07May

Remain Vigilant to Ensure AML Compliance

7th May 2020 David Whyte 407

The Gambling Commission published the fifth edition of The prevention of money laundering and combating the financing of terrorism – Guidance for remote and non-remote casinos (the “Guidance”) in January 2020. The Guidance incorporates the amendments made by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

In its 2018/2019 Enforcement Report, the Gambling Commission said:

“Compliance activity and enforcement cases revealed again and again that operators’ AML policies, procedures and controls are not fit for purpose. There has been the incorrect perception that all gambling regulators’ expectations are identical in addition to a failure to digest our guidance and implement the legislative requirements applicable to Great Britain. This must change, for these are not just regulatory matters but breaches of UK law. Those failing to learn these lessons will face further draconian action.”

Despite repeated messages and enforcement cases of a similar nature, due to ongoing failings by the industry, the Gambling Commission has “continued to imposed increasingly tough financial penalties (or payments in lieu of financial penalties) in cases where there have been major AML failings in order to send a clear message to the industry.”

Operators must take heed because the Gambling Commission will continue to hold you to account for failing to adhere to the Guidance.

As we noted in our blog on 31 March 2020, the current COVID-19 crisis presents some operators with an opportunity to ease regulatory and commercial burdens.

Operators should ensure that they have implemented all changes required following the update to the Guidance and take note of the Gambling Commission’s statement that:

“…the publication of this updated guidance must result in casino businesses reviewing, and accordingly amending, their money laundering and terrorist financing risk assessments as well as the associated policies, procedures and controls…”

Customer due diligence

Paragraphs 6.16 and 6.17 of the Guidance specify that, for the purposes of CDD (as required by Regulation 28), verify means verifying on the basis of documents or information which, in either case, have been obtained from a reliable source which is independent of the person whose identity is being verified. In addition to documents issued or made available by an official body made available by a customer themselves, information may be regarded as meeting this requirement if:

it is obtained by means of an electronic identification process (by using electronic identification means or by using a trust service); and
that process is secure from fraud and misuse and capable of providing an appropriate level of assurance that the person claiming a particular identity is, in fact, the person with that identity.

Enhanced customer due diligence and enhanced ongoing monitoring

There are now further requirements for EDD measures and/or an assessment of whether there is a high risk of money laundering or terrorist financing (which, if identified, would require EDD measures) where:

in relation to any transaction where there is a requirement apply CDD measures, either of the parties to the transaction are established in a high-risk third country;
a transaction is complex or unusually large, there are unusual patterns of transactions, or the transactions have no apparent economic or legal purpose;
the customer is the beneficiary of a life insurance policy; or
the customer is a third country national who is applying for residence rights in or citizenship of an EEA state in exchange for transfers of capital, purchase of a property, government bonds or investment in corporate entities in that EEA state.

Other changes

Other changes to the Guidance include changes to the risk-based approach, risk assessments, risk-based CDD and new flow diagrams showing the Architecture for the risk-based process (figure 2) and The risk framework and risk-based customer due diligence (figure 3). These highlight the requirement that licensed casino operators:

take appropriate measures in preparation for, and during, the adoption of new products or business practices, and assess and mitigate any money laundering risks arising from such adoption, in addition to the existing and similar requirement for new technology, including cryptocurrencies (Regulation 19(4));
have specific policies, procedures and controls for the measures described above (Regulation 19(1) and (2)); and
take appropriate measures to ensure that any agents used by operators, for the purposes of their business, are given appropriate training in AML and CTF (Regulation 24).

Factors to consider

The new requirements can be addressed by:

reviewing money laundering and terrorist financing risk assessments now, and each time a new product or business practice is introduced;
reviewing AML/CTF policies, procedures and controls to ensure that the Guidance has been considered;
ensuring that all employees are appropriately trained and understand the changes; and
amending contractual clauses and training procedures to ensure that agents are appropriately trained.

If you would like to discuss any of the issues raised, please do get in touch with us.

06May

Gambling Commission Response on Remote Key Equipment Changes

6th May 2020 Bahar Alaeddini 381

In our blog on 3 February 2020 we outlined the Gambling Commission’s proposed changes to the variation application and notification requirements in relation to key equipment, removing the requirements in licence conditions 2.1.1 and 15.2(17).

In response to the consultation, which closed on 26 March 2020, the Gambling Commission received 35 responses, including 30 operators and one law firm (Harris Hagan!). Unsurprisingly, for the reasons previously explained, there was significant support for the Gambling Commission’s proposals.

Outcome of the consultation:

Licence condition 2.1.1 will be removed, meaning licensees will no longer need to complete an application to vary their licence when adding new or moving key equipment. As set out in our earlier blog, licence condition 2.1.2 will remain in place.

Licensees will no longer be required to submit a key event, under licence condition 15.2.1(7), where changes are made to the location of key equipment within a jurisdiction. The key event will be retained as there are other matters that need to be reported under this requirement.

The changes take effect at the end of July 2020.

We very much welcome these changes and the Gambling Commission’s long overdue pragmatic approach to the present burdensome and clunky requirements.

05May

Keeping Affiliates in Line: “No Fudging”

5th May 2020 Lucy Paterson 406

Ensuring that operators have adequate oversight of their marketing affiliates has been on the Gambling Commission’s agenda for some time, but now appears to be under the spotlight once again. Historically, the Advertising Standards Agency (the “ASA”) and the Gambling Commission have not been shy to take action against operators who they consider have had inadequate oversight of their affiliates, and the current global crisis has again brought the issue to the fore, with concerns that affiliates have sought to exploit the situation for marketing purposes. Whilst the Gambling Commission has no jurisdiction over affiliates, the ASA (which does) has repeatedly ruled that:

both the operator and the affiliate are responsible and accountable for non-compliant advertising, even where the advertisement was the sole creation of the affiliate; and
operators cannot absolve themselves of responsibility for marketing communications where they ultimately reap the benefits.

In a recent message to the gambling industry in the light of the COVID-19 crisis, Neil McArthur emphasised the need for licensees to ensure that their affiliates are “conducting themselves properly” – or the Gambling Commission will not hesitate to take action. A similar message was delivered by his predecessor, Sarah Harrison, at WrB in February 2017, in which she said:

“…my message to is that they need to get their house in order. But far more importantly, my message to operators is there is no ‘fudge’ around this, no equivocation – the affiliates who promote your brand and who drive business to your websites are your responsibility, and it is you who are accountable.”

If you get a mention by the CEO of the Gambling Commission in a keynote address to the gambling industry, it is rarely good; it sets alarm bells ringing. Unfortunately, whilst some operators have improved practices, it seems those bells were not heard by many in 2017.

Unlicensed Third Parties

Affiliates are not licensed by the Gambling Commission although, arguably, they could be licensed under the existing legislation. Our view remains that it has no appetite for licensing affiliates, and it is much easier to hold a relatively small number of operators responsible.

As they are not licensed, affiliates are not bound by the Licence Conditions and Codes of Practice (“LCCP”), though they must comply with both the Code of Non-broadcast Advertising and Direct & Promotional Marketing (known as the CAP Code) and the Code of Broadcast Advertising (known as the BCAP Code) (the “Advertising Codes”).

Despite not being bound by the LCCP, in accordance with social responsibility code provision 1.1.2, licensees must:

ensure that the terms on which they contract with affiliates require affiliates to conduct themselves as though they were bound by the same licence conditions and codes of practice;
oblige affiliates to provide them with the information they need to comply with any reporting requirements; and
have the right to terminate in the event of breach or behaviour inconsistent with the licensing objectives.

There is no doubt that licensees are considered responsible for the actions of third parties with whom they contract, which includes affiliates. The buck very much stops with them. In response to the need for greater oversight and control over affiliates, practical challenges and regulatory risks, many affiliate marketing programmes have been drastically reduced and, in some cases, radically disbanded.

Industry Code for Affiliates

Following Neil McArthur’s CEO Breakfast Briefing on 2 October 2019, three Gambling Commission industry working groups were created, which included the Safer Advertising Online Working Group. We reported on recent updates on 2 April 2020, which included the adoption and implementation – by all affiliates – of a code of conduct. This will be updated and amended on a regular basis to ensure all measures undertaken by the industry will be implemented equally by affiliates. It is expected that this code of conduct will be in place by July 2020 and the Gambling Commission has made very clear that licensees will be “held to account for these commitments” from this date.

The industry code has not been published yet. Affiliates are strongly encouraged to engage with their licensed partners and the Responsible Affiliates in Gambling group, which is an independent body established in May 2019 and chaired by Clive Hawkswood (former CEO of the Remote Gambling Association), set up to help raise standards in the sector, particularly in respect of responsible gambling. Equally, licensees should engage with the Betting and Gaming Council and conduct a comprehensive review of its affiliate programme.

Considerations for Affiliates

Act as if you are licensed yourselves, only without the licence fees. If you do not, you do not have a future in the gambling industry.
Educate yourselves on the legal and regulatory requirements relating to gambling advertising.
The requirements are all readily available online with operators, regulators and, of course, lawyers eager to provide guidance.
Review your training requirements and deliver any additional training.
Make sure your advertisements are legal and not misleading (particularly regarding free bets and bonuses, by stating significant terms and conditions) and socially responsible.
Consider what safer gambling information you should provide.
Ensure you comply with any advertising codes in other countries that you may be advertising in.
Ask your licensed partners for assistance and how they are preparing to implement the new industry code. Some operators have existing marketing guides for their affiliates on the rules and regulations governing marketing in the jurisdictions in which they operate.

Considerations for Licensees

Ensure marketing carried out by affiliates is socially responsible and in compliance with the Advertising Codes.
Encourage affiliates to use the free and paid for copy advice service provided by CAP and the ASA.
Educate affiliates by providing detailed guidelines, including worked examples of compliance and non-compliance.
Review your marketing guidelines and rules, including your marketing approval process and the role of your marketing PML holder.
Review your policy, procedures and controls relating to affiliates, ensuring you have a comprehensive and robust audit approach. This should be led by your marketing PML.
Review your training requirements and deliver any additional training. This may include both employees and affiliates.
Review your affiliate agreements to ensure compliance with social responsibility code provision 1.1.2 (as detailed above), the LCCP, the Advertising Codes and your marketing guidelines and rules, and strengthen where required. By way of example:
- if affiliates can only use material that you have produced in-house, include a term that such material may not be amended; and
- if affiliates can modify or develop content, specify that approval is required before material is published.
Ensure you have adequate remedy in the event of breach such as inclusion of a term allowing you to withhold any revenue share.
Ensure you have the right to terminate easily and promptly in the event of breach or behaviour inconsistent with the licensing objectives.

Affiliates play a critical role for operators, generating traffic and revenues. In addition to recognising the value of affiliates, operators must acknowledge (if they have not already) that those same affiliates now also represent a genuine risk to their business and reputation. Ultimately, licences are a privilege not a right so ensure you have adequate measures in place to protect your licence!

If you would like to discuss any of these issues, including provision of training, please do get in touch with us.

01May

New Gambling Commission Commissioners

1st May 2020 Bahar Alaeddini 372

The Gambling Commission recently announced the appointment of four new Commissioners with immediate effect. Terry Babbs, Brian Bannister, Jo Hill and Sir Martin Narey were appointed as Commissioners for five years from 30 April 2020. There are now 11 Commissioners, including the Chair, Bill Moyes. Together, they form the Gambling Commission’s Board of Commissioners (the “Board”).

The Gambling Commission describes the Board as follows:

“They provide experience and knowledge from a wide range of sectors and industries. It is responsible for ensuring that we fulfil our statutory objectives. The Board sets the overall strategic direction, including helping to put consumers at the heart of what we do. The Board’s work helps us to ensure the licensing objectives are met.”

Given their strategic importance to the Gambling Commission’s work and their licensing, regulatory and enforcement functions, it is worth taking a closer look at each Commissioner’s background, the Board and Regulatory Panel.

Commissioners

Basic biographies for each Commissioner are available on the Gambling Commission’s website. It is interesting to note the strong focus on consumers, mental health and the vulnerable. This could be coincidental; however, it seems most unlikely. The Cabinet Office public appointment advertisement sought three (not four) candidates, including “a candidate with experience in consumer protection, communications and/or public affairs and regulation.” The additional criteria for Commissioners required experience of at least one of the following:

expertise in organisational HR strategy and policy, including senior executive remuneration;
expertise in consumer protection;
expertise in communications and public affairs;
experience of working within a legal or regulatory framework; or
the procurement of major publicly funded projects and the subsequent management of such projects.

The composition of the Board does not seem particularly balanced when the Gambling Commission is responsible for the regulation of commercial gambling in Great Britain. What about requiring candidates, or at least one, to have “lived experience” of gambling or technology? My former employer, the Health & Care Professions Council, has registrant and lay Council members, which would be much fairer. The Financial Conduct Authority’s Board is largely made up of members with financial services backgrounds and the Advertising Standards Authority’s Panel members come from marketing and commercial backgrounds.

Brief overview of each Commissioner’s background:

Terry Babbs has held executive roles in the private and public sectors, including at Tesco. He is also the Senior Independent Director at the General Dental Council.
John Baillie is a Chartered Accountant and former Partner of KPMG. He was a member of Reporting Panel of the UK Competition and Markets Authority for nine years.
Brian Bannister is the Executive Director for Strategic Insight and Influence at the Law Society and previously held roles at PwC, including as UK Director of Public Affairs, responsible for Government, regulator and stakeholder relations.
Carol Brady MBE has held various roles in trading standards and is now Chair of the Claims Management Regulation Unit for the Ministry of Justice and Managing Director of her own consultancy business. She was awarded an MBE in June 2016 in recognition of her services to consumers and better regulation.
Stephen Cohen has over 37 years’ experience in asset management and recent experience as Chair of a fintech software business. He also sits on the Board of the Health & Care Professions Council (my former employer) and the JPMorgan Japan Investment Trust plc.
Jo Hill is currently Executive Director of Strategy and Risk at the Pensions Regulator. She has held various roles at the Financial Conduct Authority and is also a Trustee of the Money and Mental Health Policy Institute.
Dr Bill Moyes was appointed as Chair in September 2016. He is also Chair of the General Dental Council. He had a long career in the Civil Service and has held leadership roles in five national regulators.
Sir Martin Narey had a long career in the Civil Service, including as the Director General of the Prison Service and leading the Probation Service. He was Chief Executive of Barnardo’s until 2011, previously sat on the Council of the Advertising Standards Authority and is a Government adviser on children’s social care. He was knighted in 2013 in recognition of his services to vulnerable people.
Trevor Pearce CBE QPM spent 40 years in local policing and national agencies, including the National Crime Squad, Serious Organised Crime Agency and National Crime Agency.
Jonathan Scott retired as Senior Partner and Chair of the law firm, Herbert Smith Freehills, and continues as a Consultant to the firm. He is also a Non-Executive Director of the Competitions Markets Authority.
Catharine Seddon spent 20 years as a film maker and has held judicial roles, including as a Magistrate. She holds various roles, including on the Legal Services Board and at the Pensions Regulator, and sits on Mental Health Tribunals.

Board of Commissioners

Commissioners are appointed by the Secretary of State for Digital, Culture, Media and Sport. As set out in paragraph 2.7 of the Gambling Commission’s Corporate Governance Framework, they have individual responsibilities as members of a public body, including to act in good faith and in the best interests of the Gambling Commission.

Paragraph 2.6 provides:

“The Board of Commissioners has corporate responsibility for ensuring that the Commission fulfils the aim and objectives set out in legislation and complies with any statutory or administrative requirements for the use of public funds. Other important responsibilities of Commissioners are:

ensuring that high standards of corporate governance are observed at all times
establishing the overall strategic direction of the Commission within the relevant statute and the policy and resources framework agreed with the responsible Minister
ensuring that the Commission operates within the limits of its statutory authority and any delegated authority agreed with DCMS, and in accordance with any other conditions relating to the use of public funds
ensuring that, in reaching decisions, the Commission takes into account any guidance issued by DCMS
appointing, with the Secretary of State’s approval, a Chief Executive (including the terms and conditions of employment)
ensuring that a distinction is made and set down in writing between strategic planning and management, which are the responsibility of the Commission, and day-to-day management issues which have been delegated to the Chief Executive.”

Board meetings normally take place in Birmingham at the Gambling Commission, but may also take place elsewhere, if appropriate, and by telephone or video conference. There are six Board meetings scheduled in 2020. Board papers are supposedly available on the Gambling Commission’s website, although none appear to be available after June 2017!

Regulatory Panel

Pursuant to its delegated statutory powers (in paragraph 8 of Schedule 4 of the Gambling Act 2005), the Gambling Commission has a Committee of Commissioners, on which any Commissioner may sit, which is known as the Regulatory Panel.

The Regulatory Panel must be made up of at least two Commissioners, although normally it will comprise three Commissioners.

The Chair of the Gambling Commission (currently, Bill Moyes) will, if present, preside at all meetings of the Regulatory Panel. Otherwise, he may designate a Commissioner to chair.

Examples of cases considered by the Regulatory Panel:

Determination of operating or personal licence applications. This could be following a referral from the Gambling Commission or, in cases where a “minded to refuse” letter or “minded to grant with condition” letter has been sent, the applicant wishes for the case to be heard before a Regulatory Panel.
Determination of a change of corporate control application where the licensee has received a “minded to revoke” letter and wishes for the application to be determined by the Regulatory Panel.
Reviewing the Gambling Commission’s decision to suspend a licence, either at the outset or during a review.
Determination of an operating licence review following a “minded to” letter setting out the Gambling Commission’s preliminary conclusions. Personal licence reviews take place before a Director of the Gambling Commission.

Additionally, the Regulatory Panel may also determine a case in replacement of other persons with delegated powers, such as the Chief Executive or a Director. Full details of the Gambling Commission’s delegation of licensing and regulatory decisions can be read here.

Much of the Gambling Commission’s compliance and enforcement work is not considered by the Regulatory Panel because regulatory settlements are reached between the licensee and Gambling Commission. If regulatory settlements become less attractive – such as increasingly punitive penalty packages – the Commissioners and, their “knowledge and experience” may become much more relevant to gambling businesses and the work that we do.

24Apr

Betting and Gaming Council Announces Safer Gambling Strategy

24th April 2020 Jessica Wilson 425

Last month the industry association, the Betting and Gaming Council, announced a new 10-point safer gambling action plan for its members in response to the COVID-19 pandemic. The action plan, which came into force on 27 March 2020, aims to strengthen consumer protection and build upon existing safer gambling measures implemented by its members.

Whilst overall gambling has dramatically declined due to cancellation of sporting events and the closure of betting shops and casinos, the Government’s lockdown and social-distancing guidelines mean more people are spending time in their homes. Customers may now be gambling online more frequently and, during this difficult time, could be at their most vulnerable and a greater risk of problem gambling. The Betting and Gaming Council’s action plan consists of 10 pledges which set out the standard expected of operators to increase their safer gambling measures and to protect customers during the crisis.

The 10 pledges are as follows:

Members will increase safer gambling messaging across all sites, apps and channels including inbox messaging to all existing and new customers reminding them of the safer gambling tools available.
Members will implement heightened monitoring and data collection in the knowledge that customers are required to abide by social distancing measures. Any material change in customer play patterns, including any increase in time and spend, beyond normal patterns before the crisis, indicates potential markers of harm and operators must step up interventions.
Members, operating heightened monitoring, shall actively promote deposit limits and send a deposit limit message with link to the tool to any player exhibiting abnormal patterns of play that are a marker of harm.
Members shall commit to an immediate and ongoing review of their marketing and advertising – in volume, content and targeting – and will act to ensure it is both appropriate and responsible given the increased risk.
Members will report to the BGC instances of illegal rogue and inappropriate advertising and the BGC will report these to the regulator.
These Pledges will fully apply to all affiliates. Members will enforce a strict one-strike-and-you’re-out policy for breaches of these pledges.
Members will sign-post to Gamcare advice and the 24-hour free to call National Gambling Helpline and GamStop for self-exclusion in their safer gambling messaging, particularly where issues around anxiety or isolation are apparent from monitoring systems or customer interactions.
Members restate their commitment to maintaining the vital flow of important funding for Research, Education and Treatment (“RET”).
Members shall conduct welfare checks on employees during this crisis.
Members should play a full part in supporting the Government’s ‘National Effort’ by encouraging staff to volunteer for community service, as well as offering premises where possible for use by those supporting the effort to tackle the Coronavirus.

Commenting on the pledges, Michael Dugher, chief executive of the Betting and Gaming Council, said:

“In this time of national crisis, with so many people self-isolating and social distancing at home, it is vital that we do everything possible to ensure safer gambling and to protect potentially vulnerable or at risk people.”

Building on these pledges, and in response to a letter from the Sports Minister, members have this week committed to further safer gambling measures, as detailed in a letter from Michael Dugher to the Sports Minister in which he says:

“I can give you 100 per cent assurance that despite the severe financial pressures the industry is under at present, our members in the regulated sector are fully committed to working with you and the Government to address all concerns on safeguarding customers.”

These additional measures include:

Responding to the Sports Minister’s request for safer gambling messages to be given more prominence in all adverts across all channels. This is being treated as an immediate high priority.
Ensuring that the Gambling Commission’s recent request for data is urgently provided.
Expediting agreed changes to VIPs, advertising technology and game design.
In addition to implementing restrictions on VIP accounts for anyone under 25, members will look to bring forward age-gating on advertising technology to help prevent under 25s receiving advertising along with all other measures.

The letter also provides an assurance that Betting and Gaming Council members are “firmly committed to increasing funding for RET despite the severe financial pressures.”

The pledges and additional measures, together with the marketing code for the Virtual Grand National which took place on Saturday 4 April 2020, demonstrate the industry’s renewed commitment to safeguarding customers and raising standards. This is despite the disappointing response to the current crisis from the Gambling Commission, which we wrote about in our blogs on 25 March 2020 and 3 April 2020.

16Apr

Vlog on Gambling Commission Licences

16th April 2020 Bahar Alaeddini 390

I am pleased to share our new training vlog on the basics of licences issued by the Gambling Commission. Happy watching!

The contents of this video are for general information purposes. Nothing in this video constitutes legal advice and legal advice should always be taken on appropriate gambling legal, regulatory and licensing requirements.

Harris Hagan is committed to creating and sharing content you will be interested about and will find useful. Please email us with any (reasonable!) suggestions for future training vlogs.
If you have enjoyed watching our vlog, please like, comment or share.

14Apr

Gambling Commission Business Plan 2020-2021

14th April 2020 Harris Hagan 378

In the midst of the Coronavirus crisis and national lockdown, the Gambling Commission pushed ahead and published its annual business plan for 2020-2021 on 1 April 2020. Clearly, the business plan was prepared before recent events, but Neil McArthur’s foreword heavily referenced current circumstances, including observing an immediate increase in participation in online gambling.

The Gambling Commission did not shy away from reaffirming its commitment to tackling gambling-related harm and holding operators to account by, “if necessary, using powers to suspend and revoke operating and personal licences”.

The business plan outlined five key priority areas, whilst making it clear that “verything do is centred around making gambling safer, balancing the enjoyment people get from gambling and identifying the risks that gambling can present to consumers and the wider public.” These five priorities are:

1. Protecting the interests of customers

Focusing on new regulatory requirements to make gambling safer, specifically in relation to VIP/high value customers, responsible game and product design and advertising technology. This follows the recent work of the industry working groups, which we wrote about in our blog on 2 April 2020.

The Gambling Commission will also advise the Secretary of State on the Government’s review of the Gambling Act 2005.

2. Preventing gambling harm to consumers and the public

Topping the Gambling Commission’s list is the intention to establish, by Q2, an ‘Experts by Experience’ Advisory Board, which will “ensure that the voice of consumers, particularly those who have experienced harm, fully informs decisions right at the heart of the Commission.” Industry reception to this initiative has been mixed, with Peter Hannibal of GBG describing it as “scary” amid concerns over the potential for a lack of representation from experts whose experience of gambling is positive. John White of BACTA is more welcoming of the initiative, but only if a wide range of players are the experts, not just those who have experienced problems. No details have been published regarding the Board’s constitution.

The Gambling Commission will also publish an evaluation of its actions to reduce the risk of harm to children and young people, and will review the way that it measures participation in, and prevalence of, gambling.

Finally, Neil McArthur mentioned in his foreword the single customer view initiative, which, with the use of technology, will aim to tackle the challenge “where operators currently only have a partial view of a customer’s behaviour.” This follows a two-day event on this subject on 11 and 12 February 2020. Further details are available here.

3. Raising standards in the gambling market

Raising standards by protecting against threats to betting integrity, developing an improved test-house assurance framework, implementing the Fifth Money Laundering Regulations, and delivering industry events and initiatives to raise standards.

It also intends to make online gambling safer by undertaking targeted action to improve standards in the remote gambling sector, which hints at the Gambling Commission shifting its focus in relation to its regulatory investigations and enforcement action.

4. Optimising returns to good causes from lotteries

The current National Lottery licence, held by Camelot UK Lotteries Limited, ends in 2023. A key priority for the Gambling Commission is the fourth National Lottery licence competition and “finding the right operator, who will innovate to engage players and protect them, run the National Lottery with integrity and continue maximising returns to good causes to benefit society.”

5. Improving the way it regulates

We very much welcome the Gambling Commission’s intention to improve accessibility to its:

digital services, such as eServices; and
often painfully slow and inefficient online application system.

How the Gambling Commission expects to achieve this when it is also considering reducing its staff headcount (as reported by the Guardian) is yet to be seen, but we remain hopeful.

It also plans to establish the case for changes to its fees and advise DCMS accordingly (this will no doubt mean increased fees!) and publish clearer documentation on its corporate governance process.

Given the global uncertainty caused by the pandemic, target dates may be subject to change. The Gambling Commission intends to review the position at the end of Q1, and revise the business plan, where necessary.

Nevertheless, the industry has been warned: “Those who fail to meet expectations will find approach to enforcement getting even tougher than it has been to date.” Given that we have seen the Gambling Commission’s enforcement work (and financial penalties) increase steadily over the last few years, operators would be wise not to view this as an empty threat.

08Apr

Welcome To Harris Hagan’s Vlog

8th April 2020 Bahar Alaeddini 422

In a blog post last week I mentioned the launch of our video blog with weekly vlogs or blog tutorials providing training on key topics in the gambling industry. These will be published on our website and available completely free of charge.

I am pleased to share our very first vlog in which I discuss our desire to bring a new perspective to what we do and how we interact with you.

Harris Hagan is committed to creating and sharing content you will be interested about and will find useful. Please email us with any (reasonable!) suggestions for future training vlogs.
If you have enjoyed watching our vlog, please like, comment or share.

08Apr

GAMSTOP, Prophet and Sportito – A Cautionary Tale

8th April 2020 Lucy Paterson 425

GAMSTOP is a multi-operator self-exclusion scheme which enables players to restrict their online gambling by self-excluding from online operators with a single request, rather than requesting exclusion from each operator individually. Through the scheme, which was launched in 2018, players in Great Britain can elect to self-exclude from online gambling websites and apps for a period of six months, one year, or five years. Once the minimum duration period has elapsed, the self-exclusion remains in force until the player requests that GAMSTOP remove them from the scheme.

Whilst initially, participation in the scheme was voluntary for operators, the Gambling Commission announced on 14 January 2020 that participation would become a licence condition on 31 March 2020, meaning that any of the more than 200 operators who had not integrated the scheme by that date would be in breach of a mandatory condition of their licence. The compulsory integration of the scheme, together with other initiatives such as gambling blocking software and payment card blocking, forms part of the Gambling Commission’s National Strategy for Reducing Gambling Harms, a three-year strategy which aims to drive and coordinate efforts to create a lasting impact on reducing gambling harms.

Indeed, the Gambling Commission did not delay in taking action against operators who had not complied by the 31 March 2020 deadline. On 3 April 2020, it announced that it had suspended the licences of two operators who had failed to integrate GAMSTOP – Dynamic Bets Inc, trading as Prophet, and Sportito.

Neil McArthur, CEO of the Gambling Commission, said:

“We have made it clear to operators that we are ready and willing to use our powers to protect consumers, as this action demonstrates. Self-exclusion is an important tool to protect vulnerable consumers, which is why we made it compulsory for all online operators to be signed up to GAMSTOP by 31 March. We took action because the operators had not complied by the deadline, which placed vulnerable consumers at risk.”

Though Prophet and Sportito have since integrated the scheme and had their licence suspensions lifted, the failure by both operators will now result in a review of their licences.

The swift action taken by the Gambling Commission highlights the absolute importance of licensees’ compliance in the current climate. The Gambling Commission has clearly shown that it will not be distracted by the global crisis and will continue to take whatever measures are necessary to protect consumers and protect the licensing objectives.

At a time when much of the gambling industry is in turmoil, licensees must ensure that they are not so distracted by protecting their commercial interests that they neglect their compliance obligations. Whilst ensuring the financial viability of the business will, understandably, be at the top of all gambling businesses’ agendas at this time, taking an eye off the ball when it comes to compliance may prove to be a very costly mistake further down the line.

Operators and suppliers should therefore ensure that they stay abreast of the Gambling Commission’s latest updates and are prepared to implement any required changes. Monday 14 April 2020, for example, will see the ban on the use of credit cards to gamble for all online and offline gambling products, with the exception of non-remote lotteries, come into effect, and operators must ensure that they are ready to implement this with immediate effect, or face similar action against their licence(s).

As mentioned in our blog post last week, operators should also be aware that the Gambling Commission will shortly launch consultations to amend the LCCP to:

introduce restrictions on customers under 25 years of age from being recruited to VIP incentive schemes;
require increased safer gambling, enhanced due diligence and spend checks before any customers are recruited to such schemes; and
require full audit trails detailing the decision-making process to require greater accountability when customers are recruited to such schemes.

Whilst no date has yet been set, these new requirements are expected to be in place no later than July 2020. It would therefore be wise for operators to consider how they will implement these changes now, in order to reduce workloads when gambling operations return to normal.

07Apr

Consultation on LCCP Information Requirements, Regulatory Returns and Industry Statistics

7th April 2020 Jessica Wilson 398

Gambling Commission licensees are required to report certain information to the Gambling Commission in accordance with the Licence Conditions and Codes of Practice (“LCCP”).

On 26 February 2020 the Gambling Commission issued a consultation, in two parts on its changes to regulatory data reporting requirements. Its proposals seek to:

improve data quality and the efficiency of regulation;
reflect continued focus on consumers and social responsibility;
ensure requirements are reconciled against…current and future data needs; and
streamline…existing requirements and, where possible, reduce regulatory burden.

Part 1: Proposed changes to information reporting requirements within the LCCP

We recommend that all licensees read the consultation and respond. We highlight some of the Gambling Commission’s significant proposals:

Additional obligations

Licence condition 15.1.3 – Reporting of systematic or organised money lending

This new licence condition will require licensees to report any suspected organised money lending between customers, elevating existing ordinary code provisions 3.8.1 and 3.8.2.

Licence condition 15.2.1(19b) – Reporting key events

This key event will be amended to include the need to report any criminal investigation involving a person holding a key position.

Licence 15.2.2 – Other reportable events

Elements of ordinary code provision 8.1.1 will be elevated to licence condition 15.2.2, to ensure the reporting of any material change to a licensee’s structure, operation of its business, managerial responsibilities or governance arrangements.

Additionally, the Gambling Commission proposes to add a new requirement for reporting actual or potential breaches under Parts 7 or 8 Proceeds of Crime Act 2002, Part III Terrorism Act 2000 or any superseding legislation.

LCCP 15.2.3 – Other reportable events

The Gambling Commission proposes to include a new licence condition, for non-remote and remote casino operating licensees, requiring them to report:

any actual or potential breaches by the licensee of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on Player) Regulations 2017 (the “2017 Regulations”);
within 14 days of appointment, the identity of the officer responsible for the licensee’s compliance with the 2017 Regulations;
within 14 days of appointment, the identity of the nominated officer; and
within 14 days of the departure or removal of the above-mentioned persons.

Removed obligations

Licence conditions 13.1.1 and 13.1.2 – Pool-betting

The requirements for licensees to proactively notify the Gambling Commission of any person authorised to offer pool-betting on a track or in relation to football pool-betting have been removed.

Licence condition 15.2.1 – Reporting key events

Good news! Various key events, including the investments other than by subscription of shares and referral of a dispute to an ADR entity, have been removed.

Ordinary code provision 8.1.1 – Information requirements

This provision will be removed in its entirety as the Gambling Commission proposed to incorporate elements within licence conditions 15.2.2 and 15.3.1.

Other proposed amendments

Submission of key events

The Gambling Commission proposes to rearrange key events in licence condition 15.2.1 and reportable events in licence condition 15.2.2 and include wording that requires all key events to be submitted via eServices. This will mean key events can no longer be submitted by email.

Licence condition 15.3.1 – General and regulatory returns

Currently, the Gambling Commission allows licensees to choose their reporting periods for regulatory returns. It planned to harmonise reporting periods after point of consumption licensing in 2014, but these plans were disbanded due to the GBGA judicial review. This variation in reporting period dates complicates the Gambling Commission’s internal processes and impacts on the quality of its official statistics. It proposes to align and harmonise, with unified reporting periods across the industry, as follows:

Type of return	Reporting period	Submission window
Annual	1 April to 31 March	1 to 28 April
Quarterly	1 April to 30 June 1 July to 30 September 1 October to 31 December 1 January to 31 March	1 to 28 July 1 to 28 October 1 to 28 January 1 to 28 April

Further, it proposes to reduce the period of 42 days for a licensee to submit an annual regulatory return to 28 days, to mirror the 28-day period to submit quarterly regulatory returns.

Part III – Personal key events

Personal licensees will be provided with 30 working days to report key events (presently five working days). These will have to be reported via Personal eServices only, meaning they cannot be submitted by email.

Part 2: Proposed changes to regulatory returns

The Gambling Commission’s proposals include significant reduction to the amount of data requested in regulatory returns. However, it “also intend to introduce new datapoints that place a greater focus on commitment towards consumers and the prevention of gambling-related harms, and to implement several changes focused on improving data quality…”. The wording of questions will be amended to ensure consistent use of terminology.

Reduced data requirements

Non-GB data will only be required at an aggregated activity level.
Reporting of GGY will be simplified to combine B2C revenue share GGY with proprietary GGY.
Gaming machine technical licensees will no longer need to provide the number of units sold, software sales, gross value of software sales, instead just requiring total value of sales. This will include removal of the requirement for reporting numbers of machines leased, sold, profit share, by venue type, the number of machines purchased or scrapped, by second-hand and new.
The total number of inactive, acquired or disposed premises will no longer be required.
Non-remote casino data on a venue-by-venue basis, and monthly casino drop/win data, will no longer be required. However, the Gambling Commission may require aggregate level data to be split by ‘High End London’ casino and ‘Other’ casino.
Software game titles will no longer be required as this has been superseded by the Games Register.
Turnover figures for non-remote bingo, split between participation fees and sales, will no longer be required.
The RET questions will be simplified to two questions requesting the name of the recipient of the contribution and the value.
Workforce numbers will no longer be required due to inherent data quality issues.

New requirements

The Gambling Commission proposes to add new questions focusing on safer gambling, including customer complaints, customer accounts, customer interactions and safer gambling tools such as deposit limits and exclusion schemes.

Length of return periods

Whether a licensee submits quarterly or annual returns is currently dependent on the sector the licence relates to. The Gambling Commission intends to change this to be based on aggregated GGY. This would result in larger operators, such as bingo operators, changing from annual to quarterly returns and smaller remote operators changing from quarterly to annual returns. The thresholds are yet to be determined.

New digital service

“ proposes to improve the usability, accessibility and availability of eServices system for the submission of regulatory returns; possibly building a new digital service.” At this stage, we understand this will allow regulatory returns questions to be dynamic and tailored to a licensee’s activities with, for example, use of an API.

Industry statistics

The Gambling Commission intends to make “improvements” to its industry statistics. These are contingent on implementation of the regulatory returns’ improvements detailed above. At this stage, we understand this will include:

reducing the current lag (seven to eight months) from the end of the reporting period to publication of the industry statistics, to three months;
half-year updates; and
presenting the information in a more accessible format and embedded within the Gambling Commission’s website.

Respond to the consultation

The consultation closes on 20 May 2020 and can be accessed here.

Any changes to the LCCP will be implemented in October 2020.