In an effort to help businesses struggling in the face of the global coronavirus pandemic, the Government announced, on 17 March 2020, a business rates holiday for businesses in the retail, leisure and hospitality industries, which is set to last for the next 12 months. However, when the Business Rates Local Authority Guidance was published the following day, it became apparent that the Treasury had specifically excluded casinos, bingo halls and betting shops from the business rate relief by classifying them as financial services.

The Betting and Gaming Council (“BGC”) lobbied the Government in an open letter, advising that its members, which constitute approximately 90% of the betting and gaming industry in the UK, employ over 70,000 people and pay tax of over £3bn, and clearly form part of the UK leisure industry in providing entertainment, food and drink to millions of people every year.  Around 64,000 jobs in the betting and gaming industry are at risk following Government-mandated business closures on 20 March 2020, and the cancellation of football matches and horseracing, which has led to a significant reduction in sports betting.  

In its letter to the Government, the BGC made clear that:

“If there is no change in the Government’s approach, within months many casinos will be insolvent and we run the very risk that permanent closures of betting shops will occur.

…

Without the kind of help that the Government is rightly prepared to offer other sectors, including in other parts of the hospitality, leisure and entertainment industries, there is a real danger that the physical presence of our industry on the high street, in our towns and cities, will be largely wiped out.

Not only is this a sector which provides a leisure activity enjoyed by millions of people up and down the country, but its closure could lead to a migration of gambling to the black market, which is not only unregulated and an unsafe place for people to bet, but it also contributes nothing to the Exchequer or the country.”

The BGC also suggested other short-term measures which could be introduced to help its members’ businesses survive, including assistance with payroll costs, access to loans and additional time to pay taxes and gaming duties. 

Following the BGC’s lobbying, and cross-party support, the Government has now confirmed that the business rates holiday is to be extended to all businesses based in the UK in the retail, leisure and hospitality sector, with casinos, betting shops and bingo halls now forming part of the leisure sector.  Businesses do not have to apply for the business rates holiday; it will automatically be applied to their next tax bill.

Additionally, on 20 March 2020, the Government announced its Coronavirus Job Retention Scheme, which is available to every employer in the UK, large or small.  Under the scheme, employers who have asked their employees to stop working and have designated them as furloughed workers (and notified them of this change in status) can apply for a grant to cover 80% of their wages, up to a maximum of £2,500 per employee per month, enabling the employees to retain their jobs. This scheme is open for three months, initially, and will be extended if necessary. Details of how to claim through the scheme have now been published.

Further help for small and medium sized enterprises is available via the Government’s Coronavirus Business Interruption Loan Scheme (“CBILS”), under which such businesses will have access to loans, overdrafts, invoice finance and asset finance of up to £5m, with no interest payable by the business for the first 12 months. 40+ accredited lenders offer CBILS, which opened for applications on 23 March 2020 and can be accessed by UK based businesses with an annual turnover of no more than £45million, so long as they meet the British Business Bank eligibility criteria. Further details of CBILS are available here.

Larger businesses can seek help through the HM Treasury and Bank of England Covid Corporate Financing Facility (“CCFF”) which will buy the company’s short-term debt in the form of commercial paper.  An explanation of CCFF and its eligibility criteria are available here.

Finally, businesses which pay UK tax and have outstanding tax liabilities may also be able to receive support with their tax affairs via HMRC’s Time to Pay service which has a dedicated telephone helpline on 0800 0159 559.

Further details are available on the BGC’s designated webpage on COVID19.

Following the recent cancellation of almost all sporting events, and with future cancellations and postponements looking inevitable, licensees may be considering diversifying their product offerings in order to provide betting on virtual events and/or eSports. The Gambling Commission (the “Commission”) has emphasised that notwithstanding these unprecedented times, all licensees are expected to comply with the LCCP and the Gambling Act 2005 to ensure licensing objectives are upheld, and that consumers are protected. Therefore, any diversification of product offerings will require careful planning and consideration of the following key issues. 

Licensees must ensure that they are appropriately licensed to provide their product offerings. Licensees who hold a remote betting (standard) (real events), or remote casino, operating licence, or the equivalent host versions, will not be licensed to provide betting on virtual events, and an application to vary will need to be submitted, and granted, before offering such activities. 

The Commission’s guideline service standard on applications to vary, which it regularly failed to meet pre-pandemic, is “up to eight weeks”.  However, as the Commission’s entire workforce is now working from home, it has warned its application processing times may be longer than usual.  Furthermore, the Commission has stated:

“We are also unable to fast track applications. We will continue to monitor the situation and will communicate any changes to our expectations accordingly.”

Licensees should, therefore, be prepared for delay.  How long is anyone’s guess!

Operators should also be aware of the potential attraction of eSports and betting on virtual events to those who are underage, paired with the potential, with children no longer at school, for increased attempts by the underage to access gambling products. Operators must ensure that they have controls in place which ensure that at the very least, the customer’s name, address and date of birth is verified before they are able to gamble.

Operators should bear in mind the potential for cheating in eSports, with participants able to cheat in order to win or to deliberately underperform in order to lose. Operators who provide betting on eSports must satisfy themselves that the competitions and events upon which customers are able to bet are effectively managed to ensure their integrity and fairness for customers who gamble on those events.

Operators must also carefully consider the risk presented by customers who would usually gamble on sports betting products moving to alternative products, and the effect that this may have on their gambling. The constant and immediate availability of betting on virtual events has the potential to encourage such customers to gamble beyond their usual limits and what they can afford.

In the light of the health crisis, social distancing measures and potential disruption to players’ income, the Commission has reminded “online operators must continue to act responsibly, especially in regard to individual customer affordability and increased social responsibility interactions.  As a reminder, expect licensees to:

• Assess individual affordability on an ongoing basis – customers may be experiencing disrupted income
• Increase social responsibility interactions and intervene where customers are showing signs of gambling related harm
• Onboard new customers in a socially responsible way and not exploit the current situation for marketing purposes
• Refresh the information they have on customers regularly
• Review the levels which trigger interaction for AML and SR
• Ensure that your gambling products have been tested by a test house before they are released to the market.”

More generally, operators should be conscious of the need to reassess the risks of their business being used for money laundering and terrorist financing in the light of the introduction of any new products. The AML risk assessment will need to be reviewed and, if required, updated to reflect any changes in risk resulting from the product diversification. New products may necessitate updates to AML and safer gambling policies and procedures, and this should be carefully considered in the light of any updates to the AML risk assessment.

It is important to ensure that the marketing of any new products is carried out in a socially responsible manner and complies with the CAP and BCAP codes. All advertising must also be carried out in compliance with the Gambling Industry Code for Socially Responsible Advertising. The Commission has also emphasised that licensees must not exploit the current situation for marketing purposes. Operators must also ensure that any direct marketing conducting conforms to data protection legislation and that customers are only contacted about virtual event betting or eSports if the required consents have been secured.

Product diversification may well prove to be a useful tool to ease commercial pressures for many licensees in these unprecedented times. However, careful consideration must be given to the gambling legal, regulatory and licensing requirements, and associated risks.

If you would like to discuss any of these issues, including assistance with an application to vary, please do get in touch with us.

The world is currently facing its greatest health emergency since the Spanish Flu pandemic of 1918 and its worst economic crisis since the Great Depression following the stock market crash of 1929.  For the gambling industry this means a global shutdown of land-based venues and a dearth of sports betting opportunities.

The British Gambling Commission (the “Commission”) issued guidance and FAQs last Wednesday, 18 March 2020, recognising these “unprecedented circumstances” and reassuring the industry that they have a plan which will minimise the impact on their regulatory work. The remainder of the guidance reminded licensees of their compliance obligations. Whilst those in the industry who remain able to continue to operate must of course do so in accordance with the law, and the LCCP, this is almost certainly as obvious to them as it is to the Commission, and was probably not necessary to repeat.

In any event, it is only a part of what the industry is entitled to expect from its regulatory authority at such a critical time. The Commission’s own Statement of Principles for Licensing and Regulation provide that the Commission will:

• not impose unnecessary regulatory burdens in upholding the licensing objectives;
• not unduly hinder the economic progress of licensees;
• have regard to the desirability of promoting economic growth and its duty to permit gambling; and
• provide a fair regulatory framework within which licensees, both new and existing, can compete and grow with as limited a regulatory burden as is compatible with the protection of consumers, the public and the licensing objectives.

No-one would reasonably expect the Commission to stop regulating as it is required to do. However, its guidance is disappointing in what it does not say; congratulating itself for its own preparedness and repeating the need for compliance, coupled with its apparent lack of engagement with the industry, serve to suggest a lack of interest and understanding of the industry which they regulate, whether this is or is not the case. Some licensees may not recover from this disaster. Many thousands are employed in gambling and are at risk of losing their jobs. The corollary of the Commission’s own policy statement ought to have provoked the Commission also to ask, “how can we help?”

In its guidance the Commission itself asks for understanding of its position; for example, that it may be slower in responding to consumers who call its contact centre and regarding applications to vary to add new licensable activities, which would allow licensees to accept bets on virtual events. And yet it extends no such understanding to the industry.

There are steps which the Commission could at least consider and discuss with the industry to alleviate the burden of regulation, without unduly risking the licensing objectives; for example:

• to delay or postpone enforcement activity which is not critical to protecting consumers in the short-term to allow licensees to focus on supporting their customers during this difficult period;
• postponing the payment of financial penalties;
• suspending the payment of licence fees;
• postponing regulatory updates and developments such as the VIP code of conduct and industry code for responsible product and game design;
• postponing policy statements and changes to the LCCP and Codes of Practice;
• dispensing with PML maintenance requirement; and
• assisting the industry in its interaction with Government and advocating on its behalf, for example, on the exclusion of casinos and bookmakers from the recently announced business tax relief intended to ease the impact of the coronavirus pandemic.

None of these measures would impact on the regulatory role of the Commission, nor would they risk the licensing objectives. They might help the industry come through this difficult time with fewer business casualties and job losses.  This is an opportunity for the Commission to mitigate the risk to the industry without risking the public or consumers. All of us – industry, regulators, advisers – need to come together to lessen the impact of the crisis, and to ensure that there is a healthy and well-regulated industry for consumers to continue to enjoy in the future.

Four of Harris Hagan’s lawyers were individually ranked in the global rankings, for Gaming & Gambling, of the prestigious Chambers & Partners legal directory.  For the second year in a row, we are the only law firm, in the world, to have four lawyers recognised in Chambers Global 2020.

Julian Harris was ranked Band 1 and recognised as one of the leading gaming specialists in the UK and a major name in international gaming circles, with peers commenting on his “great reputation” and his “very big standing in the industry.”

John Hagan was also ranked Band 1 and recognised for his “excellent reputation in the industry,” and others saying: “He is at the top of his game.” 

Bahar Alaeddini was ranked Band 3 (previously, Up and Coming) with one source enthusing “she is really good because she’s very efficient and well established.”

Hilary Stewart-Jones was ranked Band 2 and recognised as an “excellent lawyer” and for her deep knowledge and long-established commitment to online gaming.

We always strive for high standards in our exciting and challenging legal specialisation in the never dull gambling industry, and believe we are the market leading law firm.  We are delighted that our work and commitment to the gambling industry is recognised by the prestigious legal directories.

The Betting and Gaming Council (“BGC”), the single industry group which represents British-licensed gambling operators, has called for the Government to take action against unlicensed gambling operators endangering children. 

Analysis conducted for the BGC shows that: 

• 4 in 10 search results for key gambling terms on major search engines are unlicensed black-market operators;
• Children are able to access illegal gambling websites, which have no strict ID and age verification measures, unlike British-licensed operators;
• There have been 27 million visits from UK IP addresses to black market gambling websites; and
• An estimated 200,000 people in the UK have used illegal gambling sites in the past 12 months.

The BGC has called on the Government to ensure that the Online Harms Bill, which is soon to be introduced to Parliament, to crack down on platforms profiting from unregulated operators.  

The BGC is particularly concerned to ensure that children and young people are adequately protected from gambling harms by preventing their ability to access illegal websites, which do not employ the same strict age verification measures now required by British-licensed operators.

The scale of the problem facing the government is vast, with the size of the gambling black market in the UK estimated to be worth around £1.4 billion in stakes. Whilst unlicensed websites can block access to their sites by UK IP addresses, such measures are often easily circumvented through the use of a Virtual Private Network (“VPN”).

Michael Dugher, Chief Executive of the BGC, stated:

Search platforms are promoting black market gambling operators for profit – putting British consumers, including children, at risk. None of the UK’s strict licence safeguards are in place on these illegal sites.

Regulated bookies and online operators have a strict zero tolerance approach to underage gambling, yet unlicensed operators are free to prey on vulnerable consumers.

We welcome the government’s Online Harms Bill. But it also provides the government with a chance to clamp down on the black market and help protect punters who want a flutter in a safe environment.”

The campaign for action to be taken to prevent children and young people being able to access illegal gambling sites is not new; in 2018, the Advisory Board for Safer Gambling warned in its paper Children, young people and gambling: A case for action that internet service providers, app stores, search engine companies and other relevant providers should be vigilant to the possibility of third party use of their products to provide illegal gambling to children and young people and proactive in preventing it. 

In its response to the paper, the Gambling Commission acknowledged that it “…cannot tackle the risks to children and young people by acting alone…action is needed from Government”. It is hoped by BGC and industry groups that this action will take the form of a crackdown on illegal gambling operators within the remit of the Online Harms Bill.

All online gambling businesses providing facilities for gambling have remote gambling equipment, known as “key equipment”.  This is recorded in Schedule R of their Gambling Commission remote operating licence. 

On 30 January 2020, the Gambling Commission published a consultation on the removal of the variation application and notification requirements in relation to key equipment. The consultation proposes that licence conditions 2.1.1 and 15.2.1(7) of the Licence Conditions and Codes of Practice be removed entirely so that operators will no longer need to notify the Gambling Commission of any changes to key equipment, either by way of a key event or an application to vary. 

Currently, if a gambling business wants to relocate their key equipment to a different jurisdiction, they are required under licence condition 2.1.1 to apply to vary their remote operating licence.  The key equipment must not be moved until the application has been granted and an amended remote operating licence issued, which can take several weeks. Additionally, where a gambling business moves key equipment within a jurisdiction, this must be reported as a key event under licence condition 15.2.1(7).  The Gambling Commission’s rationale was so that it could physically inspect the key equipment; however, it has acknowledged this is rarely needed, particularly as many gambling businesses have moved to the cloud.  

The requirements are complex, with most not understanding them, particularly when involving aggregation platforms and other suppliers.  In many cases, Schedule Rs have 100s of entries and run to 10s of pages.  Also, the requirements are hugely burdensome for operators and suppliers, often causing business disruption needing to wait for determination by the Gambling Commission.  They are also burdensome for the Gambling Commission, with the effort required not reflected in the £25 application to vary fee.  

Licence condition 2.1.2 will remain in place and will continue to allow the Gambling Commission to access remote equipment and/or request copies of data held on the equipment, which it considers is all it now requires. The consultation closes on 26 March 2020 and it is proposed that the changes should come into effect in July 2020.  Responses to the consultation can be submitted here and we strongly recommend all online gambling businesses to respond with support for the Gambling Commission’s proposals.