I can confirm that, whilst on a plane in the air, the laws of the country in which the plane is registered apply.
If the airline wish to operate gambling machines or run gambling games during the flight, then they would have to conform to the appropriate regulations as set out by the Gambling Commission.
As luck has it, the Gambling Commission are based in Victoria Square in Birmingham, so you can pop in and ask them to clarify the law for you and then sit and watch perplexed as they fail to understand their own regulations.