Gaming Law 2022

Last Updated November 16, 2022

UK

Law and Practice

Authors



Harris Hagan is currently the only specialist gambling law firm in the City of London. The firm has an international reputation as a trusted adviser to many of the world’s largest gambling and leisure operators in all areas of land-based and online gambling, liquor and entertainment. The firm’s outstanding reputation has been founded on unparalleled legal experience, knowledge and an in-depth commercial understanding of the industry. Harris Hagan has also advised overseas regulatory authorities and governments on the regulation of gambling and assisted with draft legislation. The firm is noted for its pre-eminence in advising on highly complex regulatory issues and for advising on a wide range of commercial contracts.

Changing Times

Operating in the gambling industry in Great Britain has become increasingly challenging. In recent years, driven partly by a rising “anti-gambling lobby”, there has been a notable shift in the Gambling Commission’s approach to regulation. A continued increased emphasis on consumer protection has led to ever stricter provisions to protect players from themselves, and the burden is on operators not only to interact with customers who show signs of problem gambling and question whether they are playing with money legitimately acquired, but also to question customers’ ability to afford their gambling spend. The Gambling Commission continues to be advised by its Digital Advisory Panel, Advisory Board for Safer Gambling and a Lived Experience Advisory Panel, although the latter  consists of only those harmed by gambling. 

Numerous stakeholders and commentators have indicated, in various reports, that changes need to be made in the British gambling industry. The reports are not only critical of the gambling industry, but also the work of the Gambling Commission, with some recommending a completely new regulator. In January 2022, the Parliamentary All-Party Betting & Gaming Group published its findings into “the competence and effectiveness” of the Gambling Commission, which reported “evidence of bad practice” and “excessive and unnecessary over-regulation” by the Gambling Commission.

In the wake of the government’s announcement regarding the review of the Gambling Act 2005 (the “2005 Act”) (the “Gambling Review”), which commenced nearly two years ago, a series of reviews have taken place, culminating in no fewer than five recent reports on the regulation of gambling in Great Britain:

  • the National Audit Office report, on 28 February 2020, Gambling regulation: problem gambling and protecting vulnerable people;
  • the All-Party Parliamentary final report, on 16 June 2020, Online Gambling Harm Inquiry;
  • the Public Accounts Committee report, on 22 June 2020, Gambling regulation: problem gambling and protecting vulnerable people;
  • the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry report, on 2 July 2020, Gambling Harm – Time for Action; and
  • the Social Market Foundation report, on 5 August 2020, Gambling review and reform: towards a new regulatory framework.

The reports are too voluminous to summarise.

The government published the Terms of Reference and Call for Evidence for its review of the 2005 Act on 8 December 2020, which closed in March 2021 (the “Gambling Review”). The Call for Evidence received 16,000 responses, although none of these responses have been published 20 months later.

To ensure its regulatory framework “can protect children and vulnerable people, prevent gambling related crime, and keep gambling fair and open in the digital age”, the Government set out three objectives in the Gambling Review:

  • examine whether changes are needed to the system of gambling regulation in Great Britain to reflect changes to the gambling landscape since 2005, particularly due to technological advances;
  • ensure there is an appropriate balance between consumer freedoms and choice on the one hand, and prevention of harm to vulnerable groups and wider communities on the other; and
  • make sure customers are suitably protected whenever and wherever they are gambling, and that there is an equitable approach to the regulation of the online and the land-based industries.

The industry currently awaits the Government’s White Paper, which is a type of Command paper that will set out the Government’s vision for change and proposals for reform, and will provide another consultation opportunity, after which a draft Bill will be published, assuming the proposed changes are made by way of primary or secondary legislation. The White Paper was due to be published in June 2021, but at the time of writing (November 2022), is not expected until 2023 and has been expected “in the coming weeks” for several months. A version of the White Paper was leaked in July 2022. See 14.1 Anticipated Reform.

Increased Enforcement

Anti-money laundering, responsible gambling and consumer protection have been continuing areas of key focus across UK gambling sectors in recent years, as reflected in high-profile enforcement action, and this is not set to change. This has been coupled with an increased focus on the accountability of personal licence holders (including CEOs), as reflected in various high-profile enforcement cases. The continued escalation in compliance assessments and licence reviews has resulted in record financial penalty packages.

The new “special measures” process is now a permanent feature of the Gambling Commission’s regulatory toolkit and is used where serious failings are revealed as part of a compliance assessment, with the licensees being invited to submit and agree an action plan to rectify the failings, to avoid a formal licence review being commenced.

In its 2021–22 annual report, the Gambling Commission confirmed that its enforcement work during the previous year had resulted in the suspension of six operating licences, and a total of £26.1 million was paid by 12 gambling operators in fines (£21.7m) and regulatory settlements (£4.4m).

Affordability

In 2021, the Gambling Commission consulted on the issues of customer interaction and affordability (see 1.2 Recent Changes regarding customer interaction). The initial consultation proposed the imposition of additional requirements on remote operators, to address concerns identified by the Gambling Commission through its compliance and enforcement work that players are being permitted to gamble beyond their means. The Gambling Commission’s view is that common to all these cases has been the ineffective controls framework used by licensees to identify and mitigate this risk.

Proposed requirements included the introduction of specific indicators for customer interaction, linked to a requirement to act when a risk of harm is identified. Perhaps most controversial, and possibly why the consultation received approximately 13,000 responses, were proposals that “operators must conduct defined affordability assessments at thresholds set by the Commission”; an expectation that licensees question not merely the legitimacy of the funds used for gambling, but whether it is affordable. Many see this as a step too far, amounting to a paternalistic intervention into private matters, and seeking to restrict, or at least interfere in, the choices adults make.

The Gambling Commission chose not to publish the results of the consultation relating to affordability, with the Gambling Commission’s CEO plainly stating that affordability checks are a matter for the Gambling Review, rather than the Gambling Commission. The consultation results have been provided to Government to inform the White Paper accordingly. See 14.1 Anticipated Reform.

It seems inevitable that mandatory affordability checks will be introduced in the foreseeable future. Given the regulatory burden and cost of affordability checks, their introduction is likely to transform the British market, with some leaving these shores (by surrendering their licences or having them revoked by the Gambling Commission) or through M&A activity. Customers who object to such affordability checks, particularly those gambling at high levels or at risk of experiencing gambling-related harm, could move towards the black market.

Fourth National Lottery Licence Competition

The fourth National Lottery licence was formally awarded to Allwyn Entertainment UK (“Allwyn”) on 20 September 2022. The Gambling Commission, Allwyn and Camelot UK Lotteries Ltd (the holder of the third National Lottery licence) are in a transition period, with the fourth licence due to come into effect in February 2024. It is expected that the fourth licence will have a fixed ten-year term.

Regulatory Panel Reform

In July 2021, the Gambling Commission published its consultation response in relation to its proposed changes to its Corporate Governance Framework, in particular with regard to Regulatory Panels. These are the only quasi-independent options available to an applicant/licensee, save for an appeal to the First-Tier Tribunal in appropriate cases, and provide the first opportunity for applicants/licensees to attend an oral hearing to challenge the decisions that Commission staff are minded to take about personal or operating licences.

Despite concerns about the independence and impartiality raised by many respondents to its consultation, the Gambling Commission is introducing the role of adjudicators, who will be Gambling Commission employees, will be legally qualified and employed solely for the purposes of sitting on regulatory panels, and reducing the minimum quorum for regulatory panels to one adjudicator and one commissioner, although the Gambling Commission states the quorum will normally comprise one adjudicator and two commissioners.

The Gambling Commission’s consultation response indicated that these changes would come into effect “during 2021 to 2022, once adjudicators can be recruited” and four weeks’ notice of the date of change would be posted on its website. However, at the time of writing (November 2022), no such date has been communicated.

Gambling Commission CEO

In March 2021 the Gambling Commission’s previous Chief Executive, Neil McArthur, left his role. Andrew Rhodes was appointed as the new interim chief executive in June 2021 and was appointed to the role permanently in June 2022.

New Licence Conditions

Following its consultation on remote customer interaction, the Commission announced in April 2022 that a new social responsibility code provision (SRCP) 3.4.3 would be introduced for online gambling operators. On 12 September 2022, part of SRCP 3.4.3 came into effect, and applies to all remote B2Cs. The provision includes requirements to implement effective customer interaction systems and processes to minimise gambling-related harm (which must embed the three elements of customer interaction: identify, act and evaluate), monitor specified harm indicators, and tailor the action taken based on the number and level of indicators of harm exhibited. The Gambling Commission intends, subject to consultation, to introduce the remaining requirements of SRCP 3.4.3 and the associated guidance in February 2023.

Marketing

The gambling industry has introduced a self-imposed advertising ban that came into effect on 1 August 2019. No gambling advertisements will now be shown during televised live sports before the 9pm watershed, starting and ending five minutes before and after a match. The intention is to curb the potential impact of gambling advertisements on children and others vulnerable to gambling-related harm.

The sixth edition of the Industry Code for Socially Responsible Advertising, now under the custody of the BGC, was implemented on 1 October 2020. During COVID-19 lockdown, all BGC members (accounting for around 50%) voluntarily agreed to the removal of all TV and radio gaming product advertising.

On 22 October 2020, the Advertising Standards Authority (ASA) issued a consultation on new, strengthened rules and guidance for gambling adverts to protect children and young people. An interim statement was published in August 2021 and revised guidance on protection of adult audiences came into effect on 1 November 2021.

The Committee for Advertising Practice announced the introduction of tough new rules for gambling advertisements. The new rules, which came into effect on 1 October 2022, introduce a strong appeal test, which prohibits advertisements that are “likely to be of strong appeal to children or young persons, especially by reflecting or being associated with youth culture”, meaning sportspeople, social media influencers and other celebrities who are prominent in youth culture are prohibited from being used in gambling advertisements.

Anti-money Laundering

As a result of the UK government’s sanctions against Russia, on 28 February 2022 the Gambling Commission reminded gambling businesses that they must apply a risk-based approach regarding their relationships with business associated with Russia and sanctioned individuals. Licensees’ money laundering and terrorist financing risk assessments and policies should contain provisions for mitigating the risk of dealing with sanctioned customers, as well as the risk of conducting business relationships with sanctioned jurisdictions. On 4 April 2022, the Gambling Commission published further guidelines to operators regarding Russian sanctions and related reporting requirements to the Gambling Commission.

Licensing, Compliance and Enforcement Changes

On 23 June 2022, the Gambling Commission issued its response to its consultation on the Licensing, Compliance and Enforcement Policy Statement, published on 17 November 2021. The changes, which were wide-ranging and significant, and relate to an important document that underpins every aspect of the licensing lifecycle, were broadly grouped into three categories: licensing, compliance and enforcement. Despite (at least some) respondents raising what are considered to be well-founded concerns regarding the changes, the Gambling Commission implemented its proposals almost invariably without amendment. Licensing changes include a right to reject incomplete licence applications. Compliance changes include making special measures a permanent fixture. Enforcement changes include considering the financial resources of ultimate beneficial owners when calculating financial penalties.

The following online sectors are regulated in Great Britain:

  • betting (live, in-play, fixed-odds and pari-mutuel, betting exchanges and intermediaries);
  • bingo;
  • casino;
  • fantasy sports;
  • gaming machines;
  • gambling software;
  • lotteries; and
  • poker.

Free-to-play social gaming is not regulated. The Gambling Commission concluded, following a scoping review in 2015, that the sector did not require regulation but would continue to be monitored by the Gambling Commission for any potential risks.

See 2.2 Land-Based for product definitions.

The following land-based sectors are regulated in Great Britain.

  • Arcades can be divided into three categories:

a)       adult gaming centres;

b)       licensed family entertainment centres; and

c)       unlicensed family entertainment centres.

Each arcade category can offer a specific subcategory of gaming machine. Those under 18 years of age may not be allowed access to the adult-only section of a licensed family entertainment centre or an adult gaming centre.

  • Betting (live, in-play, fixed-odds and pari-mutuel, betting exchanges and intermediaries). See 3.2 Definition of Gambling for a definition of betting.
  • Bingo is not defined in UK legislation; however, the Gambling Commission has published guidance stating that bingo constitutes “equal chance” gaming. See its website for further guidance.
  • Casino constitutes arrangements providing people an opportunity to participate in one or more casino games. “Casino game” means a game of chance that is not equal-chance gaming.
  • Fantasy sports is not defined in the 2005 Act, but the Gambling Commission has issued guidance on its website regarding this product. See 12.3 Fantasy Sports.
  • Gaming machines means a machine that is designed or adapted for use by individuals to gamble (whether or not it can also be used for other purposes).
  • Gambling software is defined as computer software used in connection with online gambling, which does not include software used solely in connection with a gaming machine. Given the complexity of this term, the Gambling Commission issued an advice note in June 2014 on what constitutes gambling software.
  • Lotteries (raffles), excluding commercial lotteries. See 3.2 Definition of Gambling for a definition of lotteries.
  • Poker – in spite of the skill element, the chance element that the deal of a card introduces means that poker falls within the definition of gaming. See 3.2 Definition of Gambling for a definition of gaming.

The key legislation applicable to the gambling sector is as follows:

  • the Gambling Act 2005;
  • the Gambling (Licensing and Advertising) Act 2014;
  • the National Lottery Act of 1993 (as amended by the National Lottery Act of 2006);
  • the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017;
  • the Fifth Anti-Money Laundering Directive; and
  • the Proceeds of Crime Act 2002 (Part 7).

The 2005 Act is set out as follows:

  • Part 1 interprets key concepts and contains definitions of important terms;
  • Part 2 establishes the Gambling Commission’s powers and duties;
  • Part 3 deals with offences;
  • Part 4 addresses the protection of children and young persons; and
  • Parts 5, 6, 7 and 8 deal with various types of licences.

The Licence Conditions and Codes of Practice (LCCP) is issued under the 2005 Act, Section 24, and is, in the authors’ opinion, the key reference document with which all licence holders should familiarise themselves. See also 1.1 Current Outlook.

Gambling, in the 2005 Act, means gaming, betting or participating in a lottery.

Gaming means “playing a game of chance for a prize”, including games where the chance element can be eliminated by superlative skill. “Prize” constitutes money or money’s worth and “playing” means a chance of winning, irrespective of whether there is a risk of any loss.

Betting means the making of, or acceptance of, bets on:

  • the outcome of an event;
  • the likelihood of anything occurring or not; or
  • whether anything is true or not.

Subcategories of betting:

  • real event betting (ie, fixed-odds betting);
  • virtual event betting (based on a random number generator);
  • betting intermediary (peer to peer); and
  • pool betting.

Lotteries are classed as “simple” or “complex” and they cannot be run for private or commercial gain. Lotteries are “simple” if:

  • payment is required to participate;
  • one or more prizes are allocated to one or more members of a class; and
  • the allocation of prizes relies wholly on chance.

Complex lotteries differ on the point of prize allocation, whereby prizes are allocated by a series of processes, the first of which relies wholly on chance.

Subcategories of lotteries include:

  • society lotteries (small and large);
  • local authority lotteries;
  • incidental lotteries;
  • private lotteries;
  • customer lotteries; and
  • the National Lottery (subject to separate legislation).

The 2005 Act also addresses the following cross-category activities in the event that products may satisfy more than one of the above definitions of gambling:

  • betting and gaming;
  • lotteries and gaming; and
  • lotteries and betting.

Land-based gambling is not specifically defined under the 2005 Act.

Online gambling is referred to as “remote gambling” and means “gambling in which persons participate by the use of remote communication”. Remote communication includes the internet, telephone, television, radio or any other kind of electronic or other technology for facilitating communication.

Part 3 of the 2005 Act covers all offences; however, key offences are as follows.

Providing facilities for gambling (2005 Act, Section 33):

  • without authorisation from the Gambling Commission, whether through a licence or acting in the course of another’s business who holds a licence; or
  • in a manner not in accordance with the terms and conditions of any licence held either by the licence holder or in the course of another’s business who holds such licence.

“Providing facilities for gambling” occurs where a person satisfies at least one of the following:

  • inviting others to gamble in accordance with arrangements made by them;
  • providing, operating or administering arrangements for gambling by others; or
  • participating in the operation or administration of gambling by others.

Other key offences of note include:

  • inviting, causing or permitting a child (under the age of 16) or young person (not a child, but less than 18) to gamble (2005 Act, Section 46);
  • manufacturing, supplying, installing or adapting gambling software, in the course of business, without an operating licence whilst physically located in the UK (2005 Act, Section 41); and
  • cheating at gambling or doing anything to enable or assist another person to cheat at gambling (2005 Act, Section 42).

See 9.5 Sanctions/Penalties for advertising sanctions and penalties.

The penalties for the key offences listed in 3.5 Key Offences and 9.5 Sanctions/Penalties are a maximum of 51 weeks’ imprisonment and/or an unlimited fine.

See 1.1 Current Outlook and 14.1 Anticipated Reform.

The Gambling Commission and various licensing authorities enforce the 2005 Act. Under the 2005 Act, Part 2, the Gambling Commission’s primary functions include:

  • issuing operating licences;
  • issuing personal licences;
  • specifying general licence conditions for each type of licence and any individual licence conditions that it considers appropriate;
  • issuing codes of practice concerning the way in which facilities for gambling are to be provided;
  • regulating licence holders;
  • investigating and prosecuting illegal gambling and other offences under the 2005 Act;
  • issuing guidance to local authorities on their role; and
  • advising the Secretary of State on the incidence of gambling, how it is carried out, its effects and its regulation.

The ASA regulates gambling advertising in the UK. See 11. Enforcement.

The Gambling Commission’s approach to regulation is risk-based, with the aim of continuing to raise standards. The Gambling Commission indicated in its Business Plan, April 2021 to March 2022, that its five strategic objectives continue to be:

  • protecting children and vulnerable people from being harmed by gambling;
  • a fairer market and more informed consumers;
  • keeping crime out of gambling;
  • optimising returns to good causes from the National Lottery; and
  • improving gambling regulation.

On 6 November 2020, the Gambling Commission published its first National Strategic Assessment (NSA) alongside its Raising Standards for consumers – Compliance and Enforcement report 2019 to 2020. The NSA is a document comprised of the latest available evidence with the aim of assessing the issues and risks associated with gambling-related harm. The report outlines the Gambling Commission’s assessment of the key issues faced in making gambling fairer, safer and crime free, and sets out the priority actions and an overview of progress that has been made since 2019.

See 1.2 Recent Changes.

The types of licences are:

  • generally, for companies – operating licences and, if applicable, premises licences; and
  • for individuals – personal licences.

Generally, the operating licence types are:

  • non-remote for land-based activities (these will require an accompanying premises licence, as detailed below); or
  • remote for online activities.

The 2005 Act enables the Gambling Commission to authorise all regulated land-based and online activities outlined in 2.1 Online and 2.2 Land-Based, including gambling software. Licences authorising multiple licensable activities (for instance, bingo and casino) are classed as a “combined operating licence”. Subject to exceptions, licences are also amenable to “umbrella” arrangements for those acting in the course of another’s business. “Umbrella” arrangements are approved at the Gambling Commission’s discretion following a review of various factors, including:

  • consolidation of company accounts;
  • ownership structure;
  • responsibility for compliance; and
  • governance arrangements.

See also 6. Online Gambling.

Premises Licences

Premises licences, issued by the relevant licensing authority (not the Gambling Commission), are available that authorise the following activities:

  • casinos;
  • bingo;
  • an adult gaming centre for making Category B gaming machines available for use;
  • a family entertainment centre, for Category C gaming machines; and
  • betting.

See 5.1 Premises Licensing for requirements.

Personal Licences

Personal licences are governed by the LCCP and issued by the Gambling Commission. They allow the Gambling Commission to regulate individuals and hold key decision-makers accountable for any inadvertent or deliberate breaches of the LCCP. General conditions for licences, as stipulated by the 2005 Act, Section 75, are listed under Part 3 of the LCCP.

The two types of personal licences are:

  • a personal management licence (PML); and
  • a personal functional licence (PFL).

The LCCP requires persons with responsibility for any of the below key positions to hold a PML:

  • overall strategy and delivery of gambling operations;
  • financial planning, control and budgeting;
  • marketing and commercial development;
  • regulatory compliance;
  • gambling-related IT provision and security; and
  • the money laundering reporting officer.

Individuals working in a casino who are involved in gaming or handling cash (for example, croupiers, dealers and cashiers) must hold a PFL. Under the 2005 Act, Section 133, personal licences may not be issued to individuals who already hold one but may authorise the performance of more than one function.

Operating licences and personal licences are readily available subject to the fulfilment of application criteria and payment of the application fee.

Land-based casino premises licences are subcategorised into “small”, “large” and “converted”. Converted casino premises licences were awarded under the repealed Gaming Act 1968. They may be moved to alternative premises within the same licensing authority area but there are no new licences available. Sixteen “small” and “large” casino premises licences were issued under the 2005 Act and awarded by the relevant licensing authority area following a public competition. The majority of these licences have now been awarded, meaning that no other casino premises licences are available, though it is unlikely that the remaining available small casino premises licences will be the subject of a public competition (see “Premises Licences” in 4.4 Types of Licences).

Pursuant to the 2005 Act, Section 110, operating licences are indefinite in duration, subject to the payment of annual fees and compliance with licence terms and conditions.

Key Application Requirements for Operators

Operating licence applications must be submitted to the Gambling Commission, which will conduct an extensive investigation (having regard to the licensing objectives) in order to determine the applicant’s suitability to carry out the licensed activities. The Gambling Commission broadly uses the following principles to assess any application:

  • identity and ownership;
  • finances;
  • integrity;
  • competence; and
  • criminality.

The 2005 Act, Section 69(2), requires that operating licence applications:

  • specify the activities to be authorised by the licence;
  • specify a UK correspondence address;
  • be made in the form and manner decided by the Gambling Commission (applications must now be made via the Gambling Commission’s online system);
  • disclose any relevant offences;
  • include documents and information requested by the Gambling Commission; and
  • be accompanied by the prescribed fee.

Currently, there are no server location or data storage obligations.

Key Differences, if any, Between Application Requirements for Land-Based and Online Operators

Land-based casinos are generally considered to be a high-impact activity in terms of the Gambling Commission's work, which means that applications may attract a high level of scrutiny and interest. In addition, non-remote casino operating licence applications must be accompanied by a casino premises licence application, which must be submitted to the licensing authority of the area in which the premises is situated.

Key Application Requirements for Directors, Owners or Senior Management

Individuals holding 10% or more equity and/or voting rights in an existing or proposed licensee must apply for an Annex A authorisation from the Gambling Commission.

Individuals who occupy a key management position or who are able to exercise significant influence over the operator must hold a PML.

Key individuals for small-scale operators may be exempt from this requirement to hold a PML and may apply instead to hold an Annex A authorisation. See 4.4 Types of Licences for further information on personal licences.

The Gambling Commission assesses personal licences according to the same suitability criteria listed above for operating licences. Furthermore, the Gambling Commission introduced a strict policy, from April 2018, to reject incomplete applications.

Subject to full information being provided, Gambling Commission guidance indicates that operating licence applications take approximately 16 weeks to process. However, in the authors’ experience, this can take longer depending on several factors, including product complexity, ownership structure, source of funding and the Gambling Commission’s workload.

Application fees for operating licences are determined by the types of activities and financial projections for the first year. These can be calculated using the Gambling Commission’s online fees calculator. All application fees have increased by 60% as of 1 October 2021.

At the time of writing, November 2022, application fees for personal licences are GBP370. There is no application cost for Annex A applications.

Annual fees are determined in the same way as application fees, outlined in 4.9 Application Fees. Annual fees may be found on the Gambling Commission’s website or may be calculated using the online fees calculator. The Gambling Commission has removed all annual fee discounts for combined and multiple licences, from 1 October 2021, and increased annual fees for non-remote operating licences by 15% from 1 April 2022.

The requirements for a premises licence are:

  • they must be held, or applied for, in conjunction with an operating licence authorising the activity for which the premises is to be used;
  • the right to occupy the premises (freehold, leasehold or tenancy); and
  • only one premises licence can apply to a particular premises at a time (subject to exceptions).

See 1.1 Current Outlook and 1.2 Recent Changes.

Historically, remote operating licences did not reflect the distinction between B2B and B2C business models. B2B operators hosting games through B2C websites required a licence authorising remote casino, bingo, betting (virtual events) or betting (real events), in addition to gambling software, as hosting games constitutes providing facilities for gambling. However, new legislation introduced in April 2017, the Gambling (Operating Licence and Single-Machine Permit Fees) Regulations 2017 (SI 2017 No 303), created B2B-specific “host” subcategories:

  • casinos (game host);
  • bingo (game host);
  • general betting (host) (real events); and
  • general betting (host) (virtual events).

However, these licences are subject to various requirements, including:

  • the company must hold a gambling software operating licence; and
  • the company must not contract with players directly.

See 6.1 B2C Licences.

Affiliates are not regulated by the Gambling Commission, as companies only providing advertising services or branding to a gambling operator do not require an operating licence. Social responsibility code provision 1.1.2 provides that responsibility for third-party compliance lies squarely with the licence holder, who must ensure that third parties “conduct themselves in so far as they carry out activities on behalf of the licensee as if they were bound by the same licence conditions and subject to the same codes of practice as the licensee”. The then Gambling Commission CEO, Neil McArthur, reiterated the obligation on licensees on 25 March 2020 by stating that the Gambling Commission “expects [licensees] to ensure that [their] affiliates are conducting themselves appropriately”.

In December 2020, the government responded to the House of Lords Gambling Industry Committee Report and said that whilst the government shares the Committee’s concerns about the risks posed by marketing affiliates, it has concerns about the potential for a reduction in operator accountability if there was a move to licensing affiliates.

The Gambling Commission’s July 2019 article “Free-to-play games being available through gambling affiliates” provides some additional guidance on how licensees should approach affiliate marketing. 

See 6.3 Affiliates.

See 1.1 Current Outlook and 1.2 Recent Changes.

There are no technical measures in place regarding consumer protection and the Gambling Commission does not have direct powers to enforce either payment or website blocking. However, it seeks to protect consumers’ rights, through its powers under the 2005 Act to seek enforcement action.

Responsible gambling – now coined “safer gambling” by the Gambling Commission – is one of the Gambling Commission’s biggest areas of focus, across licensing, compliance and enforcement. Its oversight and requirements are broad, meaning they cannot be summarised in this chapter. The focus, which stems from the third licensing objective (protecting children and other vulnerable persons from being harmed or exploited by gambling), is proper identification and engagement with those who may be at risk of, or experiencing, harm, ensuring terms and conditions are clear, fair and straightforward for consumers and do not target vulnerable or self-excluded customers. The House of Lords Report published on 2 July 2020 recommended adding “making the identification and prevention of potential and actual harm a third aim” of the Gambling Commission.

There have been repeated examples of customers being allowed to gamble significant sums of money in short timeframes, significantly beyond their personal affordability, and without any intervention from the operator.

Key RG requirements include:

  • detailed requirements regarding customer interaction (see 1.2 Recent Changes);
  • the provision of gambling management tools (see 7.3 Gambling Management Tools);
  • licensees must, as soon as practicable, take all reasonable steps to prevent any marketing material being sent to a self-excluded customer;
  • at the end of any self-exclusion period chosen by the customer, self-exclusion remains in place, for a further six months, unless the customer takes positive action to gamble again; and
  • notwithstanding the expiry of the period of self-exclusion chosen by a customer, no marketing material should be sent to them unless and until they have asked for, or agreed to accept, such material.

Following the embarrassing collapse of Football Index, on which the government commissioned an independent report into its regulation (published on 22 September 2021), the Gambling Commission made changes to its policies to set out its “clear policy position” that applications that it considers contain an element that should be regulated by the FCA “are likely to be refused” and this includes “products whose name, branding, marketing or game rules contain language associated with financial products such as ‘stock’, ‘share’, ‘index’ or ‘investment’ risk harming the second and third licensing objectives, because they may give the impression that they are in the nature of a valuable investment rather than a gambling product.”

See 1.2 Recent Changes and 7.1 RG Requirements.

Gambling management tools include:

  • making information readily available to customers on how to gamble responsibly and how to access information about, and help in respect of, problem gambling;
  • self-exclusion (operator and national) with a minimum of six months (up to twelve months);
  • financial limit (deposit, spend or loss);
  • timers;
  • reality checks; and
  • timeouts (24 hours, one week, one month or such period as reasonably requested by the customer, up to six weeks).

The Multi-Operator Self-Exclusion Scheme (MOSES) assists land-based operators with identifying at-risk gamblers. GAMSTOP is the online equivalent, initiated by the Gambling Commission and led by the Remote Gambling Association. From 31 March 2020, all online gambling operators are required, under the LCCP, to join GAMSTOP.

The current principal legislation is the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (implementing the Fourth Anti-Money Laundering Directive (the “Fourth AMLD”), which, from 10 January 2020, is amended by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (implementing the Fifth Anti-Money Laundering Directive). Amendments introduced by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 include increased levels of scrutiny required for transactions from high-risk countries and virtual currencies.

Money-laundering offences are outlined in the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TACT).

The Gambling Commission has also issued guidance for casinos, and separately for non-casinos, regarding their duties and responsibilities under the POCA. The most recent edition was published in November 2020.

See 1.2 Recent Changes.

See 8.1 AML Legislation. The AML requirements are complex and cannot be adequately summarised here, particularly given the Gambling Commission’s ongoing focus and extensive casework in this area. Generally, the Gambling Commission expects licensees to comply fully with the terms of their licence, as relevant to AML and CTF, and pay close regard to the various guidance documents it issues.

Compliance and enforcement activity continue to reveal that operators’ AML policies, procedures and controls are not fit for purpose and, in many cases, customers are allowed to gamble using the proceeds of criminal activity. The Gambling Commission has warned the industry that “a failure to digest [its] guidance and implement the legislative requirements applicable to Great Britain... must change, for these are not just regulatory matters but breaches of UK law. Those failing to learn these lessons will face further draconian action.”

The ASA regulates UK advertising and, therefore, gambling advertising. However, it does not carry any enforcement powers. Instead, and as the LCCP has specific rules on advertising, any gambling advertising breaches by a licence holder may lead to enforcement action by the Gambling Commission. This includes seeking criminal prosecution, as breach of a licence condition is a criminal offence under the 2005 Act, Section 35.

“Advertising” is widely defined under the 2005 Act, Section 327, and generally encompasses any action that encourages one or more persons, either directly or through an agent, to engage in facilities for gambling. This covers most forms of advertising, including online content and emails to consumers.

See 9.2 Definition of Advertising. Advertising must be socially responsible and comply with the LCCP; in particular, social responsibility code provision 5.1.6. The key LCCP advertising provisions are:

  • all advertising of gambling products and services should be undertaken in a socially responsible manner;
  • operators should comply with the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (the “CAP Code”), the UK Code of Broadcast Advertising (the “BCAP Code”) and the Industry Code;
  • adverts must not include a child or young person and no one who is, or seems to be, under 25 may be featured participating in gambling;
  • operators must satisfy themselves that their adverts are not misleading;
  • operators must comply with any provisions of the CAP and BCAP codes in relation to free bet and bonus offers, including by stating significant terms and directing customers to the full terms, which should be no further than one click away;
  • no adverts should appear on any web page that provides advice or information on responsible gambling;
  • operators must not place adverts on websites providing unauthorised access to copyrighted content and must take all reasonable steps to ensure that third parties (eg, affiliates) do not do so; and
  • operators must be able to terminate contracts with third parties that breach this provision.

The following codes are also applicable:

  • all UK gambling advertising – Gambling Industry Code for Socially Responsible Advertising (Industry Code), administered by the BGC;
  • broadcast advertising – the BCAP Code, administered by the ASA; and
  • non-broadcast advertising – the CAP Code, administered by the ASA.

The ASA also provides the below additional guidance:

  • “Gambling advertising: protecting children and young people” (April 2019);
  • “The marketing of gambling on eSports on social media” (April 2020);
  • “Gambling advertising: responsibility and problem gambling” (November 2021);
  • “Gambling and lotteries guidance – protecting under-18s (October 2022)”; and
  • “Advertising Guidance – Age-restricted ads online” (November 2022).

The Gambling Commission’s web page “Advertising/marketing rules and regulations” provides an overview covering the various LCCP and industry regulations.

See 9.3 Key Legal, Regulatory and Licensing Provisions. In addition, since 1 November 2014, gambling operators wishing to advertise in the UK must hold a Gambling Commission operating licence pertaining to the type of activity advertised. Separately, the Gambling Commission confirmed that advertising-only licences will not be granted.

As of 1 August 2019, a voluntary “whistle-to-whistle” sports betting advertising ban initiated by the UK betting sector (including a ban on all TV betting adverts during pre-watershed live sport) came into force.

In relation to online search activity, from 1 October 2020, the industry has introduced a list of negative keywords against which no online gambling advertising should be served. This is a voluntary measure introduced in the Industry Code.

During COVID-19 lockdown, all BGC members (accounting for around 50%) voluntarily agreed to the removal of all TV and radio gaming product advertising.

The Committee for Advertising Practice announced the introduction of tough new rules for gambling advertisements. The new rules, which came into effect on 1 October 2022, introduce a strong appeal test, which prohibits advertisements that are “likely to be of strong appeal to children or young persons, especially by reflecting or being associated with youth culture”, meaning sportspeople, social media influencers and other celebrities who are prominent in youth culture are prohibited from being used in gambling advertisements.

The following constitute criminal offences and attract up to 51 weeks’ imprisonment and/or an unlimited fine.

  • Inviting another person under 18 to gamble (Section 46, 2005 Act).
  • Advertising unlawful gambling (Section 330, 2005 Act) – excepting lottery promotion, advertised gambling is held to be unlawful if:

a)       the gambling advertised requires a licence, notice, permit or registration and, at the time of advertising, these arrangements have not been completed; or

b)       arrangements for the advertised gambling are not such as to ensure that any exceptions to the offence apply.

The Gambling Commission also has the power to take regulatory enforcement action for breaches, including seeking to prosecute offenders.

Recent financial penalties imposed by the Gambling Commission include a GBP1.32 million fine against LeoVegas in August 2022 for failing to effectively implement its anti-money laundering and social responsibility policies, procedures and controls, and a GBP2,873,750 fine and warning against Petfre (Gibraltar) Ltd (trading as Betfred and Oddsking) in September 2022, also for social responsibility and anti-money laundering failures.

See 1.1 Current Outlook and 1.2 Recent Changes.

Disclosure to the Gambling Commission is required within five working days (or as soon as possible) via a key event notification using the Gambling Commission’s eServices, an online self-serve portal.

Separately, a change of control application providing detailed information and the appropriate fee must be submitted to the Gambling Commission for assessment of the suitability of the new controller(s) to uphold the licensing objectives regarding the existing licence. The application or notification of licence surrender must be provided within five weeks of the change occurring, otherwise the licence will be revoked.

Under the 2005 Act, Section 103, advance applications for persons or entities expected to become a controller can also be made prior to the change occurring. Subject to the Gambling Commission’s assessment of all necessary information, which it indicates typically takes around 12 weeks, the existing licence will either be granted continuance under the new controller(s) or it will be revoked.

A change of corporate control is defined in Section 102 of the 2005 Act and occurs when a person or legal entity becomes a new “controller” (as derived from the Financial Services and Markets Act 2000, Section 422). This is a complex definition, and needs to be considered in detail, but is generally broken down as:

  • 10% or more of the shares in the licensee, as filtered by the corporate layers;
  • 10% or more of the voting power;
  • 10% or more of the rights to profits/dividends; or
  • the ability to exercise significant control over management of the licensee.

Where there is a non-alignment, a cumulative assessment must be made.

The same requirements apply as there are no exemptions for passive investors.

Under the 2005 Act, Part 2, the Gambling Commission has the power to investigate and prosecute offences directly. Its regulatory powers also include calling licences for review and initiating investigations in the following circumstances:

  • to establish whether its conditions are being complied with;
  • where it fears a licensee has been convicted of a relevant criminal offence;
  • where it considers a licensee to be unsuitable to continue holding a licence; and
  • generally, where a review is deemed appropriate.

The Gambling Commission’s sanctions are:

  • issuing a warning to a licence holder;
  • attaching an additional condition to a licence;
  • removing or amending a condition to a licence;
  • suspending a licence;
  • revoking a licence; and
  • imposing a financial penalty following breach of a licence condition.

The Gambling Commission also has the power to commence a criminal prosecution.

The Gambling Commission’s approach to enforcement is currently set out in three key documents:

  • the Statement of principles for licensing and regulation;
  • the Licensing, compliance and enforcement, policy statement; and
  • the Statement of principles for determining financial penalties.

Contravention of the 2005 Act, including the LCCP (issued under the 2005 Act), results in criminal liability. In August 2017, the Gambling Commission set out its “new vision” for its enforcement, emphasising its focus on putting consumers first. The key changes proposed included:

  • putting all regulatory tools, including licence review (both of the operator and personal management licences), on an equal footing by removing the then current bias in favour of settlement;
  • introducing higher penalties for breach, particularly where systemic and repeated failings were seen; and
  • using time-limited discounts to create better incentives for early settlement.

In recent years, the Gambling Commission has garnered a reputation for taking enforcement against its licensees. In certain cases, a “regulatory settlement” is reached, meaning that it is not a sanction and stops short of a formal licence review. This is subject to the Gambling Commission’s discretion and will only be considered if various factors are met, including:

  • the licensee being open and transparent in its dealings with the Gambling Commission;
  • the licensee being able to demonstrate that it has insight into apparent failings;
  • a timely disclosure of material facts;
  • preparedness to agree to the publication of a public statement setting out the failings in order to deter future non-compliance by others and/or share learning;
  • preparedness to make a divestment of any amount accrued as a result of the failing;
  • preparedness to follow advice and implement procedures to ensure there is no repetition of failings;
  • preparedness to contribute to the direct costs to the Gambling Commission of investigating the matter in respect of which regulatory settlement is sought; and
  • preparedness to volunteer a payment in lieu of the financial penalty the Gambling Commission might otherwise impose for breach of a licence condition.

The regulatory settlements and licence reviews are detailed in numerous public decisions or public statements issued on the Gambling Commission’s website and usually include a financial penalty (a record penalty package of GBP17 million was issued to Entain Group in August 2022).

A financial penalty imposed by the Gambling Commission will usually consist of two elements:

  • an amount to reflect any detriment suffered by consumers and/or remove any financial gain made by the licensee as a result of the contravention or failure; and
  • an amount that reflects the seriousness of the contravention or failure, the impact on the licensing objectives and the need for deterrence.

The Gambling Commission will take into account all material circumstances of the case, such as the seriousness and duration of the breach, whether it is a first time offence, the involvement of management, the level of any financial gain from the breach, and the extent of steps taken to remedy the breach. The Gambling Commission may discount the financial penalty where an operator has been transparent and co-operative.

It is worth noting that the financial elements of regulatory settlement, which are not sanctions, are calculated differently, and the Gambling Commission has the power to impose a financial penalty without carrying out a licence review.

The Gambling Commission is responsible for issuing and enforcing financial penalties regarding any LCCP breaches. Any contravention of the 2005 Act itself is a criminal offence and will trigger a potentially unlimited fine, enforced by the courts, and imprisonment for up to 51 weeks (see 3.6 Penalties for Unlawful Gambling and 9.5 Sanctions/Penalties).

It is worth noting that any payment made as part of a regulatory settlement is not a financial penalty (as it is not a sanction) and is a payment made in lieu of a financial penalty. These are treated differently by the Gambling Commission and could, theoretically, be enforced by recommencing the licence review.

Following a review of a personal licence, the Gambling Commission may impose:

  • a warning;
  • additional licence conditions or amend existing ones;
  • a financial penalty (only if a licence condition has been breached);
  • suspension; and/or
  • revocation.

To date, the Gambling Commission has not imposed a financial penalty or reached a payment in lieu of a financial penalty (as part of a regulatory settlement) in respect of a personal licence.

The Gambling Commission keeps a regulatory sanctions register, which contains details of sanctions imposed on personal licence holders following licence reviews.

There have been no additional significant updates in this sector since the Gambling Commission’s consideration in 2016. See the Gambling Commission’s March 2017 position paper “Virtual currencies, eSports and social gaming” for further information.

See 12.1 Social Gaming.

There has been an increase in bookmakers offering fantasy sports in the UK. The Gambling Commission’s position remains that any fantasy leagues run in the course of business may require a licence (pool betting) where prize values are determined by the number of paying entrants.

This is not applicable in this jurisdiction.

Although blockchain-related gambling is not currently regulated, the Gambling Commission has responded to stakeholder interest with guidance on its website regarding “Blockchain technology and crypto-assets”. The guidance focuses, in particular, on the importance of source of funding, third-party social responsibility and, for existing licensees, general notification requirements regarding funding and payment.

The following rates are effective from 1 April 2022.

Bingo:

  • 10% of bingo promotion profits.

Betting:

  • 15% of “net stake receipts” for fixed-odds bets, totalisator bets on horse or dog races and bets taken on betting exchanges;
  • 3% of “net stake receipts” for financial spread bets;
  • 10% of “net stake receipts” for all other spread bets; and
  • 15% of bookmaker’s profits from bets that are not at fixed odds and are not on horse or dog racing.

Casino (“gaming duty”):

  • 15% of gross gaming yield for the first GBP2,686,000;
  • 20% of gross gaming yield for the next GBP1,852,000;
  • 30% of gross gaming yield for the next GBP3,243,000;
  • 40% of gross gaming yield for the next GBP6,845,000; and
  • 50% of gross gaming yield for the remainder.

Lottery:

  • 12% of the price paid or payable on taking a ticket or chance in a lottery.

Machine games:

  • 5% of net takings from dutiable machine games with a maximum cost to play of not more than GBP0.20 and a maximum cash prize of not more than GBP10;
  • 20% of net takings from dutiable machine games with a maximum cost to play of not less than GBP0.21 and not more than GBP5 and a maximum cash prize of more than GBP11; and
  • 25% of net takings from all other dutiable machine games with a maximum cost to play of more than GBP5.

Remote gaming duty (as of 1 April 2019):

  • 21% of gross gaming revenues on all remote gaming transactions with customers whose usual place of residence is in the UK.

Please note, the majority of gambling activities are exempt from VAT.

See 1.1 Current Outlook. The next stage of the Gambling Review is publishing of the White Paper which will detail the Government’s proposals for reform. Whilst the White Paper is not expected until 2023, given recent political turmoil, a version was leaked in July 2022, indicating that the proposed reforms would include (although none were confirmed by the Department for Digital, Culture, Media & Sport).

  • Mandatory deposit limits for online gambling.
  • Requirements for operators to check three risks: binge gambling, significant affordable losses over time and financially vulnerable customers.
  • Stake limits for online slots at between £2 and £5, with higher limits if affordability checks have been passed.
  • Affordability checks comprising of “soft” frictionless checks (through credit agencies or open banking), and “hard” checks (including detailed source of wealth checks), with the following suggested thresholds:
    1. soft checks at GBP125 net loss per month / GBP500 in 12 months; and
    2. hard checks at GBP1,000 loss within 24 hours / GBP2,000 loss in 90 days.
  • The establishment of a Gambling Ombudsman to deal with complaints.
  • The prohibition of online VIP schemes and bonus/free bet offers based on a customer’s spend or loss.
  • A voluntary agreement with the Premier League to ban gambling companies from being main shirt sponsors.
  • Increase to RET payments (financial contributions to support research, prevention and treatment of gambling-related harms) to be made by licensed operators.
  • Further increase to Gambling Commission fees.
  • Enabling the Gambling Commission to set its own fees in the future.
  • Increased gaming machine entitlements for certain land-based casinos.
  • Permitting high-end casinos to offer credit to international customer base.
  • Possible reallocation of unused casino licences.
Harris Hagan

6 Snow Hill
London
EC1A 2AY
England

+44 20 7002 7636

info@harrishagan.com www.harrishagan.com
Author Business Card

Trends and Developments


Authors



Harris Hagan is currently the only specialist gambling law firm in the City of London. The firm has an international reputation as a trusted adviser to many of the world’s largest gambling and leisure operators in all areas of land-based and online gambling, liquor and entertainment. The firm’s outstanding reputation has been founded on unparalleled legal experience, knowledge and an in-depth commercial understanding of the industry. Harris Hagan has also advised overseas regulatory authorities and governments on the regulation of gambling and assisted with draft legislation. The firm is noted for its pre-eminence in advising on highly complex regulatory issues and for advising on a wide range of commercial contracts.

Review of the Gambling Act 2005

The gambling industry in Great Britain has been, and continues to be, in a period of uncertainty as we await publication of the Government’s White Paper as part of the review of the Gambling Act 2005 (the “2005 Act”) (the “Gambling Review”).

Why do we have a Gambling Review?

The Gambling Review was launched two years ago to consider whether the current legislation (the 2005 Act) is effective, remains fit for the digital age, and whether further protections are needed.

The Gambling Review is about using evidence to assess whether the balance of regulation is right. Government must consider the balance between gambling being a fun leisure activity for nearly half of the adult population and consumer freedom of choice, against the harm that gambling can cause to some individuals, families and communities.

Technological developments, such as the introduction of the smartphone, have shaped the gambling industry since the 2005 Act came into effect, resulting in a shift towards online gambling that is available to customers anywhere and at any time. Smartphones were not a consideration for Government at the time of the 2005 Act because they were not in existence. Sir Alan Budd, who was the Government-appointed economist asked to review the gambling laws in 2000,recently conceded in a House of Lords inquiry that no one had even thought about the possibility that someone might be holding something in his or her hand and be allowed to gamble freely”. Although the 2005 Act was designed to be future-proofed, many (including the present writers) agree that changes are necessary to the regulatory framework to bring it in line with the ever-advancing technological developments.

Standards have been raised considerably, in recent years, with new rules on customer interaction, anti-money laundering, VIPs and online game design and a ban on gambling with credit cards. However, the industry has been somewhat fragmented and slow in its response to change, and numerous failings from operators with cases of clearly unaffordable gambling continue to be seen. Enforcement action continues unabated with the Gambling Commission always having the benefit of 20/20 hindsight.

Despite the surge in its enforcement action, many (justifiably, in the present writers’ view) believe the Gambling Commission is not fit for purpose and is failing to regulate effectively in breach of the Statutory Code of Practice for Regulators, which stresses the need for regulators to adopt a positive and proactive approach towards ensuring compliance by:

  • helping and encouraging regulated entities to understand and meet regulatory requirements more easily; and
  • responding proportionately to regulatory breach.

The Gambling Commission continues to struggle with its workload, with huge backlogs, not following due process, and being reluctant to work with its licensees or industry lawyers. More recently, the Gambling Commission has been accused of misinformation. Earlier this year, through freedom of information requests, an industry commentator uncovered that Public Health England had made a fundamental “mistake” in its analysis of suicide prevalence in gambling. Most distressing, the Gambling Commission used the suicide statistic knowing it was “unreliable” and, therefore, knowingly misled the government on the public health risks of gambling.

There is no doubt that the Gambling Review has been a hugely controversial and contested issue. Many would probably acknowledge that the regulatory framework, as opposed to the legislation, needs some change, though the tension arises in considering what, and how much, change is necessary. The tension is then heightened by the powerful anti-gambling lobbyists who believe gambling is immoral and should be prohibited completely, rather than looking to reduce problem gambling.

The White Paper

The White Paper is the next step in the Gambling Review. It is a type of Command paper that will set out the Government’s vision for change and proposal for reform, having reviewed the 16,000 responses received to its Call for Evidence, which closed in March 2021.

It is expected that the White Paper will set out options for reform, rather than a clear recommended course of action. Reform can be achieved in several ways, including the following.

  • New primary or secondary legislation, which will take at least a year. Once a draft Bill is published, it will pass through various readings in the House of Commons and the House of Lords, before receiving the Royal Assent.
  • Changes to the Commission’s licence conditions and codes of practice or guidance, which is likely to take several months.
  • Self-regulation.

The White Paper was originally expected by the end of June 2021, and since then it has been expected “within the coming weeks”. Whilst a version of the White Paper was leaked in July 2022, as discussed below, nobody knows for certain when the official White Paper will be published.

One reason for the delay is the recent unexpected political instability, which has resulted in several Cabinet reshuffles, and shifted focus away from the Gambling Review. On 27 October 2022, a new Gambling Minister, Paul Scully, was appointed and he is the fifth minister responsible for the Gambling Review.

The high turnover of Gambling Ministers has not only led to delay, but also caused a change in approach to the Gambling Review and White Paper, with some Gambling Ministers choosing to start from scratch rather than using their predecessor’s advanced draft, leaving the industry in perpetual limbo. It is understood, from close industry sources, that Damian Collins MP (fourth Gambling Minister responsible for the Gambling Review between 8 July 2022 and 27 October 2022) was preparing a White Paper different from the one leaked in July 2022. Yet to be seen is what approach the current Gambling Minister, Paul Scully MP, will take. Undoubtedly, the White Paper would be delayed further if he decides to start from scratch, again.

White Paper leaks

In July 2022, a version of the White Paper was leaked, setting out key proposals. The then Gambling Minister, The Rt Hon Chris Philp MP, confirmed that this version of the Paper was with 10 Downing Street for review.

Whilst none of the proposed reforms were confirmed by the Department for Digital, Culture, Media & Sport, the leak provides an insight into what the official White Paper may include.

  • Mandatory deposit limits.
  • Stake limits for online slots. Unlike land-based gambling, remote gambling is available 24/7 and has no stake limits. Therefore, the introduction of maximum stakes for online slots was suggested, anticipated at between £2 and £5, with higher limits if customers have passed affordability checks. The rationale is that online operators have access to customer data to monitor and track their play and intervene where necessary.
  • Affordability checks. Broadly, three categories of affordability checks were proposed:
    1. soft checks (through credit agencies or open banking) at £125 net loss per month / £500 in 12 months;
    2. hard checks (including detailed source of wealth checks) at £1,000 loss within 24 hours / GBP2,000 loss in 90 days;
    3. affordability checks for new accounts with £500 net loss in 24 hours for the first month / £500 net loss in 24 hours and £1,000 net loss in 90 days for those aged under 25.
  • Establishment of a Gambling Ombudsman to handle complaints. It is not known whether the Ombudsman will be an entirely new body, or whether it will be an extension to an existing complaints body. It is understood that the industry would welcome the introduction of a Gambling Ombudsman.
  • Proposals to review of structure limits on casino products, such as stake, prize and speed limits, although these are not expected to be prescriptive.
  • Increased RET payments to be made by licensed operators. Currently there is a voluntary system in place for licensees to make annual financial contributions to organisations that assist with the research, prevention and treatment of problem gambling. The White Paper leak did not suggest a statutory levy, though it is suggested that a minimum payment will be introduced. There is currently a strong divided opinion on whether a statutory levy should be imposed and, if so, the rate. On one hand it is viewed as a type of tax, but on the other hand it is argued that the current voluntary system lacks transparency.
  • Prohibition of online VIP schemes and bonus or fee bet offers based on a customer’s spend or loss.
  • A voluntary agreement with the Premier League to ban gambling companies from being their main football shirt sponsors.
  • Further increase to Gambling Commission fees, with the Commission able to amend its fees without review by the Department for Digital, Culture, Media & Sport.
  • Increased gaming machine entitlements for certain land-based casinos.
  • Permitting high-end casinos to offer credit, under specified conditions, to their international customer base.
  • Possible reallocation of unused casino licences.
  • Requirements for operators to check three risks: binge gambling, significant affordable losses over time, and financially vulnerable customers.

Affordability

The industry has reached a vexed and challenging state on the concept of affordability. The intention behind affordability checks is to ensure that customers only gamble with what they can reasonably afford to spend. The aim is then to identify those experiencing or at risk of gambling-related harm, and to intervene to reduce harm at the earliest opportunity.

Whilst affordability checks have not yet become a formal requirement, they will without any doubt be introduced as part of the Gambling Review, and the Commission has already been seen enforcing its own affordability expectations, which have not been enacted.

Numerous concerns have been raised about affordability checks, including privacy and nanny state control over customer spending, instead of allowing consumer freedom in spending money as they see fit. Further, many customers will not provide operators with the information they need to evidence their affordability. This may be for a number of reasons, only one of which is that they cannot afford to gamble at the level they are gambling. Other reasons include privacy, principle, inconvenience, and confidentiality. Those customers that choose not to provide evidence will then be pushed towards other operators or the black, unsafe and unregulated market.

It is clear that greater standardisation is needed than is presently the case. It is likely that any checks introduced as part of the Gambling Review will be with a single customer view, given that many customers have accounts with several operators. Whilst the White Paper leak suggests some thresholds, it is yet to be seen at what level affordability checks and thresholds will be introduced, but one can only hope that they will be proportionate, balanced and avoid unreasonable intrusion and disruption.

Conclusion

The gambling industry in Great Britain remains in limbo as it awaits publication of the White Paper. Whilst one can speculate what the proposals may be, the current political instability and the number of Gambling Ministers (five and counting!) cement that nothing is certain and the White Paper leak of July 2022, whilst insightful, cannot be relied upon. For now, onlookers must sit tight and hope that, when published, the White Paper’s proposals are balanced, proportionate, reasonable and fair.

Harris Hagan

6 Snow Hill
London
EC1A 2AY
England

+44 20 7002 7636

info@harrishagan.com www.harrishagan.com
Author Business Card

Law and Practice

Authors



Harris Hagan is currently the only specialist gambling law firm in the City of London. The firm has an international reputation as a trusted adviser to many of the world’s largest gambling and leisure operators in all areas of land-based and online gambling, liquor and entertainment. The firm’s outstanding reputation has been founded on unparalleled legal experience, knowledge and an in-depth commercial understanding of the industry. Harris Hagan has also advised overseas regulatory authorities and governments on the regulation of gambling and assisted with draft legislation. The firm is noted for its pre-eminence in advising on highly complex regulatory issues and for advising on a wide range of commercial contracts.

Trends and Development

Authors



Harris Hagan is currently the only specialist gambling law firm in the City of London. The firm has an international reputation as a trusted adviser to many of the world’s largest gambling and leisure operators in all areas of land-based and online gambling, liquor and entertainment. The firm’s outstanding reputation has been founded on unparalleled legal experience, knowledge and an in-depth commercial understanding of the industry. Harris Hagan has also advised overseas regulatory authorities and governments on the regulation of gambling and assisted with draft legislation. The firm is noted for its pre-eminence in advising on highly complex regulatory issues and for advising on a wide range of commercial contracts.

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