DCMS

4th Floor
100 Parliament Street
London SW1A 2BQ



www.gov.uk/dcms




Jenny Williams
Commissioner and Chief Executive
Gambling Commission
Sent by email


5
th
August 2014

Dear Jenny

Binary options

As you know, Government has been looking at the issue of the supervision of binary
options. The following sets out the action that Government will take on this issue, and
can be used to notify industry.

Binary options are a form of fixed-odds bets on financial markets. In Great Britain, the
way they are addressed in legislation means they are regulated and supervised as
gambling transactions.

The Government proposes to consult on amending the Regulated Activities Order 2001
to take such products out of the scope of the Gambling Act 2005 and regulate them as
financial products. This would bring binary options within the remit of the Financial
Conduct Authority (FCA), in line with standard European practice. Financial services is
not a devolved matter and therefore this change would mean that the regulation of binary
options is consistent across the UK.

For most existing licensed gambling operators this will have little or no impact on their
business. Binary options account for less than 1% of the Gambling Commission-
regulated online gambling market. Operators who offer binary options alongside more
traditional betting products will merely find this part of their activity regulated by the FCA.

The enactment of the Gambling (Licensing and Advertising) Act 2014 means that some
operators offering binary options from overseas jurisdictions will require operating
licences from the Gambling Commission when the Act comes into force later this year. In
view of the consultation, the 2014 Act will not be commenced for the purposes of binary
options. This is to avoid relevant operators having to make applications and pay fees that
might later prove unnecessary. The effect of this is that operators will not, for the time
being, require a gambling operating licence to offer binary options, and no application to
the Gambling Commission to do so will be necessary until further notice.

The Government expects to publish its consultation in January 2015.
Department for Culture, Media & Sport








I am copying this letter to Richard Knox, Deputy Director, Securities and Markets at HM
Treasury, and Edwin Schooling Latter at the Financial Conduct Authority.

Regards

Alison Pritchard

Alison Pritchard
Head of Gambling, Licensing and Lottery