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Isle of Man Rethinks Online Gambling Licensing System

by Robert Lee, Tax-News.com, London

22 July 2003


The Isle of Man has seen a steady exodus of prominent online gambling firms this year, a situation that many in the industry have blamed on an inflexible regulatory environment.

In the early stages, when the Isle of Man opened its arms to online casinos in 2001, the island attracted the cream of the online gambling firms, including Littlewoods, MGM Mirage and SunOnline (whose Casino Atlantis online was later bought by Kerzner International). However, the five firms that were initially granted licences have now dwindled to just one, Littlewoods, after MGM Mirage closed last month, and Rank Interactive's Hard Rock Casino online moved its operations to Alderney. Earlier in the year, Casino Atlantis also closed, and Actionline's Club Fiore left the island for Canada.

Whilst a lack of access to the potentially large US market (where online gambling is technically illegal) has hampered growth in the industry, some observers have cited the Isle of Man's 'tier one' regulatory status as one of the most crucial factors behind the industry's decline in the jurisdiction.

"The Isle of Man pioneered well-regulated online gambling, and there were always going to be some growing pains associated with a new industry. But they could have made it easier for some of their licensees to do business," Tobin Prior, CEO of Casino Atlantis told Online Casino News.

Prior pointed to certain rules such as anti-money laundering regulations, which only permitted customers to withdraw money via the same method as they had deposited it as one example of over-regulation. “Customers could only withdraw to the initial deposit method, so they couldn't make larger withdrawals via alternative methods such as wire transfer if they had initially deposited by credit card, even though both methods were acceptable in the jurisdiction,” Mr Prior explained, adding that: “Decisions were taking a long time, and procedures that had been put in place changed - there was too much of a straightjacket put around business decisions.”

Meanwhile, Derek Cannon, the Isle of Man's Gaming Inspector conceded that the creation of an online gambling licence has been "a very sharp learning curve – although we’ve had licensed gambling for 40 years in the IOM, we were the first to put our heads above the parapet as regards online gaming”.

Mr Cannon revealed that the experience of the last couple of years has led the island's authorities to consider a relaxation of certain regulations, and spoke of the creation of an ambassador for the industry in an attempt to sell the jurisdiction to online gambling firms. “At present, some of the lower tier jurisdictions are moving towards more stringent regulation, and the Isle of Man has the option of moving closer to the lower tiers in terms of becoming less restrictive”. However, the online gaming market will remain closed to American punters in order to protect the island's reputation in the US, Mr Cannon announced.


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