ON-LINE GAMBLING
THIRD PARTY RISKS
THE UK PERSPECTIVE
Robert Hadley
Partner
Kirkpatrick & Lockhart
Nicholson Graham LLP
www.klng.com
UK Regulation
Third Party Commercial Risk
Contracts
Money Laundering
The Criminal Risk
UK REGULATION
Online Betting / Online Gaming
Online Betting
No practical distinction
Online Gaming
Licence linked to premises
Licensed/operation/server overseas
Gambling Act 2005
THIRD PARTY COMMERCIAL RISKS
General Risks
Reputation
Association
Regulatory implications
Professional implications
THIRD PARTY COMMERCIAL RISK
Directors
Financiers / Backers
Suppliers:
Enablers of the business - software
Facilitators - catering
Investors
Advertisers Gaming Act 1968 s 42(1)(c)
Joint DCMS/Gambling Commission guidance
THIRD PARTY COMMERCIAL RISK
Civil liability
a breach of contract; or
a wrongful act (tort); which
causes loss.
Y is not liable for the acts of X (Salomon vSalomon & Co) [1897] AC 22, HL
THIRD PARTY COMMERCIAL RISK
Civil Liability
Inducing/Facilitating Breach of Contract
Conspiracy
Unlawful means
Lawful means
Lonhro -v- Fayed [1992] 1 AC 448
Douglas -v- Hello [2005] EWCA Civ 595
THIRD PARTY COMMERCIAL RISK
Agency Theory
Dishonestly assisting a breach of trust
Twinsectra v- Yardley [2002] UKHL 12
Financial services implications
Insolvency Act 1986 s.214
Shadow Directors
CONTRACTS
Terms termination provisions
Frustration
Bangladesh Export Import Co Ltd vSucden Kerry [1995] 2 Lloyd s Rep 1
Illegality
Express terms breach leading to
termination/release
MONEY LAUNDERING
Criminal Matter
Proceeds of Crime Act 2002
Offences:
Concealing - s.327
Becoming involved in an arrangement - s.328
Acquiring/using/possession s.329
Failing to report - s.330 to 332
Tipping off - s.333 and 342
MONEY LAUNDERING
Know or Suspect
Criminal Property - s.340(3)
Proceeds of Criminal Conduct - s.340(2)
Must be conduct which is criminal in the UK
CRIMINAL RISK - UK
D & O Insurance
No specific offence
Aiding and abetting
Accessories and Abettors Act 1861
Conspiracy
Attorney General s Reference (No 1/1982)
[1983] QB751
THE LONG ARM OF US JUSTICE
Foreign Corrupt Practices Act
US companies/issuers
Activities in the US
Extradition
Nigel Potter
NatWest Three
Tollman
EXTRADITION ACT 2003
US A category 2 country
Judge must not consider whether a prima
facie case made out s.84(7)
EXTRADITION ACT 2003
1. Secretary of State
Papers in order
No enquiry as to substance - s.70
EXTRADITION ACT 2003
2.
Court
Identity
Extradition Offence
Bars to extradition
Double jeopardy
Oppression through lapse of time
Extraneous factors race, religion etc
Speciality comfort that no charge except
per extradition request
Hostage-taking risk
Age or health
Compatible with Human Rights Act
EXTRADITION ACT 2003
3. Secretary of State
Death penalty and no reliable assurance
won t be applied/carried out
EXTRADITION ACT 2003
Extradition Offence
Section 137
Where not sentenced already, must allege
conduct which is a criminal offence in the US
and would have been a criminal offence had
it occurred in the UK (in each case carrying a
potential sentence of at least 12 months).
Dual criminality
EXTRADITION ACT 2003
Wire Act Fraud
Racketeering
Money Laundering
Tax Evasion
Conspiracy to Defraud
Aiding and Abetting
ON-LINE GAMBLING
THIRD PARTY RISKS
THE UK PERSPECTIVE
Robert Hadley
Partner
Kirkpatrick & Lockhart
Nicholson Graham LLP
www.klng.com