17Feb

Socially responsible marketing: How to strike the right balance

17th February 2025 Gemma Boore 88

In Great Britain, companies in the gambling industry face unique challenges when it comes to marketing and advertising. Gambling operators and affiliates alike are expected to keep abreast of complex and diverse requirements set by the Gambling Commission, the Advertising Standards Authority, the Betting and Gaming Council, the Information Commissioner’s Office and the Competition and Markets Authority – to name just a key few – to ensure British brands are marketed in a compliant and socially responsible manner.

To assist our regular readers, we outline below some of the key changes to British rules and regulations that will either imminently, or have recently, impacted the way in which companies undertake gambling marketing – including some that can occasionally, be overlooked.

Why is compliant marketing so important?

For companies in the gambling industry, striking the right balance between promoting brand/s, complying with regulatory obligations and protecting customers is key. Not just for compliance reasons (although this is – of course – paramount): socially responsible marketing also enhances reputation, differentiates a company from its competitors in a crowded marketplace, and helps to build consumer trust. However, achieving such a delicate balance is no mean feat because the ecosystem in which gambling companies operate is rapidly evolving.

How do you keep abreast of changing requirements? If you undertake marketing for a gambling brand that holds an operating licence issued by the Gambling Commission, it is a good idea to sign up for regulatory newsletters, including those published by the following organisations:

The Gambling Commission’s eBulletin, which includes information about consultations, recent regulatory enforcement action, changing requirements and other compliance matters: https://www.gamblingcommission.gov.uk/e-bulletin
The Advertising Standards Authority (“ASA”)’s newsletters – five are available but in our opinion, the most useful are the ASA rulings (which are weekly ASA adjudication alerts), the insight newsletter (which provides advice on advertising compliance) and the update newsletter (which includes details of public consultations): https://www.asa.org.uk/newsletter.html
The Betting and Gaming Council (“BGC”)’s newsletter, which includes news from the betting and gaming industry body, including in relation to the codes of conduct that apply to its members: https://bettingandgamingcouncil.com/ (click “BGC News signup” at the top of the page)
The Information Commissioner’s Office (“ICO”)’s E-newsletter (which provides updates on the latest developments in data protection laws) and Action We have Taken eNewsletter (which includes news on the action the ICO has taken against nuisance marketers, the trends they are seeing, and areas that will be investigated in the future): https://ico.org.uk/about-the-ico/media-centre/e-newsletter/

By subscribing to the above newsletters and other third party sources, such as this blog and gambling industry news articles, you will be amongst the first to be informed of regulatory changes that could impact the way that you undertake future marketing. Key changes are often also publicly consulted upon before they take effect. By signing up to regulatory newsletters and learning about future consultations, you may also have the opportunity to voice your opinion and shape future rules and regulations, before they come into effect.

If you are an affiliate, it is also important to remember that the brands you are marketing may have their own bespoke requirements. If so, these will typically be set out in your contract, or in a brand guidelines document that will be updated by the operator from time to time. Although there will of course, be many similarities between different operators’ requirements, each one will have its own approach and risk rationale when it comes to advertising – so it is important to check your contract, or get in touch with your affiliate manager if you want to find out more.

What changes are on the horizon?

We set out below some of the key changes that will impact gambling advertising and marketing in Great Britain in the near future.

1 May 2025: Changes to direct marketing preferences

The Gambling Commission’s requirements regarding gambling marketing and advertising are set out in Part 5 of the Code of Practice provisions in the Licence Conditions and Codes of Practice.

From 1 May 2025, a new Social Responsibility Code Provision (“SRCP”) 5.1.12 will come into effect, which will read as follows:

1. “Licensees must provide customers with options to opt-in to direct marketing on a per product and per channel basis. The options must cover all products and channels provided by the licensee and be set to opt-out by default. These options must be offered as part of the registration process and be updateable should customers change their preference. This requirement applies to all new and existing customers.
2. Channel options must include phone call, email and text messages (SMS) as applicable.
3. Product options must include betting, casino, bingo, as applicable. Operators must make clear to customers which products they offer are covered under relevant categories.
4. Where an operator seeks an additional step for customers to confirm their chosen marketing preferences, the structure and wording of that step must be presented in a manner which only asks for confirmation to progress those choices with one click to proceed. There must be no encouragement or option to change selection; only the option to accept or decline their selection.
5. Customers must not receive direct marketing that contravenes their channel or product preferences.
6. Existing customers who have not already opted out of marketing must be asked at their first log-in after commencement of this provision to confirm their marketing preferences if they have not done so already. Existing preferences can be copied over providing they match the format of this requirement.”

In essence, SRCP 5.1.12 is being introduced to ensure that from 1 May 2025, remote B2C gambling operators give their customers more granular options regarding direct marketing preferences.

While this change will certainly empower customers with greater control over the types of marketing they receive, the changes are controversial as they will essentially prevent operators from the relying upon the ‘soft opt in’ under the Privacy and Electronic Communications (EC Directive) Regulations 2003 (“PECR”): a commonly accepted exception to the general prohibition on sending unsolicited direct marketing to consumers, that permits businesses to market similar products and services to existing customers unless they have expressly opted out. The net effect being that, from 1 May 2025, gambling will stand alone in being the only industry that does not benefit from this business-friendly exception and many operators and affiliates will need to obtain fresh consent from, in some cases, the majority of customers to whom they are currently lawfully marketing.

We strongly recommend that operators and affiliates prepare for this seismic shift by:

(a) reviewing marketing lists now to identify the customers to whom they will no longer be able to send marketing from 1 May 2025. For example, because they are marketing to those customers in reliance upon the soft opt in under PECR or because the express consent they previous obtained was not sufficiently granular;
(b) seeking to obtain fresh consent from these individuals, that is compliant with the new requirements, as soon as possible; and
(c) ensuring their systems and processes for preventing marketing being sent to customers that do not grant express consent are robust and do not cause them to breach SRCP 5.1.12 once it comes into force.

For further discussion on the proposed changes please see our blog: White Paper Series: Direct marketing and cross-selling in the crossfire.

TBC: Changes following the Gambling Commission’s Autumn Consultation

As at the time of writing, the Gambling Commission’s response to its proposals regarding socially responsible incentives in its Autumn Consultation is still pending. This is despite the fact that the response to the other proposals in that consultation was published on 4 February 2025 (for more information, please see our blog: White Paper Series: New rules on customer led tools, customer funds and statutory levy), which confirmed:

“We aim to publish our response on Socially responsible incentives by the end of March.”

While future changes regarding socially responsible incentives are not yet set in stone, we anticipate that significant changes will come to pass. Licensees should anticipate:

new rules restricting (or evening banning) wagering requirements on free bets and bonuses; and
a ban on the mixing of product types within incentives. For example: giving free spins to sports bettors; or free bets to bingo players.

Although the devil will of course, be in the detail – the biggest (and smartest) players are already taking steps to prepare. For example, by permitting internal marketing and compliance experts opportunities to examine current marketing techniques together; identify any practices that may not comply with the Gambling Commission’s future rules; take external advice, where appropriate; and brainstorm novel techniques that may have more longevity in terms of helping the business to acquire new customers, increase their engagement with products (in a socially responsible way), and prevent customer attrition (otherwise known as ‘churn’) in the future.

Which marketing obligations can sometimes be overlooked?

As well as scanning the regulatory horizon for future change, marketing teams should ensure they are alive to recent reforms to direct marketing and advertising rules that, in our experience, can occasionally be overlooked.

Social Responsibility Code Provision (“SRCP”) 3.4.3: Remote Customer Interaction

Although most remote licensee are acutely aware of SRCP 3.4.3 and the GBGC’s associated customer interaction guidance for the remote sector (the “Guidance”), the obligation for remote licensees to stop sending marketing to customers that are displaying strong indicators as harm (as defined by their systems and processes, having taken the Guidance into account) is one that can still in our experience, be overlooked.

The requirement in question means that remote operators must ensure that when their customers are, in their view, displaying strong indicators of harm, they must promptly cease sending the customer direct marketing communications. In other words, licensees must ensure that:

(i) they have systems in process in place to identify indicators of harm;
(ii) assess when those indicators of harm are strong – either on their own or when taken together; and
(iii) there are adequate and effective communication channels between a licensee’s responsible gambling and marketing teams, such that marketing is stopped at the appropriate juncture.

Licence Condition (“LC”) 7.1: General Fair and Open Obligations and Related Obligations

Existing regulations like LC 7.1..1 (fair and transparent terms and practices), Ordinary Code Provision (“OCP”) 5.1.1 (rewards and bonuses – SR code), and 5.1.2 (proportionate rewards) of the LCCP stress the need for fairness and transparency in marketing offers.

This means that companies must ensure that significant terms are clearly presented in advertisements; full terms and conditions are easily accessible; and do not contain any unfair provisions. In our experience, this is an area of focus for the Gambling Commission during a compliance assessment, which may therefore expose licensees to enforcement action. We therefore suggest that licensees proactively review their general and offer-specific terms and conditions against the LCCP requirements.

CAP/BCAP Codes and the BGC’s Gambling Industry Code for Socially Responsible Advertising (the “Industry Code”)

The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the “CAP Code”), for those undertaking television marketing, the UK Code of Broadcast Advertising (the “BCAP Code”), and the BGC’s Gambling Advertising Code, are essential reading for marketing teams. These codes outline how and when to target marketing efforts and are entrenched in the LCCP under OCP 7.1.1 (compliance with advertising codes), which states:

1. All marketing of gambling products and services must be undertaken in a socially responsible manner.
2. In particular, Licensees must comply with the advertising codes of practice issued by the Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP) as applicable. For media not explicitly covered, licensees should have regard to the principles included in these codes of practice as if they were explicitly covered.

Common pitfalls, such as inadequate age-gating on third party platforms; use of brand ambassadors that strongly appeal to under 18s and/or not including significant terms and conditions on a promotion, can lead to regulatory action and reputational harm.

SRCP 1.1.2: Responsibility for Third Parties

Although we are confident that most licensees are acutely aware of SRCP 1.1.2 (responsibility for third parties – all licences), which states as follows; in our experience it is one of the requirements of the LCCP that is commonly breached. Sometimes by a third party that is carrying out a regulated activity on behalf of a licensed operator, but also sometimes by the licensee themselves – in cases where they have entered into an agreement that does that not require the third party to conduct themselves as if they were themselves bound by the LCCP and/or that cannot be terminated in accordance with SRCP 1.1.2.

Licensees are responsible for the actions of third parties with whom they contract for the provision of any aspect of the licensee’s business related to the licensed activities.
Licensees must ensure that the terms on which they contract with such third parties:

a. require the third party to conduct themselves in so far as they carry out activities on behalf of the licensee as if they were bound by the same licence conditions and subject to the same codes of practice as the licensee

b. oblige the third party to provide such information to the licensee as they may reasonably require in order to enable the licensee to comply with their information reporting and other obligations to the Commission

c. enable the licensee, subject to compliance with any dispute resolution provisions of such contract, to terminate the third party’s contract promptly if, in the licensee’s reasonable opinion, the third party is in breach of contract (including in particular terms included pursuant to this code provision) or has otherwise acted in a manner which is inconsistent with the licensing objectives, including for affiliates where they have breached a relevant advertising code of practice.

In addition to ensuring that commercial agreements are compliant with the above provision, we also recommend that licensees conduct and refresh due diligence, including PEP (politically exposed person) and sanction checks, on affiliates and other partners.

Establishing detailed brand guidelines, requiring approval for new marketing copy, and conducting regular audits can also help to mitigate the risk of vicarious non-compliance, which could threaten a brand’s integrity.

Our top tips for compliance

While a changing regulatory environment can present challenges, there are strategies that you can put in place to assist your business to stay compliant:

Communication: Fostering strong communication channels between marketing and compliance teams is essential. In larger organisations, it is equally important for brands to collaborate effectively, ensuring that all marketing strategies align with compliance standards across the wider business.
Induction and Refresher Training: Arrange comprehensive induction and refresher training sessions for marketing teams, particularly when regulatory changes are imminent. Harris Hagan can provide tailored training, along with the creation and updating of internal checklists and guides to ensure that staff are well-informed about current and forthcoming requirements.
A/B Test New Methods: Consider A/B testing new consent and marketing methods in anticipation of forthcoming changes to marketing preferences and socially responsible incentives. This proactive approach can help identify effective strategies that comply with upcoming regulations.
Involve Compliance Teams: When devising new campaigns or marketing new products, involve compliance teams early in the process. Having legal experts review marketing copy, especially for innovative or unconventional products, is critical. Keeping thorough records of these reviews can provide additional protection.
Implement Technical Solutions: Ensure that robust technical systems are in place to suppress marketing communications where appropriate, such as in cases of strong indicators of harm have been identified, a customer has self-excluded, or when consent is withdrawn. Regularly test systems to ensure there is no ‘single point of failure’ in marketing controls. This will, in in turn support you to demonstrate that ‘reasonable steps’ have been taken, if there is any subsequent oversight.
Distinguish Between Marketing and Service Communications: It’s important to understand the distinction between marketing communications and service communications. These two types of communication should not be mixed to avoid confusing customers and to maintain regulatory compliance.
Contingency Plans: If a marketing mistake occurs, having policies and procedures in place to limit potential damage is essential. Companies should notify regulators as required and take steps to protect their brand reputation. After addressing the incident, take the time to analyse what went wrong and implement measures to reduce the risk of recurrence.

Conclusion

Striking the right balance between promoting your brand and protecting customers in the gambling industry is not just a matter of compliance; it’s a smart business strategy.

By: (1) embracing socially responsible marketing practices; and (2) taking proactive steps now, gambling companies can ensure their marketing efforts align with both their brand values and the welfare of their customers, creating a win-win scenario for all stakeholders involved.

Please get in touch with us if you have any questions about direct marketing, are interested in receiving our handy gambling advertising guide in Great Britain, would like assistance reviewing your terms and conditions and/or ads for compliance with British gambling regulatory requirements, or are looking to arrange training for marketing staff, compliance teams and/or PML holders in your gambling business.

20Jan

ICE Barcelona 2025: John Hagan to moderate a panel of sports and industry experts

20th January 2025 Harris Hagan 111

From 20 – 22 January 2025, ICE will be bringing together the entire gaming industry over three days of networking and education in Barcelona.

On Tuesday, Co-founder and Partner, John Hagan will moderate a panel at the World Regulatory Briefing on Betting on the Future: A United Team on Sports Integrity.

Following a historic summer of sporting success at the Olympics, Wimbledon and Euros, and with the 2026 World Cup on the horizon, the focus on match fixing and sport integrity continues to grow, fuelled by media reports of high-profile athletes placing wagers on their sport and criminal involvement in the manipulation of fair play and other forms of corruption, damaging public perception. Featuring representatives from major sports leagues and betting industry experts, this session will address the nature and scale of the issue, the reputational and economic impact, and how stakeholders can work together to prevent match fixing and build a sustainable betting market.

John will be joined by the following panellists:

Angela Celestino, Intelligence Manager – UEFA
Dieter Braekeveld, Intelligence and Investigations Manager – International Olympic Committee
Luke Saunders, Vice President Commercial – OpenBet
Matt Fowler, Head of Global Operations – International Betting Integrity Association

Please see the below details for your calendar:

Date: Tuesday 21 January 2025

Time: 10:05am – 10:50am CET

Location: CC5.1, Fira Barcelona Gran Via

For more details, please click here.

Alongside John, Partners Bahar Alaeddini and David Whyte will be attending ICE Barcelona 2025. Please get in touch with us if you would like to arrange a meeting to discuss the UK market and how Harris Hagan may support you.

18Oct

Gemma Boore to moderate direct marketing roundtable at EGR London Summit during Safer Gambling Week

18th October 2024 Harris Hagan 117

Senior Associate, Gemma Boore will be co-hosting a roundtable discussion at the EGR London Summit 2024, which takes place next week on 23 October 2024 at etc.venues Chancery Lane.

Gemma, alongside co-host David Murphy, Chief Marketing Officer at QiH Group, will moderate the roundtable, Direct marketing practice: striking the right balance for brand awareness and customer choice, during which attendees will share their perspectives on gambling marketing and advertising.

Gemma will share her legal perspective on the unique challenges faced by the gambling industry when marketing their brands. For example, the Gambling Commission’s proposals regarding direct marketing and cross-selling, which Gemma previously discussed in her blog: White Paper Series: Direct marketing and cross-selling in the crossfire. Further information and discussion regarding the Gambling Commission’s implementation of these proposals (which will come into force on 1 May 2025) can be found in our subsequent blog: Gambling Commission publishes Summer 2023 Consultation Response and Betting & Gaming Council announces New Industry Voluntary Code.

The EGR London Summit 2024 is an exclusive industry event and includes a full agenda of discussions throughout the day focussing on safer gambling strategies and broader regulatory updates.

For more information and to apply to attend, visit the EGR London Summit website.

07Mar

Is the cookie finally crumbling? ICO caution to UK websites on harmful online choice architecture

7th March 2024 Gemma Boore 140

On 31 January 2024, the UK’s Information Commissioner’s Office (“ICO”) published an update on its progress working with some of the UK’s top websites to ensure they comply with data protection law. The ICO also warned other organisations they must take steps to proactively ensure their use of advertising cookies and similar technologies are compliant.

This update follows the publication of an open letter by the ICO (which can be found here), in which it wrote to the Data Protection Officers (“DPOs”) of 53 of the UK’s top 100 websites (based on active time spent by UK users) warning that they would face enforcement action if they failed to ensure their website users had fair choices over whether or not to be tracked for personalised advertising within 30 days (the “Call to Action”).

In its January update, the ICO confirmed that there has been an “overwhelmingly positive response” to the Call to Action, with 38 of the 53 organisations contacted correcting their cookie banners and a further four committing to reach compliance within a month. In addition, several others are working to develop alternative solutions, including contextual advertising (which allows advertisers to target ads based on the page, app, video, or audio content being consumed, or the context in which it is being consumed, by the user without the use of cookies) and subscription models (which encourage the user to subscribe or sign-up to receive content / advertising), and the ICO promises to provide further clarity on how these models can be implemented in compliance with data protection law (at the time of writing, we are still awaiting this update).

In the meantime, and most importantly, the key message from the ICO is:

“We will not stop with the top 100 websites. We are already planning to write to the next 100 – and the 100 after that.”

In this article, we discuss the background to the Call to Action and consider what steps companies in the gambling sector (including both operators and affiliates) can take to ensure their websites are compliant with data protection and other relevant laws.

Background to the Call to Action

In November 2023, the ICO issued a public statement confirming that in its view, some UK websites were not ensuring that it was as easy for users to ‘reject all’ advertising cookies as it was to ‘accept all’: a topic upon which the ICO had recently published guidance. See:

joint blog from Stephen Almond, ICO’s Executive Director for Regulatory Risk and Will Hayter, the Competition and Markets Authority’s (“CMA”) Senior Director in the Digital Markets Unit: It’s time to end damaging website design practices that may harm your users; and
the ICO’s joint position paper with the CMA: Harmful design in digital markets: How online choice architecture practices can undermine consumer choice and control over personal information,

both of which cited those recovering from gambling addiction as examples of consumers that may see unwanted advertisements for gambling, particularly if they are “steered to accept all cookies” and that this may “encourage them to gamble, in turn leading to financial loss and possible negative impact on their mental health”.

In the ICO’s November 2023 public statement, Almond further explained:

“We’ve all been surprised to see adverts online that seem designed specifically for us – an ad for a hotel when you’ve just booked a flight abroad, for instance. Our research shows that many people are concerned about companies using their personal information to target them with ads without their consent… Many of the biggest websites have got this right. We’re giving companies who haven’t managed that yet a clear choice: make the changes now, or face the consequences.”

and once again, cited the targeting of gambling addicts as an example of bad practice.

Accordingly, it seems clear that gambling advertising is a subject already firmly caught within the crosshairs of the ICO, but what exactly do gambling operators and their marketing affiliates need to do?

The Call to Action

On 19 December 2023 (four weeks after the warning was first published), the ICO decided to publish a template version of its Call to Action letter to DPOs, to enable other UK website operators to understand its concerns, and proactively take action to address potential areas of non-compliance.

In the Call to Action letter, the ICO confirmed that it had assessed the relevant website’s cookie banners against three areas of concern:

Non-essential advertising cookies are placed before the website user has the opportunity to provide consent

This concerns instances where non-essential advertising cookies are placed either without any consent from users completely or before consent is requested. In each case, the ICO considers that this is unlikely to comply with consent requirements under the Privacy and Electronic Communications (EC Directive) Regulations 2003 (“PECR”) and the UK retained EU law version of the General Data Protection Regulation (“UK GDPR”) because the user’s personal data would be processed without / before they had given valid consent.

Users can reject non-essential advertising cookies as easily as they can accept them

Some website operators display cookie banners with a button allowing users to immediately consent to all cookies (i.e. an ‘Accept All’ button that provides consent in one click), but do not incorporate a similar (i.e. equally prominent) mechanism for the user to refuse the placement of non-essential cookies as easily or in one click. The ICO’s concern is that, without such a mechanism, any consent obtained by a user clicking ‘Accept All’ on the cookie banner cannot be regarded as having been freely given, specific or informed (requirements for valid consent under the UK GDPR) in relation to each processing activity. Failure to obtain valid consent to the placement of non-essential marketing cookies and thus the processing of personal data, is unlikely to comply with PECR and UK GDPR.

Non-essential advertising cookies are placed even if the user did not consent to such cookies

Lastly, the ICO assessed whether website operators respect the choices of their users. In the ICO’s view, placement of non-essential advertising cookies and/or processing of personal data obtained via such cookies, in circumstances where the user has previously indicated that such cookies should not be placed, is unlikely to comply with PECR and UK GDPR.

Website operators were given one month to bring their website’s cookie banner into compliance or respond to the ICO, setting out: (a) the steps they plan to take; (b) why they are unable to take those steps within one month; and (c) the expected timescale for the implementation of those steps.

The Call to Action confirmed that the ICO would conduct a further assessment of the cookie banners on the recipient’s website in one month’s time to establish whether steps had been taken to improve compliance with PECR and UK GDPR.

Online Choice Architecture

As noted above (and in the Call to Action), on 9 August 2023 the ICO published a joint position paper with the CMA, which considered how online choice architecture (“OCA”) (i.e. the way information is presented and choices are structured online) could lead to data protection, consumer and competition harms.

The OCA position paper helpfully gave examples of OCA practices that the ICO and CMA jointly considered had the potential to harm consumers and explained how such practices could breach applicable laws including PECR, UK GDPR, and UK consumer protection laws including the Consumer Rights Act 2015.

Of relevance to the Call to Action, are the examples provided by the ICO / CMA in the OCA position paper, of “harmful nudges and sludge” techniques:

Harmful nudges (also called dark nudges): being when an organisation makes it easy or ‘nudges’ users to make inadvertent or ill-considered decisions; and
Sludge: being when an organisation creates unnecessary or unjustified friction or ‘sludge’ making it difficult for users to get what they want or do as they wish on the website.

The ICO and the CMA are concerned that the use of such techniques could encourage consumers to make choices they would not otherwise have made and that do not align with their best interests or preferences. This may include selecting less privacy-enhancing choices when personalising their privacy settings (e.g. by accepting all cookies including non-essential advertising cookies), thus allowing the organisation to process (and / or share) their personal data in ways that a user may not have intended or, in the absence of harmful nudges and sludge, have indicated to the organisation.

In the ICO’s view, use of these techniques is:

likely to infringe on Article 5(1)(a) of the UK GDPR, which requires that personal data is “processed lawfully, fairly and in a transparent manner in relation to the data subject (‘lawfulness, fairness and transparency’)”; and
in turn, likely to breach Regulation 6 of PECR, which requires that users are: (a) provided with clear and comprehensive information about the purpose of cookies and; (b) given the opportunity to refuse them. In the ICO’s view, this means being given the opportunity to refuse non-essential cookies with the same ease as they can be accepted (e.g. by providing a ‘Reject All’ option as well (and as equally prominently) as an ‘Accept All’).

The CMA is additionally concerned that harmful nudges and sludge may confer a competitive advantage to certain large platforms; and inhibit entry and expansion by smaller businesses.

Next steps

The ICO has stated that it will continue to “steadily” work through its list of UK websites and advises all organisations to take action to become compliant now.

We therefore strongly recommend that DPOs of those in the gambling industry review their organisation’s mechanisms for obtaining consent to personalised advertising, including consents obtained via cookie banners, proactively to ensure these comply with data protection, consumer and competition laws. This applies to gambling operators and affiliates alike; not least because:

Gambling Commission licensees

Gambling Commission licenses are required by social responsibility code 5.1.6 of the Licence Conditions and Codes of Practice (“LCCP”) to ensure that all marketing of gambling products and services is undertaken in a socially responsible manner.

Failure to obtain valid consent to the processing of personal data, particularly that used for marketing, may therefore be considered a breach of the LCCP and lead to enforcement action by the Gambling Commission.

It is also worth noting that any enforcement action taken by the ICO / CMA against such companies would likely also attract the interest of the Gambling Commission; and

Marketing affiliates

Even though affiliates are not themselves regulated by the Gambling Commission, the licensed operators with whom they do business are, and accordingly:

- will be held responsible under social responsibility code 1.1.2 of the LCCP for the actions of third parties (such as affiliates) relating to the provision of marketing of licensed gambling; and
- are required to ensure their contracts enable them to terminate if, in their reasonable opinion, the third party is in breach of contract or has otherwise acted in a manner that is inconsistent with the licensing objectives.

Any enforcement action against affiliates by the ICO / CMA could therefore jeopardize affiliates’ relationships and potentially lead to the termination of their contracts with licensed British gambling operators.

In addition to reviewing cookie consent practices, we also suggest that DPOs consider whether any of the other examples of harmful OCA in the ICO / CMA position paper, including ‘confirm shaming’, ‘biased framing’, ‘bundled consent’ and ‘default settings‘, are being used by their organisation. It is likely that future ICO / CMA enforcement action will centre on such techniques and, in the case of bundled consent, this is already subject to a recently closed Gambling Commission consultation. For further discussion, please see our recent blog: White Paper Series: Direct marketing and cross-selling in the crossfire.

For the meantime we, along with the industry, await to see whether formal ICO enforcement action will be taken against any bad actors. It will also be very interesting to hear the ICO’s views on contextual advertising and subscription models – we will write a further blog if we consider these of key relevance to the gambling sector.

Please get in touch with us if you have any questions regarding harmful OCA, data privacy and / or consumer protection compliance for gambling businesses, or if you require any other assistance.

With thanks to Chris Biggs for his co-authorship.

22Sep

DCMS Committee inquiry on gambling regulation

22nd September 2023 Harris Hagan 205

In case you missed it earlier in the month, on 5 September 2023, the Rt Hon Stuart Andrew MP (Gambling Minster), Ben Dean (Director, Sport and Gambling at DCMS), Andrew Rhodes (Chief Executive, Gambling Commission), Sarah Gardner (Deputy Chief Executive, Gambling Commission) and Tim Miller (Executive Director for Research and Policy, Gambling Commission) appeared before the DCMS Committee examining the Government’s approach to the regulation of gambling. The Gambling Commission gave evidence in the first session at 10am, and the Gambling Minister and DCMS gave their evidence in the second session at 11.30am.

Watch the recording of the DCMS committee oral evidence sessions:

01Sep

Advertise with caution: ASA shine AI-fuelled torch on foul play

1st September 2023 Gemma Boore 181

Traditionally, the Advertising Standards Authority (“ASA”) have relied on “limited, labour-intensive manual searches and complaints from the public” to monitor and regulate the online advertising environment. However, since 2021, they have been “investing in data science capabilities and building a team to help take on the specific challenges of regulating online advertising”.

As a result, one of the newer weapons in the ASA’s armoury is its Active Ad Monitoring system (“the AAM System”). The AAM System, which processes more than 100,000 adverts per month, uses artificial intelligence (“AI”) to proactively search for online adverts that might breach the UK Advertising Codes. Specifically, the AAM System deploys “machine learning algorithms to identify and flag likely non-compliant adverts”, following which ASA experts can manually review and take any necessary action. The process is helpfully explained in the ASA’s graphic below:

The ASA’s commitment to use technology, such as AI, to detect and enforce more effectively aligns with the approach being taken by other authorities. For example, it was recently revealed that the police force in Devon and Cornwall detected almost 300 drivers breaking the law in three days using AI – and it appears a similar (although perhaps not quite so extreme) increase in enforcement activity is coming to fruition at the ASA.

Over the course of 14 days in August 2023, the ASA published three rulings relating to gambling adverts that potentially breached the ASA’s ‘strong appeal’ tests. The strong appeal tests effectively prohibit content (including imagery, themes etc.) that has a strong level of appeal to under-18s in gambling adverts; regardless of how the content is viewed by adults.

In each case, the adverts in question were identified for investigation following intelligence gathered by the AAM System.

We discuss the recent rulings and provide our insights below.

Novak Djokovic, Rafael Nadal, Nick Kyrgios and Stefanos Tsitsipas – of strong appeal

The adverts

This ruling concerned four promoted tennis-related tweets, featuring tennis players Novak Djokovic, Rafael Nadal, Nick Kyrgios and Stefanos Tsitsipas. Two of the tweets celebrated Djokovic’s impressive run of form, while the other two were polls which asked users to vote on tennis-related questions during the Australian Open.

The ASA’s assessment

The following factors were considered:

Djokovic, Nadal, Kyrgios and Tsitsipas had all appeared in a Grand Slam final in the previous year;
Djokovic and Nadal have each recently been ranked as the world’s number one player and had the joint record for the most Grand Slam titles won;
Kyrgios reached the Wimbledon final in 2022 and Tsitsipas reached the Australian Open final in 2023; both finals attracted large media coverage and would have been of interest to under-18s.

All four were therefore ‘star’ players with a high profile and would be considered high risk according to the ASA’s guidance on the strong appeal tests.

In its defence, the advertiser pointed out that:

most of the players’ social media followers were over 18 and that the players’ commercial partnerships were with adult-oriented brands; and
they understood that Twitter users self-verified their age, and because that was not always accurate, they had added an additional level of assurance by targeting the ads on social media to only reach over-25s.

Having considered the facts, the ASA determined that all four players were likely to be of strong appeal to under-18s. The regulator went on to note that it would have been acceptable for the ads to appear in a medium where under-18s could entirely be excluded from the audience for all intents and purposes. However, that would only apply in circumstances where those who saw the ads had been robustly age-verified as being 18 or over, and it did not consider that the methods in question (i.e. self-verification by Twitter users coupled with behavioural targeting) met that threshold.

Accordingly, the ASA determined that the adverts breached CAP Code (Edition 12) 16.1, 16.3 and 16.3.12 (Gambling) because they used people who strongly appeal to those under-18 years of age when under-18s could not entirely be excluded from the audience.

Granit Xhaka – of strong appeal

The advert

This ruling related to a tweet published on Twitter in February 2023 featuring the text: “Granit Xhaka pulled out this stunning finish last season in Arsenal vs Man United”. The tweet contained an embedded video which opened with a footballer kicking a ball from the corner. As he did so, a green digital circle appeared around him. As the ball travelled, a green triangle appeared where the ball had been kicked and the gambling operator’s logo appeared. The video then cut to footage from a football match between Arsenal and Manchester United and showed Xhaka scoring a goal as the crowd cheered. The score of the match then appeared overlayed onto the video.

The ASA’s assessment

The following factors were considered:

Even though the original tweet was not published by a gambling operator, it was promoted by an operator using the Twitter Amplify feature and as such, the tweet was considered by the ASA to be an advert for that operator.
Football is an activity that is highly popular amongst under-18s in terms of participation and viewership, there is sophisticated infrastructure around organised participation in football, and it has an exceptionally high media profile (including dedicated media for under-18s). Hence, those who play football at an elite level are likely to appeal strongly to under-18s.
At the time the advert was seen, Xhaka was a player for Arsenal Football Club. Xhaka is therefore well-known to Arsenal fans and other football fans more widely. Xhaka is also well-known for being the captain of the Swiss national team.
Although the tweet was only promoted to users over 25 years of age, under-18s could not entirely be excluded from the audience due to the lack of robust age-verification controls/measures on Twitter.

Accordingly, the ASA determined that the advert breached the CAP Code (Edition 12) 16.1., 16.3 and 16.3.12 (Gambling) because it featured an individual who strongly appeals to under-18s, and under-18s could not in practice entirely be excluded from the audience.

Robbie Savage – not of strong appeal

The advert

This ruling concerned a promoted tweet which stated: “ No matter who the manager is Leeds are going down. @RobbieSavage thinks it’ll be too little, too late at Elland Road…”. The tweet contained an embedded video clip that featured Savage discussing Leeds United’s relegation prospects. The video featured the gambling operator’s logo intermittently and the BeGambleAware logo. Text at the end stated, “It’s who you play with.”.

The ASA’s assessment

The following factors were considered:

The advert appeared in a medium where under-18s could not entirely be excluded from the audience, so the age verification ‘safety net’ could not be used as a defence if the advert was found to be of strong appeal to under-18s.
Savage had played for several Premier League teams and at an international level for Wales. However, he had not been a Premier League player for 15 years, and his Wales career ended four years before that, so he is now more associated with punditry/the media.
Savage’s punditry and other media appearances were primarily aimed at adult audiences e.g. tactics, team performance, financial and strategic issues etc. This is supported by audience data.
Savage appeared as a contestant in Strictly Come Dancing in 2011, which was sufficiently long ago not to be relevant to the current generation of under-18s.
Savage’s social media profile was unlikely to make him strongly appeal to under-18s, with only 8,810 social media followers aged under-18 collectively across Instagram, Facebook, and Twitter.

Taking this into account, the ASA ruled that the advert was not likely to be of strong appeal to under-18s, and did not therefore breach the CAP Code.

Harris Hagan insight

Below are our key takeaways from the recent rulings:

Age verification must be robust – do not rely on Twitter. It now appears to be a settled position that if operators wish to rely on the defence that the advertisement is not accessible to under-18s, there also needs to be a backstop of robust age verification controls in place. Self-verification by users and behavioural targeting are not sufficient.
The gambling operator is the most likely party to face the music. The Xhaka ruling demonstrates that the mere promotion of someone else’s tweet by a gambling operator may be sufficient for the tweet to be deemed an advert by the operator themselves. Operators should therefore exercise caution when using promotional tools on social media platforms, such as Twitter Amplify. As a rule of thumb, the same consideration should be given to third party promoted tweets as those that are self-published. It also notable that, although they were approached for comment, the ASA did not bring any action against the original publisher of the Xhaka tweet.
Football pundits could be fair game. The fact an individual is a current (or recent) football pundit does not automatically mean they are of strong appeal to under-18s. Consideration should be taken of the individual’s overall appeal to under-18s, including the time that has elapsed since they were an active football player or coach (if applicable), the team(s) with which they were associated, and any other recent appearances on television and other media.
Celebrities with ‘some’ under-18 followers need not be ruled out. It is notable that Savage’s social media following across three platforms included approximately 8,810 followers aged under 18. Clearly this number does not take duplicates (i.e. followers on two or more social media platforms) into account. However, it is still interesting that the ASA did not consider that this suggested a strong appeal to under-18s. We have yet to find out what number will tip the scales in this scenario – would 20,000, 50,000, 100,000 or even 1,000,000 followers have resulted in a different outcome? We can but wait and see where the threshold lies but, in the meantime, advertisers can take some comfort that for now, there is a precedent that (just) 1,000s of under-18 followers is a relatively safe bet.
More ASA enforcement activity will come. Based on the recent spike in enforcement activity (three rulings in 14 days), we think it is fair to suggest that the ASA’s enhanced monitoring capabilities will increase the frequency and saturation of rulings, particularly in relation to relatively new rules such as the strong appeal tests, which are – to some degree – open to interpretation. But could the increase in surveillance activity inadvertently lead to over-interference, despite that not necessarily being the ASA’s intention? We, for one, will be interested to see whether the ASA’s current trajectory of enforcement activity in the gambling sector will continue.

Next steps

If you would like more information on the strong appeal tests and the associated guidance published by the ASA, please refer to our previous article: Getting it right: how to comply with the “strong appeal” test when using sports personalities to advertise sports betting.

Otherwise, please get in touch with us if you would like to discuss the strong appeal tests further, or if you would like our assistance training your marketing teams to advertise your brand in a compliant, yet commercially viable, manner.

With credit and sincere thanks to Adam Russell for his invaluable research and co-authorship.

18Aug

Online Advertising Programme Consultation: Impacts for the gambling industry

18th August 2023 Adam Russell 191

The UK Government recently published the response to its Online Advertising Programme (“OAP”) consultation, which will have consequences for gambling advertisers including marketing affiliates, and the publishers and platforms with which they work.

To recap, the OAP was set up with the aim of supporting sustainable growth for the advertising industry, while also building a fit-for-purpose framework that would protect consumers against harmful (paid-for) content posted online.

Following a call for evidence, the Government concluded that:

“It is clear from the responses we received that increasing trust in online advertising is vital for the growth of the sector. However, the scale and speed of development in this field has presented a number of challenges. A lack of transparency and accountability in the supply chain, combined with misaligned incentives, has led to insufficient action to address illegal harms associated with online advertising – negatively impacting consumer trust. More must be done, both by the government and by those across the whole advertising supply chain, to prevent bad actors using online advertising as a method of reaching victims, and therefore to support the success of this important industry.”

Accordingly, the Government has announced new rules to require platforms (including social media platforms), intermediaries (including marketing affiliates) and publishers (including apps and websites) to more proactively tackle illegal advertising and protect under-18s from age-restricted adverts. These duties shall apply across all sectors, which includes the gambling sector.

The measures are designed to complement a package of other reforms, such as the Online Safety Bill.

What was the purpose of the OAP consultation?

The public consultation, which was mentioned in Chapter 2 of the Gambling White Paper, was a programme through which the Government sought to address paid-for advertising and marketing issues that are common in all industries including gambling.

Taxonomy of harms

The consultation proposed a “taxonomy of harms” which set out a spectrum of harmful online content and placement considered to be “caused by or exacerbated through online advertising”. The taxonomy of harms, which included 12 types of consumer harms and three types of industry harms, was designed to be used as the framework and basis for determining potential action under the OAP.

The OAP consultation went on to propose three core options for reforming the online advertising environment, along with other supplementary measures which could build on the current codes for advertisers.

Proposals/options in the OAP consultation

Self-regulatory approach
Introduce a statutory regulator to backstop more fully the self-regulatory approach
Full statutory approach

Responses to the OAP consultation

115 submissions were received. Respondents ranged from market participants engaged across various stages of the online advertising supply chain, stakeholders working in competing or complementary markets, and consumer groups. Respondents with an interest in the gambling industry included the Betting and Gaming Council (“BGC”), bet365, Gambling Related Harm All Party Parliamentary Group and Peers for Gambling Reform.

Key themes

There were various interlocking themes within the responses. We shall focus on one relevant theme from each Part:

Part 1, Scope of the OAP: The need to ensure that the scope of online advertising and actors is defined in a way that “avoid new or novel categories of advertising falling through regulatory gaps.”
Part 2, Harms caused by online advertising: There are several issues concerning fraudulent adverts which ought to be addressed, including the thorny area of advertising around cryptoassets. For more discussion regarding cryptoassets in the context of gambling, please see our recent White Paper Series article.
Part 3, Regulatory framework: Many felt that neither the current self-regulatory regime, nor the existing industry initiatives, are effective in addressing the taxonomy of harms. In particular, the Advertising Standards Authority (the “ASA”) was described as “lack transparency and accountability”. 25% to 33% of respondents supported full statutory regulation across the supply chain.
Part 4, Decisions on regulatory reform: There was a considerable level of support for several measures in the consultation. Responses in relation to transparency measures mostly focused on record keeping, with some emphasising that a proportionate approach would be appropriate. Responses in relation to accountability measures were wider-ranging and more varied.

Additionally, the responses suggested a range of industry initiatives for consideration, for example:

The Internet Advertising Bureau (IAB) UK initiatives, including Gold Standard and Ad Verification Guidelines;
Branded Content Marketing Association’s Influencer Marketing Best Practice Guidance;
Influencer-related initiatives noted by the Influencer Marketing Trade Body;
Gambling awareness tools;
Market-based artificial intelligence (AI) tools.

Actions from the Government

After considering the responses, the Government concluded that the current self-regulatory framework is not appropriate to combat the taxonomy of harms identified in the OAP consultation. As such, the Government pledged to introduce a targeted package of measures designed to:

tackle illegal advertising – such as fraud and scams, the spread of malware, and adverts for illegal products and services. These harms are generally perpetrated by bad/illegitimate actors using advertising to undertake criminal activity; and
increase protections for children and young people against adverts for products and services that are illegal to be sold to them – including gambling, alcohol, vapes and other age-gated products and services.

To achieve these aims, the Government plans to introduce a new regulatory framework for online advertising. The framework will statutorily regulate parties in the online advertising supply chain that are not currently regulated. This includes platforms (including social media platforms), intermediaries (including marketing affiliates) and publishers (including apps and websites). For the avoidance of any doubt, advertisers (e.g. gambling operators) are excluded from the new measures because they are already held accountable under the current self-regulatory advertising and marketing framework policed by the ASA.

The Government will expect platforms, intermediaries and publishers to apply mitigative measures which:

make it more difficult for bad actors to access and abuse the online advertising environment (this would include black market (unlicensed) gambling operators);
detect and mitigate unlawful adverts quickly; and
increase cyber resilience.

Further, the Government will require platforms, intermediaries and publishers to use systems which proportionately prevent children and young people from seeing illegal adverts. There will be a focus on the control that a party can exercise over the content and placement of adverts, as well as their size and reach.

The BGC has responded by confirming that it supports the Government’s new rules and stronger sanctions to tackle illegal adverts.

Next steps

The Government shall be forming a Ministerial-led taskforce in the coming months to undertake non-legislative action. This will involve asking industry to cooperate with the Government by improving the evidence base on the scale of threat and impact of illegal harms and building on existing voluntary initiatives focused on tackling drivers of illegal harms.

The Government will also shortly be launching a further consultation on the mechanics of potential legislation, including its preferred choice for a regulator to oversee the new rules.

Finally, when parliamentary time allows, the Government intends to bring forward legislation to achieve the aims explored above.

Harris Hagan insight

Although it is already an offence under the Gambling Act 2005 (the “2005 Act”) to advertise unlawful gambling and, in this context, advertising is widely defined so it could encompass platforms, intermediaries and publishers – the OAP is a welcome development in the gambling sphere. If properly implemented, the Government’s plans to make platforms, intermediaries, and publishers more accountable for harmful content should help to reduce consumer exposure to black market (unlicensed) gambling online.

The fact that more participants in the advertising supply chain will be required to use systems to proportionately prevent harmful content reaching children and young people is more positive news for the industry. After all, it is often the platforms and publishers that hold the power to properly target gambling advertisements. However, in Great Britain, it is the gambling operator that bears the most risk (both in terms of risking sanction by the Gambling Commission and committing an offence under the 2005 Act) in the event that their services are inadvertently advertised to those aged under 18.

With that said, this is but the first step for the OAP and it remains to be seen how the Government’s proposals will be implemented. We urge interested parties to participate, where possible, in discussions with the Government to help shape the OAP over the coming months.

Please get in touch with us if you would like to discuss the OAP further or if you would like assistance on any other advertising-related matters.

With credit and sincere thanks to Gemma Boore for her invaluable co-authorship.

03Aug

White Paper Series: Direct marketing and cross-selling in the crossfire

3rd August 2023 Gemma Boore 206

Welcome back to Harris Hagan’s White Paper Series of articles.

We have previously discussed the UK Government’s proposals relating to gambling sponsorship (see our previous White Paper Series article on sponsorship).

In this article, we outline changes proposed in the Gambling Commission’s Summer 2023 consultation regarding direct marketing and cross-selling (the “DM Consultation”), which was published on 26 July 2023 and will remain open for 12 weeks, closing 18 October 2023. We then contrast these proposals with the UK Government’s recommendations in the White Paper: High stakes: gambling reform for the digital age regarding direct marketing and cross-selling. Finally, we explain how, if implemented, the Gambling Commission’s proposals would change current privacy and direct marketing laws, and how they apply to the gambling industry as a whole.

1. Background

In Chapter 2 of the White Paper, which deals with marketing and advertising, tougher restrictions on bonuses and direct marketing are one of the key reforms proposed by the Government. In the introduction to the chapter, the Government confirms that it recognises that online bonus offers can present risk, particularly for those experiencing gambling harm. In order to mitigate this risk, one of the key recommendations in Chapter 2 is that the Gambling Commission consult on strengthening consent for direct marketing, with the aim to give customers more choice in terms of the marketing they receive and how.

According to the White Paper, the proposal to strengthen consent for direct marketing is in addition to what the White Paper refers to as (emphasis added):

“the forthcoming introduction of requirements to not target any direct marketing at those showing strong indicators of risk, as outlined in the Gambling Commission’s requirement 10.”

For those in the know, this rather cryptic/confusing reference is to Requirement 10 of social responsibility code provision (“SRCP”) 3.4.3 of the Licence Conditions and Codes of Practice (“LCCP”), which reads as follows (emphasis added again):

“Licensees must prevent marketing and the take up of new bonus offers where strong indicators of harm, as defined within the licensee’s processes, have been identified.”

Requirement 10, which is now in force, was originally due to come into effect on 12 September 2022 alongside the Gambling Commission’s revised Remote Customer Interaction Guidance (“RCI Guidance”). However, to widespread surprise, the Gambling Commission delayed the implementation of Requirement 10 to 12 February 2023 and decided at the last minute to consult on the RCI Guidance before it came into effect.

The subsequent Consultation on Remote Customer Interaction (the “RCI Consultation”) was launched on 22 November 2022 and open for only six weeks (subsequently extended to nine) instead of the traditional 12. Eight months later, the RCI Guidance is still not in effect and the Gambling Commission has yet to publish a response to the RCI Consultation.

It is therefore confusing that the White Paper (published on 27 April 2023):

links to the not-yet introduced RCI Guidance when it refers to Requirement 10;
refers to the Requirement 10 as “forthcoming”; and
suggests that Requirement 10 applies where there are “strong indicators of risk” (not “strong indicators of harm”, the latter being the language of both SRCP 3.4.3 and the RCI Guidance).

It is also perplexing that the Gambling Commission has chosen to publish the DM Consultation before the RCI Consultation, despite promising the contrary at IAGA’s 40^th Annual Gaming Summit in Belfast.

For further analysis on the RCI Consultation (which we now have no idea when the response to which will be received), please see our five-part series of articles with Regulus Partners. available here: Part 1; Part 2; Part 3; Part 4 and Part 5.

Back to the topic at hand: Direct marketing. In the White Paper, the Government sets out a number of proposed principles for the Gambling Commission to explore through the DM Consultation, set out below:

At first blush, these appear on balance to be sensible suggestions that broadly build upon principles in existing privacy and direct marketing laws; we discuss this in further detail below.

More recently, in a pre-briefing to selected industry stakeholders on 5 July 2023, the Gambling Commission used its own terminology/short hand to describe the areas upon which the DM Consultation would focus:

Finally, on 26 July 2023, the Gambling Commission published its first summer consultation, a copy of which is available here:

Download the DM Consultation

Below, we:

explain the current legal position in relation to each of the principles identified by the Government in the White Paper as requiring reform;
(attempt to) link the White Paper principles to the Gambling Commission’s proposal, as set out in the DM Consultation, to add a new SRCP to the LCCP regarding direct marketing preferences (“SRCP 5.1.12”); and
finally, share our views on possible implementation issues, timelines, practicalities and direct costs that may impact the industry should SRCP 5.1.12 come into force in its current form – with the aim to help respondents shape their own responses to the DM Consultation.

For ease of reference, the proposed wording for SRCP 5.1.12 is set out below:

“Applies to: All licences
SR Code – 5.1.12 – Direct marketing preferences
Licensees must provide customers with options to opt-in to direct marketing on a per product and per channel basis. The options must cover all products and channels provided by the licensee and be set to opt-out by default. These options must be offered as part of the registration process and be updateable should customers’ change their preference. This requirement applies to all new and existing customers.
Channel options must include email, SMS, notification, social media (direct messages), post, phone call and a category for any other direct communication method, as applicable.
Product options must include betting, casino, bingo, and lottery, as applicable. Operators must make clear to customers which products they offer are covered under relevant categories.
Where an operator seeks an additional step for consumers to confirm their chosen marketing preferences, the structure and wording of that step must be presented in a manner which only asks for confirmation to progress those choices with one click to proceed. There must be no encouragement or option to change selection; only the option to accept or decline their selection.
Customers must not receive direct marketing that contravenes their channel or product preferences.”

If you would like our assistance responding to the DM Consultation, please contact Gemma Boore or your usual contact in the Harris Hagan team.

2. Analysis

Principle A in the White Paper: Opt-in to marketing and offers should be clear and separate options at sign‑up, not bundled with other consent such as broader terms and conditions and privacy policy.

What is the current legal position?

As rightly noted in the White Paper, there are already clear requirements that operators must seek informed and specific consent to send direct marketing to consumers. These are outlined in the Privacy and Electronic Communications (EC Directive) Regulations 2003 (“PECR”) and UK General Data Protection Regulation, as implemented by the Data Protection Act 2018 (“UK GDPR”) – both enforced by the Information Commissioner’s Office (“ICO”).

The current legal position can be broken down as follows:

PECR requires that, subject to limited exceptions, specific prior consent must be obtained to send direct marketing to individuals by electronic communication (e.g. emails, calls and texts – NB. this does not include non-electronic methods of communication, this will be important later on).
According to ICO guidance, the best way to obtain valid consent is to ask customers to tick opt-in boxes confirming they are happy to receive marketing calls, texts or emails from you.
Consent is defined in the EU General Data Protection Regulation (“EU GDPR”) (which was transposed into national law by UK GDPR following Brexit) as “any freely given, specific, informed and unambiguous indication of the data subject’s wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her” .
To put things simply, the implementation of EU GDPR significantly strengthened the concept of consent for the purposes of PECR and meant that many companies needed to refresh consents previously obtained for direct marketing as they did not meet EU GDPR’s new higher threshold of consent. This was typically because existing consents had not been freely given (e.g. they were obtained in order to gain an incentive, such as an entry into a competition); were not specific enough (e.g. they did not specify who would send the marketing, or what type of marketing would be sent); or had been obtained by means of a pre-ticked box during sign up (which does not involve an affirmative action by the customer – rather, it requires inaction).
There is however, one key exception in PECR to the requirement to obtain consent to direct electronic marketing and this is known as the “soft opt-in”.
Broadly, the soft opt-in means that you do not need to obtain consent when you’re sending marketing emails or texts to offer similar goods or services to your customers or prospective customers. The example given in the ICO guidance is that “if a customer buys a car from you and gives you their contact details, you’d only be able to market to them things that relate to the car eg offering services or MOTs”.
To rely on the soft opt-in, you must give the customer a simple opportunity to refuse or opt out of the marketing, both when first collecting the details and in every message after that.

As can be seen from the above, there is an argument that the second limb of Principle A (i.e. consent should not be bundled with other consent such as broader terms and conditions and privacy policies) does not alter the current legal position. The higher threshold of consent to direct electronic marketing is already required and has been since 25 May 2018 (when EU GDPR came into force). It would be very difficult to argue that marketing consents bundled with consent to, for example, terms & conditions or privacy notices are “freely given, specific, informed or unambiguous” – and any gambling operators engaging in this practice are already at risk of enforcement action from the ICO. So, what did the Government want the Gambling Commission to change?

What is proposed in the DM Consultation?

SRCP 5.1.12 proposes new specific requirements for licensees to offer all customers (not just new) more granular consent options (per channel and per product) – with consent options set to opt-out by default (i.e. not pre-ticked). There is no exception to this rule, i.e. gambling companies will no longer be able to rely upon the soft opt-in. Arguably, this does not change the high bar of consent that is already required under UK GDPR and PECR (as intimated by the Gambling Commission’s pre-briefing); rather, it removes an exception to the high bar of consent which otherwise applies to all other commercial businesses in the UK.

Turning to the first limb of Principle A (i.e. opt-in to marketing and offers being clear and separate options at sign-up), this indicated that the Government wanted to give consumers more choice in terms of whether they receive (i) marketing and/or (ii) offers.

The Government’s commentary regarding submissions in the call for evidence from people suffering from gambling harms sheds some light on what was intended here:

“Submissions from people with personal experience of gambling harms elaborated on the negative effects which can come from… …direct marketing and inducements. These ranged from feeling ‘spammed’ by the volume of marketing, including in forms such as push notifications that they had not intentionally agreed to; to continuing to receive marketing even after an operator had removed them from offers due to the risk of harm and receiving promotions via email during periods of abstinence which triggered a relapse.”

It appears the Government is distinguishing between marketing of a service, on one hand (for example, provision on odds for sporting events or new casino games by email, text or push notification); from the provision of incentives such as free bets or bonus offers, on the other.

Surprisingly, there is no equivalent reference to this distinction in the DM Consultation.

What could possibly go wrong?

If operators can no longer rely upon the soft opt-in exception, this would:

significantly alter current practices whereby operators and affiliates have to date, in line with current rules, sent (e.g.) marketing emails and texts to customers offering similar services;
result in operators and affiliates needing to seek fresh consent from millions of individuals that have not actively opted-out to marketing – potentially losing huge tranches of customer databases in the process; and
mean gambling would stand alone – in terms of being the only commercial industry in which express consent is always required in order to send electronic marketing.

These changes are likely to have a huge impact on big and small operators alike, as well as the affiliates that send direct marketing on their behalf – each of which are likely to have spent significant time and money curating their customer databases lawfully since EU GDPR, often by relying on the soft opt-in.

And when would this momentous change take place? The Gambling Commission notes that preferences to receive offers would need to “be reconfirmed in a new format”, implying that fresh consent must be obtained in order to be able to continue marketing to customer databases after a certain date. Will this be the case from a hard-stop date, or will an operator be permitted to send marketing until its customer is next presented with the option to reconfirm preferences (e.g. the next time they sign in) – meaning that some customers will forever lie in limbo, receiving marketing but never confirming that they no longer wish to receive it?

The Gambling Commission’s commentary in the DM Consultation regarding the process for existing customers suggests that the latter option may indeed be the case:

“We are proposing that, if introduced, licensees must direct customers to the webpage or area of the site/app where they can decide whether to opt in to offers or not at the first opportunity after implementation date, for example upon next login.”

Either way, refreshing consent for all soft opted-in customers (or, in the worst-case scenario, all customers), will undeniably result in a huge number of customers that are currently receiving marketing with no objections, suddenly being suppressed from marketing lists – and consequential loss of revenue for operators and affiliates.

How many of those customers will expressly opt back in with each operator, for each product and for each channel – surely only a proportion…. was this what is intended? A clean start for the population as a whole – so those who wish to receive gambling marketing can, once again, choose to receive the (metaphorical) filth and the remaining population (who must have either gambled or opted into marketing at some point if they are currently receiving marketing – after all, EU GDPR did happen) can be spared? Was this really what the Government intended in the White Paper or the Gambling Commission’s way of quashing gambling advertising to the greatest extent possible, despite the Government’s conclusion that it could not find a causal link between advertising and gambling harms or the development of a gambling disorder?

Finally – although those in the pro-gambling camp may not wish to highlight this in their response – no commentary on the DM Consultation would be complete without acknowledging the lack of mention of the Government’s recommendation that opt-ins to marketing and offers should be clear and separate options at sign‑up. Although this may be a relief for the industry (who might want to distinguish consent for incentives vs generic marketing), what does it say about the Gambling Commission’s ability to transpose the UK Government’s recommendations into enforceable, realistic and practical requirements? Playing devil’s advocate, it is of course, possible that the Gambling Commission plans to save this final treat for its forthcoming consultation on free bets and bonus offers, which is due later this year.

We can but “watch this space”.

Principle B in the White Paper: Customers should be able to change preferences at any time through their account settings.

What is the current legal position?

The right to withdraw consent is entrenched under EU GDPR. Article 7(3) provides that the “data subject shall have the right to withdraw his or her consent at any time” and “It shall be as easy to withdraw as to give consent”.

Similarly, and as noted above, those seeking to send direct electronic marketing without obtaining consent under the soft opt-in must be given a simple opportunity to refuse or opt out of the marketing, both when first collecting the details and in every message after that.

The question is therefore how the DM Consultation was intended to build on current legal requirements.

Some light is shed on the issue by the following commentary in the White Paper:

“…a recent behavioural audit of popular online gambling operators found there was usually extra friction associated with unsubscribing from communications, including ‘scarcity messages’ to discourage consumers from doing so.”

This audit, which was conducted by the Behaviour Insights Team (“BIT”), cited various examples of ‘dark patterns’ used by gambling operators. Dark patterns are techniques used to encourage or compel users into taking certain actions, potentially against their wishes.

From a marketing perspective, the dark patterns identified in BIT’s audit included emotional messaging (e.g. making the customer feel guilty about wanting to unsubscribe) and false hierarchies (e.g. making buttons that the operator wants the customer to press brighter, more colourful, or easier to find, than for example, an unsubscribe button).

What is proposed in the DM Consultation?

SRCP 5.1.12 requires that options to opt-in for direct marketing must be offered to customers as part of the registration process and be “updateable” if customers want to change their preferences.

In addition, the Gambling Commission acknowledges the results of the BIT audit in the preamble to the DM Consultation and cites an example of one operator seeking confirmation when a customer opted-out of marketing in a way which appeared designed to introduce a fear of missing out on offers. In its commentary, the Gambling Commission notes that:

“While seeking a confirmation could be useful to ensure preferences haven’t been accidentally altered, any accompanying message shouldn’t be aimed at discouraging the player’s choice.”

This led to the following (slightly long-winded and very specific) requirement in SRCP 5.1.12:

“Where an operator seeks an additional step for consumers to confirm their chosen marketing preferences, the structure and wording of that step must be presented in a manner which only asks for confirmation to progress those choices with one click to proceed. There must be no encouragement or option to change selection; only the option to accept or decline their selection.”

What could possibly go wrong?

The first requirement for preferences to be “updateable” is of course, an extension of the White Paper’s explicit suggestion that customers should be able to change marketing preferences at any time via account settings. This practice of course, already being common within the industry (not least because the right to withdraw consent is a fundamental concept of EU and UK GDPR) – but not a specific requirement under the LCCP. By incorporating such a requirement into the LCCP as a SRCP, compliance will be a condition of licences and in the event of breach, the Gambling Commission will have the right to take enforcement action, as well as the ICO.

The second requirement, introduced to prevent operators from encouraging customers not to unsubscribe from marketing, in our view, feels a little short-sighted. Rather than limiting such a restriction to additional steps in the unsubscription process, the Gambling Commission could have sought to prohibit the use of dark patterns in direct marketing completely, potentially by publishing new guidance.

By side stepping the issue, SRCP 5.1.12 addresses only one of the problems identified by BIT in its audit. This means that the use of other dark patterns may continue to permeate gambling marketing following the implementation of the White Paper and beyond. For example, in terms of emotional messaging or false hierarchies in other parts of the customer consent journey or within direct marketing messages themselves (rather than just on one page that confirms a customer’s request to unsubscribe).

Principle C in the White Paper. Operators must offer the opportunity to opt-in and out of different forms of communication (e.g. text vs email vs push notifications).

What is the current legal position?

The position under PECR is best summarised in the ICO’s Direct Marketing Guidance, which states (emphasis added) that:

“When using opt-in boxes, organisations should remember that to comply with PECR they should provide opt-in boxes to obtain specific consent for each type of electronic marketing they want to undertake (eg automated calls, faxes, texts or emails). Best practice would be to also provide similar opt-in boxes for marketing calls and mail.”

The ICO goes on to give the following example of good practice:

Push notifications and direct messages on social media are not mentioned in the ICO’s Direct Marketing Guidance, but it follows that specific consent should also be obtained to these channels as they are examples of electronic marketing.

According to the White Paper, the Government is not convinced that the granular level of channel consent required by PECR is being obtained across the industry as a whole:

“When signing up, many major operators offer only an ‘all or nothing’ approach where a user is either unsubscribed from all marketing or provides consent to all communications.”

It follows that the DM Consultation would explore the need to reiterate current PECR requirements, by mandating that specific consent is obtained to each channel that will be used for direct electronic marketing.

What is proposed in the DM Consultation?

As drafted, SRCP 5.1.12 requires that licensees must provide customers with options to opt-in to direct marketing on a per-channel basis. Specifically:

“Channel options must include email, SMS, notification, social media (direct messages), post, phone call and a category for any other direct communication method, as applicable.”

What could possibly go wrong?

While we knew it was very likely (if not a certainty) that the DM Consultation would consult on requiring the industry to obtain specific, granular consent for electronic marketing channels such as email, SMS and by extension, push notifications and direct messages on social media; we are surprised that the Gambling Commission is also considering requiring prior consent to marketing by telephone or post. It is surprising because neither of these channels are currently subject to consent requirements in PECR – rather, the ICO refers to options to opt out of these channels as being “best practice”.

As is the case with the removal of the soft opt-in, this change will mean the gambling industry stands alone in the UK as the only commercial industry in which consent is required to send marketing by post or live phone call. Is this not perhaps, a step beyond what was intended by the Government in the White Paper? If we turn back to Principle C in the White Paper, it is notable that this mentions text, email and push notifications only. Did the Government really think new restrictions should also apply to live phone calls and post – or is this another example of the Gambling Commission exceeding its remit and seeking to further suppress gambling advertising even when the Government has concluded there is a lack of conclusive evidence of a relationship between gambling advertising and harm?

Finally, respondents will note that there is a question in the DM Consultation regarding whether the category “any other direct communication method” future proofs SRCP 5.1.12. In our view, this does indeed have the effect of future proofing the provision but, in the same way as the references to “post” and “phone call” in SRCP 5.1.12 extend consent requirements beyond PECR, the catch-all category will also extend it to all other present and future non-electronic methods of communication. For example, a face-to-face conversation with a gambler in a casino, bingo hall, betting shop, racecourse – or even on the street.

Once again, is this really what is intended and if it is, how does one obtain consent to having a conversation with someone without any communication in the first place? In our view, in order to be practical, prevent inadvertent breach by licensees and reduce the current (perhaps unintended?) regulatory creep, SRCP 5.1.12 should be restricted to the types of electronic communication for which prior consent to direct marketing is already required under PECR (e.g. texts, fax, emails, automated phone calls etc).

Principle D in the White Paper. Customers should be given the option to opt-in to bonuses and promotional offers separately from other marketing, and to set controls regarding which products they receive offers on. Specifically, there should be no ‘cross-selling’ without user opt-in.

What is the current legal position?

Please see our analysis of Principle A above, for a discussion regarding the distinction between incentives and generic marketing – and conclusion that Government’s recommendation to these two forms of marketing be distinguished for consumers has not come to fruition in the DM Consultation.

With regard to cross-selling (which is the practice of marketing a product (e.g. casino) to a customer that is actively participating in another product (e.g. bingo)), it is important to remember that consent under UK GDPR must be freely given, specific, informed, and unambiguous.

The “specific” and “informed” aspects of this definition suggest that the practice of cross-selling different products and services could prove difficult when express consent is relied upon. If an individual has agreed to receive marketing regarding online bingo, they would not expect to receive marketing regarding sports betting opportunities, for example.

The soft opt-in exception to PECR however, is more permissive. In this case, marketing emails or texts regarding similar goods or services can be sent to customers without express consent being obtained in advance. According to the ICO’s Direct Marketing Guidance, the key question when determining whether products are similar is whether the customer would reasonably expect messages about the product or service in question.

In the White Paper, the Government revealed that it was particularly concerned regarding cross-selling practices in the industry. It noted that although causality between problem gambling and gambling on multiple products was not clear, various pieces of evidence presented to it revealed troubling findings:

“the number of different gambling activities individuals participate in is a risk factor for harmful gambling in young people, and that participating in seven or more gambling activities was associated with harmful gambling in adults.”

“engagement with multiple activities is associated with harm, raising important questions about the appropriateness of operators actively encouraging customers to expand their repertoire, particularly to those products associated with a higher problem gambling rate such as online slots.”

The White Paper goes on to recommend that there should be an increased level of customer choice around whether customers receive promotional offers and if so, what kind of offers and for which products.

The key question for the Gambling Commission to consider was therefore, how granular should any such requirement be? Marketing of (i) online slots to horse racing bettors; or (ii) online bingo to sports bettors (being the two examples given in the White Paper) are obvious examples that are likely to require separate consent going forward. But what about marketing online slots to land-based slots customers or marketing online poker to customers that play other card games online?

What is proposed in the DM Consultation?

The Gambling Commission appears to have gone for the easy option here. It has proposed, in new SRCP 5.1.12, that licensees provide customers with options to opt-in to direct marketing on a per product basis. Specifically:

“Product options must include betting, casino, bingo, and lottery, as applicable. Operators must make clear to customers which products they offer are covered under relevant categories.”

For clarity, examples of products that fall into these broad categories are set out in the preamble to the proposal:

“…the betting option includes virtual betting, gambling on betting exchanges, betting on lottery products as well as all real event betting. Casino includes slots, live casino, poker and all casino games. Bingo includes only games offered in reliance on a bingo licence e.g., not casino products. Lottery covers any lottery product offered in reliance on a lottery licence.”

What could possibly go wrong?

The Gambling Commission’s decision to broadly categorise all gambling products into four pots: (i) betting, (ii) casino, (iii) bingo and (iv) lottery, will be welcome news for marketing teams. By grouping the wide array of potential gambling products so broadly, there will still be many opportunities for cross-selling within each stand-alone category.

To provide some colour – although it will no longer be possible to market slot games to sports bettors – operators with diverse product offerings will still be able to cross-sell a wide range of products. For example:

someone receiving marketing about sports betting could be sent opportunities to bet fixed odds on the weather, politics, lotteries or virtual events – or even match bet other users on a betting exchange;
someone receiving marketing about slot games could be shown games such as keno, poker, roulette, baccarat or any of the other wide array of games in the casino family;
someone receiving marketing about lotteries could be offered scratch cards to raise money for the same, or a similar, good cause.

In each case, these communications could be sent without prior specific consent – provided the customer consented to receive direct marketing regarding the wider category of products. Arguably, such consent may have been given in the first place, with the expectation that direct marketing would be sent regarding products that the customer was already actively using only (e.g. sports betting offers for sports bettors; free stakes for slot game players etc.) – this will no longer be the case.

We query whether in fact, this change chips away at – rather than extends – the high bar of consent currently required by PECR.

3. Conclusion

In this article, we have delved into the proposals in the DM Consultation regarding direct marketing and given you, the reader, our high-level observations on some of the issues that may arise if SRCP 5.1.12 is introduced in its current form, without amendment. This is, however, just the consultation phase and the Gambling Commission has released the proposed wording for SRCP 5.1.12 with the stated intention (whether or not honourable) of collating feedback from interested stakeholders before making a final decision on how to proceed.

In the short time before the consultation closes on 18 October 2023, we urge you to consider (and if possible, investigate) the impact that SRCP 5.1.12 would, as drafted, have on your business. If the industry is to positively influence the consultation process, it is imperative that it engages by submitting evidence-based and fully considered responses. The more voices that are heard, the more likely the Gambling Commission is to take into account feedback on its proposals and, if appropriate, adjust them to better reflect the recommendations made by the Government in the White Paper and hopefully, reduce the likelihood of unintended consequences.

The time has officially come to speak now – or forever hold your peace. Please get in touch with us if you would like assistance responding to any of the Gambling Commission or DCMS consultations.

05Jul

White Paper Series: Gambling sponsorship of sport – a modern endemic or just the weapon du jour in political warfare?

5th July 2023 Chris Biggs 202

Twenty years after the first partnership between a Premier League football team and a gambling company, the Premier League clubs released a statement on 13 April 2023 confirming that they had “collectively agreed to withdraw gambling sponsorship from the front of clubs’ matchday shirts…” with the aim to reduce the prominence of gambling sponsorship in the Premier League from the end of the 2025/26 season (the “Voluntary Ban”).

Two weeks later, the UK Government released its White Paper High stakes: gambling reform for the digital age, in which the Government commended the Voluntary Ban and also endorsed the creation of a new cross-sport gambling sponsorship code (the “Sponsorship Code of Conduct”) to ensure sponsorship deals are socially responsible.

Critically, however, the White Paper did not – despite calls to the contrary from anti-gambling campaigners – ban gambling sponsorship of sports. For many, this raised eyebrows and prompted the question: did the Premier League and the Government go far enough?

Some say not. Indeed, in the most recent survey by the Football Supporters Association (the “FSA”), 73.1% (nearly three quarters) of respondents agreed with the statement:

“I am concerned about the amount of gambling advertising and sponsorship in football.”

In this White Paper Series blog, we delve deeper into the Voluntary Ban and the Sponsorship Code of Conduct and consider the effectiveness of these methods of self-regulation.

1. Background

The liberalisation of gambling advertising was one of the major changes introduced by the Gambling Act 2005 (the “2005 Act”). Before the 2005 Act, only bingo and lotteries were permitted to advertise on television. Since then the landscape has shifted significantly and gambling marketing, including by means of sponsorship, has become both highly visible and lucrative. Gambling brands provided 12% of sports sponsorship revenue according to a 2019 estimate.

Aside from horse racing and greyhound racing, which have integral links to betting, gambling sponsors are most strongly present in top-tier football, where 8 out of 20 Premier League teams in the 2022/23 season had a front-of-shirt gambling sponsor and all teams had an ‘official betting partner’. In smaller sports such as darts and snooker, a substantial amount of sponsorship revenue also comes from gambling operators.

Potentially as a result of its visibility and the associated revenue, the questions on sponsorship in the call for evidence published by the Government in preparation for its production of the White Paper attracted a high number of responses, with strongly polarised views. Industry stakeholders (as well as representatives of sectors that benefit from gambling advertising, such as broadcasters and sports governing bodies) broadly took the view that the current regulatory regime was fit for purpose. These respondents also emphasised the contributions that gambling revenue makes to other sectors.

In contrast, many other respondents (particularly across the health, charity and academic sectors) argued that gambling advertising was in need of significant reform, with several stakeholders in this group advocating a complete sponsorship ban. Many of these responses expressed concern regarding the link between sports and gambling and a common theme was the need for a ‘precautionary’ approach to the regulation of advertising, arguing that the absence of evidence of harm must not be treated as evidence of an absence of harm.

In the end, the Government concluded that although the limited high‑quality evidence they received on sport sponsorship indicated that it does have a level of impact on gambling behaviour, this was not as marked as for other forms of marketing (such as seeing gambling advertising online or receiving direct marketing) and it was these latter advertising mediums that should be subject to reform following consultation – and we will discuss the proposed reforms in these areas in a later blog.

Returning to sports sponsorship, the White Paper commended the steps taken voluntarily by the industry and other regulators to date, including the Voluntary Ban, sports governing bodies’ agreement to adopt the Sponsorship Code of Conduct and the introduction of the strong appeal test by the Advertising Standards Authority (the “ASA”); as well as the ASA’s recent high profile enforcement action in relation to the strong appeal test (which we have previously discussed) – but did not recommend the introduction of any more draconian measures to curb the prevalence of gambling sponsorship of sports.

The Voluntary Ban and the Sponsorship Code of Conduct appear therefore to have been well-timed pre-emptive strikes for self-regulation, but will they go far enough?

2. Voluntary Ban – the toothless tiger?

It is without doubt that the Voluntary Ban is a positive step in the right direction by the Premier League. The reduction of children’s exposure to gambling by way of sponsorship, advertising or otherwise is, as the Secretary of State Lucy Frazer noted in her speech to Parliament unveiling the White Paper, a key motivation of both sides of Parliament and the industry as a whole:

“We must do more, which is why we are taking steps to make gambling illegal, in many forms, for under-18s. I welcome the Premier League’s announcement on banning gambling advertising from the front of shirts. Footballers are role models for our children, and we do not want young people to advertise gambling on the front of their shirts…”

The Government’s decision not to recommend further measures to reduce gambling sponsorship of sports (and specifically, football) has not, however, come without scepticism. During the unveiling of the White Paper, several members of Parliament questioned the effectiveness of the Voluntary Ban and criticised the Government’s decision not to take further action. Below we consider some of these arguments and ask whether the Voluntary Ban has actually gone far enough.

First and foremost, it is undeniable that the Voluntary Ban will, once it is implemented, be an important step in reducing the prevalence of gambling advertising to children, for example in football sticker albums that are directly marketed to children. However, the ban does not come into force until the end of the 2025/26 season (theoretically permitting three more football seasons and associated sticker collections with front of shirt sponsorship, at the time of writing) and even when it does come into force, the Voluntary Ban does not extend to the backs of matchday shirts nor other parts of the playing kit. Indeed, the sceptics amongst us will probably expect to see a sea of sleeves adorned with gambling logos in 2026/27.

The second point to note is that shirts (front or otherwise) really are the tip of the iceberg of gambling sponsorship. In the absence of significant reform (for example, in the Sponsorship Code of Conduct, discussed below), we can expect to continue to see gambling sponsorship on pitchside hoardings and structures within football stadiums that are visible to the crowd and/or those watching the match broadcast on television or online.

Thirdly, the Voluntary Ban applies to the Premier League only – lower divisions in the English Football League will be free to continue to accept sponsorship, including on the fronts of shirts – from gambling operators if they choose.

The final argument raised during the Parliamentary debate was that, without a firm stance from the Government, the Premier League could change its tune and reduce the extent of the Voluntary Ban or reverse it entirely. This is of course, an inherent risk of advocating reform by means of self-regulation by an industry – the industry retains control but this risk is countered by the fact that self-regulation is invariably the quickest method to achieve change. During the debate, the Government countered the possibility that the Premier League would subsequently change its position with the reassurance that it “made position very clear to the Premier League” regarding the action it ought to be taking, and it will take any further steps as necessary in the event of further research into the issue.

3. Make the code, not war

In comparison, the Sponsorship Code of Conduct remained largely outside the focus of the Parliamentary debate surrounding the White Paper’s publication.

This may be because the White Paper is rather vague on the scope of the Sponsorship Code of Conduct. Although it recommends that the new code will be common to “all sports” apart from greyhound and horseracing, we do not yet know what this will mean in practice. Will motorsports or esports be included, for example? Instead, the White Paper simply states that:

“Sports bodies need to ensure a responsible approach is taken to gambling sponsorship through the adoption of a Code of Conduct which will be common to all sports. For individual sports we believe that sports governing bodies are best placed to drive up standards in gambling sponsorship, recognising their specific context and responsibility to their fans. We welcome the work that is underway through sports governing bodies to develop a gambling sponsorship Code of Conduct, and will continue to support its development and implementation across the whole sporting sector…
…The measures included in a sponsorship Code need to be robust enough to provide meaningful improvements in the social responsibility of gambling sponsorships, while giving flexibility to accommodate the material differences between sports.”

The Government goes on to set out some possible principles to be included in the Sponsorship Code of Conduct:

Until we see the draft Sponsorship Code of Conduct, we will not know what impact, if any, it will have on current sponsorship arrangements. Certainly, a couple of the principles suggested in the White Paper appear to go no further than current requirements. By way of example:

(a) it is an offence under the 2005 Act to advertise unlawful gambling, including by means of sponsorship arrangements, and this offence carries a maximum sentence of imprisonment for a term not exceeding 51 weeks and a maximum fine of £5,000 (at the time of writing). If the possibility of committing a criminal offence is not a deterrent against accepting sponsorship from a gambling operator that is not appropriately authorised by a Gambling Commission licence, a commitment to a sports governing body under a voluntary Code of Conduct is unlikely to carry much additional weight; and

(b) operators are already required to follow relevant industry codes on advertising, notably the Industry Code for Socially Responsible Advertising, which provides that:

“advertising of adult-only gambling product suppliers should never be targeted at children….and this Industry Code continues to require that gambling operators do not allow their logos or other promotional material to appear on any commercial merchandising which is designed for use by children. A clear example of this would be the use of logos on children’s sports’ shirts.”

Lastly, it is currently unclear when the Sponsorship Code of Conduct will (1) be published; and (2) come into force. In terms of a timeline, the White Paper simply states that the Government will:

“work with sports bodies to refine the code over the coming months.”

Given the Government’s repeated promises that the White Paper (which took nearly 30 months to be published following the call for evidence) would be published in “the coming weeks”, many will be wary regarding this statement and likely, rightly so. Not only has the Government committed itself to maintain involvement in the process of agreeing the Sponsorship Code of Conduct (which may slow it down) but the new code must also be reviewed, approved and adopted by governing bodies across “all sports”. We for one, do not envy the person responsible for overseeing such a mammoth task.

4. Our final thoughts…for now

Ultimately, we have again been delivered the message to “hurry up and wait” by the White Paper. Until the Voluntary Ban comes into force and the Sponsorship of Code of Conduct is adopted across all sports (whenever that might be), it is likely that gambling sponsorship will continue to be the subject of keen debate in the press, politics and beyond. Indeed, in recent weeks, several Premier League Clubs have been caught in the crossfire and criticised for continuing to accept front of shirt sponsorship from gambling operators, even though the Voluntary Ban does not come into force until 2025/26.

When it does come in, there are also concerns that the Voluntary Ban may not significantly reduce the visibility of gambling brands in major sports – but is this really the issue that the press and politicians are making of it? Some may argue that gambling sponsorship is simply the weapon du jour in the ongoing political warfare surrounding gambling. The White Paper, which sought to be evidence-based, concluded that the limited evidence on gambling sponsorship considered by the Government revealed that sponsorship has a limited effect on gambling behaviour. So, does it really need to be curbed and if it does, what will be the real financial impact of this on sports clubs, some of which currently derive a significant proportion of revenue from gambling sponsorship?

In our view, the key question will be whether the Sponsorship Code of Conduct can find the balance that the White Paper, and most of the industry, seeks. If it is well-considered and efficiently implemented, the Sponsorship Code of Conduct may yet prove itself to be an example of effective self-regulation. But to achieve this, sports governing bodies must strike a balance between (a) reducing the commercial practices that unduly increase the risk of exposure of gambling to children on the one hand, and (b) on the other, permitting gambling sponsorship – along with the financial injection that it brings – safely for the benefit of all levels of sport.

With credit and sincere thanks to Gemma Boore for her invaluable co-authorship.

A recent study by Djohari et al. (2021) on the visibility of gambling sponsorship in football related products marketed directly to children revealed that gambling logos were visible, largely on the front of the shirts, in 42% of the stickers 2020 Panini Premier League sticker album.

30Jun

Judgement by the company you keep: Licensees’ responsibilities for third parties

30th June 2023 Chris Biggs 213

On 19 June 2023, the Gambling Commission released its new hub addressing licensees’ responsibilities for third parties (the “Hub”). In its announcement, the Gambling Commission explained that the Hub sets out its expectations and requirements for licensees which enter into business relationships with third parties. This includes white label and other unlicensed partners.

The announcement comes as a warning to licensees who contract with third parties. There is a strong undertone of compliance in the announcement, reminding the industry that the Gambling Commission’s release of the Hub follows its recent “enforcement action against operators for failures related to due diligence checks on third parties.”

What is included in the Hub?

Primarily, the Hub sets out the Licence Conditions and Codes of Practice (“LCCP”) including social responsibility code provisions (“SRCP”) that impose obligations on licensees relating to their business with third parties.

SRCPs

The Hub sets out the following relevant SRCPs:

SRCP 1.1.2 Responsibility for third parties – all licences

This SRCP applies to all licensees who contract with third parties for the provision of any aspect of their business related to their licensed activities, and makes clear that they are responsible for third parties. It also requires licensees to ensure any contracted third parties conduct themselves, in so far as they carry out activities on behalf of the licensees, as if they were bound by the same licence conditions and subject to the same codes of practice.

SRCP 1.1.3 Responsibility for third parties – remote

This SRCP applies to all remote licensees.

The Gambling Commission further explains the requirements imposed on licensees by SRCP 1.1.2. It reiterates that it expects licensees will: (1) conduct adequate due diligence on third parties to “ensure (amongst other things) that they are competent and reliable”; and (2) have sufficient oversight and controls in place to ensure all activities are carried out in accordance with the LCCP.

The Gambling Commission warns that a failure to maintain adequate control of third parties can result in regulatory action against licensees, including suspension or revocation of an operating licence.

White label partnerships

There is limited detail included within the Hub specific to white label partnerships. However, the Gambling Commission importantly reminds licensees that the responsibility for compliance of all B2C gambling websites, including white labels, sits with the licensee and cannot be transferred to any other party. Licensees must know their customers and implement their controls to minimise any risk to the licensing objectives. A failure to do so may bring into question the licensee’s suitability to hold a licence.

The Gambling Commission directs licensees to section 7 of its Compliance and Enforcement report 2019 to 2020 for guidance on how it expects licensees to conduct their white label partnerships.

Early action after the White Paper

Echoing the Gambling Commission’s commitment in its Advice to Government, the White Paper sets out that:

“To ensure all licensees fully understand their responsibilities when entering into such arrangement, the Gambling Commission will consolidate existing information and good practice for operators on contracting with third parties, including white labels.”

Given the Hub was released less than two months after the White Paper, the Gambling Commission will consider this announcement as a box ticked, despite the relatively basic information provided.

Additional requirements or new guidance has not been published. This is, as expected, following the Gambling Commission’s view (as stated in its Advice to Government) that it considers the existing legislative and regulatory framework provides sufficient controls to address the current risks.

The release of the Hub is a timely reminder to all licensees contracting with white labels or other unlicensed third parties for any aspect of their business in Great Britain, that they, as the licensees, are ultimately responsible for the third parties with whom they contract.

Key takeaway

We recommend that all licensees review their policies, procedures and controls relating to third parties, including due diligence processes and contractual agreements to ensure they are fit for purpose and mitigate the risk of regulatory enforcement action, as the Gambling Commission will judge licensees based on the company they keep.

Please get in touch with us if you would like assistance with any due diligence, compliance or enforcement matters, or any aspect of your business and its arrangements with third parties.