- Original Poster
- #1
This post is for anyone looking at setting up/starting an licensed online business in the UK. It details our experience and the eventual demise of the business in the summer of 2012.
Our company held a license from the UK Gambling Commission to offer gambling services online to UK customers. As a business we had been in existence for over 8 years and had a UK based bank account for that time. Our gambling website was a new venture however and our business previously was not in the betting/gambling industry.
Have secured a license and developed our website and platform we applied to our current banking providers to upgrade our account to enable us to more easily handle payments from UK customers. Our bank turned us down and stated that they did not need to give us a reason for the refusal.
We in the meantime applied in person (i.e. meeting local business bank managers) to all the major British High St banks (RBS/Natwest, Barclays, Lloyds and HSBC) to open a business bank account. We were not seeking or required any type of finance or loan, merely a banking facility to enable us to operate as a business in the UK (like any other small business).
All these meeting were initially very positive but all were subject to the application being sent off and approved by the respective 'commercial risk' departments within the banks. The applications were all turned down. We asked all to tell why they felt they could not open an account for us and they all were very circumspect. In fact, despite being requested, they all failed to deliver a response in writing/email. They told us via phone calls. Most tended to say something like "we do not want to be associated with gambling companies at this time". A couple also stated that the refusal had nothing to do with our business, it's viability or it's owners.
As a company we were solvent and had sufficient funds to enable us to launch the website and see us through our first year of trading. Our business presented no risk in terms of it's gambling format because of the exact type of gambling we were licensed to do.
Meanwhile we received a letter from our current banking provider to inform us they were closing our account. We had two months notice and they stated they did not have to give us a reason for closing our account.
In July our account closed and we had no alternative but to cease trading. The company is now dormant. Our UK Gambling Licence was due to be renewed in September but we decided it was pointless. The project is dead.
We spoke to our local MP who wrote to the Government minister concerned. We have received one response saying that it was not 'appropriate' for the Government to interfere in the decisions of 'commercial organisations'. We have responded to this by reminding the Government that at least two of these banks are effectively owned by the Government. We are awaiting a further response.
We also re-iterated to them that we know we are not an isolated case. The UK banks are routinely refusing banking services to legitimate UK businesses in gambling industry and failing to provide any explanation.
And the reason why these banks are doing this? It has nothing to do with the UK and UK businesses. The reason is to do with a law passed in the United States (where online gambling is essentially illegal) which makes banks (or institutions that process payments for online gambling) a target for US authorities, enabling them to fine and close them down.
In other words, our company, a UK licensed business aimed at UK customers, based entirely within the UK has been effectively closed down because the UK banks feel we would present a risk to them from US law enforcement.
UK online gambling is worth something £6bn per year, most of which goes abroad through companies operating in places such as Gibraltar. The UK Government has made plenty of speeches trying to encourage entrepreneurs and businesses in the online digital sector to setup in the UK. The online gambling sector could be worth a lot to the exchequer if businesses could be convinced to operate within the UK.
So far the Governments response to our situation shows that these speeches are words with nothing behind them. Currently the Government do not feel it is appropriate to intervene in banks, bailed out by the British taxpayer and owned by the British Government, when these banks are actively stifling growth in the largest online digital sector their is.
Please note that this policy is in place across all banks in the UK not just the one's cited above. It applies to small/startup businesses. I'm sure if you have a big fat cheque to hand to your banker they will suddenly find it a lot easier to open a bank account for you. They're bankers after all.
So our advice to anyone looking to start a business in the UK in this area is first find a bank willing to open a business account for you. Once you find that no-one will then the answer is to move abroad and set up your business their to serve your UK customers online.
I hope this will be of use to someone, and save them a lot of expense and time should they be looking to start a new venture in this area.
Our company held a license from the UK Gambling Commission to offer gambling services online to UK customers. As a business we had been in existence for over 8 years and had a UK based bank account for that time. Our gambling website was a new venture however and our business previously was not in the betting/gambling industry.
Have secured a license and developed our website and platform we applied to our current banking providers to upgrade our account to enable us to more easily handle payments from UK customers. Our bank turned us down and stated that they did not need to give us a reason for the refusal.
We in the meantime applied in person (i.e. meeting local business bank managers) to all the major British High St banks (RBS/Natwest, Barclays, Lloyds and HSBC) to open a business bank account. We were not seeking or required any type of finance or loan, merely a banking facility to enable us to operate as a business in the UK (like any other small business).
All these meeting were initially very positive but all were subject to the application being sent off and approved by the respective 'commercial risk' departments within the banks. The applications were all turned down. We asked all to tell why they felt they could not open an account for us and they all were very circumspect. In fact, despite being requested, they all failed to deliver a response in writing/email. They told us via phone calls. Most tended to say something like "we do not want to be associated with gambling companies at this time". A couple also stated that the refusal had nothing to do with our business, it's viability or it's owners.
As a company we were solvent and had sufficient funds to enable us to launch the website and see us through our first year of trading. Our business presented no risk in terms of it's gambling format because of the exact type of gambling we were licensed to do.
Meanwhile we received a letter from our current banking provider to inform us they were closing our account. We had two months notice and they stated they did not have to give us a reason for closing our account.
In July our account closed and we had no alternative but to cease trading. The company is now dormant. Our UK Gambling Licence was due to be renewed in September but we decided it was pointless. The project is dead.
We spoke to our local MP who wrote to the Government minister concerned. We have received one response saying that it was not 'appropriate' for the Government to interfere in the decisions of 'commercial organisations'. We have responded to this by reminding the Government that at least two of these banks are effectively owned by the Government. We are awaiting a further response.
We also re-iterated to them that we know we are not an isolated case. The UK banks are routinely refusing banking services to legitimate UK businesses in gambling industry and failing to provide any explanation.
And the reason why these banks are doing this? It has nothing to do with the UK and UK businesses. The reason is to do with a law passed in the United States (where online gambling is essentially illegal) which makes banks (or institutions that process payments for online gambling) a target for US authorities, enabling them to fine and close them down.
In other words, our company, a UK licensed business aimed at UK customers, based entirely within the UK has been effectively closed down because the UK banks feel we would present a risk to them from US law enforcement.
UK online gambling is worth something £6bn per year, most of which goes abroad through companies operating in places such as Gibraltar. The UK Government has made plenty of speeches trying to encourage entrepreneurs and businesses in the online digital sector to setup in the UK. The online gambling sector could be worth a lot to the exchequer if businesses could be convinced to operate within the UK.
So far the Governments response to our situation shows that these speeches are words with nothing behind them. Currently the Government do not feel it is appropriate to intervene in banks, bailed out by the British taxpayer and owned by the British Government, when these banks are actively stifling growth in the largest online digital sector their is.
Please note that this policy is in place across all banks in the UK not just the one's cited above. It applies to small/startup businesses. I'm sure if you have a big fat cheque to hand to your banker they will suddenly find it a lot easier to open a bank account for you. They're bankers after all.
So our advice to anyone looking to start a business in the UK in this area is first find a bank willing to open a business account for you. Once you find that no-one will then the answer is to move abroad and set up your business their to serve your UK customers online.
I hope this will be of use to someone, and save them a lot of expense and time should they be looking to start a new venture in this area.
