13Jan

Reminder: Changes to remote games design requirements come into force on 17 January 2025

13th January 2025 Tiffany Babayemi 148

The Gambling Commission has reminded licensees that on 17 January 2025, the revised remote gambling and software technical standards (“RTS”) will take effect, introducing new requirements to extend the rules that already apply to slots, to other online products. Licensees should ensure their online games are compliant with the new requirements of the RTS before 17 January 2025.

Background

In May 2024, the Gambling Commission published its response to its Summer 2023 consultation in which it confirmed that it would proceed with the Game Design proposals as set out in the consultation. The changes to the RTS include the introduction of a minimum speed of play, features which reduce thinking time or contribute to dissociation from the act of gambling, and display of the amount of time and spend.

Summary of the proposals and the new requirements

Proposal 1: Player-led ‘spin stop’ features

RTS requirement 14E: The gambling system must not permit a customer to reduce the time until the result is presented.

RTS implementation guidance 14E:

Features such as turbo, quick spin and slam stop are not permitted. This is not intended to be an exhaustive list but to illustrate the types of features the requirement is referring to.
This applies to all remote games, regardless of game cycle speed.
This requirement does not apply to bonus and/or feature games where an additional stake is not wagered.

Applies to: all casino.

Proposal 2: Minimum speed of play

RTS requirement 14G: It must be a minimum of 5 seconds from the time a game is started until the next game cycle can be commenced. It must always be necessary to release and then depress the ‘start button’ or take equivalent action to commence a game cycle.

RTS implementation guidance 14G:

A game cycle starts when a player depresses the ‘start button’ or takes equivalent action to initiate the game and ends when all money or money’s worth staked or won during the game has been either lost or delivered to, or made available for collection by the player and the start button or equivalent becomes available to initiate the next game.
A player should commit to each game cycle individually, continued contact with a button, key or screen should not initiate a new game cycle.

Applies to: all casino games (excluding peer-to-peer poker and slots).

Proposal 3: Prohibition on autoplay

RTS requirement 8A: The gambling system must require a customer to commit to each game cycle individually.

RTS implementation guidance 8A:

This requirement does not prohibit offering functionality to automatically post blinds in peer-to-peer poker.

Applies to: all gaming (including bingo).

Proposal 4: Prohibition of features which may give the illusion of “false wins”

RTS requirement 14F: The gambling system must not celebrate a return which is less than or equal to the total stake gambled.

RTS implementation guidance 14F:

By ‘celebrate’, the Gambling Commission means the use of auditory or visual effects that are associated with a win are not permitted for returns which are less than or equal to last total amount staked.
The following items provide guidelines for reasonable steps to inform the customer of the result of their game cycle:

Display of total amount awarded.
Winning lines displayed for a short period of time that will be considered sufficient to inform the customer of the result. This implementation should not override any of the display requirements (as set out in RTS 7E).
Brief sound to indicate the result of the game and transfer to player balance.

Applies to: all casino.

Proposal 5: Operator-led simultaneous products

RTS requirement 14C: The gambling system must not offer functionality which facilitates playing multiple games at the same time.

RTS implementation guidance 14C:

Operators are not permitted to offer functionality designed to allow players to play multiple games at the same time. This includes, but is not limited to, split screen or multi-screen functionality.
Combining multiple games in a way which facilitates simultaneous play is not permitted.

Applies to: all casino (excluding peer-to-peer poker).

Proposal 6: Display of net position and time spent

RTS requirement 2E: All gaming sessions must clearly display a customer’s net position, in the currency of their account or product (for example, pounds sterling, dollar, euro) since the session started.

RTS implementation guidance 2E: Net position is defined as the total of all winnings minus the sum of all losses since the start of the session.

Applies to: all casino (excluding peer to peer poker).

RTS requirement 13C: The elapsed time should be displayed for the duration of the gaming session.

RTS implementation guidance 13C:

Time displayed should begin either when the game is opened or once play commences.
Elapsed time should be displayed in seconds, minutes and hours.

Applies to: all casino (excluding peer to peer poker).

Proposal 7: Update to security audit requirements

We take the opportunity to remind licensees that the new security audit requirements under section 4 of the RTS came into force on 31 October 2024. Annual security audits conducted after 1 November 2024 must be to the updated to comply with the International Organization for Standardization (ISO)27001:2022.

Next Steps

The new RTS requirements come into force on 17 January 2025, meaning licensees must adhere to these requirements before this date.

Please get in touch if you have any questions about the new game design requirements.

31Oct

Gambling Commission Annual Report 2023-2024

31st October 2024 Ting Fung 176

The Gambling Commission’s latest Annual report and accounts (the “Annual Report”) for the reporting period 1 April 2023 to 31 March 2024 (the “Period”) was published on 17 October 2024. Key focuses during the Period include the implementation of the Gambling Act Review and the Gambling Commission’s award of the Fourth National Lottery Licence, which led to the first ever change of licensee in the history of the National Lottery.

Performance report

The Annual Report contains a performance report in which the Gambling Commission provides a detailed overview of its delivery during the Period against the five strategic objectives from its 2021-2024 Corporate Strategy. We have summarised some key information from this performance report below, along with other highlights from the Annual Report.

Protecting children and vulnerable people from being harmed or exploited by gambling

Following the publication of the Gambling Act Review White Paper, there were a number of consultations in the Period in relation to proposed changes to the Licence Conditions and Codes of Practice (“LCCP”) and the Remote gambling and software technical standards. Proposals included: (a) improving consumer choice on direct marketing; (b) strengthening age verification on premises; and (c) reviewing socially responsible incentives to ensure incentives such as free bets and bonuses do not encourage excessive or harmful gambling. The issue that proved most controversial related to financial risk checks, with the Gambling Commission reiterating in the Annual Report that this a complex area as it aims to “protect vulnerable people from harm whilst respecting the freedom of others to gamble freely”. Therefore “ committed to a step-by-step approach to implementation and a pilot on the enhanced financial risk assessments to test the process and impacts on consumers.”

The Gambling Commission sets out the several changes it made to the LCCP during the Period including by: (a) setting out its approach to ‘vulnerability’; (b) extending the requirement to participate in GAMSTOP to all gambling licensees that make or accept bets by telephone and email; and (c) adding an additional reportable event that requires all gambling licensees to inform it when they become aware that a person who has gambled with them has died by suicide.

Gambling Commission publications in the Period aimed at improving the breadth and quality of data included:

The Gambling Survey for Great Britain: Statistics on gambling participation – Annual report Year 1 (2023): Official statistics (See Other highlights below for further detail);
Evidence Gaps and Priorities 2023-2026 (July 2023); and
Young People and Gambling Report (November 2023).

2. A fairer market and more informed consumers

The Gambling Commission points out that it has reviewed its approach to tackling non–compliant terms and practices, including the processing of customer withdrawals. Delays to the withdrawal of funds from accounts, (more than 2,400 complaints during 2023) remained the primary consumer complaint during the Period. The Gambling Commission has previously worked with the Competition and Markets Authority and updated the LCCP to clarify licensees’ responsibilities, including the requirement that licensees do not seek to verify information at the point of withdrawal that they had the opportunity to do earlier in the process. In the Annual Report the Gambling Commission reiterates that “Where such practices are identified, we will continue to hold licensees to account.” Please see our blog Account withdrawals: The mask operators cannot hide behind for more information.

In addition to initial outputs from the Consumer Voice research programme, the Gambling Commission has completed 58 website reviews, with 51 websites found to be either complaint or to have minor issues relating to things such as promotional bonus offer terms. The remaining websites reviewed raised more significant issues requiring further investigation and/or escalation.

Keeping crime out of gambling

The Gambling Commission explains that it has continued to work with partners to undertake intelligence-led disruption and enforcement initiatives to contribute to a reduction in crime associated with gambling, stating that “our collection, analysis and sharing of intelligence with other regulators and agencies remains a cornerstone of our work.” It has held discussions with search engine providers to discuss referrals and further action on search results and talks are ongoing to improve its ability to disrupt unlicensed operators.

Key figures in the Period in this area include:

384 cease and desist and disruption notices were issued to unlicensed operators resulting in 136 website restrictions through suspension or IP blocking; and
122 compliance assessments of online and land-based operators, 77 website reviews and 182 security audits were conducted.

In addition, from April 2023, the Gambling Commission also assumed responsibility for collecting the Economic Crime Levy from licensed casino operators.

Optimising returns to good causes from the National Lottery

Returns to good causes which were derived from a combination of the Third and Fourth Licence period totalled £1.7 billion at the end of the financial year. The Period saw the transition of the National Lottery licence from Camelot to Allwyn, who were formally granted the Fourth Licence to operate the National Lottery on 1 February 2024. Subject to the resolution of the legal challenges this licence will run for 10 years.

Key changes to the Fourth Licence include:

A new ‘Incentive Mechanism’ so that all National Lottery products will now make returns to good causes at the same level (meaning Allwyn will only see profits rise if returns to good causes increase); and
A move to an outcomes-based approach that will give Allwyn greater responsibility to fulfil its obligations, while retaining the Gambling Commission’s powers to intervene if they fail to do so.

Improving gambling regulation

The Gambling Commission recognises the need for an upgrade to existing systems in order to “serve the needs of the business more efficiently” and expects this to be completed during 2024 to 2025. Its requirement that licensees send returns quarterly is intended to ensure the information it receives is relevant and timely, and enables it to identify issues arising as early as possible.

Further information on the Gambling Commission’s plans for gambling regulation are set out in its Corporate Strategy 2024 to 2027 published on 8 April 2024, with commitments to be detailed in annual business plans and outcomes published in future annual reports.

Other highlights

Gambling Commission research

In respect of other datasets referred to in the Annual Report, the Gambling Commission’s Cost of Living (2023) research found that:

“1 in 5 gamblers who reported changes in their gambling behaviour (either increased or decreased) said this was entirely due to increased cost of living. In addition, 8.5 per cent of gamblers reported using gambling to supplement their income on a regular basis.”

The Gambling Commission therefore continues to stress the need for operator vigilance during these times of heightened consumer vulnerability.

Gambling Survey for Great Britain

In respect of the Gambling Survey for Great Britain (“GSGB”), which focuses on the types of gambling activities that people take part in and the reasons why people gamble, the Annual Report emphasises that because the GSGB is a new survey, it does mean that it cannot compare GSGB data to data from previous alternative surveys and that, with time, the data collected will grow and enable it to look at trends and comparisons across this data source.

Enforcement?

The Annual Report notes that in 2023 – 2024, enforcement action led to the suspension of one operating licence and £13.4 million in fines or regulatory settlements: a reduction on the previous year. The Gambling Commission acknowledges that it has seen a significant increase in compliance from larger operators at the point of their assessment, with the rate of operators achieving compliant first-time outcomes doubling and the rate for the largest operators almost trebling in the past two years.

In terms of other operational activities, 133 operator licenses were processed and 122 compliance assessments were conducted for online and land-based operators in the Period.

Industry figures and statistics

Gross Gambling Yield (“GGY”) for the British gambling industry in 2022-2023 was £15.1 billion (a 6.8% increase when compared to April 2021 – March 2022) and GGY for the British remote and/or online sector was £6.5 billion in 2022 – 2023 (a 2.8% increase when compared to April 2021 to March 2022).

For the Period, the Gambling Commission’s fee income comprised:

£1.21 million from operator applications (down from £2.05 million in 2022-2023)
£0.75 million from personal licence fees (down from £0.76 million in 2022-2023)
£23.86 million from operator annual licence fees (up from £22.89 million in 2022-2023)
£0.36 million from miscellaneous sources (down from £0.39 million in 2022-2023)

In terms of expenditure, gambling regulation costs in the Period totalled £21.07 million (up from £19.33 million in 2022-2023), and National Lottery functions accounted for £19.34 million (down from £21.58 million in 2022-2023), of which £17.03 million was spent on the National Lottery Fourth Licence competition. Overall, the Gambling Commission’s table of year-on-year expenditure for gambling and National Lottery regulation shows an increase in operational costs since 2019-2020.

What’s next?

In the Foreword of the Annual Report, Gambling Commission Chair, Marcus Boyle and its Chief Executive Officer, Andrew Rhodes, both agree that:

“The next few years provide a once-in-a-generation opportunity to make gambling safer, fairer and crime free.”

The Gambling Commission’s next steps are set out in its Corporate Strategy 2024 to 2027. For further details on the Corporate Strategy 2024 to 2027, see the previous blog from Gemma Boore.

03Apr

Reminder: Changes to LCCP now in force

3rd April 2024 Chris Biggs 202

In accordance with the Gambling Commission’s Changes to multi-operator self-exclusion, notification of deaths by suicide and payment services: Consultation Response (“Consultation Response”) published on 17 October 2023, two changes to the Licence Conditions and Codes of Practice (“LCCP”) came into force on 1 April 2024:

A. Social responsibility code provision 3.5.5 – Remote multi operator self-exclusion

The Gambling Commission has extended the requirement to participate in the GAMSTOP multi-operator scheme to include all gambling licensees that make and accept bets by telephone and emails, which includes betting services conducted via SMS text and instant messaging services such as WhatsApp, Telegram, Facebook Messenger and Instagram Direct. The amended wording to social responsibility code provision 3.5.5 now reads as follows:

“Applies to: All remote licences except: any remote lottery licence the holder of which does not provide facilities for participation in instant win lotteries, ancillary remote betting when relied upon to provide facilities for betting via a machine (commonly known as self-service betting terminals) on premises where a betting or track premises licence has effect, remote general betting (remote platform), remote betting intermediary (trading room only), gaming machine technical, gambling software, host, ancillary remote bingo, and ancillary remote casino licences.

1. Licensees must participate in the national multi-operator self-exclusion scheme.”

B. Licence condition 15.2.2 – Other reportable events

The Gambling Commission has added a requirement to this licence condition that requires all gambling licensees to inform the Gambling Commission when they become aware, or have reasonable cause to suspect, that a person who has gambled with them has died by suicide. This additional requirement at licence condition 15.2.2 reads as follows:

“Applies to: All operating licences.

2. The licensee must notify the Commission, as soon as reasonably practicable, if it knows or has reasonable cause to suspect that a person who has gambled with it has died by suicide, whether or not such suicide is known or suspected to be associated with gambling. Such notification must include the person’s name and date of birth, and a summary of their gambling activity, if that information is available to the licensee.”

In its Consultation Response, the Gambling Commission provides some guidance on its expectations of a licensee’s ‘reasonable cause to suspect’, indicating that the word ‘reasonable’ was an “important qualification” and further stating:

“We do not expect gambling businesses to actively investigate various sources of information but to be cognisant of developments it might become aware of and respond accordingly.”

Whilst it remains somewhat ambiguous as to what may be considered ‘reasonable’ in these circumstances, the Gambling Commission explains that it introduced this wording to ensure licensees do not fail to report complex cases where they do not have ‘actual knowledge’ of a death by suicide. All licensees must therefore now ensure they notify the Gambling Commission as soon as reasonably practicable upon becoming aware, or having reasonable cause to suspect, that a customer has died by suicide and (where applicable) ensure they participate in GAMSTOP.

Many licensees will have already implemented these requirements into their policies, procedures and systems. However, for those that have yet to do so, you may find the following helpful:

GAMSTOP

The Gambling Commission published a blog on 18 December 2023, which provides information on how to integrate with the GAMSTOP application programming interface.

Helpfully, the blog links to a webinar delivered by the Gambling Commission and GAMSTOP, which provides:

a summary of GAMSTOP’s work completed to date – starts at 1 minute 40 seconds;
an overview of the GAMSTOP scheme – starts at 6 minutes 17 seconds;
guidance about the integration process – starts at 17 minutes 29 seconds; and
a question and answer session – starts at 32 minutes 06 seconds.

Reporting suicides

If licensees become aware, or have reasonable cause to suspect, that a customer has died by suicide, they should provide the following information to the Gambling Commission:

the date the licensee became aware of the death;
the person’s name;
date of birth; and
a summary of their gambling activity, if this information is available.

This information should be submitted to the Gambling Commission via eServices as soon as reasonably practicable. It is critical to remember that the Gambling Commission requires any deaths by suicide to be reported – it does not matter whether the suicide is known or suspected to be associated with gambling. As noted by the Gambling Commission in its Consultation Response:

“…we are not expecting gambling businesses to determine whether the person’s death was caused by or connected to their gambling activity. Responsibility for establishing whether a death is by suicide is a matter for a coroner or the police to determine.”

Additional details about information the Gambling Commission expects licensees to include in these notifications can be found in the Gambling Commission’s LCCP Information requirements guidance.

In terms of the timing of the notification, the Gambling Commission does not provide guidance on what is meant by “as soon as reasonably practicable”. However, licensees should note the relative urgency and would be well-advised to put in place robust systems and processes to ensure that any relevant facts/matters are reported to appropriate personnel within the business as soon as possible – ideally to those in the compliance department, including the personal management licence (“PML”) holder responsible for the licensee’s regulatory compliance function.

In addition, all employees (and particularly those that are customer-facing and/or who supervise this cohort) should be trained on the new reporting obligation as soon as possible, to mitigate the risk that relevant facts or matters are known within the wider business but not reported “up” through the appropriate channels.

We also recommend that licensees review their terms and conditions and privacy policies to make it clear that they are required to disclose information to the Gambling Commission in these circumstances.

Please get in touch with us if you: (i) would like us to review your policies and procedures to ensure they comply with the Gambling Commission’s requirements; (ii) require training for the PML holders in your business; and/or (iii) would like any other assistance in relation to licensing and compliance matters.

23Feb

White Paper Series: DCMS announces online slots stake limits

23rd February 2024 Chris Biggs 204

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

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

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

In reaching this decision, DCMS states:

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

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

Implementation

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

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

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

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

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

Key points of note in the Consultation Response

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

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

£5 stake limit

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

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

£2 stake limit

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

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

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

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

Scope of limits

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

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

Summary

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

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

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

21Dec

DCMS Committee on gambling regulation publishes its report

21st December 2023 Francesca Burnett-Hall 199

The Department for Culture, Media and Sport (“DCMS”) Committee on gambling regulation, appointed by the House of Commons, has today published its report with its conclusions and recommendations to Government.

The inquiry launched in December 2022, at a time when there was considerable uncertainty about the status of the Gambling White Paper. The original terms of reference were as follows:

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 UK jurisdiction?

After the publication of the White Paper, on 27 April 2023, the terms of reference were broadened to include:

What are the most welcome proposals in the Gambling White Paper?
Are there any significant gaps in the Government’s reforms?
What are the potential barriers to the Government and Gambling Commission delivering the White Paper’s main measure by summer 2024, the Government’s stated aim?

Culture Media and Sport, Chair, Dame Caroline Dinenage MP, said:

“While gambling regulation should not overly impinge on the freedom to enjoy what is a problem-free pastime for the majority, more should be done to shield both children and people who have experienced problem gambling from what often seems like a bombardment of advertising branding at football and other sporting events. The Government needs to go further than the proposals in the White Paper and work with sports governing bodies on cutting the sheer volume of betting adverts people are being exposed to.”

The Committee received more than 160 submissions and held four oral evidence sessions.

Main conclusions and recommendations:

Implementation of the Gambling White Paper

The Government must set out a detailed timetable for the delivery of the White Paper’s proposals, with the Committee concerned that there was no mention of gambling legislation in the King’s Speech.
The Government and Gambling Commission should set out how they will address the growing trend of unlicensed gambling sites targeting the self-excluded. The Gambling Commission must also continue to work to improve its knowledge of the black market and its ability to monitor the number of British consumers gambling with illegal operators.

Online gambling protections

The Committee supports the principle of financial risk checks, but they must be minimally intrusive with customers’ financial data properly protected. There should be a pilot of the new system before the checks are fully implemented.
Stake limits for online slots should match those for electronic gaming machines in land-based venues and not exceed £5. Online deposit limits should be set by default and require customers to opt out rather than opt in.

Children and young adults

The Government should review the case for banning children’s access to social casino games, which are often playable on smartphones and simulate gambling activities and products.
The Committee supports the proposed enhanced online gambling protections for young adults aged 18-24, namely triggering a financial risk check at a lower monetary loss threshold and limiting the stake for online slots to £2. The Government, Gambling Commission, and gambling operators must ensure these measures do not unintentionally lead to more adults in this age group giving a higher age at account-creation.

Gambling advertising

There is an urgent need to better understand the effects of gambling advertising on the risk of harm. The evidence for a link between advertising and gambling harm currently appears much stronger than evidence indicating there is a risk of displacement to the black market if gambling advertising were restricted. The Government must commission research on the link between gambling advertising and the risk of gambling harm, including specifically for women and children.
The Government should have taken a more precautionary approach to gambling advertising in general – particularly to minimise children’s exposure. While a complete ban on gambling advertising would not be appropriate, there is still scope for further regulation beyond that proposed by the Government.
The Government should work with the Premier League and the governing bodies of other sports to ensure that the gambling sponsorship code of conduct contains provision to reduce the volume of gambling adverts in stadia. A higher proportion of gambling advertising in stadia should be dedicated to safer gambling messaging. The Government must require sports governing bodies to publish the code without further undue delay.

Land-based gambling

Customers who prefer to pay on electronic gaming machines using cash should continue to be able to do so on all machines following any introduction of cashless payments.
The Government must ensure that the new settlement arising from the review of the Horserace Betting Levy mitigates the impact of the White Paper’s reforms on the racing industry and ensuring British racing’s future.

Gambling research, prevention and treatment

The Committee supports the proposed structure and governance of the new statutory levy to be imposed on operators in the industry to fund gambling research, prevention and treatment. The Government must ensure that service providers currently operating via the voluntary funding system are adequately supported in the transition to a statutory levy. There should be a new national strategy for reducing gambling harms.

A Gambling Ombudsman

The scope of the new gambling ombudsman should include all disputes between gambling operators and their customers, not only those relating to social responsibility failings.

Government has two months to respond.

Please get in touch if you would like discuss any of the proposals in the White Paper or would like any assistance preparing a response to the Gambling Commission’s current open consultations: the Autumn consultation, which includes proposals relating to incentives, customer-led tools, customer funds protection and regulatory returns reporting (closing 21 February 2024) and the December consultation on proposals relating to financial penalties and financial key event reporting (currently closing 15 March 2024).

01Dec

White Paper Series: Gambling Commission launches Autumn 2023 consultation

1st December 2023 Harris Hagan 220

On 29 November 2023, the Gambling Commission launched its Autumn 2023 consultation (the “Autumn Consultation”). It is the Gambling Commission’s second consultation addressing its commitments within the White Paper, following the Summer 2023 consultation.

The Autumn Consultation sets out five proposed changes to the Licence Conditions and Codes of Practice (“LCCP”) and Remote Gambling and Software Technical Standards (“RTS”), several of which were foreshadowed in the Gambling Commission’s Advice to Government in April 2023. These include:

Socially responsible incentives

The Gambling Commission wants to make changes to ensure that incentives such as free bets and bonuses are constructed in a socially responsible manner and do not encourage excessive or harmful gambling. Proposals include banning or limiting (to a maximum of 1, 5 or 10 times) the use of wagering requirements in promotional offers and banning the mixing of product types (e.g. betting, bingo, casino and lotteries) within incentives for new and existing customers, as well as updating social responsibility code provision 5.1 of the LCCP to make it explicit that incentives should be constructed in a manner that does not lead to excessive or harmful gambling.

Customer-led tools

The proposals include amendments to the RTS to ensure customers can seamlessly use pre-commitment tools (such as deposit limits) to maintain awareness and control over their gambling. The Gambling Commission is also seeking stakeholder views on: (a) minimising friction in the customer journey when they choose to use customer-led tools; and (b) cross-operator deposit limits, the prospect of which is sure to be a key area of focus in industry responses.

Improved transparency on customer funds in the event of insolvency

The Gambling Commission is seeking to improve the transparency of operators who have a ‘not protected’ rating (under the Gambling Commission’s rating system) in relation to customer funds. It proposes an addition to the LCCP, to require licensees to remind customers, no more than once every 6 months, that their funds are not protected in the event of insolvency throughout the customer relationship.

Changes to the frequency of regulatory returns

As we previously discussed, the Gambling Commission is proposing to amend the LCCP to require all regulatory returns be submitted on a quarterly basis.

Notably, the Gambling Commission states it will continue to engage with industry on the “final specification of fields for reporting” outside of the consultation process. We understand that this will be conducted through the Gambling Commission’s User research programme shortly, which we explained in a recent blog.

Removing obsolete Gambling Commission requirements due to the Government’s upcoming statutory levy (LCCP RET list)

Running alongside the Government’s consultation on the statutory levy, the Autumn Consultation proposes to remove the current requirement to make an annual financial contribution to fund research, prevention and treatment (“RET”) from the LCCP, once the statutory levy is introduced or at the beginning of the financial year in which the levy is introduced.

For further information about the statutory levy (and the Government consultation), please see our recent blog.

Other industry updates

The Gambling Commission explains that it is currently analysing the responses to its Summer 2023 consultation, which closed on 18 October 2023, and will release “one or more responses” to that consultation in 2024. It will also be launching another consultation on two “business as usual” matters shortly. This will include proposals addressing the clarity and transparency of the Gambling Commission’s calculation of financial penalties as well as licensees’ reporting of financial key events.

Next steps

The Autumn Consultation will be open for 12 weeks, closing on 21 February 2024. Responses can be submitted online, or by post to the Gambling Commission’s Policy Team.

We strongly encourage all licensees and stakeholders to review and respond to the Autumn Consultation. Please get in touch with us if you would like to discuss this matter further or require our assistance preparing responses.

29Nov

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

29th November 2023 Chris Biggs 208

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

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

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

What is the COL Research?

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

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

The COL Research specifically aims to test three core hypotheses:

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

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

Wave 1

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

Wave 2

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

Wave 3

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

Qualitative wave

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

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

Key findings

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

Topic 1: Financial comfort and concerns, and wellbeing

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

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

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

Topic 2: Changes in gambling behaviours

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

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

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

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

Topic 3: Motivations for gambling

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

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

Interim conclusions

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

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

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

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

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

Takeaway points

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

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

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

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

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

28Nov

New Industry Code for Responsible Gambling (7th edition) comes into force this week

28th November 2023 Ting Fung 214

The seventh edition of the Industry Group for Responsible Gambling Code for Socially Responsible Advertising (the “IGRG Code”) was published by the Betting and Gaming Council on the 5 September 2023 and will come into force on 1 December 2023.

Pursuant to ordinary code provision 5.1.8, all licensees are required to follow the IGRG Code.

The IGRG Code has been strengthened following government’s indication in the White Paper to:

“take existing commitments in the industry code further, and use the full potential of available advertising technology to target all online advertising away from children and vulnerable people and those showing indicators of harm.”

What’s new?

The IGRG Code, which was last updated in October 2020, has been amended as follows:

Extension of the safer gambling messaging requirement to 20% of advertising space across online and broadcast media (previously, this commitment only applied to television and radio).
Extension of the 25+ rule to all digital media platforms, including those which operate age verification processes.

You can download a copy of the IGRG Code from the BGC’s website.

31Oct

Revised remote customer interaction guidance comes into effect

31st October 2023 David Whyte 237

The Gambling Commission’s revised remote customer interaction guidance (“CI Guidance”) has today (31 October 2023) come into effect, along with the requirement set out in Social Responsibility Code Provision (“SRCP”) 3.4.3 that remote licensees must take the CI Guidance into account.

As readers of our blog will no doubt be aware, we have provided several updates (for example, in December 2022 and January 2023) on, and been critical of, the evolution of the CI Guidance, since the first announcement by the Gambling Commission on 14 April 2022 of the new SRCP 3.4.3 and the associated CI Guidance.

The Gambling Commission has now set out its requirements. Irrespective of their views about the CI Guidance, it is vitally important that those remote licensees to which the CI Guidance applies are compliant with SRCP 3.4.3 and can demonstrate that they have taken the CI Guidance into account. We do not propose to further analyse the CI Guidance in detail in this blog. Rather, we set out below some key considerations for those licensees who must comply with these requirements.

Key considerations

Consideration 1: Be wary of the language used in the CI Guidance

We have previously raised concerns about the Gambling Commission introducing formal requirements through guidance, and about the risk that the language used in the CI Guidance might: (a) inaccurately reflect the requirements set out in SRCP 3.4.3; (b) cause confusion; and/or (c) expose licensees to the risk of broad interpretation by the Gambling Commission.

We note that the Gambling Commission has retained its use of “must” and “should” in the CI Guidance, having confirmed in its response to its consultation on the CI Guidance, published on 24 August 2023 (the “CI Consultation Response”) that it has “ensured that consistently appl ‘must’ language when quoting or referring to the requirements, and use ‘should’ language when referring to guidance which must be taken into account”. Licensees should take note of this distinction, but at the same time be aware that the requirement imposed by SRCP 3.4.3 to “take into account” the CI Guidance might effectively make such distinction irrelevant.

Consideration 2: Document your decision-making processes

As the Gambling Commission explains in the CI Guidance, SRCP 3.4.3 “sets out the requirements relevant licensees must comply with in relation to remote customer interaction. For compliance and enforcement purposes, will expect licensees to demonstrate how their policies, procedures and practices meet the required outcomes. This can be through implementing relevant parts of the guidance or demonstrating how and why implementing alternative solutions equally meet the outcomes”.

Licensees will likely be aware that the Gambling Commission has taken a very literal approach to the interpretation of its guidance in the past (e.g. its guidance for remote and non-remote casinos on the prevention of money laundering and combating the financing of terrorism). It is therefore likely that the Gambling Commission will take the same literal approach in relation to the CI Guidance. Licensees should ensure that they carefully document their decision-making process in relation to the CI Guidance, in particular in cases where their approach is inconsistent with, or diverges from, the CI Guidance. This documented decision-making process will enable licensees to demonstrate to the Gambling Commission that they have met their regulatory obligations in the event of future oversights and/or regulatory scrutiny.

Consideration 3: Licensees are not expected to screen all customers for every indicator of vulnerability

The Gambling Commission makes it clear in the CI Guidance that its “aim” for SRCP 3.4.3(3), which requires licensees to “consider the factors that might make a customer more vulnerable to experiencing gambling harms”, is to ensure that “where licensees know that customers are in a vulnerable situation, these customers are supported”. Licensees should note that the Gambling Commission also confirms that it does not expect licensees to screen all customers for each of the factors of vulnerability set out in the CI Guidance.. Rather, it expects that licensees “consider and act on information that they have available to them” (our emphasis added).

Consideration 4: Not all information included in the CI Guidance is required to be taken into account

The Gambling Commission clarified in the CI Consultation Response that certain information included in the CI Guidance is not required to be taken into account by licensees. Rather, that information has helpfully been included in an attempt to provide licensees with clarification or additional explanation to assist their understanding. Licensees should ensure that they are aware of this distinction, particularly when they are revising their policies and procedures and/or documenting their decision-making process.

A helpful example of this is the additional information – which is not required to be taken into account – set out below paragraph 5.3 of the CI Guidance. This lists further sub-categories of potential indicators of harm which, whilst not required indicators, may be of particular use to licensees when considering the formal indicators that they are required to incorporate into their approach to customer interaction by SRCP 3.4.3(5).

Consideration 5: No change to affordability requirements (yet!)

At present, the Gambling Commission’s position on customer affordability has not changed. Whilst the Government set out its proposed financial risk check model in the White Paper, upon which the Gambling Commission is consulting, the CI Guidance does not address those issues. Rather, it restates the current position at paragraph 4.6, reminding licensees that: (a) open source data that can assist them in assessing affordability exists; (b) thresholds should be realistic and based on average available income; and (c) they should be aware of the distinction between ‘disposable income’ and ‘discretionary income’.

Consideration 6: Manual reviews of automated decisions are only required if customers contest that decision

SRCP 3.4.3(11) requires that “icensees must ensure that strong indicators of harm, as defined within the licensee’s processes, are acted on in a timely manner by implementing automated processes”. It also requires that, where such automated processes are applied, “the licensee must manually review their operation in each individual customer’s case and allow the customer the opportunity to contest any automated decision which affects them”.

The Gambling Commission clarified its position in relation to this manual review in the CI Consultation Response and does so again in the CI Guidance, stating that its expectation is that “where a decision is made solely by automated means and which has legal effects or similarly significantly affects a customer the licensee contacts the relevant customer to inform them of the decision and their right to contest it”. It is only where the customer exercises their right to contest the decision that a substantive manual review must be undertaken.

Licensees should take steps to review their data protection processes and procedures to ensure that they are consistent with both data protection legislation and the Gambling Commission’s expectations as set out in the CI Guidance.

Consideration 7: Do not overlook evaluation

Licensees are likely to have gone to significant lengths to ensure their adherence to the burdensome requirements set out in the CI Guidance, with particular focus on indicators of vulnerability and harm. In doing so, there is a risk that they may have overlooked the importance of evaluation as required by SRCP 3.4.3 (12)-(14). Licensees should therefore ensure that their approach to customer interaction incorporates the mandatory evaluation processes both at the individual customer level and of the whole system, and that those evaluation processes are documented and audited.

Next steps

Please get in touch with us if you would like to discuss the CI Guidance, or if you would like assistance with drafting and/or updating your policies and procedures in light of the CI Guidance.

24Aug

Gambling Commission publishes new remote customer interaction guidance

24th August 2023 Adam Russell 240

On 23 August 2023, the Gambling Commission announced that they have published new remote customer interaction guidance in relation to Social Responsibility Code Provision 3.4.3 (“SRCP 3.4.3”) of the Licence Conditions and Codes of Practice.

Context

In April 2022, the Gambling Commission introduced new “stronger and more prescriptive” remote customer interaction requirements for remote gambling operators under SRCP 3.4.3, which tightened the rules on identifying at-risk customers and taking “proportionate timely action to reduce harm”.

At the time, the new remote customer interaction requirements were due to take effect on 12 September 2022 and in June 2022, the Gambling Commission published associated guidance, designed to support compliance with the new requirements under SRCP 3.4.3.

However, to widespread surprise, in September 2022, the Gambling Commission announced their decision to delay the implementation of:

paragraph 3 of SRCP 3.4.3 (“Licensees must consider the factors that might make a customer more vulnerable to experiencing gambling harms and implement systems and processes to take appropriate and timely action where indicators of vulnerability are identified. Licensees must take account of the Commission’s approach to vulnerability as set out in the Commission’s Guidance”);

paragraph 10 of SRCP 3.4.3 (“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”); and

other references in SRCP 3.4.3 to the guidance,

until at least 12 February 2023.

In the intervening time, the regulator decided that it would “be beneficial to use the time now available” to conduct a consultation on the guidance itself.

The consultation on the remote customer interaction guidance closed in January 2023.

The Gambling Commission also announced that, irrespective of the consultation on the guidance, requirement 10 of SRCP 3.4.3 would come into force on 12 February 2023 in any event.

New customer interaction guidance now published

Seven months after the consultation closed, the Gambling Commission have finally published the new remote customer interaction guidance, together with the associated consultation response.

The new remote customer interaction guidance contains various updates to the guidance originally published in June 2022, which we will explore in an upcoming blog.

Remote operators will be required to take into account the new remote customer interaction guidance from 31 October 2023.

In addition, SRCP 3.4.3 requirements:

to take into account the guidance; and

to “consider the factors that might make a customer more vulnerable to experiencing gambling harms and implement systems and processes to take appropriate and timely action where indicators of vulnerability are identified”,

will come into force on the same date.

Next steps

We are closely reviewing the new guidance and consultation response, and will be sharing our analysis and insights in due course.

Please get in touch with us if you would like to discuss this development, or if you would like assistance on drafting/updating your policies and procedures in light of the new guidance.