26Sep

Bahar Alaeddini named an Emerging Leader of Gaming 40 under 40

26th September 2023 Harris Hagan 179

We are very delighted to announce that Partner Bahar Alaeddini has been named an Emerging Leader of Gaming 40 under 40 by The Innovation Group, organisers of the Emerging Leaders of Gaming, and Global Gaming Business.

The programme recognises professionals under the age of 40 already making significant impacts in the global gambling industry, and the next generation of industry leaders.

This honour recognises Bahar’s continued exceptional impact on the gambling industry since joining Harris Hagan in 2012. Bahar advises many of the world’s largest online and land-based gambling companies, regulators, governments, financial institutions, and private equity firms on gambling law and regulation. Bahar is also at the forefront of thought leadership in the gambling sector, sharing her extensive experience and insight by authoring many articles on the topic, including acting as the editor of the Chambers Global Practice Guide on Gaming Law. Additionally, Bahar is General Counsel of the International Association of Gaming Advisors and top-ranked in Chambers UK and The Legal 500.

The group’s achievements will be celebrated at G2E in the Networking Lounge (Booth 5649) on 11 October 2023 from 4pm to 5pm. The reception is open to all registered G2E attendees, including past honourees and professionals across the Emerging Leaders of Gaming network.

22Sep

Julian Harris wins VIXIO’s 2023 Compliance Lifetime Achievement Award

22nd September 2023 Harris Hagan 192

We are very delighted to announce that Consultant and Founder Julian Harris has been awarded the Global Regulatory Award for Compliance Lifetime Achievement by VIXIO Regulatory Intelligence.

This special award recognises Julian’s unprecedented work in trailblazing a “culture of compliance and regulatory standards within the industry” for more than 40 years. During that time, Julian has advised many of the world’s largest online and land-based gambling companies, regulators, governments, financial institutions, and private equity firms on gambling law and regulation. Julian has also been at the forefront of thought leadership in the gambling sector, sharing his extensive experience and insight on various gambling regulatory issues by authoring many articles on the topic, including acting as editor of global publications on gambling law, and in his speeches at conferences across the world. He also served as President of the International Association of Gaming Advisors, the first person to do so from outside North America, testament to the esteem in which he is held amongst gaming advisers worldwide.

Julian first came to specialise in gambling law in 1981 representing the Gaming Board for Great Britain (the then British regulator). He co-founded Harris Hagan with John Hagan in 2004, in anticipation of the Gambling Act 2005 and the expected growth of the gambling industry in Great Britain. It was a bold and inspired decision at a time when niche law firms were rare in the City of London.

Upon receiving this distinguished award, Julian commented:

“I am greatly honoured and humbled by this award. I have felt privileged to have enjoyed being a part of this exciting industry for some 40 years, working with industry, fellow advisers and regulators internationally.
To receive this award from such a distinguished panel of judges and from the most respected global regulatory awards is particularly gratifying.”

The 2023 Global Regulatory Awards will take place on 29 November 2023.

03Aug

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

3rd August 2023 Gemma Boore 204

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

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

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

1. Background

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Download the DM Consultation

Below, we:

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

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

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

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

2. Analysis

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

What is the current legal position?

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

The current legal position can be broken down as follows:

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

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

What is proposed in the DM Consultation?

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

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

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

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

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

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

What could possibly go wrong?

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

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

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

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

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

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

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

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

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

We can but “watch this space”.

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

What is the current legal position?

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

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

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

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

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

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

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

What is proposed in the DM Consultation?

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

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

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

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

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

What could possibly go wrong?

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

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

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

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

What is the current legal position?

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

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

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

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

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

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

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

What is proposed in the DM Consultation?

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

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

What could possibly go wrong?

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

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

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

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

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

What is the current legal position?

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

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

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

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

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

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

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

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

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

What is proposed in the DM Consultation?

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

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

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

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

What could possibly go wrong?

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

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

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

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

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

3. Conclusion

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

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

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

04Jul

White Paper Series: The Gambling Commission’s powers – more to come?

4th July 2023 David Whyte 187

As all stakeholders seek to get to grips with the White Paper and their focus is drawn to its high-profile proposals such as financial risk checks and stake limits, they might be forgiven for overlooking the potential aftereffects apparent from some of the more inconspicuous proposals, particularly when those proposals are considered in the context of the Gambling Commission’s Advice to Government – Review of the Gambling Act 2005 (the “Advice to Government”).

When referring to the Gambling Commission’s powers and resources in the White Paper, the Government states in its summary (our emphasis added):

“The Commission has a broad range of powers that enable it to regulate the industry effectively but there are some small changes that could be made around its ability to investigate operators, including improving the Commission’s responsiveness to changes of corporate control.”

There is limited information contained in the White Paper about what those “small changes” might be. Points of note are:

“The government and the Commission are clear that an enhanced approach to compliance enforcement is required to effectively monitor the industry and ensure that operators are abiding by the rules.”
The Gambling Commission has advised that “some of its powers concerning investigations could be enhanced to better protect consumers and hold operators to account”. In particular, “it is concerned that licence holders are able to take action that can hinder or frustrate an investigation, including surrendering their licence during the course of the investigation.”

The Government concludes:

“When Parliamentary time allows, we will legislate to give the Commission additional powers to assess and regulate new business owners, reflecting the increased complexity of the entities that it regulates. We will also look at the case for providing further powers to ensure that licensees are not able to interfere with the Commission’s ability to conclude its investigations or move their finances to reduce the size of their fine.”

To understand fully the extent of the “small changes” or “further powers” that the Government may decide are appropriate, it is necessary to consider the Advice to Government, within which the Gambling Commission proposes amendments to the Gambling Act 2005 (the “2005 Act”) “to allow for streamlined regulatory action in a number of areas”. This article focusses on three of those areas: (a) the process for change of corporate control (“CoCC”) applications; (b) options for investigations and licence surrender; and (c) flexibility for penalties that can be imposed on licensees.

Change of corporate control

Under section 102 of the 2005 Act, a change of corporate control (“CoCC”) takes place when a new person or other legal entity becomes a new “controller” of a licensee (more information on a CoCC can be found in our previous blog). When a CoCC occurs, licensees must notify the Gambling Commission, via eServices by means of a key event, as soon as reasonably practicable and in any event within five working days of them becoming aware. Licensees must then submit a CoCC application within five weeks of the event occurring or the Gambling Commission is obliged to revoke the licence, although it may, at its discretion, extend the five-week period. Presently, in determining a CoCC application, the Gambling Commission has a binary choice, it may, in law, only grant the application or refuse it. If the latter, the licence is revoked.

The complexity of corporate structures and financing have increased the burden on both the Gambling Commission and licensees to investigate and/or evidence proof of ownership and source of funds related to CoCC applications and this, along with suitability considerations, means increasingly prolonged investigations. The Gambling Commission recommends: (a) the removal of the binary nature of the CoCC decision, to allow for the possibility of it granting the application subject to its imposition of conditions on the licence; (b) an amendment to allow for the appeal by a licensee against the Gambling Commission’s decision not to grant an extension of the five-week period for the submission of a CoCC application, which at present can only be appealed by means of judicial review; and (c) that it be given the ability to apply a financial penalty for the submission of CoCC applications outside the five-week reporting window.

In the main, these proposals are proportionate and reasonable. The removal of the binary nature of the CoCC decision will benefit both licensees and the Gambling Commission, as will the introduction of the proposed appeal process. The Gambling Commission has become increasingly strict in relation to the late submission of CoCC applications, so licensees will be unsurprised that it is now proposing the imposition of a financial penalty in those circumstances. Whilst a financial penalty is certainly better than the alternative of revocation, licensees may wish to seek clarification in relation to how the quantum of the proposed financial penalty will be calculated. A fixed fee would most certainly be preferable to the application of the Statement of principles for determining financial penaltie s (the “FP Statement”), which incudes no formula for calculating quantum, allows for uncapped financial penalties, and contains various criteria that may be not be appropriate to the late submission of a CoCC application.

Refusal of licence surrender

The Gambling Commission recommends that the Government considers amending the 2005 Act to permit it to refuse a licence surrender under certain circumstances when an investigation is taking place, so that it retains “regulatory authority” over licensees, post surrender, primarily with a view to it imposing a financial penalty. The implication from the Gambling Commission’s proposal, which is supported by little more than reference to “vidence from casework” is that, in its view, licensees may be utilising surrender as a means of avoiding a financial penalty, and that they may “move finances during, or in anticipation of, an investigation” to avoid the same.

Potential options proposed by the Gambling Commission are: (a) requiring its consent before the surrender of a licence in circumstances where enforcement action has been commenced; (b) extending the application of the relevant sections of the 2005 Act that provide the power for the Gambling Commission to impose a financial penalty, such that for a specified period they apply to a licence that has lapsed or been surrendered; and (c) amending the 2005 Act to prevent licensees from triggering a mandatory licence revocation by failing to pay their annual licence fee.

We have several concerns about this proposal and the Gambling Commission’s justification for it:

Licences are valuable assets that are difficult to obtain. Reputable licensees subject to enforcement action will: (a) wish to continue to operate in the British market, clear their name and protect their asset; and/or (b) be very concerned at having to disclose their surrender to regulators in other jurisdictions without having defended the alleged licence condition breach to a conclusion; and/or (c) be aware their previous standing will be taken into account in the context of any new licence application, as will that of the PML holders and controllers involved. Surrender is much more likely to be due to a desire to exit the market in Great Britain, likely influenced by ever-increasing regulatory requirements, the inordinate length of time taken by the Gambling Commission to carry out a licence review, or by other commercial or economic factors. Some licensees who do surrender might not even have considered doing so, but for the reminder included by the Gambling Commission in much of its enforcement related correspondence that a licence can be surrendered at any time. The implication of widespread manipulative intent in the Advice to Government is therefore wrong and perhaps provides valuable insight into how the Gambling Commission perceives the integrity of its licensees.
Very exceptionally, an unscrupulous licensee may surrender their licence deliberately to avoid a financial penalty. In those very rare instances, those who do so might better be dealt with by means of criminal prosecution and the consequence and protection that brings, rather than be subject to sanction by what will, at that stage, be an exacerbated Gambling Commission.
One of the reasons given by the Gambling Commission for its recommendation is that “a surrendered license leaves unable to protect consumers or take regulatory action to hold the licensee accountable for their actions.” We struggle to understand how imposing a financial penalty on a licensee that has surrendered their licence will further protect consumers. The surrender itself, prompted by the Gambling Commission’s action, must surely both protect consumers and hold licensees accountable.
Punitive sanctions form an important part of the Gambling Commission’s regulatory toolkit but when a licence surrender has already removed all risk, are not critical to its upholding of the licensing objectives set out at section 1 of the 2005 Act. We question whether it is appropriate for the Gambling Commission, or any other regulatory body, to retain regulatory authority over a former licensee in those circumstances, when the sole objective is to facilitate the imposition of a punitive financial sanction. If, as the Gambling Commission suggests, licensees have moved finances deliberately to avoid a financial penalty, the refusal of surrender is not going to guarantee a different outcome.
A financial penalty can only be imposed if there has been a breach of a licence condition, which, by virtue of section 33 of the 2005 Act, is a criminal offence. The Gambling Commission is therefore able to prosecute should it wish to seek to impose a punitive sanction. However, the Gambling Commission may be less inclined to take this approach because: (a) it would be obliged to prove the offence beyond reasonable doubt, rather than to the lower burden of proof of balance of probabilities applicable to its imposition of a financial penalty; (b) it would likely be held to higher investigative standards and more restrictive time limits by the criminal courts; and (c) unlike a financial penalty which is unlimited and paid into the Consolidated Fund, the quantum of court fines is restricted by statute and fines are paid to the courts.

Licensees would be wise to monitor the Gambling Commission’s next steps in this area so that they may challenge the logic of this recommendation when it is revisited by either the Gambling Commission or the Government in consultation.

Flexibility for penalties that can be imposed on licensees

Statutory time limits

In the Advice to Government, the Gambling Commission refers to the 12-month time limit for laying criminal charges and the 24-month time limit for imposing a financial penalty prescribed by the 2005 Act. It suggests that these time limits have restricted its ability to prosecute or impose a financial penalty in cases where “establishing a breach” is “very complicated” and proposes amendments to the 2005 Act to: (a) introduce greater flexibility in the time limits for bringing prosecutions; and (b) explore extending the cut-off period for the imposition of a financial penalty.

Although the Gambling Commission states that it has “sound evidence from regulatory experiential knowledge and casework” that underpins its recommendations, the examples used by the Gambling Commission as justification are very broad and insufficiently detailed. As most licensees who have been involved in Gambling Commission enforcement action have experienced, the primary reason for the delay is not that “the increasing complexities of gambling businesses make establishing a breach in some cases very complicated” but rather the Gambling Commission’s inefficiency.

Licensees subject to the Gambling Commission’s enforcement process are often required to adhere to relatively short deadlines, whereas the Gambling Commission operates to much longer deadlines. Some licensees have had to wait six months or more to receive a response or update from the Gambling Commission, often only to receive a preliminary findings or findings letter that largely repeats the content of its previous correspondence. It is this inefficiency that leads to the expiration of statutory time limits. A significant factor that has led to the increasing complexity of the Gambling Commission’s investigations will likely be its inconsistent application of its regulatory requirements or a lack of clarity about the same, particularly given its increasing introduction of formal requirements through guidance, and the lack of clarity as to its expectations in relation to affordability.

Furthermore, it is not, as the Gambling Commission states in the Advice to Government, its charge to “establish a breach”: this is again an indication of its mindset. As a regulator it is obliged to investigate suspected breaches on a fair, reasonable and proportionate basis, and to reach a conclusion on the facts. A cynic might suggest that it is this determination to “establish a breach” that is prolonging its investigations. This is particularly so when Licensees’ have raised their standards significantly in recent years and therefore, despite published enforcement action, breaches may be harder to come by.

Long, process driven, delays do not only impact statutory time limits. They have a commercial impact on licensees, detract valuable resource from day-to-day compliance activities, and when related to individuals, impact their wellbeing. It is in all parties’ best interests that matters are dealt with expeditiously. Before amending primary legislation, the Government might wish to consider a careful and fact-based examination of the Gambling Commission’s productivity, including in relation to past enforcement cases. Efficient, proportionate, reasonable, and timely investigations are the very reason for the statutory time limits being imposed in the first place.

Extending the scope of financial penalties

The Gambling Commission sets out in the Advice to Government that extending the scope of financial penalties (which currently only apply to breaches of licence conditions) to encompass suitability concerns, would give it more opportunity to take action. It goes on to state that every case of a financial penalty “has also included suitability concerns which we have been unable to take into account when imposing the penalty” in inference being that if suitability concerns were to have been in scope, the financial penalties it has issued would have been greater.

We agree with the Gambling Commission’s statement: most of its cases of a financial penalty do include reference to it having suitability concerns. However, those suitability concerns are almost always directly linked to a breach of a licence condition. We therefore question whether extending the scope in the manner proposed is necessary, as a financial penalty can be imposed in those cases anyway.

If the Gambling Commission wishes to increase the quantum of the financial penalties it imposes, it has the ability to amend its FP Statement. At present, the FP Statement does not include a formula for calculating the quantum of financial penalties, much to the frustration of licensees and advisors alike. The FP Statement does, however, set out the criteria that is considered by the Gambling Commission when imposing a financial penalty. Much of those criteria could just as easily be relevant to any consideration of a licensee’s suitability: it could therefore be argued that the Gambling Commission is already taking suitability into account. Furthermore, should the Gambling Commission have serious concerns about a licensee’s suitability, it has the ability to suspend or revoke their licence. Licensees may again wish to challenge the necessity of this proposal, if it is introduced in future consultations.

Please get in touch with us if you would like assistance with any compliance or enforcement matters.

31May

White Paper Series: “Hurry up and wait”

31st May 2023 John Hagan 240

As the dust settles (at least temporarily) following the publication of the White Paper, we have “take time to think” so that we may share our insights in a series of blogs and vlogs on the many and varied aspects of the proposed gambling reforms. With the Gambling Commission already seeking to manage expectations by saying that the implementation of the White Paper “will likely take a number of years to fully complete” and urging “more haste, less speed”, this may be a long running series… We will focus on what we consider is important or interesting, ideally both, and our content will be concise and hopefully thought provoking.

Speaking about the White Paper recently in the House of Lords, Lord Grade referred to a saying in the film industry – “hurry up and wait” (also a song by Stereophonics and a military motto) – describing where you get to the location after being forced to spend a lot of time waiting, everybody is standing around, ready, but nothing happens. Having waited nearly 30 months for the publication of the White Paper, coupled with the latest (estimated) indication from the Gambling Commission that the first wave of consultations will not be seen until mid-July, this saying seems apt.

1. Spirit and intention of the White Paper

Throughout our White Paper Series, we will have as our touchstone the aim of the Gambling Review when it was published on 8 December 2020:

“The Government wants all those who choose to gamble in Great Britain to be able to do so in a safe way. The sector should have up to date legislation and protections, with a strong regulator with the powers and resources needed to oversee a responsible industry that offers customer choice, protects players, provides employment, and contributes to the economy.”

The White Paper is true to that laudable aim. As the Secretary of State says in her Ministerial Foreword, at the heart of the Government’s Review is making sure it has the balance right between consumer freedoms and choice on the one hand, and protection from harm on the other. The Government seeks to achieve this balance through an extensive package of measures across all facets of gambling regulation. If it is to be successful, the Government – and Gambling Commission – will need to retain an unerring focus on this balance, essentially the spirit and intention of the White Paper, as it is inevitably buffeted by vested interests through consultation, regulation, and legislation.

2. All things to all people

The first thing to say about the White Paper is that it has been 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. This was equally broadly unexpected, given the acrimony and divergence of views between stakeholders during the “hurry up” phase, so why has the White Paper been such a resounding success? At the risk of oversimplifying, but not wishing to overlook the obvious (including the lack of detail and long grass kicking), it is precisely because the Government has achieved a healthy balance in its proposed reforms, for which it deserves enormous credit, and it is because there is something valuable in the White Paper for everyone.

Responding to its publication, and demonstrating some of the “wins” for the respective stakeholders, comments on the White Paper included:

“Given the correct powers and resources, the Gambling Commission can continue to make gambling safer, fairer and crime free. This White Paper is a coherent package of proposals which we believe can significantly support and protect consumers, and improve overall standards in the industry.” Gambling Commission CEO, Andrew Rhodes.
“BGC members will now work with Government and the Gambling Commission to deliver targeted and genuinely ‘frictionless’ enhanced spending checks to further protect the vulnerable, a new Ombudsman to improve consumer redress, and overdue plans to modernise the regulation of UK casinos.” Betting & Gaming Council CEO, Michael Dugher.
“..it should not be left to the health service to pick up the pieces left behind by a billion-pound industry profiting on vulnerable people, so I fully endorse the statutory levy set out in today’s White Paper and look forward to reading the proposals in detail.” NHS Mental Health Director, Claire Murdoch.
“At GamCare, our priority is making sure that people who need help receive it as quickly as possible. We therefore welcome the clarity the Government has provided on how research, education and treatment will be funded.” Gamcare CEO, Anna Hemmings.
“As chair of the all-party parliamentary group on gambling related harm, I welcome this long overdue White Paper. In the APPG’s 2019 interim report, we asked for affordability checks, parity between land-based and online stakes, an independent ombudsman, a curb on advertising and, most importantly, a statutory levy. Job done.” Carolyn Harris MP.

The introduction of a statutory levy paid by licensees and collected and distributed by the Gambling Commission under the direction and approval of the Treasury and DCMS ministers, is a flagship reform. The long debate as to whether there should be a statutory levy is at an end, there will be a DCMS consultation on the details of its design and, critically, the total amount to be raised. The statutory levy will fund research, education and treatment of gambling harms and is a load-bearing pillar of the reforms for those advocating the “polluter pays” principle.

Financial risk checks, maximum stakes for online slots and the creation of an independent gambling ombudsman have also been very warmly received by key stakeholders and will all be consulted upon by DCMS. The new non-statutory ombudsman will be the subject of our next blog in this White Paper Series.

The Gambling Commission most certainly did not get everything its own way, with Government not religiously following the advice from the regulator, but the Gambling Commission will be the recipient of powers and resources intended to make sure that all gambling is overseen by a “beefed up, better funded and more proactive” regulator. Licence fees will be reviewed (upwards of course) to ensure it has the resources to deliver the commitments across the White Paper. When Parliamentary time allows, it will even get greater power to set its own fees. Detailed analysis of the Gambling Commission’s additional enforcement powers will be the subject of one of our early blogs in this White Paper Series, including some which may have passed below the radar in all the excitement.

The industry positives from the White Paper are more nuanced. The land-based industry can certainly look forward to the long overdue modernisation of casinos and bingo clubs – including greater machine entitlements, credit in casinos for non-UK resident customers, sports betting in all casinos, and additional opportunities for customers to win on the main stage bingo game – and cashless payments across all land-based gambling sectors (following consultation by the Gambling Commission on the player protections which would be required).

From an online industry perspective, the White Paper is arguably as good as could reasonably have been expected in the present political, media and regulatory environment. The Government has resisted calls for bans on advertising, rejected demands for blanket and intrusive low-level affordability checks, and will consult on maximum stakes for online slots at higher levels than leaked previously. However, in outlining the Government’s vision for the future of gambling in moderately business-friendly terms, the White Paper does provide policy direction to which to hold the Gambling Commission accountable, the beginnings of some certainty and a glimpse of what political and regulatory stability might look like, not to mention the hope that the next gambling review might be a generation away.

3. The upcoming consultations

Yes of course everyone wishes the White Paper had gone further (in their direction, naturally). Yes of course there is a lot of work to be done to implement the reforms, once we are no longer “waiting”. Yes of course the devil will be in the detail. But as even the Gambling Commission and the Betting and Gaming Council (the “BGC”) agree in their welcoming press releases, the White Paper is a “once in a generation” opportunity for change. All the key stakeholders will now be seeking to secure their respective prize and imploring Government to prioritise their interests and deliver on its promises at the earliest opportunity, not least through Government and Gambling Commission consultations.

If the risk of the reform process descending into warring factions and reaching a standstill is to be mitigated, and this would not be in anybody’s interests, it is imperative that the process itself remains balanced and that all the key stakeholders see comparable progress in relation to their interests. From an industry perspective, this means engaging positively, constructively, and wholeheartedly with the upcoming consultations, proposing pragmatic and sensible solutions to the difficult challenges the Government and the Gambling Commission face, not least in relation to cashless solutions and frictionless checks, substantiated by evidence wherever possible. It also means holding the Gambling Commission to account on what is expected of it by the Government in the White Paper, with fair prioritisation of its (no doubt stretched) resources and no reforms being left far behind, even when the Gambling Commission is not in favour of them. It means focusing on its prize and not seeking to “re-litigate” settled issues or actively seeking to frustrate other stakeholders, or indeed otherwise antagonising Government which has delivered upon a balanced vision.

The proposed reforms are going to take longer than any of the stakeholders want as they seek to claim their prizes, but they are worth waiting for, the consultation phase will be critical, with both Government and the Gambling Commission under immense pressure to listen, and we will of course be happy to assist clients with their responses where that would be helpful, as we did in the last once in a generation opportunity in 2005!

17May

White Paper Series: The End of the Beginning VIXIO Webinar

17th May 2023 Harris Hagan 232

On 16 May 2023, Bahar Alaeddini appeared as a panellist on a VIXIO GamblingCompliance webinar titled “The End of the Beginning” together with Dan Waugh from Regulus Partners, in which they discussed some of the key proposals of the White Paper, where we go from here and the impact:

22Mar

Getting it right: how to comply with the “strong appeal” test when using sports personalities to advertise sports betting

22nd March 2023 Gemma Boore 239

Nearly half a year has passed since the introduction of the “strong appeal” test for gambling advertisements in the United Kingdom, and it has been a whirlwind of a six months for sport:

the Rugby League Men’s and Women’s World Cups took place in October and November 2022 after being postponed due to Covid-19 and the Cricket ICC World T20 (Men)’s event was hosted in Australia at the same time;

the FIFA World Cup took the world by storm between November and December 2022; and

2023 has not disappointed yet either – sports fans have been treated to numerous events in Q1 including the Tennis Australian Open, the Rugby Six Nations and the Cricket ICC World T20 (Women)’s event.

For betting operators, the resurgence of live sports presents a rich (and well overdue) opportunity to re-engage with existing and attract new customers. However, regulatory restrictions on advertising gambling products in Great Britain have tightened in recent years and operators must be mindful not to fall foul of current advertising rules including the new “strong appeal” test, which came into force on 1 October 2022.

In this article, we explain the strong appeal test, consider the impact of recent rulings by the Advertising Standards Authority (“ASA”) concerning its implementation, and share our top tips for gambling operators, marketing agencies and affiliates that want to ensure they comply with the strong appeal test when advertising sports betting to UK customers.

The strong appeal test – how does it work?

The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the “CAP Code”) and the UK Code of Broadcast Advertising (the “BCAP Code”) (collectively, the “UK Advertising Codes”) set out the rules relating to marketing communications in broadcast and non-broadcast media in the UK.

Parts 16 of the CAP Code and 17 of the BCAP Code set out rules bespoke to gambling advertisements. In particular, since 1 October 2022, each section has contained the following requirement (in rules 16.3.12 and 17.4.5 respectively):

“Advertisements for gambling must not be likely to be of strong appeal to children or young persons, especially by reflecting or being associated with youth culture.

They must not include a person or character whose example is likely to be followed by those aged under 18 years or who has a strong appeal to those aged under 18.

Where appropriate steps have been taken to limit the potential for an advertisement to appeal strongly to under-18s, this rule does not prevent the advertising of gambling products associated with activities that are themselves of strong appeal to under-18s (for instance, certain sports or playing video games).”

These ‘strong appeal’ tests effectively prohibit content (including imagery, themes etc.) that has a strong level of appeal to under-18s regardless of how it is viewed by adults. It extends to the use of celebrities (including footballers) to promote sports betting or convey responsible gambling messaging.

The new strong appeal tests replace the ‘particular appeal’ test in the previous edition of the UK Advertising Codes, which generally allowed marketing communications regarding gambling to feature celebrities (including footballers) who were well known to under-18s, provided the vast majority of their fans were adults. A typical barometer used was the proportion of the celebrity or footballer’s fans on social media: if 25% or less of their fans and followers were under 18, it was generally accepted that they did not have a particular appeal to children and could therefore feature. The new “strong appeal” tests are much stricter as they focus only on whether there is strong appeal to children – appeal to adults is irrelevant.

The guidance published by CAP and BCAP relating to the strong appeal tests: “Gambling and lotteries guidance: protecting under-18s” Advertising Guidance (non-broadcast and broadcast) (the “Guidance”) notes that “determining the likely appeal of a marketing communication is not always straightforward and is, to an extent, subjective… …Advertising approaches or pieces of creative content of ‘strong’ appeal to under-18s can take a variety of forms”.

The Guidance goes on to give several examples of approaches that are likely to be problematic, two of which are of particular relevance to sports betting advertisements:

Content linked to activities that are very popular or common among younger people (both in terms of their direct participation and viewing)

In its Guidance, the ASA confirms that it considers certain subjects and activities to be of inherently strong appeal to under-18s and gambling advertisements relating to these subjects and activities will be prohibited unless they fall under one of the exemptions. Two examples of sports with strong appeal are cited in the Guidance: football and eSports.

Other national sports such as cricket and rugby are also discussed and it is noted that by comparison, these sports have low-to-moderate levels of participation and interest among under-18s. However, the national teams in these sports attract more media interest and are more likely to be considered of inherent strong appeal. Conversely, sports such as horseracing, greyhound racing, darts, snooker, boxing, motorsports and golf are noted to be more adult-orientated and unlikely to be of inherent strong appeal.

In order to advertise betting opportunities concerning sports that strongly appeal to under-18s, gambling operators must ensure that their product falls within one of the exemptions cited in the Guidance, five of which are of relevance to sports betting:

Exemption A: Products in general terms. This permits betting advertisements to promote licensed products in general terms. The Guidance notes that the rules focus principally on imagery, themes and characters that are of strong appeal to under-18s. They are not intended to restrict simple text or audio references to sports, teams or individuals generally held to be popular with under-18s.

Example: An advertisement stating that bets are available on the outcome of a particular football or eSports match would not be prohibited as this falls within Exemption A.

Exemption B: Generic descriptions. This permits generic depictions of or references to the subject of the licensed product. The Guidance notes that the generic depictions must be suitable and not, of themselves, likely to appeal strongly to under-18s.

Example: An advertisement using suitable characters or CGI to depict a sport held to be of strong appeal to under-18s (e.g. football or eSports) or generic items or places associated with the sport (e.g. a ball, goal post, trophy, or stadium) would not be prohibited as this falls within Exemption B provided that the depictions are not stylised to appeal strongly to under-18s (e.g. cartoons).

Exemption C: Logos and other identifiers. This permits the use of logos and other identifiers for the subject of a betting activity.

Example: An advertisement showing that bets are available on the outcome of a particular match, tournament or other event that includes the logo for the event or the teams playing in it would not be prohibited as this falls within Exemption C.

Exemption D: Branding. This permits material relating specifically to an advertiser’s brand identity. The Guidance notes that this exemption does not extend to brand characters, which will need to be assessed under the strong appeal test for persons and characters (discussed below).

Example: An advertisement including the brand or livery of the operator advertising the bet (e.g. an advertisement featuring the logo of Mr Green in green and white colours) would not be prohibited as this falls within Exemption D. However, the use of the character “Mr Green” would need to be assessed separately to see whether it is of strong appeal to under-18s.

Exemption F: Certain persons and characters. This permits the use of persons or characters associated with subjects of strong appeal (e.g. football and eSports) provided marketers are satisfied that they are not, in and of themselves, of strong appeal to under-18s. Again, this will be assessed separately under the strong appeal test for persons and characters.

Example: An advertisement featuring a football player would not be prohibited as this falls under Exemption F provided the football player is not themselves of strong appeal to under-18s. See below for further discussion.

2. Persons and characters who have a strong appeal to under-18s

As set out above, the UK Advertising Codes require that gambling advertisements must not feature any person or character who has a strong appeal to those aged under 18.

Persons and characters generally fall into one of five categories: (a) personalities/celebrities, (b) brand ambassadors, (c) licensed characters (e.g. a movie or video game character), (d) characters played by actors; and (e) brand-generated characters (e.g. characters created by the advertiser).

The ASA makes its assessment of appeal of these persons and characters to under-18s based both on (i) their appearance and behaviour in the advertisement, and (ii) their profile and relevance outside the advertisement for personalities, brand ambassadors and licensed characters (but not characters played by actors and brand-generated characters as these have no external profile).

In determining the extent of a person’s appeal to under-18s, advertisers are encouraged to use as many insights and sources of data as they can. Having determined what a person or character is known for (in terms of activities, roles or associations) marketers can then identify information and data sources that provide insights on the likely level of a person or character’s appeal to under-18s.

For example:

Profiles outside the context of the advertisement. In determining whether a person or character is likely to appeal strongly to under-18s on the basis of their profile, the ASA will consider factors such as: (a) whether they have obvious and direct links to activities for, or highly popular with, under-18s; (b) the general audience for, and popularity of, what the person or character is known for; and (c) the likelihood that their inclusion in an advertisement will strongly attract the attention or interest of under-18s.

Example: Persons and characters with obvious and direct links to under-18s should be avoided (e.g. current or recent children’s TV personalities, popstars associated with youth culture, licensed characters from popular board games and influencers that focus on youth-related themes).

If a person or character does not have an obvious and direct link to under-18s that would render them of ‘strong’ appeal, advertisers must still assess their likely level of appeal. Social and other media audience demographics are an important and quantitative source of data.

Example: Football players in national or other well-known teams such as Manchester United may be viewed in an aspirational or influential way among under-18s and should be avoided. The same principle applies in relation to leading sportspeople in other sports and those involved in World Cups or other high-profile tournaments. Players in lower-level teams and other individuals involved in sports (e.g. managers) are more likely to be acceptable if it can be demonstrated that the individuals have a negligible following of under-18s on social media and/or there is a negligible proportion of under-18s in the audience (either for their sport or other programmes in which they feature).

The ASA notes that more weight should be attached to present and recent activities. Personalities whose appeal has shifted away from under-18s over time are less likely to fail the strong appeal test.

Example: An individual that played in a national sports team in 2002, such as David Beckham, is less likely to appeal to under-18s now compared to an individual that played in a national sports team in 2022, such as Raheem Sterling.

Appearance and behaviour within the advertisement. The second part of the ASA’s assessment of ‘strong’ appeal for persons and characters is how they appear and behave in advertisements.

Marketers must avoid featuring behaviour that is likely to strongly appeal to under-18s. This includes youth culture themes (e.g. disregard for authority, rebelliousness, immature adolescent or childish behaviour and participation in practical jokes), speech and language (e.g. sounding like a child or using slang terms or text abbreviations), humour (e.g. slapstick or juvenile jokes) and other behaviour (e.g. dancing, singing or reciting rhymes).

Example: A person that is behaving in a manner associated with under-18s (such as Simon Bird from The Inbetweeners) is more likely to appeal to under-18s.

In addition, persons and characters played by actors must not be presented in a way that renders them likely to be of ‘strong’ appeal to under-18s. They should not wear clothing, accessories, jewellery, body art, piercings or hair styles that are obviously associated with a current trend or style popular with under-18s.

Example: A person that is wearing clothing associated with teenagers (e.g. a crop top, oversized hoodie, baggy jeans or a bucket cap) should typically be avoided.

Finally, characters that are colourful or have exaggerated features are more likely to be of strong appeal to under-18s and this includes ‘cuddly’ or ‘cute’ animals. Licensed characters (for example, from games and movies) will be assessed based on the popularity of the game or movie with under-18s.

Example: Characters with similarities to soft toys and exaggerated features such as enlarged eyes should typically be avoided. Characters related to stories or themes that are popular among children like pirates, princesses, superheroes, robots and fairy tale characters should also be avoided unless they are from traditional fairy tales, not stylised with exaggerated features and are not otherwise associated with childhood (e.g. characters such as Santa Clause, the tooth fairy and the Easter bunny are cited in the Guidance as being associated with childhood and should therefore be avoided).

There is a helpful checklist at the beginning of the Guidance that summarises the risk-based scenarios of featuring different types of persons in gambling advertisements:

High risk	o Anyone with direct connections to under-18s through their role like children’s TV presenters or film stars o Anyone with a significant under-18 following on social media o UK footballers who play for top clubs, UK national teams or in high-profile competitions – this would apply also to managers o Non-UK ‘star’ footballers, particularly those at top European clubs – this would apply also to managers o Other prominent sportspeople involved in sports like cricket, tennis and rugby that, at the highest levels, have a significant national profile o Leading eSports players

Moderate risk	o Footballers from teams outside the top-flight will be assessed on the basis of their social and other media profile o Footballers with lower profiles at top Euro/world clubs might be acceptable o Retired footballers who have moved into punditry/commentary will be assessed on the basis of their social and other media profile o Other eSports players dependent on their social media and general profile o Sportspeople involved in clearly adult-oriented sports who are notable ‘stars’ with significant social media and general profiles making them well-known to under-18s o A small but notable following of under-18s on social media will be considered alongside the personality’s general profile and could contribute to an ASA decision to categorise the individual as being of ‘strong’ appeal

Low risk	o Footballers at lower league and non-league clubs o Footballers at lesser Euro/world clubs o A long-retired footballer now known for punditry/commentary o Sportspeople involved in sports like cricket, tennis and rugby that don’t have a significant role in the sport or general profile o Sportspeople involved in clearly adult-oriented sports (e.g. darts, snooker, golf, horseracing, and motorsports)

Exception for narrowly targeted advertising

There is one key exception to the strong appeal rules: they do not apply in media where under-18s can, for all intents and purposes, be entirely excluded from the audience.

Principally, this applies in circumstances where the marketer can robustly age-verify the potential recipients of the advertisement as being 18 or older such as:

direct mail, email and SMS communications sent to recipients who have been verified as being 18 or older;
areas of websites and applications that can only be viewed/accessed those who have been verified as 18 or older on sign-up; and
online platforms (such as social networks or publications) that provide advertisers with functionality enabling them to target users that have been age-verified to a very high degree of accuracy.

In the event of challenge, the ASA expects advertisers to provide evidence to demonstrate that the systems used to identify audiences from which under-18s are, for all intents and purposes, excluded are robust. Gambling Commission licensed websites are cited as a good example of a media environment where under-18s are extremely unlikely to form part of the audience. Other sources of marketing data may also be acceptable where robust means of age verifications have been employed (e.g. payment data or credit checking). More general marketing data, such as that inferred from user behaviour, is unlikely to be sufficient.

Recent ASA rulings – what do they tell us?

To date, there have been three ASA rulings regarding the strong appeal tests, each of which provides helpful context – particularly in relation to footballers who, as noted as above, can be potentially low, medium or high-risk depending on the individual.

Philippe Coutinho, Jesse Lingard and Kalidou Koulibaly – of strong appeal

In December 2022, the ASA upheld a complaint for a promoted Tweet featuring the text “Can these big summer signings make the question marks over their performances go away?” and an embedded video that featured three current Premier League footballers: Philippe Coutinho, Jesse Lingard and Kalidou Koulibaly, set against a background of question marks.

The advertiser argued that although football and topflight footballers could strongly appeal to under-18s, targeting and age-gating tools had been used to remove under-18s from the advertisement’s audience. This included self-verification by the audience and targeting techniques designed to ensure the advertisement would only reach users aged 25 or over.

The ASA did not accept these arguments and upheld the complaint. In its view, both football and the players used (who were Premier League and international footballers at the time) were likely to be of strong appeal to under-18s; and the targeting techniques were not sufficiently robust to exclude under-18s from the audience with the highest level of accuracy, as required.

Peter Crouch and Micah Richards – not of strong appeal

In February 2023, the ASA did not uphold two complaints regarding advertisements featuring retired footballers.

The first complaint concerned two TV advertisements featuring Peter Crouch conducting a choir and celebrating (amongst other activities) with the text “COMPLETELY FREE BET BUILDER ON ALL ENGLAND GAMES”. During the advertisement, a voice-over was heard saying, “You hear that? That’s the sound of Christmas and the world cup colliding. So come on all ye faithful, let’s be having ya. Glory to the king of headbutts. Knit those kits. Cross those sprouts. Stuff those turkeys. And attack those carols. Cause from this day we’ll forever ask where were you in twenty-two.”

The second complaint concerned a promoted Tweet featuring the text “Club football returns following the international break… Get £20 IN FREE BETS when you place a £5 bet!” and an image of Micah Richards.

Both Crouch and Richards had retired in 2019 and the ASA took a pragmatic approach that although this meant “not long retired”, the teams and the games in which the players featured during the later years of their career (e.g. Burnley and Stoke City for Crouch, and Aston Villa for Richards) meant that they were unlikely still to be of strong appeal to under-18s. The players were therefore assessed on the basis of their social and other media profiles:

Peter Crouch
Crouch did not have public accounts on TikTok, Facebook or Twitch at the time the advertisements were broadcast, and his Instagram account had not been updated since 2014. He did have a public account on Twitter that, at the time the advertisements were seen, had almost 1.5 million followers but demographic data from September to December 2022 showed that 0.46% of his followers were aged 13-17 years. Even though Twitter is a media environment where users self-verify, the ASA accepted this as evidence that a very small number of Crouch’s followers on Twitter were aged under 18.

The ASA further noted that the TV programmes in which Crouch appeared (such as BT Sport, the documentary ‘Save Our Beautiful Game’ and Crouch’s own TV shows, ‘Peter Crouch: Save Our Summer’ and ‘Crouchy’s Year Late Euros’) and his podcasts were primarily aimed at adult audiences and not of strong appeal to children. The exception being ‘The Masked Singer’ in which Crouch appeared as a panellist. The ASA noted this to be a family entertainment programme and of appeal to children. However, Crouch appeared as one of four panellists, the programme was of broad demographic appeal and there was no evidence that his role in the programme had led to him being viewed in an aspirational or influential way by under-18s. Accordingly, the ASA concluded that Crouch’s appearance in this programme was unlikely to make him of strong appeal to under-18s.
Micah Richards
Richards did not have active public accounts on YouTube, TikTok or Twitch and audience demographics on Instagram and Twitter showed that: 0.07% of Richards’ Instagram followers were aged 0-16 years and 2.19% were aged 17-19 years; and 0.04% of his Twitter followers were aged 0-16 years and 2.15% were aged 17-19 years. Again, the ASA accepted that this data demonstrated that his social media profile was unlikely to make Richards of strong appeal to under-18s.

In terms of TV programmes, the ASA noted that Richards was a regular and well-known pundit on Match of the Day but BARB data in the lead up to the advertisement confirmed that a significant number of children had not watched live. The regulator also noted that Richards appeared as a pundit on Sky’s live coverage of Premier League matches which would be of strong appeal to under-18s, but that the strong appeal did not extend to the pundit-based discussion that took place around the game. Accordingly, Richards’ appearance in this context would be unlikely to hold strong appeal to under-18s.

Aside from his role as a football pundit, Richards had appeared on ‘A League of their Own’ and ‘Gogglebox’. Both programmes were scheduled post 9pm and primarily aimed at an adult audience.

In addition, Richards appeared on a CBBC programme ‘Football Academy’, which was considered likely to be of strong appeal to under-18s but the episode had not aired at the time the advertisement was seen. The ASA noted that if Richards had appeared regularly and prominently on such a programme, it was likely he would have been considered to have strong appeal to under-18s.

Top Tips

Below are our key takeaways for operators, marketing agencies and affiliates that want to comply with the strong appeal rules when advertising sports betting in the UK.

Be careful of using anybody in the advertisement that has an active presence on YouTube, TikTok or Twitch. These platforms are known to have particular appeal to under-18s. Although recent rulings do not expressly state that an active account on these platforms would denote someone as having strong appeal, it is notable that neither Crouch nor Richards had a presence on these platforms.

Do not assume that retired players will automatically fall outside the strong appeal category.Consideration should be taken of the individual’s complete career history including the time since they played topflight sport, when they stopped playing completely, and whether they played for a national team during their career, as well as recent appearances on television and other media. The sport that was played is also relevant: football and eSports are highest risk, whereas adult-orientated sports such as darts, snooker, golf, horseracing, and motorsports carry a much lower risk and the use of current or more recently retired players in these sports may be acceptable.

Do not automatically exclude football pundits. Even recent appearances as a football pundit covering football matches that are of strong appeal to under-18s, do not automatically mean that the individual will be of strong appeal themselves. Consideration should be taken of their overall appeal to under-18s.

Be cautious of links with children’s or family entertainment programmes, but do not assume this precludes all individuals featuring in them. Although an appearance in the television show that is aimed at children or is otherwise of strong appeal to under-18s is relevant and should carefully be considered, this will not automatically preclude an individual from appearing in a gambling advertisement provided the advertiser can demonstrate this did not alter the individual’s appeal to under-18s as a result.

Make use of available, verifiable data regarding social media and other followings. Be prepared to defend selections by use of robust data including individual’s social media followings and audience demographics for other media appearances. The ASA’s recent rulings on the strong appeal test are lengthy by usual standards and it is clear significant data was considered. Being able to produce relevant data is going to be vital in cases like this going forward.

Keep the position under review. Where advertisements appear on multiple occasions and/or an individual is used to represent a brand on an ongoing basis (e.g. as a brand ambassador), evidence that the individual does not strongly appeal to under-18s should be kept under regular review. An individual that did not appeal strongly to under-18s yesterday may do so today if they have featured in a new children’s or reality TV show, for example. To mitigate this, consider adding restrictive covenants to commercial agreements with brand ambassadors and others used in gambling advertisements, restricting them from participating in other programmes or media that appeals strongly to under-18s before or during the period that an advertisement is broadcast.

Review commercial scripts to ensure advertisements do not feature characters that appear or behave in a way that is likely to strongly appeal to under-18s. Avoid behaviour, speech / language and humour that is associated with youth culture. Ensure the individuals are dressed in an adult manner and do not feature other characters (e.g. cartoons or licensed characters) in the advertisement that may strongly appeal to under-18s.

If you are not satisfied that you can demonstrate that the advertisement is unlikely to appeal strongly to under-18s, exclude under-18s from the audience. It is imperative that reliable age-gating mechanisms are utilised. These may include validation by payment data and credit checking, but do not extend to self-verification or the use of data inferred by user behaviour.

Summary

This article has explained the strong appeal test, considered the impact of recent rulings by the ASA concerning its implementation and outlined key takeaways for gambling operators, marketing agencies and affiliates that want to ensure they comply with the strong appeal test when advertising sports betting to UK customers.

If you would like to discuss any of the matters raised, please do get in touch with us.

10Jan

Department for Digital, Culture, Media & Sport Committee Call for Evidence on Gambling Regulation

10th January 2023 Ting Fung 229

The Department for Digital, Culture, Media & Sport Committee (“DCMS”) Committee is examining the Government’s approach to gambling regulation, including investigating the progress made by the Government in addressing the issues raised by Parliament, how to ensure that regulation keeps pace with innovations in online gambling and the links between gambling and broadcasting and sport.

As part of its inquiry, the DCMS Committee is inviting written evidence on the following questions by 5pm on Friday 10 February:

What is the scale of gambling-related harm in the UK?
What should the key priorities be in the gambling White Paper?
How broadly should the term, ‘gambling’, be drawn?
Is it possible for a regulator to stay abreast of innovation in the online sphere?
What additional problems arise when online gambling companies are based outside of UK jurisdiction?

DCMS Committee member, Julie Elliott MP, has stated:

“Gambling acts as an enjoyable pastime for large numbers of players, but regulation is struggling to keep pace with the rapidly changing way in which it happens today. This puts people at risk of the devastating harm it can sometimes cause to lives. The DCMS Committee’s inquiry will look at the scale of gambling-related harm in the UK, what the Government should do about it and how a regulatory regime can best adapt to new forms of online gambling, based both in and outside the UK.”

Figures from the Ernst & Young report (the “EY Report”) commissioned by the Betting and Gaming Council (“BGC”) and published last November, in The economic contribution of the betting and gaming sector: 2021-2022, also reflect gambling as a popular pastime through which the gambling sector contributed £7.1bn to the UK economy between 2021 and 2022. The EY report’s statistics also serve to highlight the wider context of gambling regulation reform, on which BGC CEO, Michael Dugher, commented last month:

“Our members pump billions into the economy, support the treasury with more billions and support over a hundred thousand jobs. But this contribution is never guaranteed. This industry needs to thrive if it is to maintain its status as a global leader.

“We urge the government to find an evidence-led, balanced white paper that protects the vulnerable, allows the vast majority who bet safely to continue to do so and, crucially, allows businesses to thrive.”

Certainly, the Government’s approach to regulation needs to be balanced and proportionate, however, as delays to the publication of the White Paper continue, a factor that remains to be addressed, is the timeliness of action. Question 2 of the Call for Evidence suggests the possibility of further delay of the White Paper, which was promised “in the coming weeks” for much of last year. The latest word on the street is that the White Paper will be published in February. However, we have learned to be somewhat sceptical about any gossip on this topic; certainly, the questions being asked by the DCMS Committee, and especially question 2, might suggest a longer timeline.

09Jan

Chambers Gaming Law 2022 Global Practice Guide

9th January 2023 Adam Russell 200

Partners, Bahar Alaeddini and Julian Harris, have resumed their roles as Contributing Editors to the Chambers Global Practice Guide, with the latest edition of the Gaming Law 2022 eGuide now available online. Associate, Jessica Wilson, joined this year as a co-author.

Harris Hagan contributed to four parts of the publication

The esteemed publication spans over 30 jurisdictions and provides the latest regulatory information including: the availability and duration of licences; B2C and B2B licences; application requirements; affiliates; white labels; responsible gambling; AML legislation; restrictions on advertising; acquisitions and changes of corporate control; trends in social gaming; eSports; fantasy sports and blockchain; tax; and anticipated reform.

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

Please use the above links to review their contributions and the rest of the eGuide at your leisure.

22Dec

Putting the Customer First: Why all licensees should the take the Consultation on Customer Interaction Guidance seriously

22nd December 2022 David Whyte 221

A little over two years on from the launch of its consultation and call for evidence on remote customer interaction requirements and affordability checks, the Gambling Commission (the “Commission”) has initiated a new public consultation (the “Consultation”) – this time on the proposed Customer Interaction – Guidance for remote operators (the “Guidance”). While the Consultation has so far not attracted the same attention as the 2020 exercise, the implications are potentially just as profound. In a series of co-authored articles, Harris Hagan and Regulus Partners will explore the key proposals in the Guidance, examining the evidence that underpins them and asking whether they are in fact proportionate, legal and in the best interests of consumers.

We appreciate that some of the more cynical readers of this article may think there is little point in responding to the Consultation as the Commission will take little or no notice of any feedback it receives from licensees. However, we consider it critically important that all licensees, including non-remote licensees, do respond to the Consultation. It is more difficult for the Commission to ignore numerous representations on common concerns, and experience suggests that similar guidance may be produced for non-remote licensees in the future. Recognising that the timeframe for the Consultation will include the holiday period, the Commission has extended the originally proposed six weeks to approximately nine weeks, and it will now close on Monday 23 January 2023.

There are a number of areas of the Guidance which licensees should be concerned about – Harris Hagan included some of these in previous articles in July and September 2022. In this article, the first of the series, we set out a summary of those issues, and analyse the “Introduction” and “General requirements” sections of the Guidance. In subsequent articles we will also consider the central theme of assessing ‘vulnerability to harm’; and how licensees will be expected to take action to address it.

Key areas of concern

Our key areas of concern about the Guidance, many of which we will explore in more detail in this series of articles, are:

It has been poorly drafted. Many key terms are either undefined or defined in a fashion so highly generalised as to be almost meaningless. An absence of precision in the way that regulatory requirements are described inevitably invites a high level of subjectivity in terms of how they will be interpreted by both licensees and the Commission.
The evidence that underpins key measures contained in the Guidance is either absent or highly selective – and, in some cases, it is misleading.
It appears to conflate “indicators of harm” with actual harm – requiring licensees to take action to correct customer behaviours regardless of whether they are in fact harmful.
The definition of key terms is so broad as to make it almost impossible for licensees to justify not conducting a safer gambling interaction based on either “indicators of harm”, “vulnerability” or both.
It takes no account of the practicability of the measures required, the cost implications, or the potential for negative unintended consequences.
The Commission appears to have undertaken no research into consumer support for the measures that are being mandated or how they might react to them.
One of its more alarming aspects is the suggestion that licensees should harvest medical information about their customers. There is no demonstration within the Consultation that the Commission has considered the ethical or legal dimensions of this requirement, the extent to which licensees possess the requisite expertise to interpret such information, or whether this is even possible.

Issues not addressed in the Consultation

The Commission makes it clear that the Consultation relates solely to the Guidance which is issued on Social Responsibility Code Provision (“SRCP”) 3.4.3. The requirements of SRCP 3.4.3 itself are not within scope, nor are “matters associated with unaffordable gambling and specific thresholds which should apply”, the “separate consultation on the three key financial risks” the Commission committed to in May 2021 (yet to materialise), or matters associated with “single customer view”.

General requirements

“How to use this guidance”

There are inconsistencies in the Guidance between “aims” and “formal guidance”, and it is difficult to ascertain whether the Commission expects licensees to “take into account” or “address” its aim in setting each requirement.

The impact of this inconsistency can be seen throughout the Guidance. For example, requirement 1 states that “icensees must implement effective customer interaction systems and processes in a way which minimises the risk of customers experiencing harms associated with gambling.” However, aim 1 states that “Licensees must have effective controls to minimise the risk of customers experiencing harms associated with gambling”. There is a clear difference between implementing effective systems and having effective controls, the latter being more easily determined subjectively by the Commission and with hindsight: the assumption likely being that if any customer has suffered or experienced harm (a highly malleable term as we will explain further in our next article), the controls were ineffective.

It is critically important that the Commission ensures uniformity in the Guidance. If ‘aims’ are within scope, then the language used for requirements and aims should be consistent: if ‘aim’ is not within scope, then the “How to use this guidance” section of the Guidance should be amended and reference to licensees being obliged to “address that aim” removed, to ensure that this is abundantly clear.

Formal requirements as guidance?

Harris Hagan has previously set out its view that it is inappropriate, and arguably ultra vires, for the Commission to introduce formal requirements through guidance. The Commission seeks to address such concerns in the Consultation where it states:

“On occasion, the proposed guidance document uses the language of ‘must’ or ‘the Commission expects’. This language is used in contexts where the guidance is intended to reflect the requirements or SR Code Provision 3.4.3. The proposed guidance document also uses the word ‘should’, which denotes an approach or action that is not required by SR Code Provision 3.4.3, but which operators are required to consider. We are interested in stakeholders’ views on the language used in the proposed guidance document in this respect.”

Despite this statement, there are several areas of the Guidance where the language used does not reflect the requirements set out in SRCP 3.4.3, goes beyond those requirements, or is inconsistent with those requirements. This is inappropriate, will cause confusion, and exposes licensees to the risk of broad or inconsistent interpretation by Commission officials during compliance or enforcement action.

By means of an example:

Requirement 4 states: “Licensees must have in place effective systems and processes to monitor customer activity to identify harm or potential harm associated with gambling…”;
Aim 4 is stated as being to ensure “that customers who may be at risk of harm are identified”; and
Formal Guidance 4 states that “icensees must identify customers that may be at risk of harm.”

There is a clear distinction between “identifying harm or potential harm” and identifying customers “that may be at risk of harm”: the latter arguably being impossible as it applies to anyone who gambles. We will discuss this in more detail in a subsequent article. The importance of the Guidance being easily distinguished from the prescriptive requirements set out in SRCP 3.4.3, and of ensuring consistency between requirements and aims and formal guidance, must not be overlooked.

“How the Commission will use this guidance”

The Commission refers under this section of the Guidance to its expectation that “licensees demonstrate how their policies, procedures and practices meet the required outcomes”. However, at no point has the Commission set out what those required outcomes are. SRCP 3.4.3 is not outcome-led; it is, at least in part, prescriptive – as is the Guidance. We would therefore suggest that “requirements” rather than “required outcomes” is the more accurate language to be used here.

“Amending this guidance over time”

Under this heading, the Commission sets out that “for the purposes of raising standards, protecting customer interests, and preventing harm to customers, will update and re-issue guidance”. Harris Hagan has previously raised concerns about this approach. We remain of the view that the Commission should consult on any changes to the Guidance, particularly if those changes introduce formal requirements, or if they explain how the Commission may interpret those formal requirements. The Commission is comfortable with short consultation periods; it originally proposed that the Consultation be open for six weeks. To conduct further short consultations before amending the Guidance is hardly an arduous task, particularly given the benefit of doing so, not only to licensees and stakeholders, but to the Commission itself.

In our second article, we will discuss the concepts of “harm” and “vulnerability” that underpin the Guidance.

With thanks to Dan Waugh from Regulus Partners for his invaluable co-authorship.

Gambling Law