13Oct

KnowNow Digital Conference: Responsible Marketing for Gambling Operators 2020

13th October 2020 Ting Fung 343

Harris Hagan is pleased to join KnowNow again, this time for its second annual Responsible Marketing for Gambling Operators 2020 conference. The digital conference will take place on 15 and 16 October 2020. The focus of the sessions on the first day are on research and regulation, whilst the second day will address digital marketing best practice and protecting the young and vulnerable.

KnowNow has stated:

“This two-day event is a must for anyone interested in sustainable, responsible marketing practices. It is designed to bridge the gap between commercial considerations and operating within a player protection culture.”

Bahar Alaeddini will be moderating a panel debate, What does the future look like for affiliate marketing? How will an affiliate licensing system work and what do we do about the link between affiliates and the black market? on 16 October 2020, from 11.30 – 12.30pm. She will be joined by:

Tom Galanis, Founder and Principal of TAG Media
Clive Hawkswood, Chairman of Responsible Affiliates in Gambling
Brean Wilkinson, Product Advisor at Rightlander

Keynotes will also be provided by Ian Angus (Director of Policy of the Gambling Commission) and Brigid Simmons (Chairman of the Betting and Gaming Council).

With an estimated £200 million spent on TV advertising and £1 billion online by betting companies, the conference aims to provide attendees with guidance and food for thought on how to navigate the regulatory requirements.

Harris Hagan and KnowNow look forward to welcoming you to participate in this timely and important discussion. Register here for your two day digital pass.

20Jul

Gambling Commission Consultation on High Value Customers

20th July 2020 Julian Harris 317

Introduction

Following a breakfast briefing conducted by Neil McArthur in October 2019, the Gambling Commission announced the formation of three industry working groups, one of which was to focus on high value customer incentives.

The proposals from the working groups, co-ordinated by the Betting and Gaming Council (BGC), was published on 1 April 2020 with operators agreeing to implement the changes rapidly, some by as soon as 14 April. At the time of publication of the proposals the Gambling Commission stated that it “would launch formal consultations to ensure that the new measures are incorporated into its regulatory framework.” The Gambling Commission further stated that it “expects the industry to implement its code as soon as possible and considers most measures should be implemented within 3 months” and that it “will monitor and support implementation of the industry’s code as an interim measure.”

The proposals made were to:

Restrict and prevent customers under 25 years of age from being recruited to high value customer schemes.
All customers must first pass through checks relating to spend, safe gambling and enhanced due diligence before becoming eligible for high value customer incentives.
Reward programmes will also be required to have full audit trails detailing decision making with specified senior oversight and accountability.

The consultation was published on 26 June 2020 and closes on 14 August 2020.

New Licence Condition

The Gambling Commission proposes to introduce a new licence condition on rewards and bonuses. This will apply to all licences, except gaming machine technical and gambling software licences and will require that:-

any incentive or reward scheme must be designed to ensure that the circumstances and conditions are clearly set out and readily accessible to customers to whom it is offered;
neither the receipt nor the value is dependent on gambling for a pre-determined length of time or frequency, or alters or increases if the activity or spend is reached within a shorter time;
if the benefit comprises free or subsidised travel or accommodation the terms are not directly related to the level of gambling
if incentives or reward schemes are offered to customers designated “high value”, “VIP”, or equivalent, they must be offered in a manner consistent with the licensing objectives.

Most importantly, licensees are required – by use of the word “must” – take into account the Gambling Commission’s guidance on high value customer initiatives.

New Guidance

In its guidance, the Gambling Commission goes further than the three points that are outlined above. For example, in addition to those, it requires:-

Specific policies and procedures for the operation and governance of HVC schemes, to include authority levels for key decision making, and appropriate oversight arrangements.
A named individual, at senior executive level or equivalent, accountable for the programme’s compliance. Except for small scale operators this should be a PML holder.
Licensees should consider what additional steps are required to ensure staff are equipped and motivated to manage HVCs effectively, including enhanced training on safer gambling and AML risks specific to HVC management; job descriptions reflecting that protection of the licensing objectives are the basis for all activity carried out by staff involved with HVC rewards programmes; staff should not be incentivised or remunerated based on a customer’s loss, spend, or activity; the performance management of HVC staff should be consistent with the principle that commercial pressures should never override regulatory considerations or customer welfare; and ensuring staff managing multiple accounts retain their ability to assess risk on an individual basis.
HVC incentives should not be used to exploit vulnerable customers or to encourage problematic behaviour. Licensees must be able to evidence how their rewards and bonuses are compliant with the provisions in section 5.1 of the codes of practice.
Licensees will be expected to take all reasonable steps to verify the information provided to them and conduct ongoing checks, with frequency of checks to be determined by the assessment of risk from ongoing monitoring of the customer’s activity, behaviour and circumstances. In the absence of any change in the risk assessment, licensees should as a minimum undertake a review of a HVC’s account at least quarterly.

It is important to note the Gambling Commission’s statement at paragraph 1.5 of the proposed guidance: “We have used the word ‘must’ to denote a legal obligation, while the word ‘should’ is a recommendation of good practice, and is the standard that we expect licensees to adopt and evidence. We expect licensees to be able to explain the reasons for any departures from that standard.”

The Gambling Commission has consulted on these proposals, as it is required to do under section 24(10) of the Gambling Act 2005, before issuing or amending a code of practice. However, the addition of lengthy and detailed guidance bears resemblance to the approach the Gambling Commission has taken to customer interaction. The VIP guidance makes it explicitly clear from the wording above that, despite using the word “should”, it expects licensees to adopt the standards set out and maintain evidence of doing so. This is essentially a requirement. The manner by which the guidance has been issued, arguably opens the door to the Commission taking similar steps to that which it took in relation to customer interaction, this time in relation to the requirements for VIP customers. Essentially the Gambling Commission will be able to amend this guidance, perhaps substantially, and to add onerous additional requirements, without consultation. Whether they will do so remains to be seen, but we highlight the point as a warning to operators to be watchful. The guidance is detailed, and as we know, the devil lurks in the detail.

We recommend to operators that they reply to the consultation, seek clarity as to paragraph 1.5, and make it clear that they expect the Gambling Commission to consult prior to amending its guidance further.

With thanks to my colleague David Whyte for his invaluable co-authorship.

09Jul

Gambling Commission Creates Interim Experts by Experience Group

9th July 2020 Bahar Alaeddini 332

On 19 June 2020, the Gambling Commission announced the creation of an interim Experts by Experience Group. The interim group “will provide advice, evidence and recommendations to the Commission to help inform decision making and raise standards, along with co-creating a permanent Experts by Experience Advisory Group to advise the regulator on a more established basis.”

An unidentified spokesperson for the interim group said:

“ comprises a group of people who have suffered a wide range of gambling harms, including recovering gambling addicts, family and partners of addicts, and those who have lost children to gambling suicides…the establishment of the group is long overdue. We are determined…to play a continuing and much more active role in the deliberations and decision making across the whole remit of the Commission as part of the National Strategy to reduce gambling harms. We bring a new and vital perspective on key issues of regulation and even how the Commission itself works.”

The interim group will be in place for at least six months, at which point the Gambling Commission plans to move to a permanent Experts by Experience Advisory Group, similar to the Advisory Board for Safer Gambling and the Digital Advisory Panel.

No terms of reference are published for the interim Experts by Experience Group and its members are not known. Names may be sensitive or confidential; however, at a minimum, the number of members, members’ backgrounds, the reason for their appointment and a register of interests should be published. Otherwise, the interim group runs the risk of being labelled a quasi-lobby group, financed and supported by the Gambling Commission.

Although it is only an interim group, plainly, it has a strong level of influence over the Gambling Commission’s work. It should, therefore, be treated no differently from the Advisory Board for Safer Gambling and the Digital Advisory Panel.

The objective bystander might wonder why the interim group’s members only comprise those who have experienced gambling harms when there are 400,000 people classified as problem gamblers and 32 million gamblers in Great Britain.

Unfortunately, the Gambling Commission’s lack of transparency detracts from the real and genuine value of the Experts by Experience Group and devalues contributions made by its members. To build a sustainable gambling industry, we could all learn and develop significantly from the work of the interim group and the experiences of its members. This requires us to work in partnership and adopt a balanced approach.

It seems the Gambling Commission has failed, again, to be transparent, balanced and independent.

01Jun

Gambling updates from the Advertising Standards Authority; lockdown, eSports and children’s exposure to gambling adverts

1st June 2020 Jessica Wilson 339

The Advertising Standards Authority (“ASA”) has recently published guidance on advertising gambling amid lockdown, the marketing of eSports on social media, and a report on children’s exposure to gambling TV ads in 2019.

Gambling advertising during lockdown

As noted in our previous blog posts, the gambling industry is under a microscope during the current COVID-19 pandemic and has been subject to new expectations and guidance. Consideration must also be given to gambling advertising, and the ASA has published a “warning” to gambling operators to “pay even more attention to their responsibility under the Codes during these uncertain times”.

The CAP and BCAP advertising codes make it clear that marketing of gambling products must not be:

irresponsible in its use of content or themes that might exploit vulnerabilities; or
targeted through its content or placement at under-18s.

The global pandemic has created a new context of vulnerabilities and potentially heightened consumer risk to gambling-related harms. The ASA is therefore encouraging people to report gambling ads that:

refer to the COVID-19 crisis or related matters, such as the Government’s lockdown policy; and/or
include claims or themes that are of particular concern in the current climate (for example, ads that refer to relieving boredom, repeated play or personal problems like family difficulties).

The ASA appreciates that these are not new concerns but that they are exacerbated during the current circumstances. The ASA has further noted that it will “take swift action against ads that, in context of the present crisis, are likely to exploit people’s vulnerabilities or encourage irresponsible behaviour”.

Marketing eSports on social media

On 23 April 2020, the ASA published an advice note on the marketing of gambling on eSports on social media. The advice to licensed operators follows the ASA’s study on eSports betting marketing on social media and is to close any potential gaps between the relatively new concept of eSports and the existing CAP and BCAP codes. The advice applies to gambling marketing on all social media platforms, including Facebook, Instagram, Twitter, Snapchat, Twitch and TikTok.

The advice confirms that the CAP code rules that apply to the marketing of gambling on eSports:

are the same as those of traditional marketing on gambling; and
cover social media in the same way as they do all other non-broadcast media.

Whilst the rules are the same for eSports as for traditional marketing on gambling, the advice highlights CAP Code rules that are relevant to marketing eSports on social media, including:

Recognition of marketing: marketing communications must be obviously identifiable and must not falsely claim that the marketer is acting as a consumer, requiring social media marketing posts to be clearly labelled as such. For example, by using “#ad”.
Targeting: operators should take all reasonable steps to ensure advertising is not targeted at under-18s through the selection of media, or platform, or the ad’s content. For example, if gambling marketing can be searched for on a social media platform using terms that are likely to have particular appeal to children and there are no measures in place to protect children from seeing that marketing, then it is likely they will be breaking the CAP code targeting rules.
Appeal to under-18s: marketing must not be likely to be of particular appeal to children or young persons. For example, by using cartoons or by using a social media influencer who is associated with youth culture to promote eSports betting.
Terms and conditions: similar to the traditional marketing of gambling, the terms and conditions of offers of free bets should be made clear in gambling marketing on social media.
Affiliates and influencers: the advice provides a reminder that affiliates of gambling operators must also abide by the targeting and content rule and that gambling operators are responsible for the content produced for them on social media by influencers.

Children’s exposure to gambling adverts

On 22 May 2020, the ASA published a report titled Children’s exposure to age-restricted TV ads: 2019 update. The findings show that children’s exposure to gambling advertising has remained at a similar level over the last six years, since a peak in 2013. Since then, children’s exposure to TV gambling ads has decreased by just under half. Most of those adverts viewed by children were in relation to lottery, scratch cards and bingo.

05May

Keeping Affiliates in Line: “No Fudging”

5th May 2020 Lucy Paterson 354

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

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

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

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

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

Unlicensed Third Parties

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

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

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

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

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

Industry Code for Affiliates

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

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

Considerations for Affiliates

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

Considerations for Licensees

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

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

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

24Apr

Betting and Gaming Council Announces Safer Gambling Strategy

24th April 2020 Jessica Wilson 376

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

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

The 10 pledges are as follows:

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

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

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

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

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

These additional measures include:

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

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

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

03Apr

No Love in the Time of Coronavirus

3rd April 2020 Julian Harris 380

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

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

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

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

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

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

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

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

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

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

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

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

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

02Apr

Update on Gambling Commission Industry Working Groups

2nd April 2020 Bahar Alaeddini 373

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

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

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

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

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

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

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

The industry has agreed to:

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

The Gambling Commission’s response:

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

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

The industry has agreed to:

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

The Gambling Commission’s response:

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

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

The industry has agreed to:

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

This working group will also:

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

The Gambling Commission’s response:

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

Final thoughts

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

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

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

31Mar

Productivity in This Time of Crisis

31st March 2020 David Whyte 362

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

Annual fees

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

The only two options presented by the Commission are:

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

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

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

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

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

Compliance

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

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

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

We recommend licensees consider the following:

AML business risk assessment

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

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

AML and safer gambling policies

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

Marketing

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

Training

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

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

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

20Jan

Advice to the Gambling Commission on Actions to Reduce Online Harms

20th January 2020 Bahar Alaeddini 388

The Gambling Commission’s independent advisers, the Advisory Board for Safer Gambling (“ABSG”) and the Digital Advisory Panel (“DAP”) were tasked by the Gambling Commission, with looking at reducing gambling harm online. The Gambling Commission has recently published the advice from both advisers.

Advisory Board for Safer Gambling advice

Summary of key recommendations from the Advisory Board for Safer Gambling’s advice, written in September 2019:

Transparency and evaluation: Making assurance statements public documents with written feedback, creating a data repository and updating the evaluation protocol.
Detection of harms: Requiring licensees to be more transparent about the approaches used to detect harm and mandating minimum standards based on the best practice.
Effective interventions: By using the Implementation Plan for the National Strategy to pilot and evaluate a wide range of harm prevention interventions, creating a mechanism to work with experts by experience to co-create effective harm prevention activities, and improvements to the self-exclusion scheme and return to gambling from self-exclusion. Also partnering with the financial services sector and exploring IP blocking powers to disrupt illegal online gaming.
Game design and product characteristics: Improving understanding on product and game characteristics and their links to harm, banning the use of credit cards, customer information on products and risks, banning reverse withdrawals and using further strong enforcement measures.
Stake, prize and speed of play limits: Planning how a regime could be implemented for online gambling and, unless significant progress is made by licensee on player protection, working with the Government to introduce online limits on stakes, prizes and speed of play.
Marketing and advertising: Exploring technological solutions to reduce exposure for children and vulnerable people (including AdTech to proactively restrict exposure) and advocating a precautionary approach in relation to children and vulnerable people.

Digital Advisory Panel advice

The Digital Advisory Panel, which reports to the Board of the Gambling Commission via the CEO, meets approximately six times a year. Presently, it has six members from a range of technology backgrounds, including the current Managing Director of Twitter UK.

The Digital Advisory Panel’s terms of reference refer to the pace of change in the online gambling industry giving rise to new risks, opportunities and regulatory challenges, which the Gambling Commission must be equipped to face. It is envisaged that the Digital Advisory Panel will assist in this challenge by advising on the digital landscape and emerging trends.

The advice, written in September 2019, refers to the Gambling Commission “challenge” as follows:

“The extent and nature of gambling in GB is being transformed by technology, particularly mobile technology. It is also clear that there is no sign that this growth is going to stop. The initial wave of online gambling characterised by the web, mobile apps and the links to social, is being overrun by a second wave of digital technologies impacting on the industry created by big data, analytics, artificial intelligence, the internet of things and wearables.
The impact of this second wave of digital technologies has yet to materialise fully. These technologies present operators with the opportunity to generate further growth by using the techniques developed by social media and games companies to maintain player engagement with their mobile apps and thereby increase their revenue and profits.”

In its advice, the Digital Advisory Panel refers to Ofcom research suggesting that British people:

on average spend 24 hours a week online, twice as long as 10 years ago;
one in five of all adults spending 40 hours online each week;
check their phone every 12 minutes of the waking day; and
two in five adults first look at their phone within five minutes of waking up, climbing to 65% of those aged under 35.

Summary of key recommendations:

Habit forming apps: Regulating software development for apps and sites that promote addictive and compulsive usage. This might include increasing the ‘friction’ of using this software but will certainly involve consultation with operators and academics.
Developing a single customer view: Requiring large operators to form an “arms-length joint venture” that will provide a service that will consolidate a single customer view for all online gambling activity, with improved interventions for problem gamblers and gamblers at-risk and further research into markers of harm and specific gambling triggers.
Online advertising: Requiring operators to report annually on their progress in directing advertising away from problem and at-risk gamblers, and children.
Gambling Commission operations: Avoiding the temptation to build online or digital technologies to monitor the activities of the operators or gamblers and considering the appointment of commissioners with digital awareness.

The Gambling Commission will host a “kick-off event”, in Birmingham, in February 2020 for industry and technology providers on the industry-wide challenge to find a technology solution to creating a single customer view. We expect that details will be published very shortly.

Following both sets of advice, the Gambling Commission has set tough challenges to the industry and expects to see progress on them by Spring 2020.