14May

New Gambling Commission Guidance for Online Operators

14th May 2020 Jessica Wilson 405

On 12 May 2020, the Gambling Commission issued new “additional formal guidance” for online operators in response to “evidence that shows some gamblers may be at greater risk of harm during lockdown”.

Online operators must now take this new guidance into account and they are “expected to make changes to act on this guidance as soon as possible”.

The new guidance is issued under social responsibility code provision 3.4.1 of the LCCP which requires licensees to interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling. This includes identifying customers, interacting with customers, understanding the impact of the interaction, and taking into account the Gambling Commission’s guidance on customer interaction, which now includes the new guidance of 12 May 2020.

The new measures, to be “implemented into customer interaction frameworks” by licensees, are as follows:

Reviews of all thresholds and triggers used to track vulnerability to ensure that they reflect changed financial circumstances that many consumers will be experiencing. An emphasis should be placed on those thresholds and triggers being proactively reset on a precautionary basis to ensure customers with emerging vulnerability, such as increased time spent at play or increased spend can be identified
Specifically, reviewing time indicators to capture play in excess of one hour as the Gambling Commission believes this is a proxy for potential harm.
Set additional or modify existing thresholds and triggers which are specific to new customers reflecting the operator’s lack of knowledge of that individual’s play and spend patterns.
Implement processes that ensure the continual monitoring of the operator’s customer base, identifying customers whose patterns of play, spend or behaviours have changed in the last few weeks.
Conduct affordability assessments for customers identified by existing or new thresholds and triggers which indicate customers experiencing harm. Consider limiting or blocking further play until the checks have been concluded and supporting evidence obtained.
Prevent reverse withdrawal options for customers until further notice.
Stop bonus offers or promotions to customers displaying indicators of harm.

Guidance or requirement

Whilst guidance may be appropriate to ensure vulnerable customers are protected, particularly during the current Covid-19 pandemic, it is questionable whether the measures can be considered to be “guidance” and whether they are wholly proportionate and necessary in the light of the data on which the Gambling Commission has based these measures. The wording of the measures appears to create an obligation on the part of licensees to “stop bonus offers” and “prevent reverse withdrawals” which give the impression of requirements, rather than guidance.

Data

The Gambling Commission published two sets of data. A first set collected through a YouGov survey and a second from “the biggest operators, covering approximately 80% of the online gambling market”.

YouGov data

The YouGov data was collected from just over 2,000 people, some of whom may have taken the survey multiple times. The data is based on gambling habits of customers within four weeks from “mid-March 2020”. Whilst the data does show increased spend on online gambling, for example a 2% increase on online slot games and 1.7% on sports betting, the biggest increase of 16.4% was on National Lottery products which are regulated separately and to whom the new guidance does not apply. The data analysis also fails to consider the potential adjustment of gambling habits due to the closure of land-based venues as an explanation for the increase of spend and time on certain products, as opposed to an increase in gambling habits.

Gambling Commission data

The second set of data was collected over the period 31 March 2019 to 31 March 2020. This period only covers one week in which the country was in lockdown. It follows that this data cannot be reliable evidence that customers are at a greater risk of harm during lockdown. Further, the data shows a decrease in reverse withdrawals. The new guidance at point 6 above includes the prevention of withdrawal options until further notice. It is clear that this measure was not based on the data published by the Gambling Commission, which questions whether it was necessary and proportionate to be included within this particular guidance. The Gambling Commission, supported by research, already considered reverse withdrawals to be a flag for potential gambling harms; however, action to tackle this through an industry consultation would have been more appropriate than a strict measure introduced under the guise of guidance.

Absence of consultation

The absence of an industry consultation on the guidance is particularly disappointing. When a code of practice is amended, the industry would usually be offered the opportunity to respond to a consultation on the proposed new amendments. This was the case when the Gambling Commission last issued guidance under social responsibility code 3.4.1 in July 2019. However, it seems that the Gambling Commission has decided to omit this stage due to lockdown being a present and continuing issue. The press statement notes that the Gambling Commission will bring forward plans to consult on whether further targeted protection measures are required on a permanent basis.

The Gambling Commission’s Statement of principles for licensing and regulation begins by stating that the Gambling Commission regulates in a “straight-forward, risk-based and transparent manner”. The lack of industry consultation here is plainly neither transparent, nor based on sufficient evidence of risk.

The new requirements are significant and will no doubt be burdensome for licensees to implement “as soon as possible”. However, they are likely to be welcomed by Culture Minister Nigel Huddleston (see our blog of 24 April 2020) and the Public Accounts Committee following Neil McArthur’s appearance at the session Gambling regulation: problem gambling and protecting vulnerable people on 27 April 2020.

To comply with the new measures significant updates are likely to be required to systems, customer terms and conditions and policies, each requiring input from different people, perhaps even third-parties, which will no doubt be a challenge given the current crisis. If, as the press release suggests, operators are expected to “interact with customers who have been playing for an hour in a single session of play” the impact will be significant, particularly for large operators who may have several thousand active customers at any one time. The threat of interim licence suspension, or licence review, increases this burden, which was thrown upon licensees without consultation, warning or a timeframe to implement the required changes.

As Julian Harris wrote in our previous blog, “for regulation to be effective it requires a healthy and collaborative working relationship between regulator and whom it regulates”. This statement is echoed here and whilst both the Gambling Commission and the industry as a whole are in agreement that new measures should be introduced to protect the most vulnerable during this novel and rare situation, any changes should be proportionate, necessary and founded upon strong and clear evidence.

A further blog post on the implementation of the new guidance will follow.

24Apr

Betting and Gaming Council Announces Safer Gambling Strategy

24th April 2020 Jessica Wilson 425

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

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

The 10 pledges are as follows:

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

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

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

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

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

These additional measures include:

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

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

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

08Apr

GAMSTOP, Prophet and Sportito – A Cautionary Tale

8th April 2020 Lucy Paterson 424

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

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

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

Neil McArthur, CEO of the Gambling Commission, said:

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

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

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

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

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

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

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

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

06Apr

Banks Tackling Gambling-Related Harm

6th April 2020 Lucy Paterson 429

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

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

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

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

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

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

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

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

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

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

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

03Apr

No Love in the Time of Coronavirus

3rd April 2020 Julian Harris 446

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 476

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 456

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.

05Feb

Changing Mindsets

5th February 2020 Francesca Burnett-Hall 405

After a marked absence from ICE, Neil McArthur, the CEO of the Gambling Commission, gave a keynote speech at the ICE World Regulatory Briefing, on 3 February 2020, titled “Changing Mindsets”, talking about:

why we need to make gambling safer;
what he sees as the opportunities to make gambling safer and the risks if those opportunities are not taken; and
how he thinks a change of mindset can help – regulators, operators, advisers and suppliers – make gambling safer.

McArthur proclaimed that the gambling industry needed to “be bold”, setting out his case for change and why he considered it to be necessary. With public trust and participation rates declining, he referred to the “wholly unacceptable state of affairs” with 340,000 problem gamblers and 1.6 million at risk (data published by Public Health in 2016), and declared that these numbers needed to “radically reduce”, necessitating a “comprehensive public health response”.

Unlike previous ICE speeches, this speech appeared to be written for the consumption of the Gambling Commission’s critics, rather than its subjects.

One of the focuses of the speech was the Gambling Commission’s view of collaboration and the need to look at “complex problems” from “as many different angles as possible”, including those with direct or indirect “lived experience” of gambling related harm. In response to recent criticism from Carolyn Harris MP, following an earlier speech on collaboration, McArthur addressed the appropriateness of a regulator collaborating with its licensees, clarifying two things: (1) it was not self-regulation; and (2) licensees cannot set or mark their own homework. The fruits of the working groups will be “stress tested” before the next Raising Standards Conference and only the Gambling Commission will decide what regulatory changes should follow in the LCCP or Remote Technical Standards, with advice from the Advisory Board for Safer Gambling, Digital Advisory Panel and insights from people with lived experience of gambling harm.

The other focus of the speech was the effect mindset can have on performance, citing the performance coach Matthew Syed. McArthur highlighted too much emphasis being placed on public relations, not addressing the public health issue, and the need for a change in culture by “disrupt old mindsets…to create positive change for consumers and approach the challenges we face in a different way.” He called upon those at the top to change the tone to achieve tangible outcomes and expressed his preparedness “to work with anyone who shares determination to make rapid, positive changes to protect consumers from harm.”

Although abundantly clear already, McArthur spelt out that only the Gambling Commission will judge whether efforts adequately address harm to consumers and, if not, all options will remain on the table, with the Gambling Commission getting “tougher and tougher”. He stated that “the time to think of this as a competition between ‘poachers’ and ‘gamekeepers’ has gone…We each have a different part to play, but that must be our goal. If that isn’t anyone’s goal they need to leave the industry.”

20Jan

Advice to the Gambling Commission on Actions to Reduce Online Harms

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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.

19Jan

NHS Concerns Over Gambling

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On 14 January 2020, the head of mental health services in England, Claire Murdoch, penned a bold letter to the chief executives of BetFred, Bet365, Flutter, GVC and William Hill “regarding the increasingly clear and worrying links between gambling and mental ill health”. She refers to having seen “first-hand the devastating impact on mental wellbeing of addiction” and her concern that the prevalence of gambling in our society is causing harm. In December 2019, a report, Skins in the Game, by the Royal Society of Public Health found that over half of young people believe that playing a video game could lead to gambling and that the link between gaming and gambling is a negative one.

Ms Murdoch expresses her concern of tactics used to target those who are chasing their losses and VIP incentives, and refers to incentives that “appear designed to undermine people’s ability to stay in control: bet to view streaming; pervasive advertising; and rewards in exchange for bets, all are likely to make decision-making for vulnerable people significantly harder.” Her letter also refers to the gambling industry having a responsibility “to prevent the occasional flutter turning into a dangerous habit” and requests provision of “urgent detail on actions” being taken to reduce “the likelihood and severity of gambling addiction”.

The letter ends declaring “n industry-wide effort is needed to tackle this, and…seeking reassurance that taking measures, including the following, to minimise harm:

immediately ban credit card bets from your websites – ahead of the gambling commission’s restrictions due to come into force later this year – helping ensure people don’t spend money they don’t have and potentially rack up life changing debt and the anxiety that comes with it;
stop the targeting of high-loss customers with the so-called ‘VIP’ treatment which includes incentives such as free tickets and bets; and
end bet to view commercial deals which require a stake in exchange for sports streaming access.”

The NHS has also confirmed the opening of a new treatment centre for addiction related mental ill health, alongside the 14 gambling clinics announced in the NHS Long Term Plan last year.

On 15 January 2020, Brigid Simmonds, Chair of the Betting and Gaming Council, responded to Ms Murdoch’s letter stating “e take our responsibility to our customers incredibly seriously and we are determined to raise standards and improve safer gambling.” Ms Simmonds acknowledged the important points raised by Ms Murdoch’s letter and summarised some of the work the members had already done, including new age-verification checks, increased funding for research, education and training, the whistle-to-whistle ban on gambling advertising, the creation of GamStop, extensive work on algorithms to help identify those at risk of harmful play and the very recent waived exclusivity on FA Cup games. She added the current work of the Betting and Gaming Council’s on affordability checks, AdTech to block ad, search engines blocking ads from non-UK licensed operators’ advertising and the Safer Gambling Commitments targeted to:

prevent underage gambling and protect young people;
increase support for treatment of gambling harm;
strengthen and expand codes of practice for advertising and marketing;
protect and empower customers; and
promote a culture of safer gambling.

Ms Simmonds’ letter expressed a keenness to understand in greater detail Ms Murdoch’s experience, knowledge and concerns and how the industry may address them, and ended with an invitation to meet with the chief executives.

Responsible Gambling