All gaming operations in Gibraltar require licensing under the Gambling Act 2005. Remote Gambling licences, including for telephone and internet betting, are issued by the Licensing Authority.

The Gibraltar Regulatory Authority, in turn, is the Gambling Commissioner under the provisions of the Gambling Act 2005. The Act grants the Gambling Commissioner powers to ensure that licensees conduct their operations in accordance with their licenses and in a such a manner as to maintain the good reputation of Gibraltar.

GENERAL

The Licensing Authority will only consider licensing blue chip companies with a proven track record in gaming, licensed in a reputable jurisdiction, of good financial standing and with a realistic business plan. Licences are generally difficult to obtain. As at 1st September 2007 there were nineteen licensed operators as follows:-

The operator shall ensure that all advertising, promotion and sponsoring activity of whatever type and through whatever medium (including the internet) shall be truthful and accurate. It shall be exclusively targeted at adult players and shall therefore not be designed to appeal in any way to minors. Operators shall ensure that such internet websites as are used to advertise, promote and/or operate its gaming activities shall not include links to other sites with violent or immoral content or which may be designed for access by minors.

The licences are issued on the basis that the advertising and promotion of betting services can only be directed to citizens of nations in which it is not illegal for such activities to be undertaken and that the licence will not provide betting services to any person where the provision of such services by the operator would be illegal under the applicable law.

The operator will at all times have adequate financing available to pay all current and reasonably estimated prospective obligations in respect of prize payouts and to ensure there is adequate working capital to finance on going operations. The Operator will pay winnings and account balances to registered players in accordance with clearly established arrangements agreed to with the customer.

Operators are required to obtain the following minimum information with regard to all prospective customers. The basic information on each individual shall include full name; residential address; and age as no customer may be registered as a player if under the age of eighteen;

For fixed-odds betting operations gaming tax is currently levied as from 1 April 2005 at 1% of the turnover up to £42,500,000 of annual turnover with the gaming tax capped at £425,000 per annum, with a minimum annual tax payable of £85,000. Betting exchanges are currently taxed on the same basis as Fixed-odds operations. For internet casinos gaming tax is currently levied at 1% of the gaming yield (the drop). The maximum and minimum cap is the same as for fixed-odds betting.

The bank accounts into which any customers, funds, stakes, wagers, prizes or other monies are received, held or paid out from shall be controlled by the Company. The operation of any credit card merchant account used in the course of the business shall be fully and effectively controlled by the Company.

No bank account or credit card merchant account, nor the receipt, processing, holding and clearance of customer funds and credit card transactions, shall be maintained by the licence in a jurisdiction other than Gibraltar, or in a Gibraltar licensed institution without the prior approval of the Government.

The Operator shall be required to produce audited accounts and maintain its financial records in accordance with the applicable law from time to time. The Operator shall also be required to meet all its accounts and filing requirements as set out in the Companies Ordinance, the Companies (Accounts) Ordinance and Companies (Consolidated Accounts) Ordinance and any other applicable legislation.

EFFECTIVE CONTROL

The Licensee shall at all times be effectively controlled and managed from Gibraltar. The Licensee shall be required upon request by the GOG to produce lists of key personnel (with CV's or such other information as is reasonably appropriate) including shareholders, directors and executive managers involved in the management and operation of the Licensee's business in Gibraltar.

The Licensee hereby agrees that the control of the entire business of the Licensee will be exercised in Gibraltar, so that, inter alia, but without limitation to the generality of the foregoing, the bank accounts into which any customers' funds, stakes, wages, prizes or other monies are received, held or paid out from shall be controlled by the Licensee. The operation of any credit card merchant account used in the course of the business shall be fully and effectively controlled by the Licensee.

The Licensee hereby agrees that no bank account and credit card merchant account, nor the receipt, processing, holding and clearance of customer funds and credit card transactions, shall be maintained by the Licensee, in a jurisdiction other than Gibraltar or in a Gibraltar licensed institution, without the prior approval of the GOG.

The Operator shall comply fully with all obligations in respect of any transactions which may give rise to any suspicions in respect of money laundering. The obligations are set out under the Gibraltar Criminal Justice Ordinance and the Anti Money Laundering Guidelines published from time to time by the Financial Services Commission of Gibraltar.