04Feb

White Paper Series: Gambling Commission launches January 2025 consultation

4th February 2025 Harris Hagan 136

On 29 January 2025, the Gambling Commission launched its January 2025 consultation (the “January 2025 Consultation”). It is the Gambling Commission’s third consultation addressing its commitments within the White Paper, following the Summer 2024 consultation and Autumn 2023 consultation.

What does the January 2025 Consultation propose?

The January 2025 Consultation sets out proposed changes to the Gaming Machine Technical Standards (“GMTS”), the Gaming Machine Testing Strategy (“Testing Strategy”), and the Licence Conditions and Codes of Practice (“LCCP”), several of which were foreshadowed in the Gambling Commission’s Advice to Government in April 2023.

These include:

introducing five new standards, a licence condition and a social responsibility code provision designed to support and empower consumers to use gaming machines safely at every stage of the customer journey – this includes proposals on time and monetary limit setting functionality and information provision, such as safer gambling messaging and the display of net position and session time;
amending three existing standards having considered industry proposals to improve customer enjoyment and gameplay;
consolidating the existing 12 gaming machine technical standards into a single standard, whilst amending the format to be more consistent with the Remote gambling and software technical standards for greater clarity; and
updating the gaming machine technical standards and the related testing strategy to remove obsolete material.

1. Consolidation of the GMTS

The Gambling Commission proposes to consolidate the 12 existing GMTS into a single standard and amend the format to be more consistent with the Remote gambling and software technical standards. The proposed consolidated version of the GMTS will be structured into 8 main standards and apply to all the main categories of gaming machines, with a further 6 standards for specific technical requirements. Although the text is proposed to be re-structured, these are essentially unchanged from the existing GMTS and cover areas such as legacy gaming machines, wireless network requirements and linked progressive requirements.

Given the now identical maximum charges for use (and maximum payouts) on Category B2 and B3 gaming machines is £2 per game (reduced from £100 per game in 2019), the Gambling Commission propose amending the GMTS for Category B2 gaming machines. Proposals are in relation to the game speed of play, that each game cycle must last at least 2.5 seconds (GMTS 5.7), and use of compensators and/or regulators, now permissible subject to compliance with the requirements and implementation guidance (GMTS 5.8).

2. Amendments to the GMTS

The proposals include amendments to the existing GMTS following the Gambling Commission’s consideration of industry proposals to improve consumer enjoyment and gameplay. These include:

changes to game links (meaning an element, feature or outcome from one game is either held over or made reference to (recreated) in the next game (for example, reel band holds)) by (i) adjusting the value and the number of repeats permissible on Category C gaming machines (GMTS 5.14b) and (ii) removing the need for a 50/50 chance following a losing game on Category B gaming machines (GMTS 5.14a); and
changes to live jackpots by allowing a player to gamble a live jackpot win on all categories of gaming machine (GMTS 5.9) – allowing live jackpots to be gambled, in the same manner that other prizes can be. This would not require consumers to gamble but rather choose to gamble or collect the live jackpot win in full at their own discretion.

It is noted in the January 2025 Consultation that several other proposals were discounted for a variety of reasons. These reasons included, for example, risk to the licensing objectives and the need for primary legislation which sits outside of the Gambling Commission’s remit.

3. New technical standards of the GMTS

The Gambling Commission seeks to support and empower consumers to use gaming machines safely at every stage of the customer journey.

Notably, the January 2025 Consultation proposes to introduce five new technical standards of the GMTS. These new standards focus on:

time and monetary limit setting (GMTS 15.1) including:
- requiring operators to ensure machines offer a default option of no more than a 20-minute session and £150 in deposits;
- requiring customers to set their own limits, but these must not be more than 60 minutes or £450 deposited – setting no limits will not be an option; and
- requiring players to take a mandatory break in play of at least 30 seconds when they hit their assigned limits; in addition, an alert will be sent to staff in the venue to inform them that a gambler has reached their pre-set threshold;
safe gambling messaging during breaks in play when a customer set limit or default limit is reached or modified prior to being reached. The provision of information other than safer gambling messaging – such as a marketing of games or new promotional offers – in this scenario, will be prohibited (GMTS 15.2);
display of net position and elapsed time (GMTS 15.3);
awards less than or equal to the last total stake gambled must not be celebrated (GMTS 15.4); and
prohibiting features that permit a customer to reduce the time until the result is known (GMTS 15.5).

Regular readers will note the similarities between some of the new technical standards and the changes to the remote games design requirements that came into force on 17 January 2025. For further information, please see our blog: Reminder: Changes to remote games design requirements come into force on 17 January 2025.

A copy of the proposed new GMTS is available here.

f. Update to a social responsibility code provision of the LCCP

It is also proposed that a social responsibility code provision (SR C P 3.3.3) of the LCCP should be amended to require licensees to ensure that any gaming machines comply with GMTS 15.1 in relation to time and monetary limit setting, and ensure that staff alerts for limit setting are acted upon appropriately and in a timely manner.

g. Update to the Testing Strategy

The Gambling Commission wants to update the Testing Strategy to remove obsolete material in the strategy. Proposals include removal of the initial transitional arrangements and implementation dates.

In addition, the Gambling Commission proposes to align the testing requirements for Category B2 gaming machines with those applicable to Category B3 gaming machines, due to the identical maximum charges for use (and maximum payouts) on Category B2 and B3 gaming machines.

A copy of the proposed new Testing Strategy is available here.

h. New licence condition of the LCCP

The January 2025 Consultation proposes to introduce a new licence condition of the LCCP, under the powers conferred by section 86(2) of the Gambling Act 2005, which will allow the Gambling Commission to effectively address instances whereby a gaming machine has been illegally manufactured, supplied, installed, adapted, maintained or repaired, or does not comply with the GMTS. Making a specified machine available for use after the Gambling Commission has notified the licensee in writing that the manufacture, supply, installation, adaption, maintenance or repair of the machine will now be a breach of a licence condition if it (a) was not carried out in reliance on a gaming machine technical operating licence, or (b) did not comply with the Commission’s gaming machine technical standards, which could give rise to enforcement action by the Gambling Commission .

Will this be the last White Paper consultation by the Gambling Commission?

While this is the Gambling Commission’s third consultation implementing proposals in the White Paper, it is unlikely to be the last. A further Gambling Commission consultation for the land-based sector may be required in due course if the Government decides to remove the prohibition on the direct use of debit cards on gaming machines. The Gambling Commission is also considering undertaking a further consultation to consider the effects of legislative change following the Gambling Act Review.

Next steps

The January 2025 Consultation will be open for 16 weeks, closing on 20 May 2025. 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 January 2025 Consultation. Please get in touch with us if you would like to discuss this matter further or require our assistance preparing responses.

13Jan

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

13th January 2025 Tiffany Babayemi 115

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.

29Nov

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

29th November 2024 John Hagan 135

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

Statutory Levy

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

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

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

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

Levy funding will be split as follows:

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

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

Baroness Twycross, Gambling Minister

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

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

Online slot stake limits

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

Next steps

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

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

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

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

Our preliminary thoughts on the initial response

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

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

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

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

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

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

24Jul

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

24th July 2024 Harris Hagan 146

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

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

08May

White Paper Series: Changes to Personal Management Licences

8th May 2024 Bahar Alaeddini 156

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

The Gambling Commission proposed to:

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

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

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

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

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

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

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

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

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

Timing of new requirements

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

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

When can applications be made?

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

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

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

What do PMLs need to know?

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

Preparing new PMLs & training

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

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

Next steps

We strongly encourage gambling businesses to:

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

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

08May

White Paper Series: the White Paper, one year on

8th May 2024 Jessica Wilson 163

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

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

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

The journey so far…

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

Chapter 1: Online protections – players and products

Headline proposals included:

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

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

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

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

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

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

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

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

In summary, the following will be implemented:

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

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

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

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

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

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

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

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

Chapter 2: Marketing and advertising

Headline proposals included:

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

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

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

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

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

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

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

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

Chapter 3: The Gambling Commission’s powers and resources

Introduction of a statutory gambling levy.

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

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

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

Increased Gambling Commission fees.

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

Chapter 4: Dispute resolution and customer redress

Headline proposal:

Appointment of a Gambling Ombudsman.

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

Chapter 5: Children and young adults

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

Chapter 6: Land-based gambling

Headline proposals included:

Strengthening age verification in land-based premises.

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

Introduction of cashless payments on gaming machines.

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

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

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

Consultation progress

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

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

Other updates

Other updates from the last 12 months include:

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

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

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

14 September 2023 – Gambling Commission Industry Forum established.

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

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

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

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

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

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

11 March 2024 – Gambling Commission Industry Forum members appointed.

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

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

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

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

Where are we now?

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

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

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

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

What can we expect next?

Responses to the following consultations:

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

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

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

27Mar

Quarterly regulatory returns across the board from July 2024

27th March 2024 Francesca Burnett-Hall 186

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

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

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

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

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

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

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

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

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

The full consultation response can be seen here.

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

28Feb

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

28th February 2024 Chris Biggs 182

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

Background

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

The Petition states:

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

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

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

The Debate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Summary

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

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

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

Watch the full Debate in Parliament here:

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

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

23Feb

White Paper Series: DCMS announces online slots stake limits

23rd February 2024 Chris Biggs 179

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.

02Feb

White Paper Series: Gambling Commission consults on timing of regulatory returns

2nd February 2024 Chris Biggs 158

On 30 November 2023, the Gambling Commission released its Autumn 2023 consultation on proposed changes to Licence Conditions and Codes of Practice (LCCP) and Remote Gambling and Software Technical Standards (RTS) (the “Autumn Consultation”). In this blog, we focus on the proposed changes to the Gambling Commission’s regulatory returns requirements, which for our regular readers, will not have come as a surprise.

Background

As we have previously reported, regulatory returns have been under the Gambling Commission’s microscope in recent months:

First, in an E-Bulletin on 29 August 2023, the Gambling Commission reminded licensees to submit regulatory returns on time in accordance with licence condition 15.3.1 of the Licence Conditions and Codes of Practice (“LCCP”). We discussed this reminder in our previous blog: Gambling Commission sets its sights on late regulatory returns and incorrect fee categories.

Subsequently (and as highlighted in our article: Regulatory returns are under the microscope – but will the key issue be missed?), the Gambling Commission’s Director of Research and Statistics, Ben Haden, posted a blog on 6 October 2023, entitled Making better use of operator data, confirming the regulator’s intention to make changes to its regulatory returns, including to “sharpen” the dataset currently received from licensees. Haden also indicated that there would be a consultation on the frequency of regulatory returns in November 2023.

It therefore comes as no surprise that the Autumn Consultation includes proposals to amend the frequency of submission of regulatory returns. In addition, the Gambling Commission indicates in the Autumn Consultation that it intends to make other changes outside of the consultation process. For example, by removing data fields from regulatory returns which are:

“both burdensome for gambling licensees and data quality issues for ”.

In this blog, we outline the Gambling Commission’s proposals in relation to regulatory returns and reflect on the likely impact of these changes.

Proposed changes to frequency – subject to consultation

Currently, the frequency of a licensee’s regulatory return submissions depends on the type of operating licence it holds. The Gambling Commission is consulting on requiring regulatory returns quarterly from all licensees, irrespective of gambling licence type.

It is expected that this proposal will affect the following categories / number of licensees:

Licence/Return	No. of licensees submitting annual regulatory returns
Adult gaming centre	400
Betting	549
Bingo	157
Casino (1968)	0
Casino (2005)	0
External lottery manager	28
Family entertainment centre	112
Gaming machine technical	402
Lottery	484
Remote casino, betting and bingo	10
Software	291

The Gambling Commission proposes to introduce this change by amending licence condition 15.3.1 as follows:

15.3.1 – General and regulatory returns

Applies to: All operating licences

On request, licensees must provide the Commission with such information as the Commission may require, in such a form or manner as the Commission may from time-to-time specify, about the use made of facilities provided in accordance with this licence and the manner in which gambling authorised by this licence and the licensee’s business in relation to that gambling are carried on.
In particular within 28 days of the end of each quarterly period ~~or, for those only submitting annual returns, within 42 days of the end of each annual period,~~ licensees must submit an accurate Regulatory Return to the Commission containing such information as the Commission may from time to time specify.

Further changes – not subject to consultation

The Gambling Commission also confirms in the Autumn Consultation that it plans to implement changes in relation to:

“the range of data required, the harmonisation of reporting periods across the industry, and improving the functionality for submitting and quality assuring the data.”

This is not the first time these changes have been mentioned. They actually flow from the Gambling Commission’s Changes to information requirements in the LCCP, regulatory returns, official statistics, and related matters consultation response, published in July 2020 (the “2020 Consultation Response”). According to the Autumn Consultation, the changes proposed in the 2020 Consultation Response were not implemented at the time due to the “reprioritisation” of the Gambling Commission’s work and the COVID-19 pandemic.

Changes to harmonise reporting dates

The first change that the Gambling Commission proposes to make is in terms of the “harmonisation” of regulatory return reporting dates. According to the Autumn Consultation, this change will take effect at the same time as its proposal to move to quarterly submissions – and means that the return due dates for all licensees will become:

Return	Reporting period	Return due date
Q2 return	1 April to 30 June	28 July
Q3 return	1 July to 30 September	28 October
Q4 return	1 October to 31 December	28 January
Q1 return	1 January to 31 March	28 April

Changes to data fields

In addition, the Autumn Consultation confirms that the Gambling Commission intends to remove a significant number of data fields from the current regulatory returns process, which it states will ensure:

data completion is less time-consuming for gambling licensees;
an opportunity to clarify questions and improve data quality;
obsolete and non-business critical fields/ questions are removed; and
improved understanding of current and emerging issues.

It is currently unclear which fields will be removed. Again, the Gambling Commission has chosen not to formally consult with the industry in respect of the removal of these data fields. However, it has confirmed that it will engage – outside of the consultation process – with the industry on the final reporting fields, with the intention to reduce the current number.

In line with Proposal 1 (of Part 2) of the 2020 Consultation Response, we expect the following data fields to be impacted as part of this process:

Non-GB data

The Gambling Commission will only ask for non-GB data at an aggregated activity level, as opposed to requiring data for each sport and game category level. (It is important to note here that the Gambling Commission is concerned with non-GB revenues received in reliance on the GB licence, rather than all non-GB revenues – as this is often misunderstood by licensees.)

B2C revenue share

Reporting of revenue share Gross Gambling Yield (“GGY”) for B2C licensees will be combined with proprietary GGY across remote casino, betting and bingo sport and game categories. The Gambling Commission stated that this would not affect licensees’ fee categorisation.

Gaming Machine Technical

The Gambling Commission will no longer ask for the number of units sold, software sales or gross value of software sales and instead simply require the total value of sales. It will also remove a number of questions relating to the purchase, lease or sale of machines, profit shares and reporting of data by venue type.

Bingo (non-remote)

Turnover reporting will no longer need to be split between participation fees and sales.

Workforce

The Gambling Commission will no longer ask licensees for their workforce numbers.

For operators interested in participating in the Gambling Commission’s pilot program (or providing feedback), queries can be directed to [email protected].

The elephants in the room

It is undeniable that aligning reporting dates for licensees will bring a degree of harmony to the regulatory returns process. However, neither the proposals in the Autumn Consultation nor the Gambling Commission’s intended changes to reporting dates / data fields address one of the main issues with regulatory returns, i.e. that fee categories are calculated by reference to a licensee’s licence year, not their financial or calendar year.

Currently, the Gambling Commission is generally amenable to amending a licensee’s reporting dates if requested by a licensee – giving licensees the flexibility to align their regulatory returns reporting dates with other internal financial reporting dates, which typically increases their ability to spot when they are about to exceed a fee category. However, once the new reporting periods are introduced, it seems that licensees will be unable to harmonise Gambling Commission reporting requirements with internal deadlines. The Gambling Commission appears to have paid little heed to this – despite some respondents to the 2020 Consultation highlighting that having the flexibility to determine their own reporting periods better enabled them to manage their resources to comply with their various other financial, regulatory and business reporting obligations.

Instead, it appears that the decision to align reporting dates has been made because it will be beneficial for the Gambling Commission, leading to:

an improved ability for the Gambling Commission to budget based on more timely reporting of financial information, which will assist forecasting and ensure licensees are in the correct fee category;
a more timely and accurate picture of the gambling sector, as the Gambling Commission will not need to estimate quarterly comparisons based on annual returns; and
improved data quality for the Gambling Commission’s official statistics.

As we have indicated in our previous blog, we are certainly hopeful that the Gambling Commission’s collection of ‘better’ evidence will lead to its better regulation. However, it is also critical that these changes do not create a significant additional regulatory burden on licensees.

Finally, we also hope that the Gambling Commission will, as part of its review of the regulatory returns data fields, review and update its regulatory returns guidance. As we have previously highlighted, the Gambling Commission’s guidance on regulatory returns is in many places, unclear and lacking in detail – an issue which continues to lead to confusion for licensees and, in turn, the inadvertent submission of inaccurate information. For now, it is unclear whether the Gambling Commission will update its guidance following the Autumn Consultation; and we strongly encourage licensees and other industry stakeholders to raise this with the Gambling Commission when they respond to the Autumn Consultation.

Next steps

The Autumn Consultation will close on 21 February 2024. Responses can be submitted through the Gambling Commission’s online survey or sent by post to the Policy Team at the following address: Gambling Commission, 4th Floor, Victoria Square House, Birmingham, B2 4BP.

In the short time before the Autumn Consultation closes, we strongly encourage licensees to consider how the proposals will impact their businesses and if they wish to influence change, respond to the Autumn Consultation and/or apply to be part of the Gambling Commission’s pilot data programme.

Please get in touch with us if you have any questions about your regulatory returns or if you would like assistance with preparing a response to the Autumn Consultation.

With thanks to G emma Boore and Jessica Wilson for their invaluable co-authorship.