services mentioned in the section above. In cases where providers perform several types of gambling activities (e.g., casinos + gaming machines), they need to apply for separate licenses.
Operating licenses are separated into three categories: 1) online, 2) land-based, and 3) ancillary. Ancillary licenses apply to operators that provide telephone and email betting. In cases when gambling providers operate both remotely and non-remotely, they need to hold both online and land-based licenses.
Additionally, licensing is required even if a company’s online gambling operation is located in another country—so long as they provide services to gamblers in the UK.
Any person or group of people can apply, regardless of their location. All applicants should be over 18 years old. The application must specify the activities to be authorized by the license. Completed applications can be sent to the Gambling Commission’s website.
The Gambling Commission evaluates applicants from the following perspectives:
A complete list of requirements is published in Licensing, compliance and enforcement under the Gambling Act 2005.
Operating license applications take around 16 weeks to process. The required information includes operator identity documents, policy documents, financial documents, and documents on key people, which the Commission investigates extensively.
Applicants need to pay an application fee. If the applicant is granted a license, they need to pay their first annual fee within 30 days after being licensed. From that point on, they will only need to pay an annual fee. The exact cost can be calculated by using the Gambling Commission’s online calculator.
Premises Licenses relate to non-remote businesses and give permission for using facilities to operate as casinos (or for other gambling activity). One can be obtained through local authorities.
Applicants are eligible to apply for the premises license only after applying or receiving an operating license. In addition, the applicant should prove their right to occupy the premises.
Within seven days after submitting the application, the applicant should notify the following authorities about the new function of the premises:
The local authority is in charge of determining all the premises’ fees. Fee calculation differs depending on whether the location is in England, Wales, or Scotland. More detailed information can be found here.
Personal licenses cover the key personnel of gambling businesses. The duration of such licenses is usually five years, and they must be renewed upon expiry.
There are two types of personal licenses: personal functional licenses (PFLs) and personal management licenses (PMLs).
Staff members—such as couriers, cashiers, and security personnel—should apply for PFL. All applicants should be over 18 years old and must provide the following documents:
There are additional document requirements depending on if the applicant lives in Wales, England, or abroad. The complete list of specifications can be found here.
The application costs £185, and the review process takes approximately eight weeks.
Management employees, including those in charge of marketing, planning, IT, and compliance, must apply for a PML. During the application process, the following documents need to be provided:
There are additional document requirements depending on whether the applicant lives in Wales, England, or abroad. The complete list of specifications can be found here.
The application costs £370, and the review process takes approximately eight weeks.
Licensees must obtain and verify the identity of a customer before permitting them to gamble. Required information includes, but is not limited to, the customer’s name, address, and date of birth.
There are three main reasons why gambling companies ask their customers to pass verification:
Money laundering in the gambling sector takes two primary forms:
There are several principal regulations that gambling companies should follow.
All licensed operators must comply with the License Conditions and Codes of Practice (LCCP). According to these rules, gambling companies must assess the risk of money laundering and terrorist financing in their business.
If a company fails to meet some of the requirements, the Gambling Commission can revoke its license.
Complying with the LCCP also requires creating a set of policies and procedures to prevent illegal activities. Accordingly, companies should report money laundering to the National Crime Agency (NCA).
The Proceeds of Crime Act 2002 imposes duties on all operators for the purpose of :
In all instances where customer funds are known or suspected of having criminal origins, a report must be made to the NCA. Otherwise, the company’s employees might also be held liable for money laundering.
In order to provide a framework within which Suspicious Activity Reports (SARs) may be raised and considered:
Additionally, gambling companies need to comply with the Financial Action Task Force’s Recommendations. The latest updates to them can be found here.
If a gambling company fails to comply with the regulations, it can face substantial fines from the Gambling Commission. For instance, Buzz Group Ltd. was recently fined £780,000 for social responsibilities and money laundering failures.
The Gambling Commission is prioritizing the enforcement of AML regulations by investigating non-compliant companies. In 2020, the Commission fined businesses a total of £32.1 billion ($43.3 billion). Besides imposing financial penalties, the Commission has also revoked several gambling licenses in recent years. To avoid these consequences, companies should prioritize meeting AML requirements and reporting suspicious activities to regulators.