14Apr

Gambling Commission Business Plan 2020-2021

14th April 2020 Francesca Burnett-Hall 339

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 378

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 369

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 339

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.

06Apr

Banks Tackling Gambling-Related Harm

6th April 2020 Lucy Paterson 374

Last year the Department for Digital, Culture, Media and Sport (“DCMS”) ministers met with banks and gambling operators to discuss their growing concerns, and how companies could use technology and customer data to help those at risk of developing gambling problems. Brigid Simmonds, chair of the Betting and Gaming Council, recently called for the banking industry to intervene with their customers in the same way that gambling operators are required to – but are banks now starting to play their part?

In November 2018, Barclays became the first high street bank to assist problem gamblers in controlling their gambling, by allowing customers to block payments relating to certain categories of spending, including gambling. Unhelpfully, it can be switched instantly on and off through its online banking app. Since then, many other high street banks have followed suit in making similar measures available to customers, which work by automatically declining any attempted payments within selected categories.

Payment blocking is just one way that banks are attempting to protect customers from gambling-related harm, and the range of measures on offer varies greatly between banks.

Whilst many banks provide the option of blocking gambling payments via both credit and debit card, at present NatWest, RBS and MBNA only offer blocking on credit card payments. When the Gambling Commission’s ban on credit cards comes into effect on 14 April 2020 and customers have no option but to use their debit cards should they want to gamble, these banks will need to review this feature if it is to provide any useful function for customers at all.

Some banks are carefully considering how best to protect their customers from gambling-related harms and are innovating new ways to do so. Starling Bank now:

signposts a customer removing a gambling payment block to the National Gambling Helpline; and

has an automatic 48-hour cooling off period before actioning a customer’s request to remove a gambling payment block.

Similar cooling-off periods are already offered by a number of other banks, including HSBC, Lloyds Bank and Royal Bank of Scotland, and is likely to prove a useful tool for problem gamblers. Research shows that providing customers with a break or interruption in play provides a valuable opportunity to reflect on their gambling and, therefore, their decision to remove the gambling payment block, minimising the risk of impulsive decisions.

Monzo and NatWest go one step further. Monzo requires customers to speak to customer services before the gambling payment block can be removed, creating friction and perhaps another opportunity to reflect on their spending.

NatWest recently launched free psychological counselling in-branch to anyone, whether or not they are a NatWest customer, who has a gambling problem. The scheme was initially launched in several branches in London and the South East, but will be extended based on demand from problem gamblers. HSBC, meanwhile, has sought the assistance of GamCare to train its staff to respond to calls from customers about gambling, and has announced that it will analyse data on card spending to see who might benefit from advice.

A holistic approach is undoubtedly the best way to help those experiencing gambling-related harms and is also the approach advocated by the Betting and Gaming Council in key action four of its Safer Gambling Commitments. It is therefore encouraging to see banks of all sizes accepting that they too have a part to play in tackling the issue, and it is hoped that banks will continue to work closely with the gambling industry, DCMS, the Gambling Commission and gambling charities to improve the tools already on offer and to innovate new ways to help customers manage their gambling.

03Apr

No Love in the Time of Coronavirus

3rd April 2020 Julian Harris 382

On 1 April 2020 the Gambling Commission published its annual business plan for 2020-2021. Inevitably this was drafted prior to the onset of the Coronavirus crisis and the ensuing shutdown of all land-based gaming in the UK, although the Gambling Commission has said that it will review the plan at the end of the first quarter, and publish a revised plan if considered appropriate.

In our blog last week I expressed disappointment at the Gambling Commission’s response to the current crisis and suggested a number of measures that complete shutdown of all venues, mass furloughing, redundancies, coupled with continuing costs and zero revenue. Aside from arcane activities such as Russian table tennis there is no mainstream sport on which to offer bets, so the online industry is also affected to a considerable extent.

No such measures have been adopted by the Gambling Commission. Instead, there has been a series of warnings issued to the industry, including a message from Neil McArthur, the CEO, on 25 March 2020. Whilst recognising the impact on the industry of the crisis and referring to a planned assessment of that by the Gambling Commission, in common with his foreword to the business plan, Neil McArthur refers to evidence of an increase in online slots, poker, casino gaming and virtual sports. This is followed by a warning which in effect summarises operators’ obligations under the law and regulations, following the phrase “I want to make the Commission’s expectations absolutely clear”. As regulator, it is perhaps timely to remind operators of their responsibilities. However, while the negative inference here is that there is an increase in gambling overall, the reality is more likely that there is a spike in those products which remain available online, which is more than matched by the disappearance entirely of many others, and the closure of land-based venues.

Similarly, in his foreword to the business plan, Neil McArthur states: “gambling related harm must be drastically reduced”. It is well known that the levels have been static for many years; in fact, they have slightly reduced over the past 10 years. Of course, in an ideal world, no-one would be harmed by gambling. The numbers should be reduced, which is, on any view a laudable aspiration, given we are talking about 400,000 people. Unfortunately, the suggestion that gambling harm must be “drastically” reduced is not only also probably unrealistic, it suggests that it is out of control, which it is not. Once again, this statement risks harming the reputation of the industry and the level of public confidence in it, at a time when the future of certain sectors is in doubt.

The foreword continues with a statement that if operators cannot protect customers from harm the Gambling Commission will suspend and revoke licences. This is standard fayre, but once again the Gambling Commission has expressed its intention to “get even tougher”. This is an indication of an even stricter approach to enforcement. We believe that this may mean even higher financial penalties, fewer regulatory settlements, with more referrals to regulatory panel and possibly more licence revocations in the most serious cases. Most importantly, licensees should be prepared for many more suspensions of licences at the beginning of the enforcement process.

There is a good news story to note. Following collaboration between three industry working groups, the Gambling Commission and the Betting and Gaming Council (the “BGC”), the UK industry has agreed to a series of safer gambling measures, including:

to ensure that VIP players are over 25 and subjected to spending, safer gambling and enhanced due diligence checks;
to set a minimum 2.5-second spin speed on all slots by September 2020 and remove addictive features, such as slam stops and turbo buttons, as well as split-screen features; and
to improve its use of customer data to target advertisements on social media away from vulnerable groups, rather than towards potential customers, as well as creating media only primarily attractive to those over the age of 25.

In their announcement of this development, reported in more detail in our blog yesterday, the Gambling Commission have welcomed the progress made by collaboration with industry, with encouraging and positive remarks about significant progress. There is always more to do, as indeed the BGC acknowledge.

However, the Gambling Commission has accompanied their announcement with comments from Neil McArthur which has in effect downgraded the good news aspect and undermined the good work done by the industry and the new BGC by stating that: “the proposals do not go far enough and we will now consider what additional measures we should impose on operators.” So instead of accepting that this first collaboration has been successful, the industry is pilloried yet again. This further encourages public opprobrium and demonstrates the degree of responsibility that lies with the regulator for the public perception of gambling. It is then followed by another unnecessary threat that risks reputational harm: “Ultimately actions speak louder than words and any operator that does not put consumer safety first will find itself a target for enforcement action.” These remarks dominate and destroy the positives, calling into question whether in such attempted collaboration the Gambling Commission can be regarded as a trusted partner.

This is profoundly disappointing. When even a good news story is translated into further criticism of the industry and threat of enforcement action in relation to new agreed measures not yet even in force, one has to question whether the Gambling Commission has joined the ranks of the anti-gambling lobby. Of course, it should encourage further collaboration with a view to having a well-regulated industry that protects its consumers and the wider public, and take a firm line against those who do not comply with their obligations. But it is not the job of any regulator to wage a publicity campaign against an entire industry. Indeed, to do so, particularly in the midst of a crisis, and as a result continually erode public confidence in the industry, is not only improper, it is likely to raise questions about confidence in the Gambling Commission as regulator.

The Gambling Commission’s own Statement of principles for licensing and regulation requires the Gambling Commission to regulate gambling in accordance with the Regulators’ code “in a supportive, straightforward, risk-based and transparent manner”. In the current crisis, in its recent actions and publications there is little evidence of it being supportive or straightforward. Those on the receiving end of its enforcement action may also question its transparency. It is certainly taking a novel approach to the “need to maintain public confidence in the gambling industry”, as it is obliged to do.

For regulation to be effective it requires a healthy and collaborative working relationship between regulator and those whom it regulates. Playing to the gallery, the press and those who would abolish gambling risks creating an atmosphere of mistrust and suspicion. The Gambling Commission justifiably wants to make gambling fair and safe for all to enjoy. Progress can be made more effectively and speedily by developing the sort of measures just announced in working together with the industry and those who represent it. If, however the industry cannot trust the Gambling Commission to approach such cooperation in good faith, then the future is bleak.

A more detailed blog on the Gambling Commission’s new business plan will follow next week.

02Apr

“Tell me and I forget, teach me and I may remember, involve me and I learn.”

2nd April 2020 Bahar Alaeddini 374

Training means “the action of teaching a person or animal a particular skill or type of behaviour”. It has specific goals of improving a person’s competence, capacity, productivity and performance. As the title suggests (the words of Benjamin Franklin), any training programme must be coupled with learning and development initiatives.

On the one hand, employees need to replenish their knowledge and improve their skillset to do their jobs better. They need to feel confident about improving efficiency and productivity, and raising standards, as well as finding new ways towards their personal development and success. On the other hand, and most crucially, employers need to:

1. Develop and maintain an effective training and development programme. We recommend this include:

the assessment of training needs across the business;
the review of all communication channels with employees to ensure consistency of messaging;
reviewing existing internal training materials;
reviewing the competency of internal trainers;
the assessment of internal and external training;
considering ways to embed training and development across the business to create/strengthen a culture of compliance and learning; and
an evaluation methodology to measure success or failure.

2. Provide robust, comprehensive, relevant and up-to-date training.

Why is this important?

There is an abundance of reasons. Here are our top 10 reasons:

improved employee motivation and morale;
the workplace is likely to be a happier place;
internal mobility can be an important means of attracting and retaining employees;
maintained and improved employee performance;
identifying and addressing weaknesses;
consistency across the workforce;
increased productivity and internal collaboration;
improved compliance;
increased innovation; and
enhanced reputation and profile.

Training plays an instrumental role in maintaining and raising standards of compliance in respect of a gambling business’ legal, regulatory and licensing requirements, including promotion of the licensing objectives. Creating and cultivating a culture of compliance and learning are vital ingredients for a sustainable gambling business. Before COVID-19, we were facing the most challenging regulatory climate in a generation.

Now is a useful time to take stock and consider what long term sustainability and success looks like for your business, and establish the role that training plays.

Non-compliance is expensive, meaning that prevention is certainly better than a cure. To minimise this risk, we go above and beyond pure legal advice by providing supplementary services to our clients to assist them with staying abreast of legal and regulatory developments and priorities. The aim is to ensure that personal management licence (“PML”) holders, other key staff (for example, compliance, IT developers, those managing PMLs, commercial or other support staff) or a gambling business’ Board or Compliance Committee, understand the obligations and responsibilities that come with being licensed by the Commission.

It is, of course, individuals who make the decisions concerning the gambling business, and, therefore, these individuals who will determine whether the licence holding entity is compliant. Increasingly, the Commission is focused on holding leaders in gambling businesses to account, with the aim to improve Board focus on, and accountability for, the licensing objectives, and encouraging them to set the tone from the top and lead a culture of compliance. This is not a new area of focus. The Commission’s casework continues to show licensees (operating and personal) are not doing enough to learn and, as a direct result, it is taking a stricter approach to enforcement against businesses, imposing bigger financial penalties and tougher sanctions.

Since April 2018, there have been more than £50 million in penalty packages, including more than £30 million in 2020. Since 2018, and during the course of investigations into nine of the most serious operating licensees, the Commission examined the actions of 22 PMLs. Of these, nine surrendered their PML, six received a formal warning, one received an advice to conduct, seven are still ongoing and no further action was taken against two.

Licences (operating and personal) are a privilege, not a right. Training employees is an investment in them and the business, and help protect any gambling operator or supplier’s most valuable asset – its licence(s).

How can we help?

Ensuring compliance with an increasingly complex, pervasive and ever-changing regulatory environment requires expert advice and support. We help gambling businesses before, during and after compliance and enforcement intervention by the Commission. We have significant experience training senior management teams from leading online and land-based operators and suppliers. As external training providers, we bring a new perspective to operators and suppliers used to looking at training and compliance through their own prism.

Our training is very much tailored to our clients’ needs and, in most cases, based on our extensive knowledge working closely with them. We work closely with clients to ensure training is pitched at the right level, informative and interactive, with wide use of case studies.

Our unrivalled training services include:

reviewing internal training materials;
designing new, robust and effective training materials;
developing training and development programmes;
developing employee handbooks and manuals;
delivering training in person (post-COVID-19);
delivering training via videoconference;
delivering training via audioconference; and
training internal trainers.

We regularly train the following stakeholders:

start-ups;
PMLs;
senior management;
compliance departments;
Boards; and
Compliance Committees.

For more details of our training services, please visit our designated Training page on our website, email or call us.
From next week, we will be posting a weekly video blog (we believe the youngsters call this a vlog) or blog tutorial providing training on key topics in the gambling industry. We are committed to creating content you will be interested about and find useful. Please email us with any (reasonable!) suggestions

02Apr

Update on Gambling Commission Industry Working Groups

2nd April 2020 Bahar Alaeddini 375

On 2 October 2019, Neil McArthur, CEO of the Gambling Commission, delivered a speech at a CEO Breakfast Briefing in London in which he looked back at the year, talked about the challenges in the industry and three opportunities to reduce gambling harm:

opportunity 1: game and product design;
opportunity 2: inducements to gambling; and
opportunity 3: advertising technology.

We discussed these opportunities and industry working groups, formed in January 2020 in pursuit of these opportunities, in a blog post on 17 January 2020.

Yesterday, the Gambling Commission published an update on its “collaborative work” with the industry working groups, which included over 30 licensees, co-ordinated by the Betting and Gaming Council, and involved GamCare and people with lived experience of gambling harm.

Whilst “encouraged by the progress”, Neil McArthur challenged the industry to go further and deliver “real and rapid change for consumers”. He said:

“We set these challenges in order to deliver real and rapid change for consumers in key areas of risk. However, it is important these commitments are implemented as soon as possible. It should not take months to implement safeguards many would expect to be in place already…Whilst we are encouraged by industry proposals for making gambling products safer, we now call on operators to implement those proposals rapidly; but the proposals do not go far enough and we will now consider what additional measures we should impose on operators…Ultimately actions speak louder than words and any operator that does not put consumer safety first will find itself a target for enforcement action.”

Safer Products Working Group (opportunity 1: game and product design)

The industry has agreed to:

A minimum spin speed of 2.5 seconds on all slots.
Removal of game features which may encourage intensive play such as slam stops and turbo buttons.
Removal of split-screen slots which have been associated with potential loss of control.
A more detailed work plan which will include in-game messaging and the creation of a Betting and Gaming Council Testing Lab to investigate other game features.
Publication of the final industry code in September 2020.

The Gambling Commission’s response:

“…this work must now go further and faster, in particular around using demographics and behaviours to indicate risk.”
It will issue a consultation on “priority areas” for immediate action “as soon as possible”.

Incentivisation of High Value Customers Working Group (opportunity 2: inducements to gambling)

The industry has agreed to:

Restrict and prevent under 25s from being recruited to high value customer i.e. VIP schemes.
All customers must first pass thorough checks relating to spend, safer gambling and enhanced due diligence before becoming eligible for high value customer incentives.
Reward programmes will also be required to have full audit trails detailing decision making with specified senior oversight and accountability.
Implement some measures from 14 April 2020.

The Gambling Commission’s response:

It will issue a consultation on how to makes these permanent changes as part of the LCCP.
Expectation that the industry implements its industry code “as soon as possible and considers most measures should be implemented within 3 months.”
It will monitor and support implementation of the industry’s code as an interim measure.

Safer Advertising Online Working Group (opportunity 3: advertising technology)

The industry has agreed to:

Amend the Industry Code for Socially Responsible Advertising by July 2020 to include the points below.
A common list of negative search terms (e.g. how do I self-exclude from gambling?) and suppression websites, which will help shield vulnerable groups from online gambling ads.
Better and more consistent use of customer data to ensure paid-for-ads are targeting away from vulnerable groups across social media platforms, instead of targeting for business.
Implement an approach which means that advertising is only targeted at +25 age in social media and “Pay Per Click” advertising where platform facilities permit. This will protect young people and increase confidence in the social media platforms’ own age-gating.
Age-gating YouTube channels and content.
Adopting and rolling out to all affiliates a code of conduct which will be amended and updated on a regular basis to ensure all measures undertaken by the industry will be implemented equally by affiliates.

This working group will also:

Establish a permanent cross-industry Adtech Forum.
Continue the proactive engagement with a wide range of stakeholders (including platforms).
Work with the Gambling Commission to publish and promote consumer advice, and work with online platforms and broadcasters to identify a more effective, simple and consistent approach, about blocking gambling advertising.
Commit to monitoring and evaluating all actions to ensure only effective solutions are pursued.

The Gambling Commission’s response:

“The industry has developed an appropriate set of commitments which should help further limit exposure to online gambling adverts by vulnerable groups.”
It expects industry to work collaboratively with social media platforms to identify and implement further solutions.
Operators will be “held account for these commitments” from July 2020.

Final thoughts

At the October 2019 CEO Breakfast Briefing, Neil McArthur’s final words were:

“If we work together, I am sure we can make gambling fairer and safer.”

The industry’s response to working with the Gambling Commission and investment in meeting tough timeframes should be applauded. Much work is still to be done, particularly to deliver “real and rapid change for consumers”, as the Gambling commission expects. Widespread action and engagement across the industry when the industry codes are implemented and consultations published will be paramount.

31Mar

Productivity in This Time of Crisis

31st March 2020 David Whyte 363

The widespread closure of land-based gambling businesses, coupled with the impact of a hiatus in sport may, however undesirably, present some operators and suppliers with the opportunity to take advantage of additional spare time and ease regulatory and commercial burdens prior to the much-coveted return to normality.

Annual fees

In its recent update, the Gambling Commission (the “Commission”) has confirmed that due to the structure of its fee system, which is based on secondary legislation, it is unable to offer a reduction in annual fees or accept payment by instalments.

The only two options presented by the Commission are:

licence surrender; and
reducing the annual fee payable by applying to vary an operating licence to decrease the fee category where there is a reduction in gross gambling yield (“GGY”).

While option 2 may sound attractive, only some licensees will benefit. We recommend considering the following points when making a variation application to decrease a fee category:

it is the cheapest type of application and only costs £25.00;
it can be submitted quickly and easily though the Commission’s eServices portal;
apply as early as possible – the guideline processing time (up to eight weeks) is likely to be lengthened as the Commission experiences increased levels of absence;
the annual fee reduction will not take effect until the next annual fee is due; and
licensees who have recently paid their annual fee will not benefit from any such variation this year because the Commission does not issue refunds, as it has no statutory mechanism to do so.

Licensees whose annual fees are due in the coming weeks/months and expect to see a significant reduction in GGY should move quickly and submit variation applications as soon as possible.

Please remember that, in accordance with section 100 of the Gambling Act 2005, annual fees are payable before the licence anniversary and the Commission has the power to revoke an operating licence for non-payment.

Compliance

Neil McArthur, CEO of the Commission, has reminded licensees, particularly online operators, of the safer gambling and AML risks presented by COVID-19 and that consumer protection is paramount. In a message to online operators, on 26 March 2020, he said:

“…whilst I recognise the enormous challenges businesses are facing, I want to make the Commission’s expectations absolutely clear… If we see irresponsible behaviour we will step in immediately. So, whilst I know that the current climate is unprecedented, gambling operators must play their part in making sure that people are kept safe…”

As a follow-up to his blog on 25 March 2020, The Gambling Commission’s Response to the Coronavirus Crisis, Julian Harris will be posting his views on Neil McArthur’s latest message shortly. In the meantime, we strongly encourage licensees to view the Commission’s warning as an opportunity to take stock and respond positively and proactively as this is likely to result in improved business practices. Inevitably, this will reduce workloads when gambling businesses are finally able to operate as normal:

We recommend licensees consider the following:

AML business risk assessment

In accordance with licence condition 12.1.1 of the LCCP, all licensees (other than gaming machine technical and gambling software licences) are required to conduct an assessment of the risks of their business being used for money laundering and terrorist financing. This risk assessment must be reviewed at least annually and amongst other things in the light of any changes in circumstances or other material changes.

Licensees may wish to begin their review of this AML risk assessment now, considering internal business changes and the risks presented by COVID-19 (almost certainly a change in circumstances or other material change). Risk assessments that are part completed in draft now will require less time when premises reopen or sport recommences, meaning key employees can focus on other matters.

AML and safer gambling policies

Licensees should review their AML and safer gambling (“SG”) policies. This review should not just consider the adequacy of the policies now, but also the risks presented by COVID-19. Particular attention should be paid to the levels which trigger AML and SG customer interactions, and the approach taken to consider the customer’s affordability given the likelihood of disrupted income. Consideration should also be given as to how audits are completed, and whether any changes are required. Again, the completion of amendments in draft now will mean less effort and time is spent on this review when normality returns.

Marketing

Operators should review their marketing policies, ensuring new customers are on-boarded in a socially responsible way, cleanse customer marketing databases and review relationships with affiliates. They may wish to audit their affiliates and renegotiate terms to strengthen control and their position to deal with non-compliant affiliates.

Training

Employees who have been furloughed and/or who have not been operating in their primary role for prolonged periods of time, may need refresher training on key areas on their return to work. Licensees should take steps now to ensure that they have plans in place for this, to ensure that the high standards being adhered to prior to COVID-19 are maintained. We will discuss training in a separate blog post shortly.

The strong messages from the Commission to the remote industry during the COVID-19 crisis maintain a pre-existing tone that is likely to continue. Land-based and sports betting operators and suppliers should use this opportunity to their advantage so that they have a renewed sense of focus when the time eventually comes to return to normality.

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

31Mar

PMLs: Maintenance or Renewal?

31st March 2020 Julian Harris 342

We have encountered some misunderstanding, not least on the part of the Gambling Commission (the “Commission”), as to the nature and status of personal management licences (“PMLs”). These licences are required for individuals performing certain defined functions in the gambling industry. Holders of PMLs can be held personally liable for failures on the part of entities holding an operating licence.

The Gambling Act 2005 (the “2005 Act”) provides that a PML has effect unless and until it ceases to do so, by reason either of surrender, lapse, forfeiture or revocation. The Explanatory Notes for section 131 of the 2005 Act, which deals with duration of PMLs, specifies that

“Subject to surrender, lapse, forfeiture or revocation, all personal licences will be of unlimited duration. The Commission does not have the power to introduce limited durations for personal licences.”

However, regulations do provide that a PML holder pay fees every five years of the tenure of the licence. The Explanatory Notes to the 2005 Act explain that these fees are to be paid by the PML holder to the Commission to maintain the licence, and which are used by the Commission to cover the costs of regulation.

On its website the Commission sets out the maintenance process, which involves completing an application including provision of various documents (ID documents, a DBS application (UK and Channel Islands), police report (if overseas) and credit report (if overseas)) and paying the £370 fee. PMLs will no longer receive a maintenance pack in the post. Instead, the Commission will send an email, to their registered email address, informing them that they can sign in to the Personal eServices to start the maintenance process. We understand that this email will be sent on or shortly before the PML anniversary date. If the application is not made within 30 days of the anniversary date (five years from issue and every 5 years thereafter), then the licence will be revoked. Subject to that, and provided of course that the application is properly completed, the process is automatic; it is not a renewal application, and therefore cannot involve any reappraisal as to the PML holder’s qualification, fitness or suitability to hold such a licence. Any such question must form the subject of a licence review under separate provisions.

Until recently there was a reference on the “Personal licence maintenance” page of the Commission’s website to “renewal” of PMLs. This has now been corrected as a result of submissions made by Harris Hagan, that this was wrong in law, as there was no such provision or power. Nevertheless, there is a leftover of this on the webpage, in the inappropriate use of the word “application” to describe the process; this assumes that there is something the Commission is being asked to grant, and therefore something which can be refused, which it cannot. This is an automatic process, the purpose of which is solely the provision of updated information about the PML holder, such as for example, current address and position, and payment of the fee. It is for the Commission simply to check and record the information.

Whilst this may seem pedantic and of little importance, it is vital that the Commission does not assume powers which it does not have, and that PML holders are not confused about their position, or stressed by a pending “application”, which they may believe could be refused. This concern has been thrown into sharp focus in circumstances where PML maintenance has been delayed, or put on hold, by the Commission on the misconceived ground that enforcement action was current in relation to the PML holders’ employer, which potentially could, at some future date, result in a licence review of PMLs. Once your PML maintenance is submitted and the fee paid, and providing this is within time, your obligations are fulfilled. The Commission may ask for further information if necessary. Otherwise the PML continues, and there is no question either of grant or refusal. Job done!