UK gambling regulatory developments during the last month or so have led many to query the reason behind the Gambling Commission’s decision to publish (on 12th May) additional customer interaction guidance for remote operators.
What some have found puzzling is not only the range of topics covered in that additional guidance but also its prescriptive nature, particularly bearing in mind the absence of any prior consultation by the Commission with the remote sector. By way of example, whilst UK licensed operators are obliged by the LCCP to merely “take into account” the Commission’s guidance, they are nevertheless specifically directed by one of the new additional provisions to “prevent reverse withdrawal options for customers until further notice”.
What is also puzzling is what prompted the Commission to proceed as it did without even giving any advance notice? It said the additional guidance was “due to the ongoing COVID-19 pandemic and associated lockdown” but, at the same time, it acknowledged that data collected through the gambling industry and YouGov surveys showed that “during lockdown gambling participation is down overall”, that “the majority of those gambling indicate that they have not increased the time or money they have spent” and that “there is no evidence to suggest an increase in problem gambling”.
Delve deeper and one discovers that the real ground on which the Commission based its decision to set new rules was data showing an increase during the lockdown in both (a) the use of certain gambling products (such as online slots, poker, casino gaming and virtual sports) and (b) the number of player sessions lasting longer than an hour.
Don’t get me wrong. I’m not suggesting for one moment that none of the measures within the additional guidance lack any logic, but the manner in which they were foisted upon licence-holders could have been handled so much better by the Commission, not least because of its own very frequent call for greater collaboration.
As a consequence, the impression has unfortunately been given not only that the regulator’s trust in the sector had been so eroded that it had no alternative but to impose more prescriptive obligations, but also that the Commission was pressurised into taking this action in order to satisfy mounting criticisms of its own performance from cross-party politicians (for example within the House of Commons Public Accounts Committee and the Gambling-Related Harm APPG), the National Audit Office and media commentators alike.
There will inevitably be those who may read this article and say that erosion of trust in the sector is entirely justified by the tragic circumstances behind the announcement by the Commission on 27th May of its findings arising from its investigation into PT Entertainment Services Limited, including the reported initial reaction of PTES’s parent company (Playtech).
Add to that (a) the Commission’s warning delivered last month to other white label providers by reason of the FSB Technology regulatory settlement and (b) recent news of further ongoing regulatory investigations, and it seems that there may yet be even more fuel to add to an already well-stoked fire before the government’s review of the Gambling Act 2005 even gets to the starting post.
The way the regulatory wind is blowing points to an expectation that none of the greater restrictions (including those voluntarily self-imposed by the sector, such as the supposedly temporary removal of TV and radio advertising by BGC members, about which I wrote in my last SBC News article) will be relaxed post-lockdown. Indeed more, not less, regulation seems to be firmly on the cards, with Gambling Commission consultations due to commence shortly on stronger measures around ethical product design (including reverse withdrawals and VIP inducements) as part of the regulator’s stated intention to establish whether “further targeted player protection measures are required on a permanent basis”.
Statistics will no doubt play their part in that process. The recently published Gambling Industry Statistics predate the pandemic so will have little direct relevance, but I anticipate attention being focused on a population level survey by YouGov (referred to within a Treatment Needs and Gap Analysis Report published by GambleAware on 18th May) suggesting that gambling harm prevalence is (at 2.7% of the population) considerably higher than the widely accepted Combined Health Survey 0.7% of the population. That certainly led Carolyn Harris MP, Chair of the Gambling-Related Harm APPG, to conclude that “this new data suggests that addiction levels are far higher than has been previously thought – policymakers, the regulator and gambling support services must take note of these important findings and ensure that the correct provision and regulation is in place to support gamblers in the UK”.
On the subject of Gambling Commission consultations, all of its licence-holders should take careful note of proposals to make fundamental changes to its corporate governance framework, set out within a consultation that is presently running until 26 June 2020. Likely to attract particular controversy is the extent to which implementation of those proposals might result in Regulatory Panel hearings suffering from (a) less obvious fairness and (b) a potential loss of demonstrable independence from the decisions and recommendations of Commission officers. I recommend that all UK licensed operators and their advisors look at these proposals very carefully.
Based on previous years’ experience (and despite the absence of any mention of the same in the Commission’s current calendar of publications), we may see publication this month of the Commission’s annual “Enforcement Report”, containing reference to regulatory decisions over the last year, whether made by Commissioners sitting as a Regulatory Panel or pursuant to powers delegated to Commission officers. As and when that report is available, past experience dictates that it should be regarded as essential reading material not only for existing licensees but also for anyone thinking of applying for an operating licence or personal management licence.
Based on last year’s precedent, the Enforcement Report might possibly be followed shortly thereafter by the Commission’s annual “Money Laundering & Terrorist Financing within the British Gambling Industry Report”. If so, this will include reference to emerging ML and TF risks, including those that are the subject of a recent reminder to UK licence-holders under the headings (a) “Digital ID checks”, (b) “Cryptoasset and prepaid cards” and (c) “Money mules”, with businesses advised to “consider whether their money laundering and terrorist financing risk assessment needs updating as a result”. This follows on from a previous AML reminder from the Commission to licensees on the subject of furloughed Nominated Officers.
Gambling-related crime is to be the subject of three strands of research to be undertaken by the Howard League Commission on Crime & Problem Gambling, following publication of its literature review on this subject, covering jurisdictions including Australasia, Canada, Germany, Scandinavia, the US and the UK. That review identified the need for research into “the potential effect of gambling addiction treatment on the rate of recidivism, as well as more general research on how best to help vulnerable populations avoid the criminal justice system”.
In terms of other major gambling-related initiatives, the last month witnessed launch by the Betting and Gaming Council of its £10 million national gambling education and support programme in support of its previously declared commitment to “prevent underage gambling and protect young people”.
This was followed by publication of an ASA report entitled “Children’s exposure to age-restricted TV ads: 2019 update”, finding that children’s exposure to TV advertisements for gambling products or services has fallen to similar levels as those seen in 2008 (although it also found that children’s overall exposure to TV advertising has almost halved since 2008). Not surprisingly, the focus of future such concerns will be concentrated on gambling advertising online, the Annual Report of the ASA and CAP published on 3rd June (and entitled “Using Technology for Good”) recording that, during 2019, the ASA received 16,767 complaints regarding online advertising overall, as against 9,971 regarding TV advertising.
With live sport gradually re-awakening, betting shops and arcades possibly re-opening for business from 15th June (subject to strict hygiene and social distancing rules) and some casinos (in England at least) possibly doing likewise from 4th July, I am hoping that my next “Licensing Expert” article for SBC News will contain rather more news on land-based gambling than this predominantly online gambling focussed article does… However, in these very uncertain times, we will just have to wait and see!
David Clifton – Director – Clifton Davies Consultancy Limited