13Oct

KnowNow Digital Conference: Responsible Marketing for Gambling Operators 2020

13th October 2020 Ting Fung 57

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

KnowNow has stated:

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

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

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

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

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

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

20Jul

Gambling Commission Consultation on High Value Customers

20th July 2020 Julian Harris 64

Introduction

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

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

The proposals made were to:

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

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

New Licence Condition

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

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

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

New Guidance

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

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

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

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

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

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

01Jun

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

1st June 2020 Jessica Wilson 79

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

Gambling advertising during lockdown

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

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

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

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

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

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

Marketing eSports on social media

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

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

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

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

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

Children’s exposure to gambling adverts

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

05May

Keeping Affiliates in Line: “No Fudging”

5th May 2020 Lucy Paterson 77

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

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

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

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

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

Unlicensed Third Parties

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

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

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

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

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

Industry Code for Affiliates

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

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

Considerations for Affiliates

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

Considerations for Licensees

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

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

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