08May

White Paper Series: the White Paper, one year on

8th May 2024 Jessica Wilson 153

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.

Please sign up to our blog to receive insight and commentary on the continued journey of the White Paper.

27Mar

Quarterly regulatory returns across the board from July 2024

27th March 2024 Francesca Burnett-Hall 176

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.

16Feb

Chambers Global 2024 Legal Rankings

16th February 2024 Harris Hagan 150

Harris Hagan continues to have four lawyers individually ranked for Chambers & Partners’ Global Market Leaders Rankings (Gaming & Gambling).

We are proud to have the quality of our work in the gambling industry recognised by the prestigious legal directories and will always strive for the highest standards for our valued clients.

John Hagan (Band 1) has been praised as a “leading practitioner” for gaming and gambling matters and recognised for often assisting with “high-value international transactions”.

Bahar Alaeddini (Band 2) has been recognised for her “specific expertise” with global gaming and gambling matters, including her frequent work on regulatory and licensing matters.

Julian Harris has been recognised with the esteemed position of Senior Statesperson and commended for his “wealth of experience” regularly assisting clients with licence reviews and compliance investigations. Commentary has praised Julian as “very switched on.”

Last, but certainly not least, Hilary Stewart-Jones also continues to occupy the position of Senior Statesperson and has been recognised as a “noted figure” in the industry. Commentary has emphasised her status as “very well connected and very knowledgeable for the UK market.”

29Nov

Chambers Gaming Law 2023 Global Practice Guide

29th November 2023 Harris Hagan 169

We are pleased to announce that Bahar Alaeddini has reprised her role as Contributing Editor to the Chambers Global Practice Guide for Gaming Law 2023, and Jessica Wilson has again contributed as a co-author. The latest edition of the Gaming Law 2023 guide is now live and describes the licensing and regulatory regimes in 35 jurisdictions, including many of the major global jurisdictions.

In a year that saw a number of significant developments and regulatory updates in the UK and abroad, Gaming Law 2023 is a helpful guide to lawyers, gambling businesses and others in the industry. It provides the latest legal information on a range of topics, including: land-based and online gambling; B2C and B2B licences; application requirements; affiliates; white labels; responsible gambling; AML legislation; restrictions on advertising; acquisitions and changes of control; trends in social gaming, esports, fantasy sports and blockchain; and taxation.

Harris Hagan contributed to the following parts of the publication:

Key trends are covered by jurisdiction under the Trends and Developments section, and the practice guide also provides users with the opportunity to perform jurisdiction comparisons using the Compare locations tool.

Please use the above links to review our contributions and use the practice guide.

29Nov

Understanding the impact of increased cost of living on gambling behaviour: Gambling Commission’s interim findings

29th November 2023 Chris Biggs 172

Last month, the Gambling Commission published its interim findings on the impact of increased cost of living on gambling behaviour. The Gambling Commission’s research aims to improve its understanding of the impact of increased cost of living by examining the behaviours and motivations of gamblers during the period of high cost of living in Great Britain (“COL Research”).

The Gambling Commission commenced the COL Research in December 2022 in partnership with Yonder Consulting, and undertook a “mixed-methodology research approach” with a longitudinal survey taking place over three waves between December 2022 and June 2023. This was followed by qualitative depth interviews to further understand the impact of the rise in cost of living on lifestyle and gambling behaviours.

In this blog, we summarise the COL Research, set out the Gambling Commission’s interim findings and identify key points for licensees in Great Britain to note.

What is the COL Research?

The Gambling Commission sets out its definition of ‘cost of living’, as:

“the amount of money that is needed to cover basic expenses such as housing, food, taxes, healthcare, and a certain standard of living.”

The COL Research specifically aims to test three core hypotheses:

The rise in cost of living is likely to impact consumers’ gambling behaviour in different ways, depending on their personal circumstances and the way in which gambling fits into their lives.
Some gamblers will report that the rise in cost of living has had a mediating effect on their gambling behaviour.
The rise in cost of living may negatively impact vulnerabilities for some consumers, putting them at an increased risk of gambling-related harm.

The project commenced with three waves of quantitative research, which sought to: (1) initially establish a baseline of key gambling behaviours; (2) explore the impact of external triggers for gambling; and (3) subsequently track any changes to the core gambling behaviours.

Wave 1

Between 21 and 22 December 2022 the Gambling Commission commenced the nationally representative survey of 2,065 adults aged 18 or over. 973 participants (47%) had engaged in gambling activity in the last four weeks.

Wave 2

Between 27 February and 3 March 2023, 1,694 of the same sample group were recontacted to capture changes in the core gambling behaviours surveyed. 820 participants (48%) had engaged in gambling activity in the last four weeks.

Wave 3

Between 26 May and 2 June 2023, 1,391 of the same sample group (who all took part in Wave 2) were recontacted to capture further changes in the core gambling behaviours. 666 participants (48%) had engaged in gambling activity in the last four weeks.

Qualitative wave

The qualitative phase took place in August 2023, with the aim to build a “more rounded impression and picture of each individual”. This phase engaged with 16 individuals who each completed a three-day “digital diary pre-task” to reflect on spending habits. 16 one-hour online interviews were then conducted with gamblers who engage in a variety of different gambling types and with different gambling behaviours (whilst it is not clear, we assume these were the same 16 individuals who participated in the digital diary pre-task).

The Gambling Commission’s interim report does not discuss findings from the qualitative phase; these will accompany further quantitative and longitudinal analyses in the final report expected in “early 2024”.

Key findings

The quantitative phase of the COL Research (i.e. the three waves) surveyed the participants across three broad topics. We set out the Gambling Commission’s key findings for each topic below.

Topic 1: Financial comfort and concerns, and wellbeing

Just under half of the respondents indicated they were “just about managing but felt confident that they would be okay” with the cost of living, whereas between 40% and 43% of individuals indicated they were “financially comfortable”.

The subgroups most likely to have broader concerns about their personal finances are those who gamble online and those who score 8 or more on the Problem Gambling Severity Index (“PGSI”), however most individuals signalled the need to take steps to make their income go further during the tracked period.

In terms of wellbeing, between 45% and 49% of respondents reported “not being able to enjoy the things that they used to due to the rising cost of living” throughout the tracked period.

Topic 2: Changes in gambling behaviours

Despite the rise in cost of living, a clear majority of gamblers reported that their gambling behaviours (amount of time and money spent, number of gambling occasions and typical stake placed) had remained stable, the majority ranging from 62% to 75% depending on the type of gambling behaviour.

If a change in gambling behaviour was reported, it was much more likely to be a decrease in gambling. For example, between 22% and 26% of individuals reported a decrease in the amount of time spent gambling, compared to 6% to 7% that reported an increase in time spent gambling.

69% of individuals who did report changes indicated that these changes were “at least partially a direct consequence” of increases in the cost of living.

Individuals who scored 8 or more on the PGSI were more likely to report an increase in the gambling behaviours surveyed, despite the rise in cost of living.

Topic 3: Motivations for gambling

Respondents who previously indicated they had changed their gambling behaviours were asked questions about four specific motivations in Waves 1 and 3, displayed in the Gambling Commission’s Table 4.1:

Between 10% and 20% of online gamblers indicated that bolstering their finances was their motivation for gambling, and this motivation applied to “significantly more” individuals who scored 8 or more on the PGSI.

Interim conclusions

The concluding remarks in the Gambling Commission’s report considered the interim findings in the context of the following two hypotheses:

Has the rise in cost of living had a mediating effect on gambling behaviour?

Initial quantitative evidence does not suggest that the rise in cost of living has had a mediating effect on gambling behaviours. However, the “small proportion” of those who did make changes to their gambling during this period were more likely to have deceased their gambling; the exception being individuals who scored 8 or higher on the PGSI, who were more likely to have increased their gambling compared to other groups of participants.

Has the rise in cost of living negatively impacted vulnerabilities for some consumers?

A small minority of gamblers who said that they have changed at least one of the surveyed gambling behaviours reported using gambling to support their finances in some way, with a greater proportion of those doing so being online gamblers and/or those who scored 8 or more on the PGSI. The individuals who did change their gambling behaviours indicated that the rise of cost of living has at least partially contributed to their change in behaviour.

Takeaway points

It can be inferred from the interim findings that online gamblers and individuals scoring 8 or higher on the PGSI may be more vulnerable to gambling-related harms when faced with a rise in cost of living.

Given that the interim findings come at a time when the spotlight is on affordability and customer interaction, it will be interesting to see whether the COL Research findings feature prominently in the Gambling Commission’s response to its summer consultation that closed on 18 October 2023 and included consideration of new obligations on licensees to conduct financial vulnerability checks and financial risk assessments.

For the meantime, online operators in particular, should bear these interim findings in mind while they are updating their safer gambling policies and procedures to reflect the Gambling Commission’s revised customer interaction guidance for remote gambling licensees; and evaluate whether they ought to take increased cost of living into account in their assessment of financial risk – pending formal direction from the Gambling Commission.

The Gambling Commission’s final report in “early 2024” will combine its interim findings with further quantitative analysis of the longitudinal impact of the increased cost of living across different demographic groups, and key findings from its qualitative phase of the COL Research.

Please get in contact with us if you have any questions about the Gambling Commission’s interim findings and/or your business’ approach to customer interaction and financial vulnerability.

27Nov

The Legal 500 Country Comparative Guide 2023 – Gambling Law

27th November 2023 Francesca Burnett-Hall 156

In its second year of publication, Partner Bahar Alaeddini and Associate Francesca-Burnett Hall have jointly contributed to the UK chapter of The Legal 500: Gambling Law Comparative Guide 2^nd Edition (the “Guide”), with Bahar once again acting as contributing editor.

UK-Chapter Download

The publication – which this year spans 19 jurisdictions – gives readers an overview of gambling law, regulatory and licensing requirements in various jurisdictions and the UK, on matters including:

key gambling legislation and the legal definition of gambling;
types of gambling licences available, with a headline of the application procedures;
prohibited gambling products;
information on gambling advertising and marketing affiliates;
penalties for unlawful gambling;
anti-money laundering and safer gambling requirements;
shareholder reporting and approval thresholds; and
the regulator’s enforcement and sanction powers.

Of particular interest in this year’s edition of the Guide are the key regulatory developments and proposals for reform expected over the next 12-24 months, including those set out in the White Paper, which we outline in the UK chapter.

You can read the Guide and compare jurisdictions here.

09Nov

Unlicensed gambling – Part 1: Growing threat or exaggerated myth?

9th November 2023 Gemma Boore 195

Earlier this month, Andrew Rhodes, the Chief Executive Officer and Commissioner of the Gambling Commission, took part in a two-part podcast discussion with The Gambling Files to reflect on and discuss topical issues affecting the gambling industry. Amongst the subject matter covered, Rhodes touched in Part 2: HE REVEALS MORE! on black market activity and the steps the Gambling Commission is taking to disrupt illegal gambling in Great Britain – which Rhodes claims to have resulted in significant drops in traffic to illegal operators.

This reflected themes in Rhodes’ keynote speech at the International Association of Gambling Regulators (“IAGR”) conference in Botswana on 16 October 2023, in which he noted whilst illegal online gambling market exists in Great Britain, as it does elsewhere:

“it is not a significant concern and this position hasn’t fundamentally changed. However, that does not mean there is no illegal market or no risk”.

In other news, Lucy Frazer, the Secretary of State for Culture, Media and Sport recently digested the contents of a letter from eight UK horseracing industry leaders. In the letter, the signatories reportedly warned that affordability checks, which the Government recommended be introduced in the Gambling White Paper, will cost racing £250 million in funding over the next five years and that this would be a disaster for British horseracing as punters either walk away from the sport or turn to the black market to gamble.

Potentially to back up this claim, the Racing Post then published the results of its “The Right to Bet” survey, which found that (1) one in four of the respondents would be prepared to switch to the black market if faced with stringent affordability checks; and (2) nearly one in ten have already used black market betting sites.

A petition was then posted on the UK Government and Parliament website, calling for the Government to abandon the planned implementation of affordability checks because “more intrusive checks triggered at a higher threshold risks bettors moving to the black market where there are no consumer protection or safer gambling tools”. This petition has – as at the time of writing – accumulated 76,204 signatures, three quarters of the number needed to trigger a debate in Parliament.

So, is the black market really a growing threat, or an exaggerated distraction? What are the Gambling Commission and the Government doing to curb illegal gambling? And what can businesses do if their proprietary content (intellectual property (“IP”)) turns up on unlicensed sites?

Read on for our discussion along with a helpful checklist for licensees that receive communications from the Gambling Commission regarding black market activity.

What is black market gambling?

The term ‘black market’ gained popularity during World War II (when common household products were rationed to avoid hoarding) and generally refers to an illegitimate market in which commodities are being traded, exchanged or performed in an illegal manner.

With regard to modern gambling in Britain, section 33 of the Gambling Act 2005 (as amended) (the “2005 Act”) makes it clear that it is an offence to provide facilities for gambling to customers in Great Britain from anywhere in the world, without holding a licence from the Gambling Commission unless a relevant exemption applies. Accordingly, it is common within the industry to refer to unlicensed online operators that illegally provide facilities for gambling to customers in Great Britain, without the appropriate licence or falling under a relevant exemption, as the “black market”.

Why is unlicensed gambling bad?

As Rhodes notes in his keynote speech at the IAGR conference, every gambling jurisdiction in the world has illegal online gambling:

“Whether online gambling is prohibited or not, if you can access the internet, then you will be able to find a way to gamble. We all know this. It’s also worth pointing out at this point that what is an illegal, unlicenced operator for me in Great Britain may be a legitimate, licensed business for you and vice versa.”

From a consumer perspective, one of the fundamental problems is that black market websites are not always distinguishable from those that are locally licensed – at least to the untrained eye. This means a consumer may be gambling on an illegal gambling site without even knowing it and, in this “Wild West” of the remote sector, unlicensed operators are not constrained by regulation. It is common to see consumer reports of problems, such as the inability to withdraw funds and difficulties contacting support in the event of a complaint. Indeed, Rhodes acknowledged in The Gambling Files podcast, that recent research has shown that illegal websites actively seek to advertise to people that have self-excluded from gambling on GAMSTOP and others allow unlawful activity in itself by, for example, allowing children to gamble.

So, what is the Gambling Commission doing?

One of the Gambling Commission’s key functions is to investigate and prosecute illegal gambling and other offences committed under the 2005 Act. As Rhodes noted in his IAGR keynote speech, the Gambling Commission typically deploys an “intelligence-led approach” to combat black market operators.

This means that ordinarily, they will initially issue a cease-and-desist letter to require the unlicensed operator to suspend their operations. Failing this, the Gambling Commission will implement “disruption techniques, using its partnerships or relationships with other companies”, which can include:

asking web hosting companies to suspend or ‘block’ British consumers from accessing the websites;
contacting payment providers to remove payment services;
liaising with internet search and service providers to prevent websites appearing on search engines;
working with social media firms to take down posts which promote illegal gambling; and
engaging with international regulators, including by sharing information and raising the prominence of the issue – and Rhodes used the keynote as an opportunity to call for collaboration in this regard.

In addition, Rhodes described in his speech more novel steps that the Gambling Commission is taking to disrupt unlicensed, illegal online operators through collaboration with others:

“…this means we’ve been going further upstream, further away from where our formal powers begin and have been looking to work with others to get between those illegal operators and British consumers and generally frustrate their business and force them out of our market.”

And this has included:

working with software licensees to prevent access to popular products when their games appear to be available on illegal sites; and

engaging with licensees if we discover their affiliates have placed adverts on illegal sites – ensuring licensees remove advertising and encouraging an assessment of business relationships with these affiliates.

By taking these steps, Rhodes claimed that the Gambling Commission has “increased… enforcement actions by over 500 percent between 2021-22 and 2022-23” and “more than doubled the number of successful positive disruption outcomes” leading to a “a 46 percent reduction in traffic to the largest illegal sites coming into market”.

Notwithstanding the bountiful fruit of its recent efforts, the Gambling Commission has always acknowledged that stronger measures are required. In its Advice to Government relating to its review of the 2005 Act, the Gambling Commission explains that:

“Under our current framework, we cannot compel third party providers to take action such as to block British access to the website, remove payment services or prevent websites from appearing in search engines. Moving to criminal prosecution has had limited effect, largely because websites can immediately disappear and reappear with a different identity (a phenomenon known as ‘phoenixing’), and their ultimate owners and lines of responsibility are very difficult to fully trace. This also makes it very difficult to accurately scope the size of the black market”.

How does this play into the White Paper?

Before it was even published, the black market was the backbone of many highly politicised debates concerning the White Paper and the proposals to be made therein. Affordability (and more specifically, mandatory deposit and/or loss limits) in particular, led to outcry from the sector and various interested parties commissioned research to try to truly gauge the extent of illegal, unlicensed gambling in Great Britain.

In particular, a 2021 PwC report entitled “Review of unlicensed online gambling in the UK” commissioned by the Betting and Gaming Council, claimed that the proportion of UK online gamblers using unlicensed operators in November 2020 had increased to 4.5 per cent – or around 460,000 people – from 2.2 per cent over the previous one to two years. In addition, the study found that stakes with unlicensed operators had doubled to £2.8 billion.

Neil McArthur, the then Chief Executive of the Gambling Commission, poured cold water on the PwC report in a letter to cross-party MPs investigating the harmful effects of gambling, reportedly stating it was “not consistent with the intelligence picture” and that the impact of the black market “may be being exaggerated“.

When the White Paper was finally published in April 2023 – some 30 months after the call for evidence – it was broadly accepted to be balanced and evidence-led. Chapter 3, which considered the potential for reform in the Gambling Commission’s powers and resources, outlined the Government’s views on black market gambling and whether it presented a tangible risk. Specifically, the Government acknowledged that although estimating the size of the black market is difficult, it was clear that “excessive commercial caution risks driving customers to the black market where they can be exposed to a variety of risks”. The Government further noted that there has been a rise of illegal operators in other jurisdictions with:

“either extremely permissive regulatory regimes or no regulatory oversight, and/or are being run by individuals with suspected links to serious and organised crime.”

It then went on to acknowledge the Gambling Commission’s disruptive approach was working well to an extent (a statement with which we agree), but recommended that the Gambling Commission’s powers to action be strengthened to create a safety net, giving the Gambling Commission the versatility to “apply to court as a last resort” if required:

“When Parliamentary time allows, we will introduce legislation that will give the Gambling Commission the power to apply to the court for an order that requires ISPs , payment providers and other providers of “ancillary services” to implement measures aimed at disrupting the business of an illegal gambling operator”.

While a laudable aim, changes to legislation take time and given other legislative pressures and the impending General Election, it is not clear when these changes will take effect – there certainly was no mention of such a bill in The King’s Speech on 7 November 2023. This contrasts with affordability checks (which the White Paper recommends become mandatory for operators to carry out when consumers reach specific loss thresholds), which have already been subject to a public consultation by the Gambling Commission and may take effect much sooner.

Lessons for licensed operators

For the meantime, Rhodes emphasised in his keynote that the Gambling Commission will continue to use its existing powers (and authority) to tackle illegally, unlicensed gambling. As noted earlier, this may include the Gambling Commission contacting its own licensees to try to persuade them to take steps to disrupt illegal gambling.

If you hold a British licence and are contacted by the Gambling Commission about a black market website, we recommend that you take professional advice. You may also want to consider taking one or more of the following steps:

verify that your content is being used / your adverts are being placed on an illegal website. Involve your tech teams as they should be able to confirm whether the content is legitimate or an infringing copy of your IP;

check that games / links are accessible in Great Britain and if they are, whether you receive any British traffic from the site in question;

identify the operator of the website and/or the affiliate that is placing advertisements on the illegal site;

consider whether you have a contractual relationship with the operator / affiliate or any member of its group. If you do not have a direct contract with the operator/ affiliate or one of its group companies, consider whether there may be an indirect relationship (for example, via a content distributor or affiliate program);

if a contractual relationship exists, investigate how this arose and review all due diligence you conducted on the third party/ies during the contractual relationship;

send a cease-and-desist letter (takedown notice) to all entities that you can identify as being involved; cite restrictions in your contract (if relevant);

if the third party does not cease the activity or justify their actions:

terminate any contracts with them promptly. Note that inclusion of such a termination right is a requirement under Social Responsibility Code Provision 1.1.2 of the Licence Conditions and Codes of Practice;

consider contacting third parties such as hosting providers, domain registrars and third-party search engine such as Google who may otherwise be able to stop the website being accessible by customers in Great Britain;

engage professionals to review:

your systems and processes for identifying use of your content / placement of your ads on illegal websites; and

your standard contracts,

to mitigate the risk that your IP rights are exploited illegally in the future; and

update the Gambling Commission within the deadline they have set on the outcome of your investigation and the steps you have taken to:

address the present infringement of your IP rights; and

mitigate the risk of a similar situation occurring again.

Please get in touch with us if you would like assistance responding to a Gambling Commission request, or if would like to discuss the themes in this blog more generally.

26Oct

Andrew Rhodes’ speech at the International Association of Gambling Regulators Conference: A call for collaboration

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The current Chief Executive Officer (“CEO”) of the Gambling Commission, Andrew Rhodes, delivered a keynote speech at the International Association of Gambling Regulators (“IAGR”) Conference in Botswana on 16 October 2023. In this blog, we sum up the key messages from Rhodes’ speech, which was delivered to gambling regulators from across the world. Part One outlines Rhodes’s commentary on implementation of the UK Government’s Gambling White Paper, and Part Two summarises what was said regarding the Gambling Commission’s increasingly innovative approach to tackling black market gambling.

Part One: The White Paper

Background

Rhodes introduced the White Paper by stating that the Gambling Commission is “pleased to see so many of recommendations adopted”. He proceeded to describe “the publication of the White Paper an important moment”, citing the need to update the gambling regulatory framework with “evidence-based changes” to keep pace with digitisation in society.

Priorities

Rhodes acknowledged that “the White Paper is a key priority for the Commission”. However, he managed expectations by stating that “this will not be the work of a few months” given that the “Gambling Commission is either leading or supporting on the implementation of Government policy” in relation to “over 60 areas of work”. Rhodes then distinguished between priorities for the Government versus priorities for the Gambling Commission, the latter of which included to:

“ensure bonus offers and incentives do not lead to excessive or harmful gambling,
set further product controls for safer online games,
require operators to identify and take action for financially vulnerable consumers and to tackle significant unaffordable gambling through frictionless checks that are not disruptive for consumers.”

Rhodes noted that some of these themes would be common to all regulators at the conference and that while “attitudes, politics, regulatory frameworks and so on may be quite different”, human behaviour is similar cross-jurisdictionally, which may lead to “some commonality in the way approach these areas”.

Prior and upcoming consultations

Rhodes confirmed that the Gambling Commission has received “over 2,300” responses to its first round of White Paper consultations and that those responses “can and will help us improve the changes we make to our rules and to how gambling is regulated in Great Britain”. He considered, however that there have “been some misunderstandings” in relation to financial risk checks, some of which he put down to the complexity of the issue the Gambling Commission is facing. However, according to Rhodes, in other cases, misunderstandings have arisen as a result of “deliberate misinformation designed to muddy the waters of debate and to torpedo the implementation of Government policy.” This is potentially (we think) a not-so-subtle reference to the open letter to Racing Post readers published in September 2023, in which the Gambling Commission complained that the Racing Post has been writing imbalanced stories about the financial risk consultation.

Rhodes went on to confirm that progress is underway on launching “the next tranche of consultations”, which will initially include:

socially responsible incentives (such as bonuses and free bets), and
gambling management tools (including online deposit limits and opt-outs),

with further consultations to follow in 2024.

Gambling data and the evidence base

Rhodes noted that besides consultations, the Gambling Commission is “leading on” improvements to “gambling data” and “the evidence base”. He mentioned that the Gambling Survey of Great Britain will launch early next year. It is set to be the “largest survey of its type” worldwide and attract around 20,000 respondents annually.

He proceeded to outline the “inherent conflict” in relation to the use of problem gambling data, particularly in the context of polarised debate. Rhodes noted that some may seek to cite a low problem gambling rate of between 0.3 percent and 0.5 percent of the population, at the same time as arguing that the same “sometimes limited” sample sizes create “insufficient evidence to support intervention in areas of higher risk”. Although this is contradictory, Rhodes acknowledged that the evidence base requires improvement and promised that the Gambling Survey of Great Britain would help to achieve this – with updated questions for the digital age and “predictable, regular data” for study.

With regard to the broader evidence base, Rhodes reiterated the six priority objectives which were set out in the Gambling Commission’s three-year evidence gaps paper, namely:

early gambling experiences and gateway products;
the range and variability of gambling experiences;
gambling-related harms and vulnerability;
the impact of operator practices;
product characteristics and risk; and
illegal gambling and crime.

Part Two: The black market

Background

In the second half of the speech, Rhodes explained that the Gambling Commission has been taking an increasingly robust approach towards the black market. As above, the tackling of illegal gambling is a priority area of the Commission’s three-year evidence gaps paper, published in May 2023. Rhodes emphasised that while the black market is an issue, it “is not a significant concern” due to the high rate of channelisation. Channelisation refers to the proportion of consumers who gamble in the licensed market in comparison to the illegal market.

Actions

Rhodes outlined some of the actions that the Gambling Commission has been taking to “disrupt unlicenced , illegal online operators through collaboration with others”, which has broadly involved “going upstream, further away from where formal powers begin”. This means working with others to intervene between illegal operators and British customers to “generally frustrate their business and force them out of the market”.

Rhodes gave examples of what this work entails:

increasing engagement with payment providers and financial institutions,
collaborating with internet search and service providers to delist illegal operators from search results and geo-block their websites,
working with social media companies to remove posts which promote illegal gambling,
cooperating with Gambling Commission software licensees to prevent access to products which appear to be available on illegal sites, and
engaging with Gambling Commission licensees where affiliates have placed adverts on illegal websites.

Results

Rhodes revealed that the Gambling Commission’s combative approach has:

“more than doubled the number of successful positive distribution outcomes”
“close down hundreds of illegal lotteries”
“stop influencers promoting unlicensed gambling.

Further, between May and July, Rhodes explained that geo-blocking had restricted access to four of the top 10 illegal domains, and there was a 46 percent reduction in traffic to the largest illegal sites.

The Gambling Commission also “block 17 sites from Google search results through collaboration with Google, and “remov payment facilities from illegal sites” through their work with Mastercard.

Next steps

Rhodes pledged to “continue to study the impact of interventions and respond accordingly”, and to “deepen collaboration with partners in industry, tech and finance” to further strengthen their disruptive capabilities.

Moreover, Rhodes revealed that the Gambling Commission would be holding a Conference in March 2024 to explore “how can work with partners to further decay, frustrate and drive out illegal gambling”.

Rhodes reflected that “strong collaboration with others”, including with other regulators, has been crucial to the results the Gambling Commission’s disruptive enforcement work has yielded so far. However, he wants to see further collaboration take place and urged other regulators to join him in forging and strengthening relationships.

Reflection

This is Rhodes’ second time speaking at the IAGR conference. His last speech, delivered in Melbourne in October 2022 at a time when the White Paper was still pending, appealed for gambling regulators to work better together; share data and evidence; adopt common approaches; and coordinate actions where possible.

This year, Rhodes recognised the role that collaboration has had in successful outcomes during the last year, including in relation to tackling illegal online operators, and reiterated his call for overseas regulators to “share notes” with the Gambling Commission on gambling operators that trade globally.

Rhodes also emphasised that the Gambling Commission is “more than ready to work with ” – referring to a recent roundtable with nine US and Canadian jurisdictions as an example of the Gambling Commission “establish clear working relationships that will support all of us to be more effective”.

At the conclusion of the conference, IAGR members elected Ben Haden of the Gambling Commission as their new president. Mr Haden takes over the presidency from Jason Lane, the Chief Executive of the Jersey Gambling Commission.

Next steps

Please get in touch if you would like to discuss any aspect of this speech or if we can otherwise assist you. You can find out more about the services Harris Hagan provides here.

This blog has been written on the basis of the published version of Rhodes’ keynote speech available here, which may differ slightly from the delivered version.

19Oct

Harris Hagan retains Band 1 ranking in Chambers and Partners

19th October 2023 Harris Hagan 171

We are delighted to announce that Harris Hagan is ranked in Band 1 of Chambers and Partners UK 2024 for Gaming for the 20^th consecutive year.

“The team at Harris Hagan is comprised of experts in their field and is very accomplished at handling the complex landscape of gambling regulation in the UK.”

Partners John Hagan and Bahar Alaeddini continue to be recognised in Band 1. Consultants Julian Harris and Hilary Stewart Jones are ranked as Senior Statespeople. Senior Associates David Whyte and Gemma Boore, together with Associate Francesca Burnett-Hall, continue to be recognised as Associates to Watch. Together they constitute 7 of the 27 gaming lawyers recognised in the directory, befitting our status as a leading specialist gambling law firm. We were also invited by Chambers to write the introduction to the practice area.

We received many positive testimonials, including:

“The lawyers at Harris Hagan are top legal specialists in the remote gaming industry and have been able to assist with all our requests, with the ability to adapt to our business and commercial expectations.”

“John is the go-to person for reliable, practical and sensible advice. He has vast experience across the gambling sector and is able to draw on this to support our business.”

“Bahar is a master at solving complex issues and has an encyclopaedic knowledge of gaming laws and regulations.”

“David is very responsive and knows the industry, regulations and landscape well.”

“Gemma is very easy to deal with as well as very proficient in every aspect of her work.”

“Francesca is always available and very diligent.”

In view of the sensitive nature of much of our work, it is our long-held policy not to name clients in directories, but you know who you are, and we thank you for your continuing instructions and for helping us achieve these impressive rankings.

06Oct

Harris Hagan continues to be ranked Tier 1 in The Legal 500

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We are delighted to announce that Harris Hagan continues to be ranked in The Legal 500 2024 as Tier 1 for Gaming and Betting in the UK.

“There’s no one else to go to other than Harris Hagan for everything gaming. One stop shop for all your needs. They deliver trust, confidence and integrity.”

Managing partner John Hagan, alongside consultants Julian Harris and Hilary Stewart-Jones continue to be listed in The Legal 500’s Hall of Fame, and partner Bahar Alaeddini retains her listing as a Leading Individual.

David Whyte, senior associate, has been listed as a Rising Star and remains a key lawyer, alongside senior associate Gemma Boore, and associates Francesca Burnett-Hall and Jessica Wilson.

We received many positive testimonials, including:

“Market leader in gaming law.”

“The team is very knowledgeable about UK gambling laws and engaging with the regulator.”

“The individuals at Harris Hagan have a deep knowledge of not just the British gambling laws, but also of the way in which the regulator operates.”

“In-depth knowledge of gambling licensing in terms of regulations and how they are implemented.”

“Bahar Alaeddini and Jessica Wilson get full marks.”

“John Hagan, Julian Harris and Bahar Alaeddini are prominent leaders in the gaming law field.”

We wish to thank our clients and friends of the firm for their input and recognition of our work.