It can surely have come as no surprise that, after all that has happened in recent months, the Gambling Commission has announced proposals designed to provide greater protections for children, reduce problem gambling risks to vulnerable customers and act on its long-held perception that operators have not been doing enough to properly know their customers and to intervene at an earlier stage before consumers experience harm.
The proposals should help those operators who have been saying to the Commission – too defensively in my view – “tell us what to do and we will do it”. My personal view is that the industry should have preferred the lighter regulatory touch that originally led to the outcomes-focused style of regulation that originally dictated the Commission’s approach. That provided a greater degree of flexibility than a prescribed set of rules that necessarily limits innovation and provision of choice. However, it is too late to ask the regulator to turn back the pages and what has been announced today is the result of (a) the rapid growth in the online gambling sector since the shift to point of consumption regulation of remote gambling on 1 November 2014 and (b) what the Commission considers to have been repeated serious failings in terms of consumer protection in that time.
Indeed the “Review of online gambling” published today drives home the Commission’s opinion that “progress by the online industry to minimise harm has been significantly slower than we expected and required”.
The Commission acknowledges that it has started to see signs that online operators “are beginning to take their responsibilities as seriously as we expect and that they are making this an integral part of their business culture”, but unfortunately this is a case of “too little, too late”.
As long ago now as November 2016, the then CEO of the Commission, Sarah Harrison, called on the industry to accelerate the rate of change in raising its standards. The newly announced proposals are designed to force such an outcome. They are based on the following seven principles that have been put forward by the Responsible Gambling Strategy Board:
- In the absence of any restrictions on game characteristics, the package of protections which surround a product must be significantly and demonstrably, stronger.
- Gambling with borrowed money, including through the use of a credit card, is a risk factor and therefore consumers’ ability to gamble with credit should be restricted.
- To the maximum extent possible, consumers should be able to withdraw funds as easily as they are able to deposit them.
- Gambling operators should ensure their customers are 18 or over at the point of registration, not some later point.
- Encouraging a consumer to take greater gambling risks is not the same as upselling in other retail and commercial contexts.
- Responsible gambling information should be accessible, prominent and engaging.
- Operators should dedicate as much energy and creativity to player protection as they do to their commercial activities and should commit resources to it in sufficient quantity to reflect its importance
Certain of the following Gambling Commission proposals will be subject to consultation, so any operators reading this who object to what is proposed should not do so silently. They should respond to the forthcoming consultation putting forward cogent and carefully considered reasons why a different approach should be adopted by the regulator, ideally supported by some evidence.
1 Age verification
The Commission proposes to remove the current 72-hour window to carry out age verification checks (with a dispensation applied if a customer is using a credit card) during which it is possible for someone to register an account and deposit funds for gambling, meaning that all customers will in future have to be age verified before they are able to deposit money and gamble.
In addition, the Commission has concerns about the availability of play-for-free games, that whilst not constituting gambling, may encourage young people to gamble. As a result, it will be consulting on only allowing access to such games to those who have first been age-verified.
2 Customer due diligence
On the basis that age verification alone does not confirm that a person is who they say they are, the Commission proposes to extend to all online gambling operators the requirement for CDD checks that are presently applicable only in the case of casinos within the context of AML obligations. This would mean that the identity of all customers has to be verified before they are allowed to gamble. The modern technology exists to provide very considerable assistance in this respect but it requires equally considerable financial investment. The forthcoming consultation will also propose that mandatory account limits are imposed until operators have further verified information about their customers.
3 Unfair terms advice
In a news item posted on 23 March 2018, the Commission made clear its expectation that by 3 April online operators will remove unfair bonus promotion terms that:
- require customers to play multiple times before allowing them to withdraw their own money,
- prevent them from withdrawing their full balance by minimum withdrawal limits or
- could oblige players to take part in publicity
and that they will instead prominently flag any significant restrictions to customers.
The Commission is confirming that it will continue to work with the CMA to raise standards in the area of unfair terms and conditions and that, once further investigations and enforcement action by the CMA is completed, it will publish advice for industry, consumers and ADR providers.
4 Customer Interaction
The Commission has recently published customer interaction guidance for remote gambling operators. Whilst acknowledging that a significant amount of work is being undertaken within the industry to develop and implement more effective approaches to this subject, including the use of data and development of algorithms to ensure that customer interaction is well-targeted, the Commission wants to speed up progress. It will, therefore, be consulting on the effectiveness of the present LCCP customer interaction controls in order to “embed good practice”.
The Commission has also set out the following areas of further work that it intends to carry out:
- Assess the effectiveness of the current tools available to consumers to manage their gambling
- Review gambling product characteristics to identify whether particular features pose greater risk of harm than others
- Review its requirements on the protection of customer funds and consider whether there are sufficient protections around dormant accounts
- Consider whether gambling on credit should continue to be permitted
- Consider whether it needs to make changes to ensure that consumers can withdraw funds more easily.
The “Review of online gambling” runs to 63 pages. However, it should not just be regarded as just a list of yet more regulatory burdens to be cast upon an already beleaguered industry.
It contains some potentially very useful intelligence for both betting and gaming sectors in its section 2 “Online gambling market overview”, with:
- pie charts showing both online betting market share and online casino market share,
- Paddy Power Betfair and bet365 emerging as clear overall winners
- evidence suggesting some shift from land-based gambling to online gambling.
- a steadily narrowing difference between online and in-person casino participation split
- no clear trend for bingo (although there has been a slight narrowing of the gap between online and in-person participation)
- a significant increase in online participation in horse races (correlated with a fall in in-person participation)
- very limited information on spend but an inference from the combination of participation rates and GGY is that online consumers, in general, spend more than land-based consumers.
It also sets out the Commission’s findings in relation to the main characteristics of online betting, casino, bingo and slots participants using its December 2017 telephone survey data showing, amongst other things, an “overrepresentation of people seeking work” that it suggests operators should be used to support their customer interaction policies and procedures.
David Clifton – Director – Clifton Davies Consultancy Limited
The Betting industry’s regulatory agenda and current context will be discussed at the upcoming ‘Betting on Sports Conference’ (#boscon2018 – Olympia London-18-20 September 2018). Click on the below banner for more information…