Last week, on December 8th, 2020, the UK Digital, Culture, Media and Sports Department (“DCMS”) announced its review of UK gambling laws. As part of its review of the UK Gambling Act 2005 (the “Act”), the DCMS has launched a call for evidence that will remain open until March 31, 2021.
This rating has been expected for some time and comes as no surprise. The Conservative Party had pledged to conduct a review of the law as part of its 2019 election manifesto, describing the law as “increasingly becoming an analog law in the digital age”.
Indeed, one of the primary objectives of the law’s review is to “reflect changes in the gambling landscape since 2005, particularly due to technological advances”.
The statement of work contains the full list of questions that the review should consider, although the questions focus on the following areas:
- Minimizing the risks associated with online gambling products;
- the impact of advertising and marketing gaming products and brands;
- the effectiveness of the regulatory system (including the powers and resources of the GB Gambling Commission (“GC”));
- the suitability of redress regimes for gambling customers who feel they have been treated unfairly;
- Effectiveness of age control in gaming products; and
- Review of the 2005 legislative changes in the land-based gaming sector (particularly in casinos).
Government response to House of Lords report
This call for evidence follows the publication of a House of Lords report on July 2, 2020 entitled Gambling Harm – Time for Action (the “HoL Report”). The HoL report contains the recommendations of the selection committee on the social and economic impact of the gambling industry.
On December 10, 2020, the government published its response to the recommendations contained in the HoL report.
The government’s responses to many of the recommendations made in the HoL report relate to the need to consider the evidence gathered through the DCMS public consultation mentioned above.
However, the government has clearly stated its intention not to wait for the broader review of the Gambling Act to introduce regulatory changes in the crucial area of affordability tests. A separate public consultation on customer interaction and affordability requirements was launched on this issue last month and will be completed on January 12, 2021. The apparent willingness to make regulatory changes in this area before the law review is finalized is remarkable – and not just given the importance of the issue. In its consultation, the DCMS recognized the following:
- the need to reconcile, on the one hand, the protection of gamblers and, on the other hand, the consumer’s freedom of choice as to how they spend their money; and
- The fundamental concern of not inadvertently creating conditions that can lead to growth in black market gambling – a number of industry commentators have warned that introducing an overly restrictive affordability regime could discourage gamers who are not at risk from entering the regulated market.
Some specific points to consider in the government’s response to the HoL report are:
- Marketing partner licensingIn response, the government expressed reluctance to accept the recommendation in the HoL report to introduce a requirement for the GC to approve marketing partners before they can enter into contracts with gambling providers.
- Affordability checks: As noted above, the government has fully endorsed the recommendations of the HoL Report to have clear requirements for gambling providers when conducting affordability checks for customers and carrying out appropriate controls. This is possibly the most important issue currently under investigation. The GC has urged the industry to develop an industry-wide response in this area to prevent customers from circumventing operator-specific controls by simply playing with other operators. The government has also highlighted the role banks / financial institutions need to play in developing a best practice protocol for introducing a blocking service for gambling transactions.
- VIP programs: The government response indicated that further restrictions are likely if recent changes in operator requirements for management and incentives for VIP customers (which came into effect October 2020) do not have the intended impact have area.
- Duty of care: The government ignored and declined to comment on the recommendation of the HoL report to establish a legal obligation between gaming providers and their customers that would allow customers to file claims against gaming providers for losses they incur as a result of violating the LCCP suffer to assert directly.
- Loot boxes: The government has announced its intention to take its next steps on loot boxes in early 2021 (following the completion of its public consultation on this area, which concluded on November 22, 2020).
- Lotteries: The government has already approved the recommendation contained in the HoL report to raise the minimum age for purchasing a national lottery ticket to 18 years (this change in the law will come into force in October 2021). However, their response did not support the recommendation in the HoL report to move from the current lottery tax to a new gross profit tax.
- Sports and advertising: The HoL report had made recommendations for advertising by gambling companies not to be allowed on sports team jerseys or in any other way near sports fields. The government’s response noted that while the impact of sponsorship and advertising is viewed as part of the broader review of the law, it is important to balance public concerns in this area with: (i) the confidence of Sports organizations (especially football clubs) below the Premier League and horse racing) via funding through gambling sponsorship; (ii) existing socially responsible gaming advertising requirements and initiatives (including the Gambling Industry Code on Socially Responsible Advertising and the voluntary ban on whistle-to-whistle advertising on television); and (iii) the lack of compelling evidence of a causal link between exposure to gaming company logos and the actual problem of child or adult gambling behavior.
- “Bet to View” streaming: Similarly, the government’s response did not support the HoL report’s recommendation to include an additional provision to the Social Responsibility Code relating to the “bet to watch” -based licensing of streaming – ie access to the Content requires the existence of an account or an account to be wagered with this operator. The HoL report then goes on to say that as a result the intention is to discontinue the display of live sports by licensed gaming providers. As noted above, the government’s response did not confirm the recommendations of the HoL Report – recognizing that: (i) streaming betting arrangements have been a longstanding practice; (ii) were a valuable additional source of income for sports rights holders; and (iii) in his view, there was no clear evidence that gaming providers’ display of live sports posed a threat to licensing objectives. However, the government’s response indicated that it will continue to monitor the evidence exposed as part of its fuller review of the law.
Other recommendations in the HoL report to which the government responded were:
- maximum stakes and prize limits (both slot machines and online products);
- Control over how online gambling products are developed;
- Procurement and fee structure of the Gambling Commission;
- Management of game-related harm and related health problems;
- Problem gambling management (including self-exclusion);
- Preventing minors from gambling; and
- Monitoring the impact of gambling advertisements.
We will provide further regulatory updates in due course as the DCMS review of the law evolves.