Online Lottery Business.. What to class myself as?

[Arlo]

Hello,

I've noticed when setting up my online lottery business in the UK for US customers (in states which accepts legal gambling) I am persistently asked by banks what type of business I am running.

I have been listing it as Gambling but keep getting rejected, I am now in the process of applying at Co-Operative Bank but still not sure what to class myself as or how to describe the business?

Any help would be greatly appreciated.

Thanks!

[MichaelCorfman]

If you accept wagers then you are in the gambling business. That would be considered illegal in the United States if you accept wagers from U.S. Citizens unless you are licensed to do so within the United States. As an operator you would almost certainly be violating U.S. laws even if those individuals that placed wagers were not violating the law. And it is unlikely that you will find any bank that will knowingly provide you with a bank account to use in the conduct of such a business. Even organizations licensed in the United States to offer gambling services frequently have difficulty working with banks and payment processors. There is no legal obligation for banks or payment processors to accept organizations offering gambling services as customers, and many view the industry as one that has potential issues they wish to avoid. If you will actually be providing gambling services, then it seems clear from your post that you are planning to offer a service without having any concept of the legal landscape.

If you are a marketing organization, and promote online gaming in the form of lotteries offered by others, then it is appropriate to class yourself as a marketing business, and not a gambling business.

You have not stated where you are trying to open the bank account. Is it in the United States or the United Kingdom? I know that as a U.S. Citizen I was only able to establish a bank account in the U.K. by first creating a U.K. limited company and then having the limited company apply for a bank account, and I needed to visit the bank in person in the U.K. to obtain final approval for the account to be opened.

Michael

[Scampi]

I'm surprised any reject it, is it just a standard business account? I doubt you'll have any luck with the Co-Op. Lloyds Bank take gambling related businesses. Maybe list yourself as 'entertainment'?

[Arlo]

If you accept wagers then you are in the gambling business. That would be considered illegal in the United States if you accept wagers from U.S. Citizens unless you are licensed to do so within the United States. As an operator you would almost certainly be violating U.S. laws even if those individuals that placed wagers were not violating the law. And it is unlikely that you will find any bank that will knowingly provide you with a bank account to use in the conduct of such a business. Even organizations licensed in the United States to offer gambling services frequently have difficulty working with banks and payment processors. There is no legal obligation for banks or payment processors to accept organizations offering gambling services as customers, and many view the industry as one that has potential issues they wish to avoid. If you will actually be providing gambling services, then it seems clear from your post that you are planning to offer a service without having any concept of the legal landscape.

If you are a marketing organization, and promote online gaming in the form of lotteries offered by others, then it is appropriate to class yourself as a marketing business, and not a gambling business.

You have not stated where you are trying to open the bank account. Is it in the United States or the United Kingdom? I know that as a U.S. Citizen I was only able to establish a bank account in the U.K. by first creating a U.K. limited company and then having the limited company apply for a bank account, and I needed to visit the bank in person in the U.K. to obtain final approval for the account to be opened.

Michael

Hello,

Thanks for your detailed response.

It will operate by users only being allowed one account and also by means of paying a monthly subscription fee.

Would this be okay?

Thanks

[MichaelCorfman]

It will operate by users only being allowed one account and also by means of paying a monthly subscription fee.

Would this be okay?

If you are talking about in the states, then the first factor to consider is whether or not the activity is considered gambling. You indicate you plan to operate a lottery, and I don't believe there is any way of getting around that being considered gambling in the states. So, no, I don't think it will be okay. Your receiving consideration in the form of a subscription fee will not alter the fact that you have received consideration.

What is legal in most states is for non-profit organizations to hold raffles as a way of raising funds. But I'm guessing your proposed lottery would not be able to be classified as a lottery run by a non-profit organization to raise funds for its approved charitable operations. As an example, here are the rules for operating a raffle in the Commonwealth of Massachusetts where I live:

Hosting a Raffle in Massachusetts

If a subscription service was part of a skill-game activity, and you were careful to consult with attorneys, and pay attention to what states allow skill games, and which don't, then it is possible to operate a skill-game based site in the states. But there is no way a lottery could be classified as a game of skill.

Michael

[allaboutthebets]

Try Barclays and say marketing, a lot of the uk banks don't understand the industry, just don't mention gambling. Say you will be be offering online marketing across a broad range of products.