David Clifton: Licensing Expert – A restless November is just getting started

There are times when writing a monthly column for SBC News presents a challenge. This is one of those months. It’s not because of the paucity of potential content. It’s because of the sheer volume of potential content.

As it happens, there is a common thread running through all that I write about below, particularly with a General Election looming and Safer Gambling Week just around the corner (the latter of which I am marking by participating in a Responsible VIP Management” webinar on 12th November).

So let’s get started.

The formal launch of the Betting and Gaming Council (“BGC”) on 6th November (established “in response to calls for the industry to work together to guarantee an enjoyable, fair and safe betting and gaming experience for all”) was dominated by the announcement by ten of the UK’s top gambling companies – Aspers, bet365, Caesars, Flutter Entertainment, Genting, GVC Holdings, Playtech, Rank Group, SkyBetting & Gaming and William Hill – of what is described as “the most comprehensive set of measures from a wide group of leaders across the sector to support the UK Gambling Commission’s national strategy to reduce gambling harms”.

The key safer gambling commitments underlying those measures are to:

  • prevent underage gambling and protect young people
  • increase support for treatment of gambling harm
  • strengthen and expand codes of practice for advertising and marketing
  • protect and empower customers
  • promote a culture of safer gambling.
David Clifton

The above announcement took place one day after share values in publicly quoted gambling companies fell dramatically on publication by the Gambling Related Harm All-Party Parliamentary Group (“APPG”) of a premature and misapprehension-laden Interim Report arising from its Online Gambling Harm Inquiry. I say “premature” because, despite the report containing some fairly blistering criticisms of the industry and regulator alike, the APPG decided in its wisdom to publish its report before meeting with either the new Gambling Minister, Rebecca Pow, or any representative from the Gambling Commission. I say “misapprehension-laden” for reasons I will explain below.

The first of 28 recommendations in the report is that new gambling legislation is urgently required.

Indeed, the report (chaired by Labour Party MP Carolyn Harris) carries much the same message as that espoused over the last year or so by her party’s Deputy Leader Tom Watson who, commenting last month on the Gambling Commission’s 2019 Young People and Gambling Survey (that incidentally showed a decline in gambling participation by 11 to 16 year olds), said: “the government’s soft touch approach to gambling regulation has failed. The next Labour government will bring problem gambling under control with a comprehensive new Gambling Act, which will bring gambling advertising, spiralling losses and burgeoning in-game gambling products under control”.

Notwithstanding Tom Watson’s decision to stand down as Deputy Leader, we can expect the forthcoming Labour Party manifesto for the 12th December General Election to carry similar calls to those set out within the APPG report. To remove any doubt on that front, in his response to Watson, Jeremy Corbyn said “Although you are stepping down, I know we will continue to work together on the issues you have always championed and which we share a passion for: taking on …. the gambling companies”.

It must also be remembered that Vice-Chairs of the APPG include Conservative Party hard-liners Iain Duncan Smith and Lord Chadlington.

The former’s website records that in March this year he urged the Government to “tighten controls on the gambling industry to tackle the industry’s scandalous behaviour of incentivising vulnerable gamblers who rack up huge debts and become addicted to gambling”. Indeed, his precise words, when speaking about the industry in a Westminster Hall debate at that time, were “we need to bring the beast back under control”.

On 2 August 2019, GVC and four of the other gambling companies involved in the above-announcement at the launch of the BGC asked Lord Chadlington to chair an independent committee that will recommend how best to administer funds that they commit to safer gambling initiatives. That in itself was an interesting appointment, given that just six months earlier, Lord Chadlington had written in “The House” magazine: “I am surprised to find myself not only agreeing with Tom Watson – but even urging him to be more extreme!” 

Notwithstanding the subsequent launch of the GVC Foundation intended to coordinate and support its corporate social responsibility initiatives, objectives and donations around the world, one wonders how GVC’s relationship with the noble peer will develop, given the following extract from the introduction to the APPG report:

“We were …. appalled at the cowardly behaviour of Kenny Alexander, the Chief Executive of GVC holdings, who pulled out of appearing before the group, and failed to send a representative, shortly after receiving an email from a problem gambler which challenged the actions of GVC, copying in the GRH APPG. An industry which causes harm must be answerable for its actions.”

The APPG report contains some other very strong words of criticism, not all of them justified in my view; for example:

  1. In support of its headline-grabbing call for stake and deposit limits to be introduced in online gambling to reduce harm, the APPG maintains that there is no “justification for having slot machine-style games online with staking levels above £2” on the ground that “if they are not acceptable in land-based venues they should not be allowed online”, overlooking the fact that the maximum stake permitted for a category B1 machine in a land-based casino is £5 with a progressive prize of up to £20,000.
  2. Its call for introduction of (a) stronger measures to verify the age and identity of online gambling customers and (b) a Gambling Ombudsman for dispute resolution purposes seemingly take little or no account of newly introduced more robust LCCP requirements in each of these respects.
  3. Its comment that “in offline or land-based gambling, staff are given training on how to interact with customers and how to spot the signs of more problematic gambling” but that “such mechanisms are not possible with remote gaming” implies a lack of awareness of the Commission’s recently introduced LCCP customer interaction changes and accompanying guidance.
  4. In expressing concerns about gambling operators being permitted to access financial data of customers who opt-in to open banking for the purpose of affordability checks, the APPG appears to have taken little or no account of the very useful resource this provides to operators aiming to satisfy AML requirements to establish a customer’s source of funds in higher-risk cases, failures in respect of which have been the subject of innumerable enforcement measures by the Commission in recent years, the most recent example of which has been the penalty incurred last month by Betfred.
  5. Its call for operators to ensure they do not market to those that have self-excluded takes insufficient account of enforcement by the Commission of the existing LCCP requirements in this respect as evidenced, for example, by substantial fines historically levied on the likes of 888, LeoVegas and Rank Group for past self-exclusion failings that, together, provide clear evidence that the Commission already has adequate enforcement powers, something that the APPG is now asking for it to be given.
  6. The Gambling Commission will itself be understandably concerned that the report (a) fails to reflect the fact that the protection of children and the vulnerable lies at the heart of its work, (b) pays little heed to the National Strategy for Reducing Gambling Harms published by the Commission shortly after the APPG commenced its work and (c) fails to acknowledge that, in two speeches last month by its Chief Executive Neil McArthur (the most recent of which is entitled “Raising Standards: Our Priorities, Your Opportunities”), the Commission has called on the industry to collaborate in order to address three issues that are the subject of critical comment within the APPG report, i.e. (i) how to make gambling product design safer, (ii) develop a code of conduct in relation to operators’ treatment of VIPs (and associated inducements to gamble) and (iii) consider how advertising technology can be used for social responsibility purposes.

 In other respects, the APPG makes predictable recommendations in relation to such matters as (a) a 1% statutory levy, (b) the use of affiliates for marketing purposes, (c) banning the use of credit cards (in relation to which we await the outcome of the Gambling Commission’s consultation that concluded on 6 November) and (d) greater regulation of loot boxes (reinforcing the recent call for this by the Children’s Commissioner for England).

More extreme recommendations include requirements that UK licensed gambling companies (a) must ensure they are protecting children and the vulnerable in all countries in which they operate and (b) cease active trading in jurisdictions that have not formally legalised remote gambling.

Perhaps it is no wonder that, in the face of considerably more demanding regulatory requirements and an increasingly challenging trading environment, rising numbers of gambling operators are considering the surrender of their UK licences. Anyone thinking of following suit should take very careful note of a “reminder” of the Gambling Commission’s expectations in this respect, published last month.

To return to where I began, a UK General Election looms and, inevitably, Brexit is likely to attract more attention over the coming weeks than gambling.

So I conclude with a reminder that during the course of October: (a) DMCS has published guidance entitled “Preparing for no deal Brexit if you work in gambling, (b) UKHospitality has joined forces with the Tourism Alliance to publish a No-Deal Brexit briefing note that is more directed at the land-based hospitality sector, (c) the Government of Gibraltar has published a Preparing for a no-deal Brexit booklet, (d) the Isle of Man Government has published updated Brexit information on its website and (e) the Malta Gaming Authority has published Guidance document on the Impact of the United Kingdom’s Exit from the European Union that constitutes essential reading material for those holding or applying for MGA licences because, in addition to making specific provision in relation to limited validity recognition notices, points out that an MGA licence may only be held by a person established within the European Economic Area, which will no longer be the case when Brexit occurs.

______________________

David Clifton – Director – ‎Clifton Davies Consultancy Limited

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