16Dec

White Paper Series: Gambling Act Review Evaluation Plan – finding “the right balance of regulation in the digital age”

16th December 2024 Ting Fung 106

The Department for Digital, Culture, Media and Sport (“DCMS”) announced on 5 December 2024 that it will work with the Gambling Commission to deliver an appropriate programme of work to evaluate the impact of the policy measures implemented following the Gambling Act Review (“GAR”).

The previous Conservative Government’s plans for reform of gambling regulation involved over 60 key policy proposals, which were set out in its White Paper: High stakes: gambling reform for the digital age (published in April 2023). In its announcement, DCMS recognised the difficulty of attributing observed changes to any one policy measure in this complex piece of work, particularly given that policy measures have different timeframes and implementation processes, and potentially intersecting outcomes and impacts, but emphasised the importance, nonetheless, of evaluating the collective impact of the GAR.

What has happened so far?

In January 2024, DCMS and the Gambling Commission commissioned the National Centre for Social Research (“NatCen”) to undertake an evaluation scoping study. As part of this study, the impacts and outcomes of specific proposals will be evaluated individually, as well in a package to understand the collective impact of policy measures that have been implemented so far.

NatCen then held a series of Theory of Change (“ToC”) workshops with DCMS and Gambling Commission colleagues to identify a series of specific policy measures that had been developed since the publication of the White Paper. The scoping work highlighted that this evaluation plan requires a proportionate approach, focusing on a number of specific policy measures in detail.

What will happen next?

The forthcoming evaluation will focus on evaluating the impact that can be attributed to a number of specific policy measures implemented under the GAR. For each policy change, the evaluation will aim to gather evidence and formulate findings to answer the following questions:

What intended and unintended outcomes and impacts have been brought about in the short and longer term by the Gambling Commission, DCMS and independently led proposals in the two-year evaluation that were introduced following the GAR?
a. In what ways, if any, did these outcomes and impacts link and interact?
Were the proposals implemented as intended?
a. Did the proposals introduced reach online and land-based gambling providers and consumers as intended?
b. In what ways, if any, did implementation vary from that intended and why? If there was variation, what were the associated impacts?
What was the distinct contribution of the DCMS, the Gambling Commission and independently led proposals in achieving the observed outcomes and impacts?
a. How and why did the proposals contribute to reducing gambling-related harm to vulnerable groups and their wider communities in the short-term and longer-term (or not)? What worked best for whom, why and when?
b. How and why did the proposals contribute to increasing gambling protections, while ensuring a fair and open safeguarding of gambling-related consumer freedoms and choice for customers in the short-term and longer-term (or not)? What worked best for whom, why and when?
c. How and why did the proposals contribute to regulating the online and the land-based gambling industries more equitably in the short-term and longer-term (or not)? What worked best for whom, why and when for the online and the land-based industries?
What was the combined contribution of the proposals in achieving the above observed outcomes and impacts?
What conditions were necessary for the proposals to achieve the above observed outcomes and impacts?
What internal and external influencing contextual factors supported or impeded the proposals to achieve the above observed outcomes and impacts?
a. In what ways, if any, did internal and external influencing contextual factors interact with the proposals?
What are the implications of the findings from the evaluation for the implementation of future gambling-related policy changes?

The aim of the evaluation is to understand the impact and outcomes of specific policies – both individually and collectively – and also to establish plausible causation related to the GAR policy measures with a high degree of certainty, carefully factoring in the impact of alternative explanations. DCMS emphasises the importance of the latter given the “many and diverse” nature of the policy measures in an implementation context that “is complex, dynamic and evolving”.

How will the evaluation be designed?

With the aim of establishing a clear degree of confidence in each claim, the hypotheses (i.e. the causal contribution claims) will be developed using Contribution Analysis, which is a step-by-step approach to data collection, triangulation and analysis based on a ToC and testable causal contribution claims. Process Tracing will then be used to ensure that the hypotheses are empirically testable and guide data collection.

The evaluation will draw on multiple sources of evidence, including qualitative insights and findings from quasi-experimental quantitative analysis. DCMS believes that quasi-experimental designs “will enable robust causal estimates of the degree to which changes in outcomes can be attributed to specific GAR policy measures”.

What methodology will be used?

The quasi-experimental designs will draw from online and land-based operator data, whilst in-depth interviews, focus groups, diary studies, and surveys will be used for qualitative impact and process evaluation. The latter would involve a range of participants, including operators, people who gamble, and other relevant stakeholders, such as local providers of support services. This will run alongside periodical tracking of GAR policy implementation and external influencing factors.

Who else is involved?

NatCen will establish two independent groups to provide advice and guidance throughout the evaluation, but these groups will not play a direct role in policy development:

Lived Experience Panel
This panel will work alongside the Gambling Commission’s pre-existing Lived Experience Advisory Panel, aiming to ensure that the voices of different groups with lived experience of gambling and gambling harm, including family, friends and colleagues of people who gamble (affected others) are considered.
Evaluation Advisory Group
This group will comprise researchers, academics and evaluators with expertise and experience in the field of gambling policy, research and regulation. They will provide independent assurance for key evaluation products and outputs, and assist evaluators in the anticipation and mitigation of risks and issues which may impact the evaluation.

Next steps

NatCen and the Gambling Commission will start reaching out to stakeholders in the coming weeks, with elements of evaluation fieldwork planned to begin in January 2025. Bryony Sheldon, Gambling Commission Director of Policy added in a blog post:

“The experience of consumers, operators and other stakeholder groups will be a key part of the evaluation in the coming months, as we welcome participation in surveys, interviews and other planned research. We will also use existing Gambling Commission advisory groups, and Industry Forum to both promote participation in the evaluation and help shape how we collect data efficiently.”

Several outputs of evaluation findings will be provided to DCMS and the Gambling Commission during and at the end of the evaluation to enable evidence-based insights in ongoing policy development and decision-making.

DCMS expect the evaluation to report in 2026.

Please get in contact with us if you have any questions regarding gambling regulation in Great Britain, the White Paper or the GAR evaluation plan.

29Nov

White Paper Series: Initial Consultation Response on Statutory Levy and Update on Online Slot Stake Limits

29th November 2024 John Hagan 120

The Department for Digital, Culture, Media and Sport (“DCMS”) announced on 27 November 2024 that the Government will bring forward the statutory levy on gambling operators to generate £100 million for the research, prevention and treatment of gambling harms. The Government has also confirmed online slot stake limits of £5 for adults aged 25 and over and £2 for young adults aged 18 to 24.

Statutory Levy

Gambling Minister Baroness Twycross indicated in her Ministerial Statement that the update is only an initial response to the consultation on the structure, distribution and governance of the statutory levy on gambling operators launched on 17 October 2023 (see our previous blog on the consultation), and that its aim is to publish a further response document in the coming months. The Government maintains its commitment to having the levy in place by the summer of 2025.

The Government has confirmed that the mandated levy will be charged to all licensed operators at varying levels depending on the sector, at a set rate for all holders of a given Gambling Commission licence, with rates accounting for the difference in operating costs and the levels of harmful gambling associated with different gambling activities. “In recognition of the higher rates of problem gambling associated with products online compared to most land-based products, as well as the higher operating costs in the land-based sector, the levy will see online operators pay more towards research, prevention and treatment.”

The Government believes that a mandated levy “will guarantee increased, ringfenced and consistent funding to prevent and tackle gambling harm” and “ensure all operators contribute a fair share”, stating that “under the current voluntary system not all gambling companies contribute equally, with some operators paying as little as £1 a year towards research, prevention and treatment”.

The levy will be introduced via secondary legislation. It will be collected by the Gambling Commission and overseen by a Gambling Levy Programme Board that will have central oversight, and which will in turn be assisted by a Gambling Levy Advisory Group that will provide expert advice on funding priorities and other emerging issues.

Levy funding will be split as follows:

50% will be directed to NHS England and appropriate bodies in Scotland and Wales to develop a comprehensive support and treatment system. This will include referrals and triage, through to recovery and aftercare. So “half of funding to directly benefit NHS-led gambling treatment system”.
30% will go towards investment in gambling harm prevention, which could include measures such as national public health campaigns and training for frontline staff. A lead commissioning body in this crucial and novel area has not yet been appointed, with the Government taking the time to get the important decision on the future of prevention right.
20% will be directed to UK Research and Innovation (UKRI) and the Gambling Commission to develop bespoke Research Programmes on Gambling, undertaking vital research to inform future policy and regulation.

“The current funding system for research, prevention and treatment of gambling-related harms reliant on voluntary donations from industry is no longer fit for purpose. While the industry’s significant uplift in the level of donations in recent years is welcome, we recognise that the quantum of funding is not the only requirement for an effective and equitable system.”

Baroness Twycross, Gambling Minister

The Government emphasises in its initial response that with distribution of funding to the NHS, UKRI and the Gambling Commission, “the gambling industry will have no say over how money for research, prevention and treatment is spent”.

A formal review of the levy system will be conducted within five years, where the structure and health of the levy system will be assessed, and adjustments can be made to ensure that the Government is achieving its aims.

Online slot stake limits

As widely anticipated, stake limits will be set at £5 per spin for adults aged 25 and over and £2 per spin for young adults aged 18 to 24, “bringing online slot games in line with existing restrictions on slot machines in casinos”. DCMS’ press release cites Evidence from the Office for Health Improvement and Disparities and the Gambling Survey for Great Britain which shows that young adults can be particularly vulnerable to gambling related harm with under 25s having one of the highest proportion of respondents scoring eight or more on the Problem Gambling Severity Index of any age group. It also reiterates that online slots are “a higher-risk gambling product associated with large losses, long sessions, and binge play”.

Next steps

Operators are required to maintain voluntary financial contributions to research, prevention and treatment until the levy comes into force, with Baroness Twycross adding that its initial response “should provide sufficient notice to licensees of our approach”.

As stated above, the Government aims to publish its full response to the statutory levy consultation in the coming months, which will also include further detail on the 30% investment of levy funds in gambling harm prevention. The Government notes that the statutory instrument is silent on the distribution of levy funding, including in relation to prevention, and it is pressing on with its initial response and progressing the legislative process to meet its commitment to have the levy in place by the summer of 2025.

In respect of online slot stake limits, these will be subject to an implementation period. This means that, following debates in Parliament, operators will have six weeks from the day the statutory instrument is made to implement the £5 limit and a further six weeks thereafter to implement the £2 limit.

We will provide you with updates in due course but please do not hesitate to get in touch if you have any questions.

Our preliminary thoughts on the initial response

At the heart of the White Paper is a balance between consumer freedoms and choice on one hand, and protection from harm on the other. The White Paper was broadly well received when it was delivered in Parliament, within all sectors of industry, by the NHS, in the third sector and at the Gambling Commission, because the (Conservative) Government had achieved a healthy balance in its reforms; crudely put, there was something in it for everyone. As we said in our inaugural blog on the White Paper in May 2023, however, “it is imperative that the process remains balanced and that all the key stakeholders see comparable progress in relation to their interests”.

The announcement of the bringing forward of the statutory levy by the Labour Government is undoubtedly a momentous day for certain stakeholders and a cause for their celebration, and perhaps unsurprisingly the language is emotive and provocative, with for example the NHS saying problem gambling has “skyrocketed” and resolving to do all it can “to protect gamblers from this billion-pound industry”, and the All Party Group for Gambling related Harm saying that “for the first time the gambling industry will be mandated to pay for the harm they cause”. Even the Government itself in its press release makes more of the £1 some operators have been paying than the £50 million in voluntary contributions by Betting and Gaming Council members this year alone.

That said, we believe that it was always inevitable that the Government (whether Labour or Conservative) would lead with the statutory levy before introducing any measures relating to consumer freedom or choice, such as the long overdue land-based casino modernisation. The new Labour Government had to establish its credentials as being tougher on the gambling industry than the previous government and deliver on its manifesto promise commitment to reduce gambling harm. And we would suggest it was also sadly inevitable that the rhetoric would be critical of industry, even unfair and misleading, particularly at a time when fundamental gambling statistics such as the percentage of problem gamblers in the population are so keenly contested.

But the statutory levy itself was a fundamental plank of the White Paper, so it does not come as a surprise, even if as rumoured the rates transpire to be slightly higher than proposed, again Labour being tougher than the Conservatives. Indeed, industry has been supportive of a statutory levy in principle for some years now. Nor are the online slot stake limits a surprise, with the previous government making a similar announcement before disastrously calling an early General Election. Further, the financial implications of both the statutory levy and online slots stake limits should already be baked into industry projections and should not have a punitive impact, at least in the near future, the risk of course being that the levy rates will again, inevitably, increase in the years ahead.

For all the above reasons, we are not for the moment overly concerned that the Government is heading in a new direction when it comes to gambling reform. This is not a policy area where the new Government might argue that it was left a “black hole”, quite the reverse, it was left a fully-fledged policy developed over many years and wrapped in White Paper, which it would be well advised to adopt and move on with other legislative priorities free from gambling distractions. Nothing has happened this week which was not expected and we remain optimistic that the delicate balance of the White Paper will be delivered by the Government and the Gambling Commission in the year ahead. We will of course continue to monitor for any departure from that course in future blogs.

With thanks to Ting Fung for her invaluable co-authorship.

30Jul

Gambling Survey of Great Britain: Publication of first annual report

30th July 2024 Chris Biggs 154

After more than 3 years of development and significant industry scrutiny, the Gambling Commission published the first Gambling Survey for Great Britain (“GSGB”) Annual Report on 25 July 2024 (“GSGB Annual Report”).

In a press release announcing the publication, the Gambling Commission stated that this first edition features responses from 9,804 people “but will increase to around 20,000 by next year.” The Gambling Commission goes on to state that the GSGB Annual Report provides greater insight into attitudes and gambling behaviours:

“presenting a fuller picture, illuminating participation rates, the type of gambling activities participated in, experiences and reasons for gambling, and the consequences that gambling can have on individuals and others close to them.”

We have previously explained the GSGB’s structure and purpose in our blog Gambling Survey of Great Britain: Gambling Commission’s new approach to collecting gambling participation and prevalence data.

We now turn to the key facts outlined in the GSGB Annual Report and consider the information published by the Gambling Commission to support the GSGB.

Key Facts

The GSGB Annual Report highlights key facts from the data collected from adults aged 18 years and older living in Great Britain, summarised below.

Participation

48% of GSGB participants participated in any form of gambling in the past four weeks. This figure dropped to 27% when those who only participated in lottery draws were excluded.

GSGB participants were more likely to gamble online (37%) than in-person (29%), however this difference was largely accounted for by people who purchase lottery tickets online. Excluding those individuals, GSGB participants were more likely to gamble in-person (18%) than online (15%).

The most commonly reported gambling activities were the National Lottery (31%), purchasing tickets for other charity lotteries (16%) and buying scratchcards (13%). The average number of activities for those who had participated in gambling in the past 4 weeks was 2.2 activities during that period.

Experiences of and reasons for gambling

41% of GSGB participants who had gambled in the past 12 months rated the last time they gambled with a positive score (6 or above on a scale of 0 to 10), 37% expressed they neither loved nor hated it (score of 5) and 21% gave a negative score. When participating in lottery draws was excluded the pattern displayed a slightly higher proportion of positive scores, with 50% positive, 31% neutral and 19% negative.

The most common reasons that GSGB participants gambled were for the chance of winning big money (86%), because gambling is fun (70%), to make money (58%) and because it was exciting (55%).

Figure 11 of the GSGB Annual Report displays the full list of reasons for gambling in the past 12 months surveyed, represented below where the percentages comprise individuals who reported ‘sometimes’, ‘often’ or ‘always’ as a reason for gambling for each statement.

Notably, GSGB participants were also surveyed on the types of leisure activities in which they participated in the past 4 weeks. The vast majority of participants indicated they spent time with friends and family (98%), watched TV (95%) and listened to music (91%), with many also reported shopping (80%), eating out at restaurants (73%), participating in sports or exercise (64%), doing DIY or gardening (61%) or going to pubs, bars or clubs (50%).

Consequences from gambling

GSGB participants who had bet on non-sports events in person were over 9 times more likely than average to have a score of 8 or higher on the Problem Gambling Severity Index (“PGSI”), which represents problem gambling by which a person will have “experienced adverse consequences from their gambling and may have lost control of their behaviour.”

GSGB participants who had gambled on online slots were over 6 times more likely than average to have a PGSI score of 8 or higher.

41.4% of GSGB participants with a PGSI score of 8 or higher reported experiencing at least one of the severe adverse consequences asked about.

The severe adverse consequences surveyed required ‘yes’ or ‘no’ responses and consisted of: (1) losing something of significant financial value because of gambling; (2) relationship with spouse or partner or family member breaking down because of gambling; (3) experiencing violence or abuse because of gambling; and (4) committing a crime to fund gambling or pay gambling debts. Overall, 2.8% of GSGB participants who had gambled in the past 12 months reported experiencing at least one severe consequence.

The Gambling Commission also highlights that the GSGB is the first time that it has collected data on the consequences of someone else gambling. 47.9% of GSGB participants reported that someone close to them gambled. The most reported severe consequence of someone else gambling was the breakdown of a relationship with a spouse, partner or family member (3.5%).

Gambling Commission Guidance

To accompany the GSGB Annual Report, the Gambling Commission released Guidance on using statistics from the Gambling Survey for Great Britain (“GSGB Guidance”). The purpose of the GSGB Guidance is to ensure the GSGB data is reported correctly, with the Gambling Commission reiterating that these official statistics are new and are collected using a different methodology than previous official statistics.

The GSGB Guidance therefore lists the purposes for which the GSGB can and can’t be used, as well as where it can be used with some caution, in relation to the data on: (1) gambling participation; and (2) the consequences of gambling within the GSGB Annual Report. Of note, the GSGB can be used:

to look at patterns within the data amongst different demographic groups;
to assess future trends and changes in gambling participation and consequences of gambling, measuring changes against the 2024 baseline; and
to describe the range of consequences that someone may experience as a result of their own gambling and as a result of someone else’s gambling.

The GSGB can be used with some caution “until further work is completed”:

to provide estimates of gambling participation amongst adults in Great Britain;
to provide estimates of PGSI scores amongst adults in Great Britain; and
to provide estimates of the prevalence of consequences of gambling amongst adults in Great Britain.

The GSGB should not be used:

to provide direct comparisons with results from prior gambling or health surveys;
as a measure of addiction to gambling; and
to calculate an overall rate of gambling-related harm in Great Britain.

The GSGB Guidance also addresses the misuse of GSGB statistics. The Gambling Commission encourages the use of the statistics to support the understanding of important issues relating to gambling, but expects that “anyone using official statistics should present the data accurately and in accordance with the guidelines presented .”

Reiterating the message issued by Andrew Rhodes, Chief Executive Officer of the Gambling Commission, in his open letter to the industry in August 2023, if an individual or organisation is found to be using the GSGB inaccurately, the Gambling Commission “may contact them and request that they correct the statistics.” In “severe cases or continued misuse of official statistics”, the Gambling Commission may refer the individual or organisation to the Office of Statistics Regulation (“OSR”).

Whilst the Gambling Commission’s expectations for the use of the GSGB statistics have been made clear, it has not defined what it considers a “severe” case of misuse. However, the Gambling Commission’s Executive Director, Tim Miller, stated during the VIXIO Regulatory Intelligence webinar on 23 July 2024 that the Gambling Commission will challenge any misuse “in an appropriate way” such as by referral to the OSR, which has included “some examples in recent months where has taken those sorts of approaches.” We therefore encourage the industry to ensure its adherence with the GSGB Guidance.

Strengths and Limitations

The Gambling Commission has acknowledged that measuring adverse consequences from gambling in surveys is a challenging task, and cites Professor Patrick Sturgis’ statement in his Assessment of the Gambling Survey for Great Britain (GSGB):

“Given the widespread negative social norms around gambling, particularly harmful gambling, obtaining representative samples and accurate response data is at the more difficult end of what survey researchers seek to measure in general populations.”

Furthermore, the Gambling Commission states in its press release that Professor Sturgis warned that estimates of problem gambling rates should be used with caution due to the risk that the new methodology “substantially overstates the true level of gambling and gambling harm in the population.” The Gambling Commission updated its Gambling Survey for Great Britain – technical report to include a list of the GSGB’s strengths and limitations and caveats for the interpretation of PGSI score estimates produced in the GSGB.

Having set out these strengths and limitations, its expectations for the correct use of the GSGB statistics and the consequences for misuse, the Gambling Commission has seemingly attempted to temper the industry’s concerns about the accuracy and reliability of the new official statistics. During the VIXIO webinar, Miller stated that the Gambling Commission has listened to “recognised experts in data and statistics in developing the GSGB methodology”, as well as the GSGB Guidance. Acknowledging that all methodologies have limitations, Miller stated that a key difference is that the Gambling Commission is “very open and transparent about what the GSGB’s current limitations are”.

Miller defended criticism of the GSGB’s methodology and noted that the Health Survey for England is not without significant issues, having presented an “inflexibility” to update questions for relevance and an inconsistent method for the Gambling Commission to collect data on gambling activity. Miller confirmed the Gambling Commission continues to invest “a significant amount” into the GSGB methodology and is “confident that as to develop , this will become the new gold standard”.

Next Steps

The Gambling Commission explains that in a typical year, there will be four wave-specific publications from the GSGB, plus an annual report. In his blog accompanying the GSGB Annual Report, Ben Haden, Director of Research and Statistics at the Gambling Commission, explains that the GSGB removes its over-reliance on the PGSI as a “proxy for harms” and, even at a headline level, “a more general analysis of wider consequences and behavioural symptoms will give a far more nuanced picture than ever before.” Haden also states that two “in-depth reports” will be released before Christmas as the Gambling Commission commences its deeper analysis of the GSGB statistics.

Where the Gambling Commission acknowledges that the GSGB may overstate the true level of gambling and gambling harm in Great Britain, the release of the GSGB Annual Report will not calm industry concerns about the accuracy of these official statistics. Indeed, we share this concern where the proposals outlined in the White Paper may be evaluated, and potentially derailed, by these statistics. The Gambling Commission promised a “gold standard population survey for the whole of Great Britain”, in its effort to improve the quality, robustness and timeliness of official statistics on gambling behaviour in Great Britain: this is no doubt a challenging task. Therefore, noting Miller’s confidence in the GSGB as the Gambling Commission continues to develop the methodology, we will continue to follow the GSGB closely with the hope that the Gambling Commission moves closer to its aim.

Please get in contact with us if you have any questions about the GSGB Annual Report, the GSGB Guidance or how these statistics may impact your business.

24Jul

White Paper Series: UK Gambling Act Review: What Now? VIXIO Webinar

24th July 2024 Harris Hagan 135

On 23 July 2024, Bahar Alaeddini appeared as a panellist on a VIXIO Regulatory Intelligence webinar titled “UK Gambling Act Review: What Now?” together with Tim Miller from the Gambling Commission, Sarah Fox from the Department for Culture, Media and Sport and Dan Waugh from Regulus Partners, and moderated by Joe Ewens, Global Managing Editor from Vixio. This was the third webinar on the White Paper organised by Vixio. The panellists had an insightful and lively discussion about the current status of the White Paper proposals following the General Election:

Two earlier webinars took place on 16 May 2023, titled “The End of the Beginning”, 15 September 2023, titled “Defining the Future”. Please click on the dates to watch the earlier webinars.

08May

White Paper Series: Changes to Personal Management Licences

8th May 2024 Bahar Alaeddini 151

In our blog last Summer, White Paper Series: Transforming corporate culture by “driving personal accountability and responsibility” for lookers-on seeing most of the game?, we summarised the Gambling Commission’s key proposals relating to personal management licences (“PMLs”).

The Gambling Commission proposed to:

make clear that the person responsible for “overall management and direction of the licensee’s business or affairs” (which triggers a PML requirement) “is likely to be the CEO, MD or equivalent”;
require the person “chairing the Board (where the licensee has such a body)” to hold a PML;
make it clearer that those responsible for AML and CTF, including the Money Laundering Reporting Officer and Nominated Officer, need to hold a PML; and
assess, on a case-by-case basis, whether CEOs and directors of “parent companies or subsidiaries in the group” need to hold PMLs too.

On 1 May 2024, the Gambling Commission published its consultation response and announced it will introduce the changes as originally proposed, with only minor clarifications to make it clear that the requirement for the Chair – executive or non-executive – to hold a PML only applies to those that hold fixed or indeterminate office. Anyone appointed as Chair on a transient and/or short term basis for individual meetings will not be caught by the new requirement, but the licensed gambling business will need to retain evidence to support the fact the Chair’s role is transient and/or short term.

In our view, the Gambling Commission is striking the right balance with these changes, particularly with the requirement that Chairs must hold PMLs. Increasing the number of PMLs, particularly at a senior level, will drive personal accountability and responsibility, and thereby hopefully enhance the corporate culture and improve standards of compliance.

However, the Gambling Commission has not expressly addressed in its consultation response how the new requirements will apply to large gambling businesses (specifically, D. above), for example, group / regional / business division CEOs, MDs or equivalent, who may share the overall management responsibility and direction for the business in Great Britain. Based on the new licence condition wording, it only applies to the licensee, not its parent, related or subsidiary companies. This was a missed opportunity, and – despite the lack of clarity – our view is that the Gambling Commission would expect such individuals to hold a PML and thereby be caught by the new requirements, given that the licence condition is being implemented “as consulted” and the intention of the Gambling Commission in the consultation document was clear, as follows:

The group structures in which licensees operate vary and sometimes it may be appropriate for the CEOs and Directors of parent companies or subsidiaries in the group to hold PMLs too. This will depend on how these companies interact with the licensee and the influence they have over it.

Information on group structure, licensee interaction and influence is assessed during the process for licence application and during change of corporate control licence applications, and can be assessed at any other time.

Based on the information provided at any of these points, we would take a view on a case-by-case basis as to which individuals would need to hold a PML.

We consider that the proposed amendment to Licence Condition 1.2.1…would reinforce our expectations over which roles require a PML, and would make sure there is adequate personal coverage and accountability in each licensee’s business.

There is no one size fits all approach. Each case should be considered on its merits, taking into consideration how decisions are made, whether decisions can be overruled and by whom, and reporting lines.

Timing of new requirements

The extended requirements in relation to PMLs come into force on 29 November 2024.

Critically, PMLs must have been applied for, and been granted, before this date.

When can applications be made?

The Gambling Commission will be accepting PML applications based on the following timings:

MD, CEO or equivalent:	with immediate effect
AML and CTF:	from 1 June 2024
Board Chair:	from 1 August 2024

We regularly work with clients to prepare PML applications for their employees, senior managers and Board members. Please get in touch if you would like our assistance.

What do PMLs need to know?

If you would like tips for PMLs and employers or to understand PML requirements, such as key events, please read our overview guide.

Preparing new PMLs & training

It is imperative that PML applicants understand the personal liability that flows from holding a PML and, equally, the important role they play in ensuring business decisions are underpinned by the licensing objectives, building a strong foundation of compliance and raising standards.

Borne from our strong desire to help clients navigate the complex framework and landscape in Great Britain, we offer Partner-led PML training covering the key legal, regulatory and licensing issues for PMLs, Boards, Compliance Committees, employers and those in supporting roles, as well as scanning the horizon on key changes, including the Gambling Review, and providing practical advice based on our extensive knowledge, experience and expertise. Our training is entirely bespoke and tailored for each audience group.

Next steps

We strongly encourage gambling businesses to:

Identify the appropriate individuals who must apply for a PML now and not wait until the Autumn when the Gambling Commission is very likely to be deluged with PML applications and experiencing processing delays;
Prepare and submit PML applications early, ensuring they are complete upon submission (to minimise the risk of rejection); and
Provide adequate training to the PML applicants in advance of, or very soon after, 29 November 2024.

Please get in touch if you would like to discuss your PML requirements, PML applications or receive a deck about our PML training services, including client testimonials.

08May

White Paper Series: the White Paper, one year on

8th May 2024 Jessica Wilson 155

It has been one year since the long-awaited White Paper was published on 27 April 2023 – dubbed by Andrew Rhodes, Chief Executive of the Gambling Commission, as a “key moment” for the industry. The White Paper set out 62 specific policy proposals for the Government, the Gambling Commission, and the gambling industry to take forward in order to implement the reform of gambling regulation.

A lot has changed in the last 12 months, with the opening and closing of several consultations, and Government will begin to implement the main proposals from August 2024.

We recap the journey of the White Paper and consider what will happen next.

The journey so far…

The White Paper was divided into 6 chapters, each setting out a number of proposals. We summarise below the headline proposals within each chapter and the progress made to date.

Chapter 1: Online protections – players and products

Headline proposals included:

New default stake limits for online slot games that will be between £2 and £15 per spin, with greater protections for those aged 18 to 24.

DCMS published its response to its consultation on default stake limits on 23 February 2024, which confirmed the following stake limits would be introduced from September 2024 following secondary legislation:

£5 maximum stake limit per spin for adults aged 25 and above; and
£2 maximum stake limit per spin for young adults aged 18-24.

There will be a minimum six-week transition period for operators to introduce a £5 stake limit for all customers; followed by a further six weeks for the development of any necessary technical solutions before the lower stake limit of £2 for young adults aged 18 to 24 is introduced. Please see our previous blog for further information.

Introduction of “frictionless” financial vulnerability checks and financial risk assessments at set thresholds to understand if a customer’s gambling is likely to be harmful in the context of their financial circumstances.

This is without doubt the most controversial White Paper proposal. The Gambling Commission opened its consultation on 26 July 2023, proposing (1) light-touch financial vulnerability checks using publicly available data at £125 net loss within a rolling 30-day period or £500 net loss within a rolling 365-day period; and (2) enhanced financial risk assessments at £1,000 net loss within a rolling 24 hours or £2,000 net loss within a rolling 90-day period. The proposals sparked great debate within the industry, resulting in significant pressure on Government and the Gambling Commission, particularly from the horseracing industry.

On 22 February 2024, the Gambling Commission published a blog updating the industry on implementation plans for the proposed financial risk checks. The plans included its intention to implement the proposals via a pilot scheme for enhanced risk checks to enable the Gambling Commission to test the details of data-sharing in practice. In addition, the Gambling Commission confirmed they will initially come into force at a higher threshold, before moving to a lower threshold later in the year. The blog came four days before UK Parliament debated the petition Stop the implementation of betting affordability/financial risk checks, reflecting the mounting pressure Government and the regulator were facing.

On 1 May 2024, the Gambling Commission published its consultation response, confirming the introduction of light-touch financial vulnerability checks, alongside a pilot of enhanced frictionless financial risk assessments, with the latter only being rolled out if the pilot proves the checks can be frictionless.

In summary, the following will be implemented:

Light-touch financial vulnerability checks for customers with a net deposit of more than £150 a month. The checks will involve the assessment of publicly available data. Initially, the checks will come into force at £500 a month from 30 August 2024, to ease introduction, before reducing to £150 a month from 28 February 2025. The proposed £500 annual threshold for these checks will not be implemented, following analysis that 99% of individuals that exceeded that threshold, also exceeded the £150 a month threshold.
A pilot of enhanced financial risk assessments for operators in the three highest bands of fee categories and volunteers in lower fee categories, for a minimum of six months. The pilot will test how frictionless assessments can work in practice and will involve working with credit reference agencies and gambling businesses to assess consumer impact. Data collection will assist in setting financial thresholds at which financial risk assessments should be conducted. It is expected that the pilot will take place between 30 August 2024 and 31 March 2025, with the Gambling Commission having the ability to extend to the end of April 2025 if necessary.

On the same day, the Betting and Gaming Council (“BGC”) published a new Industry Voluntary Code on Customer Checks and Documentation Requests Based on Spend (“Industry Voluntary SR Code”), which will operate as a voluntary interim code to provide consistency across the regulated sector to social responsibility compliance until the financial vulnerability checks and risk assessments are brought into force. The Industry Voluntary SR Code sets out what actions a BGC member must take when customers wish to make net deposits of:

More than £5,000 in a rolling month (£2,500 for 18-24 year olds) – in which case the operator must undertake a financial risk assessment using open source information, information obtained from the customer previously, and financial insights from third parties, escalating to “enhanced consideration” if high-risk activity is identified.
£25,000 in a rolling 12-month period – in which case the operator must undertake “a process of enhanced consideration”.

It is intended that a supplementary BGC code on anti-money laundering checks will also be published to provide similar consistency in respect of anti-money laundering measures. Please see our previous blog for further information.

Amendments to game design rules to bring other game types in line with slots.

The Gambling Commission’s consultation closed on 18 October 2023 and the response was published on 1 May 2024. The changes extend requirements that already apply to slots to other online products. In particular, they ban speed features such as “turbos” or “slam stops”, game cycles of less than 5 seconds on casino products (N.B. the requirement for slots is 2.5 seconds), autoplay functions, celebrations of returns less than or equal to the stake, and the facilitation of playing multiple simultaneous products. The new remote games design rules come into force on 17 January 2025. Please see our previous blog for further information.

Amendments to the Remote Technical Standards to ensure customers can seamlessly use pre-commitment tools e.g. deposit limits.

The aim of the proposals is to ensure customers maintain awareness and control over their gambling. The Gambling Commission’s consultation closed on 21 February 2024 and sought views on minimising friction in the customer journey when choosing customer-led tools, and on a cross-operator deposit limit. At the time of writing, a response is awaited. Please see our previous blog for further information.

Chapter 2: Marketing and advertising

Headline proposals included:

Improving consumer choice on direct marketing by giving them more control over the gambling marketing they wish to receive.

The Gambling Commission’s consultation closed on 18 October 2023 and the response was published on 1 May 2024. Online gambling business will need to provide customers with options to opt-in to the product type (casino, betting and bingo) they are interested in, and the channels through which they wish to receive marketing. Following the consultation, the Commission removed lottery as a product type (and the land-based sector has now been excluded from the requirement) and removed post as a channel for marketing. The new rules come into force on 17 January 2025. However, in order to make customers aware of the preference choices, and so they are not hidden in an email, customers will only be required to re-confirm their marketing preferences the first time they log in after the implementation date. Until then, marketing can continue based on the customer’s prior marketing preferences. Please see our previous blog for further information.

Incentives such as free bets to be constructed in a socially responsible manner.

Proposals include banning or limiting the use of wagering requirements in promotional offers, and banning the mixing of product types. The Gambling Commission’s consultation closed on 21 February 2024. At the time of writing, a response is awaited.

Cross-sport gambling sponsorship code of conduct to be developed, which will guarantee a robust minimum standard, ensuring that gambling sponsorship across all sports is done in a socially responsible manner.

On 13 March 2024, Stuart Andrews MP announced that the code of conduct has been finalised and binds domestic sports governing bodies to four core principles: (1) reinvestment into sport, (2) maintaining sport integrity, (3) protecting children and other vulnerable people, and (4) ensuring socially responsible promotion. Bespoke, sport-specific codes are also being designed by individual governing bodies, and will be published and implemented “in due course”.

Government to work with the Department of Health and Social Care (“DHSC”) and the Gambling Commission to develop systematic safer gambling messaging, independent from industry, to maximise the information available to consumers and enable them to make informed decisions, with a better understanding of the risks.

The DHSC has initialised a review of the evidence around effective public health-led messaging. At the time of writing, a response is awaited.

Chapter 3: The Gambling Commission’s powers and resources

Introduction of a statutory gambling levy.

The statutory levy will fund research, education and treatment of gambling harms and is one of the pillar reforms within the White Paper, replacing the current voluntary system. The statutory levy will provide a sustainable and consistent income stream to support the treatment of gambling-related harms, and create a more equitable approach. DCMS’ consultation closed on 14 December 2023. At the time of writing, a response is awaited. Please see our previous blog for further information. Government confirmed in its response to DCMS’s Second Report (published 19 April 2024) that it will be publishing a response “in the coming weeks”.

Additional Gambling Commission powers, including to tackle the black market.

The Government will introduce new powers for the Gambling Commission so it can more effectively take action against the illegal online gambling market through provisions set out in the Home Office’s Criminal Justice Bill. The Bill was introduced in the House of Commons on 14 November 2023 and is currently at Commons Report stage. In the meantime, a key commitment in the Gambling Commission’s three year corporate strategy, published on 8 April 2024, is to increase investment, resource and capacity to tackle illegal gambling.

Increased Gambling Commission fees.

DCMS’ consultation is awaited. It is expected that the revised funding system will enable the Gambling Commission to adjust its fees on an annual basis where necessary, increasing or reducing fees as appropriate.

Chapter 4: Dispute resolution and customer redress

Headline proposal:

Appointment of a Gambling Ombudsman.

The White Paper proposed the formation of an independent non-statutory ombudsman to improve consumer protection and ensure fairness for consumers relating to social responsibility complaints. The Gambling Commission expected the Gambling Ombudsman to be accepting complaints within a year of publication of the White Paper, however appointment of a Gambling Ombudsman is yet to take place and seems unlikely to happen any time soon. Please see our blog for further information.

Chapter 5: Children and young adults

The headline proposals relating to children and young adults tie into the proposals in Chapter 1, with separate thresholds (for example) being applied to children and young adults.

Chapter 6: Land-based gambling

Headline proposals included:

Strengthening age verification in land-based premises.

The Gambling Commission’s consultation closed on 18 October 2023 and the response was published on 1 May 2024. New rules will come into force on 30 August 2024 requiring smaller land-based gambling licensees to carry out age verification test purchasing, extending the existing requirements in place for larger land-based gambling licensees. The LCCP will also be updated to confirm that “Think 25” is best practice for land-based premises, replacing “Think 21”. Please see our previous blog for further information.

Introduction of cashless payments on gaming machines.

The DCMS consultation regarding the proposals closed on 4 October 2023. The proposal to remove the current prohibition of cashless payments on gaming machines aims to bring the land-based sector into the digital age. At the time of writing, a consultation response is awaited. Please see our previous blog for further information.

Increasing gaming machine entitlements and relaxing rules relating to table/machine ratios.

The DCMS consultation regarding the proposals closed on 4 October 2023. The proposals aim to address inconsistencies and level the playing field between land-based and online operators, and to allow operators greater commercial flexibility. At the time of writing, a response to the consultation is awaited. Government confirmed in its response to DCMS’s Second Report (published 19 April 2024) that it will be publishing a response “in the coming weeks”.

Consultation progress

The table below provides an overview of consultations launched relevant to the White Paper and their current status.

Consultation	Headline proposals	Status
DCMS Consultation: Stake Limits Opened 26 July 2023	New default stake limits for online slot games.	Closed 4 October 2023 (extended from 20 September 2023) Response published on 23 February 2024. Changes come into force in September 2024.
DCMS Consultation: Land-based measures Opened 26 July 2023	– Changing gaming machine ratios in arcades and bingo halls. – Introduction of cashless payments on gaming machines.	Closed 4 October 2023 Awaiting response
Gambling Commission Summer Consultation Opened 26 July 2023	– Proposed changes to the Remote Technical Standards to bring other game types in line with slots. – Financial vulnerability checks and financial risk assessments. – Extending the roles required to hold a Personal Management Licence. – Regulatory panel changes (NB. not a proposal in the White Paper. Please see our blog for further information). – Improvements to consumer choice on marketing. – Tightening of age-verification in premises	Closed 18 October 2023 Response published on 1 May 2024. Changes will be implemented for all proposals (except regulatory panels) and will come into force across multiple dates between 30 August 2024 and 28 February 2025.
DCMS Consultation: Statutory Levy Opened 17 October 2023	Proposals for the structure, distribution and governance of the statutory levy.	Closed 14 December 2023 Awaiting response
Gambling Commission Autumn Consultation Opened 29 November 2023	– Amendments to customer-led tools e.g. deposit limits. – Rules around free bets and bonuses. – Changes to regulatory returns reporting. (NB. not a proposal in the White Paper. Please see our blog for further information).	Closed 21 February 2024 On 27 March 2024 the Gambling Commission confirmed it will be introducing a requirement for the submission of quarterly regulatory returns for all licence types, effective from 1 July 2024. Responses are awaited for the other proposals.
Gambling Commission December Consultation Opened 15 December 2023 NB. not related to the White Paper , but includes important proposals alongside other consultations	– Changes to criteria for imposing a financial penalty and penalty calculation methodology. – Changes to financial key event reporting	Closed 15 March 2024 Awaiting response

Other updates

Other updates from the last 12 months include:

23 May 2023 – The Gambling Commission published Evidence Gaps & Priorities, a document outlining current evidence gaps and the Gambling Commission’s approach to address these over the next three years.

19 June 2023 – Gambling Commission published a new hub for operators engaging with third parties.

25 July 2023 – As part of wider work by Government on online advertising and consumer protection, DCMS published its consultation response to the Online Advertising Programme.

14 September 2023 – Gambling Commission Industry Forum established.

23 October 2023 – The Gambling Commission called upon licensees to participate in a user research programme aimed at sharpening the dataset received through regulatory returns.

31 October 2023 – The Gambling Commission’s updated customer interaction guidance came into effect.

14 November 2023 – Criminal Justice Bill (which contains new powers for the Gambling Commission to tackle illegal online gambling) introduced in the House of Commons.

22 November 2023 – The Government published the Autumn Statement 2023, which included proposals to change the structure of remote gambling taxation.

1 December 2023 – The Betting & Gaming Council’s seventh edition of the Industry Group for Responsible Gambling Code for Socially Responsible Advertising came into force.

29 February 2024 – Publication of the first wave of the Gambling Commission’s Gambling Survey for Great Britain.

11 March 2024 – Gambling Commission Industry Forum members appointed.

27 March 2024 – Quarterly regulatory returns required for all licence types announced, effective 1 July 2024.

1 April 2024 – LCCP GAMSTOP and suicide reporting requirements came into force.

8 April 2024 – Gambling Commission launched its Corporate Strategy for 2024 – 2027.

25 April 2024 – House of Lords debate on the impact of gambling advertising, predicting enhanced pressure for greater change to advertising following the results of the Gambling Survey for Great Britain due to be published in July.

Where are we now?

The White Paper generated a substantial amount of work for all stakeholders, including the Government, the Gambling Commission and the industry. The intention was for the main measures in the White Paper to be in force by Summer 2024 and Government and the Gambling Commission were committed to and focused on implementing the proposals as quickly as possible.

It is clear a lot of work has been done by all parties to advance the White Paper proposals. Days after the one-year anniversary of the White Paper we saw publication of the Gambling Commission’s response to its Summer Consultation, which included next steps on some of the most critical aspects, such as financial vulnerability checks and enhanced risk assessments. The publication of the Industry Voluntary SR Code demonstrates the collaboration between the Gambling Commission and industry and the concerted efforts being made to ease transition during this period of change. However, some targets have been missed, for example the 1-year deadline for appointing the Gambling Ombudsman has now passed.

Whilst many of the critical proposals in the White Paper can be progressed through LCCP changes and voluntary measures, the goal of Summer 2024 now presents a tight timetable in respect of those proposals that require secondary legislation. Regardless, Government still appears to be intent on reaching that goal as it confirmed in its response to DCMS’s Second Report (published 19 April 2024) that it will be publishing responses to DCMS’s consultations on the statutory levy and land-based measures “in the coming weeks”. It also noted that it “remains on track to introduce the statutory levy via secondary legislation this Summer, with levy funding flowing to organisations as soon as possible thereafter”.

Whilst the 2024 General Election appears unlikely to affect the final outcome of the White Paper proposals, particularly as our understanding is that Labour is supportive of the balance of proposals therein, it may delay matters, as gambling is unlikely to be a high priority for any new government.

What can we expect next?

Responses to the following consultations:

DCMS Consultation: Land-based measures (expected in the “coming weeks”).
DCMS Consultation: Statutory Levy (expected in the “coming weeks”)
Remainder of Gambling Commission Autumn Consultation.
Gambling Commission December Consultation.

DCMS consultation on Gambling Commission fees.
Introduction of the statutory levy (expected this Summer).
Government consultation on bringing remote gambling into a single tax structure.
Establishment of Gambling Ombudsman (now behind schedule).
Extension of Gambling Commission powers to tackle illegal gambling.
Government review of the horserace betting levy.
Publication of the second wave and annual report of the Gambling Survey for Great Britain.

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01May

Gambling Commission publishes Summer 2023 Consultation Response and Betting & Gaming Council announces New Industry Voluntary Code

1st May 2024 Harris Hagan 153

On 1 May 2024, the Gambling Commission published the Response to its Summer 2023 Consultation on Proposed Changes to the LCCP and RTS (the “Summer 2023 Consultation Response”), confirming widespread changes to the rules that regulate licensed gambling operators in Great Britain, including in relation to financial vulnerability checks and financial risk assessments; remote games design; direct marketing; age verification and personal management licences.

Meanwhile, the Betting & Gaming Council (“BGC”) on the same day published a new Industry Voluntary Code on Customer Checks and Documentation Requests Based on Spend (the “Industry Voluntary SR Code”), which will operate as a voluntary interim code on all aspects of social responsibility (“SR”) measures where, notwithstanding any other regulatory requirement, customer spend is the trigger for action. The purpose is to provide a more consistent approach to SR compliance, specifically customer checks and document requests based on spend until the financial vulnerability checks and the risk assessments described in the Summer 2023 Consultation Response are brought into force. The simultaneous publication is not coincidental as the documents are inextricably linked, as we explain below.

In this blog, we outline the changes proposed in the Summer 2023 Consultation Response and discuss these in the context of the announcement of the Industry Voluntary SR Code.

The Summer 2023 Consultation Response

The Summer 2023 Consultation Response is the second consultation response to be published relating to the reforms outlined in the White Paper (after the Department of Culture Media and Sport published the response to its consultation on stake limits on 23 February 2024 – for further information, please see our blog: White Paper Series: DCMS announces online slots stake limits) – and the first to be published by the Gambling Commission.

The long-awaited response outlines the Gambling Commission’s plans to introduce changes to the rules set out in the Licence Conditions and Codes of Practice (“LCCP”) and Remote Gambling and Software Technical Standards (“RTS”) over the course of the next ten months – with changes coming into force in four stages: August 2024, November 2024, January 2025 and February 2025, to ease implementation.

The key changes are outlined below.

Financial vulnerability checks and financial risk assessments

Changes

The Gambling Commission will introduce light-touch financial vulnerability checks, alongside a pilot of enhanced frictionless financial risk assessments. In line with the Government’s aims in the White Paper, the latter will only be rolled out if the pilot proves the checks can be carried out in a frictionless manner.

The light touch financial vulnerability checks will apply to gambling customers with a net deposit of more than £150 a month. The checks will involve the assessment of publicly available data (i.e. whether the customer is subject to a bankruptcy order, a county court judgment, an individual voluntary arrangement, a high court judgment, administration order or decree, or debt relief order – or equivalent). Following feedback from the industry, the new financial vulnerability checks will not require licensees to consider an individual’s personal details, such as postcode or job title.

With regard to enhanced financial risk assessments, the Gambling Commission will (as was previously announced on the regulator’s blog) carry out a pilot to test how frictionless assessments will work in practice, working with credit reference agencies (including Equifax, Experian and TransUnion) and gambling businesses to examine potential consumer impact. Through data collection, the Commission will also explore the exact financial thresholds at which assessments should be conducted – before they are rolled out in a live environment. It will also consider what actions should be taken while an assessment is taking place; and the validity period of an assessment should a customer meet thresholds again.

It is intended that neither the light-touch financial vulnerability checks nor the enhanced financial risk assessments will affect consumer credit ratings.

Timing

To ease introduction of the light-touch financial vulnerability checks (for both customers and licensees), the new requirements will initially come into force at £500 a month from 30 August 2024 before reducing to £150 a month from 28 February 2025.

The pilot (in which only operators in the three highest bands of operating licence fee categories will be required to be involved, i.e., J1, K1 and L1; alongside volunteers in lower fee categories) will last for a minimum of six months and involve testing data sharing in three stages:

in relation to customer accounts that are not currently active;
in relation to historical data relating to active customers; and
on the first occasion a customer meets a threshold within the pilot period.

It is expected that the pilot will take place between 30 August 2024 and 31 March 2025. However, the Gambling Commission can extend the pilot period to the end of April 2025, should this be necessary for practical reasons.

Relationship with Industry Voluntary SR Code

The publication of the Industry Voluntary SR Code on the same day as the Summer 2023 Consultation Response is no coincidence. It has been developed jointly between BGC members and the Gambling Commission – with the aim of operating as a voluntary interim scheme that will bring consistency across the regulated sector until the frictionless financial risk checks proposed in the Summer 2023 Consultation Response have been developed, tested and implemented.

Specifically, the Industry Voluntary SR Code sets out what actions a BGC member must take when customers wish to make net deposits of:

more than £5,000 in a rolling month – in which case the operator must undertake a risk assessment of the customer to understand their financial situation and assess whether the customer is displaying any indicators of harm. It is intended that this will involve one or more of: a safer gambling interaction; a review of the customer’s affordability based on occupation, industry, job title and salary or savings/assets; a review of open-source information; a review of previous information obtained from the customer; and financial insights from third parties. As a result of the risk assessment, appropriate action must be taken when high risk activity is identified, which may include escalating to “a process of enhanced consideration”, which is similar to an enhanced due diligence check – where comfort cannot be obtained.
£25,000 in any rolling 12-month period – in which case the operator must promptly undertake “a process of enhanced consideration”.

The £5,000 threshold will be halved to £2,500 for 18- to 24-year-olds.

When determining whether a customer has met the relevant threshold, their overall net position can be ‘considered’ over the previous 180 days, which effectively means that recycled winnings within that period may be taken into account.

If risk assessments do not take place (for example, because a customer has not responded to a request for an interaction), the customer should be prevented from exceeding the relevant monthly threshold on deposits. If the customer hits the deposit limit in three consecutive months without a risk assessment taking place, the operator must restrict the customer until the risk assessment has been completed.

The Industry Voluntary SR Code also sets out a non-exhaustive list of examples of actions which could be taken by operators between the threshold for financial vulnerability checks (as mandated in the LCCP) and before the need for “enhanced consideration” as required by the Industry Voluntary SR Code, which include one-way notices and messaging, interactive questionnaires, surveys, PGSI surveys, telephone and live chat interactions, requests to set a deposit limit, and sending an activity statement with acknowledgement required – noting that these actions should not require documentation to be provided by the customer and operators shall be free to select the action that best fits with their current tool kit of interactions and at the threshold optimised for the customer.

BGC members should also note that it is intended that the Industry Voluntary SR Code will be supplemented by a BGC code on anti-money laundering checks (the “Industry Voluntary AML Code”), to provide the same consistency across the sector in respect of AML measures. The Gambling Commission and the BGC are actively working on the Industry Voluntary AML Code.

Insight

The stance taken by the Gambling Commission in relation to light-touch financial vulnerability checks and financial risk assessments is fortunately, a far cry from what the industry feared when the Summer 2023 Consultation was first published. The Gambling Commission should thus be credited for genuinely listening to all responses to the Summer 2023 Consultation and adopting a sensible pragmatic approach.

Regarding the light-touch financial vulnerability checks, the Gambling Commission has helpfully reduced the range of flags to be taken into consideration and clarified that it does not consider all flags should result in one type of action – giving the example that a county court judgment for a parking ticket should not be treated the same as a bankruptcy. It will be up to licensees to tailor actions to the nature and severity of all indicators of harm for a particular customer. Affected licensees should therefore take steps now to review their existing responsible gambling policies and procedures to determine how, when and why they should be updated to take into account both the light-touch financial vulnerability checks proposed in the Summer 2023 Consultation Response and, if they choose to adopt it, the Industry Voluntary SR Code.

Regarding the pilot for enhanced financial risk assessments, this is an undoubtedly a wise step by the regulator. Without a pilot, there was a significant risk of unintended consequences of the new rules, which may have been irreversibly detrimental for the industry. It is further positive that, in introducing the pilot in the Summer 2023 Consultation Response, the Gambling Commission has reiterated that the financial risk assessments should be frictionless for “the vast majority of customers who undergo them”; apply to “only the highest spending remote gambling accounts”; and “would not be a cap on gambling”. If the Gambling Commission can stay true to these aims, this is good for the remote industry, which has long expressed concern that such checks would encourage gamblers to move to the unregulated black market. One critical aspect of the journey ahead will be interpreting what is meant by “vast majority” in the context of the frictionless nature of enhanced financial risk checks – as we expect the Gambling Commission and the industry may have different views.

We also welcome the Gambling Commission’s confirmation that the new enhanced financial risk check requirements, once determined, will not apply to betting on a track or at local high street betting shops – presumably following extensive lobbying by the industry.

Any operators that are not in the three highest bands of operating licence fee categories but are interested in participating in the pilot scheme can express their interest by emailing [email protected].

Remote games design – reducing intensity and increasing consumer understanding

Changes

New rules will extend requirements that already apply to slots to other online products and will ban:

features which speed up the time for a result to be shown or can give the illusion of control such as ‘turbo’ or ‘slam stops’ (but these changes will not apply to bonus features where no additional stake is wagered, or prohibit “crash games” or “scratch all” features);
game cycles of less than 5 seconds on casino products excluding slots (note that this is double the 2.5 second requirement that currently applies to slots under the RTS);
autoplay – but the ban on autoplay will not prohibit auto-dabbing in bingo or auto-posting of blinds in peer-to-peer poker (NB – three card poker against house would, on the other hand, be caught);
audio or visual celebrations of returns less than or equal to stake – extending an existing requirement that currently only applies in relation to slots;
operator-led functionality which facilitates playing multiple simultaneous products such as roulette and blackjack tables – this requirement will not apply to bingo, virtual betting and peer-to-peer poker.

Further changes include requiring operators to display to consumers in real time their net spend, and time spent gambling.

Timing

The new remote games design rules come into force on 17 January 2025.

Insight

The Gambling Commission has decided to proceed to introduce all the proposals in the Summer 2023 Consultation relating to game design, with only minor amendments to clarify when the new requirements do not apply to specific products. Please see our previous blog for commentary on the original proposals: White Paper Series: Gambling Commission’s remote game design proposals – simply following suit?

Direct marketing

Changes

Online gambling businesses will need to provide customers with options to opt-in to the product type (casino, betting and bingo) they are interested in and the channels (phone, email and text) through which they wish to receive marketing.

Timing

The new direct marketing rules come into force on 17 January 2025. However, customers will only be required to re-confirm their marketing preferences (consistent with the new rules) the first time they log in after the implementation date. Until then, marketing can continue based on the customer’s prior marketing preferences.

Insight

Notably, the Gambling Commission has, following feedback, removed:

lottery as a product type (following concerns raised about the lottery sector’s ability to rely on legitimate interests for wider fundraising activities); and
post as a channel for marketing (on the basis that this goes further than existing requirements under the Privacy and Electronic Communications Regulations).

It is also positive that licensees will be permitted to rely on previously indicated marketing preferences until the next time a customer logs into their online account – however, we query from a practical perspective how quickly and effectively operators are going to be able to communicate changes in marketing preferences to third parties that undertake marketing on their behalf.

There are, however, still many aspects of the changes which are controversial – particularly in relation to the effective removal of a “soft opt in” for gambling marketing – meaning that the industry now stands alone as the only sector where positive opt-in to marketing is always required. For discussion on the Gambling Commission’s original proposals in relation to direct marketing, please see our blog: White Paper Series: Direct marketing and cross-selling in the crossfire.

Age verification – tightening verification in premises

Changes

New rules will require all land-based gambling licensees, including smaller licensees, to carry out age verification test purchasing. The newly affected categories of licensees include those that hold Category A and B betting, bingo, family entertainment centre (“FEC”) and adult gaming centres (“AGC”).

The LCCP will also be updated to confirm that it is best practice for casino, AGC, bingo, FEC and betting operators to require staff to check the age of any customer who appears to be under 25 years of age (rather than under 21 years of age) – e.g. Think 25.

Timing

The new age verification requirements come into force on 30 August 2024.

Insight

This was one of the less controversial changes proposed in the Summer 2023 Consultation and so it is unsurprising that it will come into force as originally proposed and within a short period (i.e. with just a four month lead-in – however, for testing purchasing, this date is somewhat artificial as results only need to be submitted within 42 days of the end of each financial year, meaning the deadline for testing relevant premises is actually 31 March 2025).

We recommend that licensees impacted by the new testing requirements (that have not already been voluntarily submitting test results) consider how they will comply with this requirement when it comes into force, how much that will cost and whether they involve an independent third party. Many such licensees may be able to access testing services via their trade association. Staff training will also be essential before the “Think 25” requirement comes into force on 30 August 2024.

For prior discussion on the Gambling Commission’s age verification proposals, please see our blog: White Paper Series: Time to think – Gambling Commission consultation on land-based age verification measures.

Personal management licenses (“PMLs”) – extension of roles

Changes

The Commission has extended the management roles expected to hold a PML to include:

Chief Executive Officers, Managing Directors and equivalent positions;
Chairs of boards – unless that person only holds the position on a transient and short-term basis for individual meetings; and
those responsible for AML and CTF, including the Money Laundering Reporting Officer and Nominated Officer.

Timing

The extended requirements in relation to PMLs come into force on 29 November 2024.

Insight

Again, this change has been introduced as originally proposed, with only minor clarifications to make it clear that the requirement for the Chair to hold a PML only applies to those that hold fixed or indeterminate office – a necessary change that PML applications often take months to be determined by the Gambling Commission.

For prior discussion on the PML requirements and corporate culture, please see our blog: White Paper Series: Transforming corporate culture by “driving personal accountability and responsibility” for lookers-on seeing most of the game?.

Next steps

We obviously recommend that all licensees familiarise themselves with the Summer 2023 Consultation Response and consider how the new requirements that are relevant to their business will be incorporated into their existing policies, procedures and controls in time for the deadlines. In addition, licensees should consider whether they wish to adopt the Industry Voluntary SR Code as an interim solution pending the introduction of formal financial vulnerability checks and financial risk assessments (once the pilot has completed).

This is a headline summary of today’s publications. We will be considering in depth and publishing further detailed insight into the proposed changes in the Summer 2023 Consultation Response in due course. Please sign up to our blog to receive further news, insight and analysis.

Please get in touch with us if you would like Harris Hagan to review your internal policies and procedures, provide PML training on the new requirements, or otherwise need legal advice on any gambling compliance matters.

27Mar

Quarterly regulatory returns across the board from July 2024

27th March 2024 Francesca Burnett-Hall 177

The Gambling Commission has confirmed today that it will be introducing a requirement for the submission of quarterly regulatory returns for all licence types, effective from 1 July 2024.

In our previous blog, we outlined the proposals set out in the Gambling Commission’s Autumn consultation, which also included harmonising regulatory return reporting dates, so that all operators will report at the same time.

The Gambling Commission is going ahead with its plans, which it believes will:

have a material impact on its ability to budget, through an improved ability to understand income levels on a more regular basis and forecast accurately;
provide a timelier, deeper and more accurate picture of the gambling sector, in line with the Gambling Commission’s aspirations and the intentions of the government’s White Paper;
facilitate simpler systems development for the Gambling Commission; and
simplify internal processes and improve the quality of industry statistics, as reporting periods will align.

The Gambling Commission sets out that these advantages will also directly improve its ability to use data to: (a) ensure licensees are within the correct fee category; (b) provide vital information to ensure it regulates effectively, and enable comparisons between sectors; and (c) publish industry statistics on the size and shape of the gambling market in Great Britain. It believes that:

“quarterly returns will support our aim to be a risk-based, evidence-led, and outcomes-focused regulator.”

The Gambling Commission does acknowledge that moving to quarterly regulatory returns will introduce a greater regulatory burden on those licensees that are currently only required to submit annual returns, but it hopes that this will be balanced by other changes it is making to regulatory returns, such as improving supporting guidance and streamlining the number of questions that need to be completed each quarter by removing around 600 fields across all licence types,; these changes were proposed in a previous consultation which was the subject of our blog published in 7 April 2020. For those licensees that hold multiple licences, the Gambling Commission considers that “these changes should simplify the administration required for submitting regulatory returns as they can all be done at the same time across the same time periods.”

Updated licence condition 15.3.1 will come into effect on 1 July 2024, and the first set of regulatory returns, which will relate to the quarterly return period 1 July 2024 to 30 September 2024) must be submitted by all licensees by 28 October 2024.

The Gambling Commission will set out further details of the changes, including information about the data required, in communications to licensees in the period leading up to the implementation date of 1 July 2024.

The full consultation response can be seen here.

Please get in touch if you have any questions about regulatory returns, or if you would like assistance with any compliance or enforcement matters.

28Feb

White Paper Series: Parliamentary debate on affordability and financial risk checks

28th February 2024 Chris Biggs 167

On Monday 26 February 2024, the UK Parliament debated the petition Stop the implementation of betting affordability/financial risk checks (the “Petition”), formally addressing one of the Government’s (and the Gambling Commission’s) more controversial commitments from the White Paper.

Background

Launched on 1 November 2023 by The Jockey Club Chief Executive Officer, Nevin Truesdale, the Petition reached more than 100,000 online signatures within 27 days, prompting Parliament’s Petitions Committee to schedule yesterday’s debate by Members of Parliament (“MPs”) including the Gambling Minister, Stuart Andrew (the “Debate”).

The Petition states:

“We want the Government to abandon the planned implementation of affordability checks for some people who want to place a bet. We believe such checks – which could include assessing whether people are ‘at risk of harm’ based on their postcode or job title – are inappropriate and discriminatory.”

On 16 November 2023, the Government responded to the Petition, stating it is “committed to a proportionate, frictionless system of financial risk checks, to protect those at risk of harm without over regulating”, also indicating that the Gambling Commission would set out its plans “in due course”.

Last week (and in advance of the Debate), the Gambling Commission’s Executive Director of Research and Policy, Tim Miller, published a blog entitled “Financial risk next steps – February 2024”, which provided an update on the Gambling Commission’s intended implementation of financial risk checks. We discussed these proposals in our recent blog: White Paper Series: Gambling Commission update on its implementation of financial risk checks.

The Debate

The Debate was attended by a large number of MPs, 27 of whom shared views in favour of both sides of the argument. In opening the Debate, MP for Neath, Hon. Christina Rees, stated “affordability checks are not about attacking consumer rights or curbing individual liberties, but about upholding consumer protections and curbing operator excess.” Whilst Rees acknowledged the concerns of industry bodies, operators and the horseracing community, she argued that the idea of introducing financial risk checks is not new, and that industry and consumers alike support the need for regulation against harmful betting. In Rees’ view, the issue rather seemed to be that:

“such checks need to be frictionless, without negative impact on punters or operator revenue, and without pushing vulnerable gamblers into the black market.”

Similar concerns about the proposed financial risk checks were raised by other MPs. Broadly, the major concerns from the industry (particularly horseracing) and consumers, as put forward by various MPs, were:

it is unclear if the financial risk checks would truly be frictionless;
it is inappropriate for the Government and/or the Gambling Commission to determine what is affordable for an individual;
financial risk checks would push more consumers to the black market; and
horseracing should be distinguished from other forms of gambling, such games of chance, in the implementation of financial risk checks.

Several MPs called for the Government to reconsider the proposals and start again, arguing that a one-size-fits-all approach would not work, and that a wider group of industry stakeholders and experts must be consulted in order to find the appropriate balance.

MP for Shipley, Hon. Philip Davies, on the other hand, took a slightly more nuanced approach, stating that “however much I would like the Government and the Gambling Commission to abandon the affordability check policy, I have not been here so long without accepting that some battles are impossible to win”. Davies suggested that, if they are to be introduced, the proposed “enhanced” financial risk checks should be based on data from the Steering Committee on Reciprocity (“SCOR”), instead of current account turnover data. Davies argued that the use of SCOR data would, crucially, ensure that the checks are “entirely frictionless and do not discriminate against any group, such as the self-employed”.

Amongst the arguments in support of the introduction of financial risk checks, several MPs emphasised that the lower, “light-touch”, financial vulnerability checks will be frictionless and that the enhanced financial risk checks would only require 0.3% of online gambling account holders to provide gambling businesses with additional financial information – the 0.3% being a reference to Andrew Rhodes’ (Chief Executive Officer for the Gambling Commission) blog entitled “Your questions answered on the financial risk checks consultation”, which was published on the Gambling Commission’s website on 7 September 2023. In his blog, Rhodes argued that, on the basis that nearly all gambling customers have a credit reference file which can be checked frictionlessly, only a small percentage (estimated at 0.3% by the Gambling Commission – although it is unclear on the basis of what data/research) would be asked to directly provide additional financial information to an operator in connection with a financial risk assessment.

MP for Sheffield Central, Hon. Paul Blomfield, stated that gambling addiction is a health issue which needs to have a prevention strategy. Noting gambling-related harm can occur at relatively low levels of spend, Mr Blomfield also considered that the 0.3% of customers likely to be affected by the enhanced checks is a “tiny number” in relation to the benefit that could be achieved through introducing the checks. Blomfield went on to downplay the argument that financial risk checks would cause customers to move to the black market. Blomfield cited similar concerns that were raised by the tobacco and payday lending industries, which he noted did not come to fruition after these industries were more stringently regulated.

MP for Swansea East and Chair of the All-Party Parliamentary Group on gambling related harm, Hon. Carolyn Harris, suggested that the logical way forward in protecting those gripped by gambling addiction is to introduce the financial risk checks on anyone gambling larger sums:

“Those would not stop anyone who can afford it betting as much as they choose, but it would stop those who cannot.”

Harris cited research by Dr Philip Newall from the University of Bristol and Dr David Zendle from the University of York using open banking data, which found that “unharmed” gamblers have an average monthly spend of £16.41, compared with £208.91 for the highest risk group. Harris went on to conclude that this research suggested that “risk-free” gamblers would very rarely trigger any affordability checks at the thresholds proposed by the Gambling Commission, being £125 net loss within a month for the light-touch financial vulnerability checks.

Gambling Minister, Hon. Stuart Andrew was last to respond in the Debate and did not provide any significant new information or details about the financial risk checks. Andrew appeared to attribute responsibility to the industry for its “onerous, ad hoc and inconsistent“application of financial checks under the current regime and to cite this as a basis for the Gambling Commission introducing consistent and less intrusive checks. An alternative argument might be that it is the Gambling Commission’s overreaching in its compliance and enforcement activity, particularly in relation to its application of its guidance, that provides the foundation for the proposed financial risk checks.

Andrew briefly addressed the issues raised regarding the black market and the horseracing industry, but largely focused on reiterating the Government’s position that it is not its “job to tell people how to spend their money”. Rather, and as outlined in the White Paper, the Government wants to balance individual freedom with the “necessary action to tackle the devastating consequences that harmful gambling can have on individuals and communities”. Andrew also stated:

“I believe that the proposals for financial risk checks will represent a significant improvement for both businesses and customers, compared with the current situation.”

In addressing the implementation of the financial risk checks, Andrew largely restated the Gambling Commission’s position from its blog of 22 February 2024 (referred to above). However, he emphasised that the Gambling Commission is “carefully listening” to concerns, demonstrated by its confirmation that gambling businesses will not be required to consider an individual’s personal details, such as their postcode or job title, as part of the financial risk checks. We question whether it is the Gambling Commission “carefully listening”, or the public and political traction created by the Petition that led to the Gambling Commission issuing a premature update on its intentions immediately before the Debate, and in doing so backtracking on its original proposal to obtain personal information, such as occupation, from customers. Had the Gambling Commission not so issued its update, Andrew would have had little new information to put forward.

Andrew also emphasised that the Government is supportive of the Gambling Commission’s intention to pilot the implementation of the financial risk checks, and that he hopes it is clear that:

“both the Government and the Commission want this to be a genuine pilot of how data sharing would work”.

Summary

In summary, the Debate uncovered many more questions than answers, and it is still unclear how the Government and Gambling Commission intend to ensure that the financial vulnerability and financial risk checks will truly be frictionless. What is clear, however, is that the Government and the Gambling Commission are working closely together to roll out these checks.

In terms of next steps, Andrew confirmed that the Gambling Commission will publish its full consultation response “very soon”, which reflects the Gambling Commission’s promise in its February 2024 blog that the consultation response would be published in March 2024. We, along with many other industry stakeholders, will eagerly be awaiting the publication of this response, in the hope that it will: (1) clearly set out full details of its proposals with regard to financial vulnerability and financial risk checks (including in relation to the proposed pilot phase); and (2) propose novel and well considered solutions to address some of the (we consider, genuine) concerns raised by MPs in the Debate, and by the wider industry.

Frustratingly, and despite the high number of signatories to the Petition, it is unlikely that the Government and the Gambling Commission will depart from their path as articulated in the White Paper. The Gambling Commission, it seems, is determined to establish the requirement for financial risk checks, ensure that technological developments are implemented, and only then consider and determine what the “vast majority” of customers having a “frictionless” experience actually means. To continue the theme of horse-based analogies enjoyed by several MPs during the Debate, by then, the horse will have bolted.

Watch the full Debate in Parliament here:

Please get in touch with us if you have any questions about financial risk checks or if you would like assistance with any compliance or enforcement matters.

With thanks to David Whyte and Gemma Boore for their co-authorship.

23Feb

White Paper Series: DCMS announces online slots stake limits

23rd February 2024 Chris Biggs 164

The Department for Culture, Media and Sport (“DCMS”) has today announced that the government will introduce statutory maximum stake limits for online slots games later this year, as follows:

£5 maximum stake limit per spin for adults aged 25 and above; and

£2 maximum stake limit per spin for young adults aged 18 to 24.

In reaching this decision, DCMS states:

“We believe these limits will achieve the government’s stated objectives of reducing the risk of gambling-related harm, with a lower risk of unintended consequences and less disruption to the majority of gamblers who do not suffer harm.”

DCMS’ announcement is accompanied by the publication of its response (the “Consultation Response”) to its consultation A maximum stake limit for online slots games in Great Britain, which we have previously discussed.

Implementation

DCMS’ announcement sets out that the online stake limits will come into force in September this year, subject to the passing of secondary legislation through Parliament. It is of note, however, that there is no reference to an implementation date in the Consultation Response itself. If the stake limits are approved by Parliament, the secondary legislation will impose new licence conditions on remote gambling operators, which the Gambling Commission will be responsible for enforcing.

Notably, there will be a phased approach to the implementation of these new requirements:

DCMS expects there to be a minimum six-week transition period for Gambling Commission licensees to introduce the £5 stake limit for all customers.

Following this, the government will allow a further six weeks for licensees to develop any necessary technical solutions before it expects the lower £2 stake limit for young adults aged 18 to 24 to be in place.

The phased approach acknowledges that development of technical solutions by licensees may be required for age-based limits. However, following the transition period, if licensees are unable to develop solutions adequately to distinguish between customers who are 25 and over and those who are under 25, DCMS expects licensees will not be able to offer any customers online slots stakes exceeding £2 per spin. Licensees would therefore be wise to start taking steps now to develop the technical solutions required.

Key points of note in the Consultation Response

DCMS received and considered 98 stakeholder responses and identified the following clear themes from those responses:

Online slots are a high-risk gambling product and statutory stake limits are necessary to reduce the risk of gambling-related harm.
Many respondents indicated that online slots stake limits should align with stake limits on gaming machines in land-based operators.
It is important to retain consumer choice in light of the risk of consumers moving to the illegal online market if they are no longer able to stake at their preferred levels.

£5 stake limit

Notably, 44% of respondents indicated they were in favour of the lower £2 stake limit for all adults. DCMS explains that 26% of respondents (some of whom selected the £2 limit option) indicated in the free text box of the consultation question that the stake limit should be lower than £2. Many respondents in favour of these lower stake limits indicated that this option was “most likely to reduce average losses or help minimise the risk of runaway losses”, therefore significantly reducing gambling-related harm.

DCMS states around 20% of customers currently choose to stake over £5 per spin on online slots at least once a year and will therefore be impacted by the stake limit, however only 0.6% of all spins are over £5. DCMS believes that a £5 stake limit will: (a) achieve the government’s stated objectives in a proportionate way, with a lower risk of unintended consequences such as displacement to the illegal online market; (b) help to reduce harm because of the constraint on a player’s ability to place very large stakes quickly; and (c) align with the stake limit for category B1 machines in casinos.

£2 stake limit

DCMS states that the majority (60%) of respondents favoured a stake limit of £2 or under for young adults aged 18 to 24, many of whom cited evidence showing that young adults may be particularly vulnerable to gambling-related harm and “felt that this justified greater protections either in the form of a separate stake limit or otherwise.”

DCMS agrees that the evidence justifies increased protections for this cohort of consumer:

“Young adults have the highest average problem gambling score of any age group, generally lower disposable income, ongoing neurological development impacting risk perception, and common life stage factors like managing money for the first time or moving away from support networks.”

“A separate limit for young adults aligns with the wider government approach to gambling of targeted and evidence-based interventions for those at risk, while not unduly restricting others.”

Scope of limits

The government received general support for the descriptions of ‘online slots’, ‘maximum stake’ and ‘game cycle’ proposed in its consultation. The definition of online slots appears to have drawn the most scrutiny: 65% of respondents agreed with the government’s description and 22% did not agree, with some respondents considering the description to be too vague and therefore susceptible to loopholes. DCMS states that some respondents expressed concerns that gambling operators could be incentivised to develop products which are functionally similar to online slots, but might be argued to be technically exempt to circumvent stake limits.

DCMS confirms that the government does not intend to introduce a maximum stake limit for online games other than online slots. However, its intention is for boundary-pushing products (such as those which combine fundamentally slots-type gameplay elements with other games like bingo – for instance the popular ‘slingo’ game) to be captured under the definition of slots and subject to the stake limits.

Summary

Whilst not unexpected, the introduction of the stake limits at these levels is a significant shift in the UK’s remote gambling sector and one which will come at a cost to licensees. DCMS acknowledges the likely reduction in annual gross gambling yield across the industry, as well as the costs associated with implementing the stake limits. However, DCMS is clear on the government’s position: the £5 and £2 stake limits “will limit the potential for harmful losses from those gambling at elevated levels of risk or experiencing problem gambling compared to the status quo of theoretically unlimited stakes.”

Whilst it is unclear when the government will table its secondary legislation for Parliament to consider, we encourage licensees to begin considering how they will implement the stake limits well in advance of the September commencement date (whenever that may be).

Please get in touch with us if you have any questions about the stake limits or if you would like assistance with any compliance or enforcement matters.