Breaking new ground in remote gambling law: Ten things we learned about Singapore's Remote Gambling Bill

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Singapore's first ever remote gambling law is on the way - and it is one of the most far-reaching remote gambling laws seen in any jurisdiction to date.

The Remote Gambling Bill made its first public appearance in Singapore's Parliament on Monday, 8 September.

In the preceding months, there had been no shortage of speculation as to what approach the Government would take, not least because the Government appeared to be studying the full spectrum of regulatory approaches taken across every major market around the world, including the UK, France and Hong Kong.

Some commentators predicted an absolute, blanket ban, with no exemptions. Others anticipated a monopoly licensing regime in favour of the incumbent operators (Singapore Pools and Singapore Turf Club). Commercial operators hoped for a limited "opening up" of the market, similar to that which was seen with the land-based casinos, Resorts World Sentosa and Marina Bay Sands.

So where did we end up? The new rules have important implications for punters, gambling services, social gaming services, agencies and bet brokerages, whether based in Singapore or overseas. Here are ten things we learned:

1. The Remote Gambling Act will not be the end of remote gambling in Singapore.

Plenty of coverage in recent days has suggested that the Act will prohibit the operation of any remote gambling services in Singapore. This is not the case, nor is that the stated purpose of the Act. In fact, the stated purposes of the Act are to prevent remote gambling "from being a source of crime or disorder…" and "protecting young persons and other vulnerable persons from being harmed or exploited by remote gambling". In other words, the Remote Gambling Act is about controlling remote gambling, rather than prohibiting it entirely.

2. There will be exemptions - but who can get them?

This is not a blanket ban without exemptions. The Bill has some detailed provisions regarding exemptions. At present, all we can really say is that any exemptions will be discretionary, based on one single overriding criterion: that issuing an exemption would be "in the public interest". At this point, we do not know for sure what "in the public interest" means and clearly there is plenty of room for interpretation. Each application for an exemption would be dealt with on a case-by-case basis, although the Bill does provide a non-exhaustive list of factors that the Minister can (note that it is a "can", not a "must") take into account when deciding whether to grant an exemption:

a. Whether the operator is based in Singapore. Why is this a consideration? The short answer is that if the operator is based in Singapore, it makes it much easier for the authorities to enforce the rules against them, as opposed to services that are based offshore.

b. Whether the key personnel of the applicant have been convicted of any offences, which, in the Minister's opinion, render them unsuitable to be involved with an exempt operator. This one seems fairly straightforward.

c. Whether the applicant is a not-for-profit entity that distributes the moneys forming part of its funds to public, social or charitable purposes in Singapore. This consideration is the one that has made the headlines, with many arguing that Singapore Pools and Singapore Turf Club, whose profits are distributed by the Tote Board for charitable purposes, are the real target of these exemption criteria. Yes, it does seem that being a not-for-profit entity will help operators to meet the "in the public interest" requirement, although it should be remembered that this is only one of a non-exhaustive list of factors that the Minister can consider. If the Government had wanted to exclude for-profit organisations, it could have done so, but it merely included this as a factor for the Minister to consider.

d. Whether the applicant has a consistent track record of compliance with legal and regulatory requirements applicable to it "whether in Singapore or elsewhere". The last part ("Singapore or elsewhere") is quite interesting - some may ask whether this leaves the door open to reputable, international operators, setting up an operation in Singapore. One would imagine that it will be harder for international operators but, again, if the Government had wanted to exclude them from the rules, why add "whether in Singapore or elsewhere"?

Finally, there is one other exemption that appears extraordinarily broad: "The Minister may, by order published in the Gazette, exempt any person or class of persons from all or any provisions of this Act…". It is difficult to read much into this and this may just be a case of future-proofing the rules to provide flexibility. Time will tell.

3. If a site has Singapore customers, then the rules apply, wherever the site is based.

The Remote Gambling Act is deliberately intended to have extra-territorial effect. By providing a remote gambling service with a "Singapore customer link", operators are subject to the rules, wherever in the world they are based. This raises some interesting issues:

i. What exactly is a "Singapore customer link"?

A site has a "Singapore customer link" if "any of the customers is physically present in Singapore". Potentially, therefore, if a site based in, for example, the UK and has one customer in Singapore, that site would be committing an offence under the proposed rules in Singapore. This also does not seem to be limited to Singaporean citizens, so technically a UK citizen who travels to Singapore on holiday would appear to be prohibited from gambling whilst in Singapore.

ii. How can overseas sites protect themselves?

The Bill sets out various steps that an overseas site can take to avoid breaching these rules. These include informing prospective customers that Singapore law prohibits the provision of the service to Singapore-based users, including an express term in their terms and conditions and to take "such other measures as far as reasonably practicable to ensure that the service did not, or could not reasonably have, a Singapore-customer link". It is not yet clear whether geoblocking will be expected in order to meet the last requirement.

iii. How will the rules be enforced extra-territorially?

Like any law that aims to have extra-territorial effect, the question arises as to how it can be enforced. Clearly this was one motivation for including site blocking and payment blocking within the Bill. It is not clear how fines or criminal penalties would be enforced against organisations based overseas but presumably the intention would be to rely on international criminal law principles. However, in reality, this will be difficult to enforce extra-territorially.

4. If the site is based in Singapore, then the rules apply, wherever the customers are based.

Under the new law, it will be illegal to operate a "Singapore-based remote gambling service".

Importantly, this applies regardless of whether the service targets Singapore customers or foreign customers.

A service is a Singapore-based remote gambling service if:

a) the service is provided in the course of carrying on a business in Singapore;

b) the central management and control of the service is in Singapore; or

c) where the service is provided to customers using an Internet carriage service, all or any of the relevant Internet content is hosted in Singapore.

The implication here is that even hosting or managing a service in Singapore, whether it is targeted at the Singapore market or not, will constitute an offence under the Act. More guidance is needed and the risks for organisations will depend on the precise nature of their services and operational presence in Singapore. Organisations who currently host their services in Singapore, have an operational presence in Singapore or plan to do so will need to carefully consider the implications for their business models.

5. It will be illegal for individuals to bet or play.

The majority of the offences under the Act apply to the operators or advertisers of remote gambling services. However, individual consumers will also need to be aware of the new rules, as they make it an offence to gamble online (other than through sites that get an exemption certificate, as described above).

6. The prohibitions will apply to certain social gaming websites.

In the rhetoric surrounding the Bill, the Government has gone on the record a number of times to express concern about the popularity of social gaming services. It appears that these concerns have been reflected in the Bill.

The question that arises in any country where there are online gambling laws is - does social gaming (and in particular social casino) constitute "gambling"?

As a rule of thumb, gambling laws tend to state that provided that no "money or money's worth" can be taken out of a game of chance (or a game of chance and skill combined) by way of a prize, then it is unlikely to constitute gambling. The issue of whether virtual credits or currency constitute "money or money's worth" has been debated at length in other jurisdictions, largely because existing online gambling laws often predate the widespread use of virtual credits and virtual currency.

In Singapore, it seems that the Government views virtual credits and virtual currency as "money or money's worth". The Bill is very clear on this point: "'money's worth' means anything recognized as equivalent to money and includes virtual credits, virtual coins, virtual objects or any similar thing that is purchased within, or as part of, or in relation to, a game of chance".

On a first read, this would seem to bring social casino gaming, and potentially other types of social gaming, within the scope of the rules. Read alongside the other restrictions of the Bill, there is even the possibility that social gaming sites based overseas will have to take measures to block their services in Singapore and to update their terms and conditions. Of course, the position will depend on the precise nature of each service and further analysis and guidance will be needed.

7. There will be payment blocking and site blocking.

The new rules will have teeth in the form of:

• payment blocking, implemented via orders issued to Singaporean financial institutions; and
• site blocking, implemented via orders issued to Singaporean ISPs.

Financial institutions and ISPs will need to familiarise themselves with the new rules and respond promptly to requests from the regulators.

8. We don't yet know who will regulate this.

It is not yet clear whether there will be a specific regulator to administer these rules. At present, it appears that:

• criminal actions will be brought via the police;
• site blocking orders will be issued by the Media Development Authority (MDA); and
• payment blocking orders will be issued by the Monetary Authority of Singapore (MAS).

The Casino Regulatory Authority currently administers the land-based regulatory regime but is not mentioned in the Bill. It therefore remains to be seen what role (if any) it will have in administering the Remote Gambling Act.

9. ISPs, hosting providers and search engines will be protected.

The Government does not want ISPs or hosting providers to fall within the scope of these rules and it has included various protections for them within the Act.

For ISPs and hosting providers, they can rely on an exemption which provides that "a person does not provide a remote gambling service or provide facilities for remote gambling…merely because the person provides, or operates facilities for network access, or provides services relating to, or provides connections for, the transmission or routing of data".

Search engines also get an exemption from the advertising restrictions. The rules state that the following will not constitute the advertising of remote gambling services: "an index of online search results which links or refers an end user in Singapore to remote gambling services or facilities for the access or use of remote gambling services, which is made available to that person only because that person initiates a search through an online information location service, such as but not limited to a search engine".

10. The penalties are potentially serious.

The rules are intended to be taken seriously, with offences under the Act carrying criminal liability.

Individual punters who engage in illegal remote gambling will face a fine of up to SGD $5,000 (USD $4,000) and/or to imprisonment for up to 6 months.

Betting agents face a fine of up to SGD $200,000 (USD $160,000) and/or imprisonment of up to 5 years.

Those who provide remote gambling services (whether inside Singapore or outside Singapore) face a fine of up to SGD $500,000 (USD $400,000) and/or to imprisonment for up to 7 years.

So what next?

The Bill is expected to have its second reading in Singapore's Parliament in October. It will be at the second reading that there will be scope to make changes to the Bill, so many organisations and individuals affected will be watching closely and seeking an opportunity to comment. The law itself will probably be enacted before the end of the year.

In many ways, these rules break new ground for remote gambling legislation: arguably we have not seen rules as broad and far-reaching as this anywhere in the world before.

Real-money operators, social gaming services, agencies, advertising services companies, bet brokerages and many other organisations engaged in the remote gambling industry, wherever they are based, will now need to pause for breath and assess the implications for their respective business models.