The Gambling Commission has this week announced that it will be contacting three Premier League football clubs regarding their sponsorships with gambling entities who are, or who will soon be, unlicensed to operate in Great Britain. The letter will “warn of the risks of promoting unlawful gambling websites” and specifically flag “that club officers may be liable to prosecution and, if convicted, face a fine, imprisonment or both if they promote unlicensed gambling businesses that transact with consumers in Great Britain.” The Gambling Commission’s full statement can be found here: Consumer information notice: Stake leaving GB market

Sports sponsorships with gambling businesses have been under increasingly intense scrutiny over recent months and years, particularly those brands accessing the British market via the white label model. The Gambling Commission’s communication serves as a stark reminder to football clubs and other sports rightsholders (“clubs”) that they have a responsibility to ensure that they are not committing an offence of “advertising unlawful gambling”. Under s.330 of the Gambling Act 2005, advertised gambling is unlawful if:

(a) in order for the gambling to take place, it would be necessary to hold a licence under the Gambling Act; and

(b) at the time of advertising, that licence hasn’t been obtained.

Of course, where a club is dealing with a British-licensed entity, there is no unlawful gambling and so, there can be no offence of advertising unlawful gambling. Where a club enters into an arrangement with a gambling operator who is not licensed (or ceases to be licensed) by the Commission, the Commission will need to be satisfied that consumers in Great Britain cannot transact with the unlicensed sites – the Commission will be looking for evidence that preventative measures have been taken to ensure that:

• any steps to geo-block the sites are effective; and
• consumers cannot transact with the sites from Great Britain by any means.

The Commission’s notice makes clear that it expects the relevant club to:

• undertake specific, ‘sufficient’, due diligence on the partner in respect of a British consumer’s ability to transact with an unlicensed site; and
• have well documented assurances from the operator in respect of their geo-blocking effectiveness.

The Commission also reiterates that it will also be taking steps to independently verify effective measures are in place and suggests it will have limited sympathy if a club advertises gambling brands or products that are not licensed in Great Britain but should have been.

Whilst sponsorship deals with unlicensed operators are far less common, the Commission’s statement is a red flag to any club in this position and an important reminder to all of those clubs entering into sponsorship arrangements with gambling operators to be properly advised.

Our checklist for all clubs entering into gambling sponsorship agreements is:

1. Carry out thorough due diligence on the brand they are contracting with. Clubs should be clear on the identity of the legal entity behind the brand and the details of any party who operates the brand’s site (including under a “white label” arrangement). There are a variety of checks, searches and investigations that can and should be undertaken at the outset of any contractual relationship in this highly regulated sector (including relevant ownership and anti-money laundering checks). This recent Commission notice also highlights how important it is for clubs to ensure that they are able to respond quickly and appropriately, with the relevant information, if needed.

2. Negotiate a robust sponsorship agreement. There are a range of protections clubs can consider including in their sponsorship agreements more generally around the licensed status of a gambling operator and what might happen in the event that changes – clubs should be seeking a range of protections such as:

• • notification obligations;
  • suspension/termination rights; and
  • indemnities.

It is also important for a club to be clear on exactly where the promotional activity can and will take place.

3. Seek specialist advice. The world of negotiating high-profile, complex sponsorship agreements can be challenging enough. If you also combine this with the added responsibility of ensuring that you are complying with the ever-changing regulatory landscape, often in multiple territories, this can make the gambling sector an incredibly difficult area to navigate. As a result, football clubs are often left unnecessarily exposed, with insufficient contractual protection and limited options in the event of a change in licensed status of a gambling partner, or in the event of other regulatory changes. Wiggin’s Sport team’s deep-rooted football sector expertise together with our market-leading Betting & Gaming practice means there is nobody better placed to advise you on your arrangements with gambling business and ensure that you are properly protected and best placed to respond if the Gambling Commission do come knocking.

Please do get in touch if any of our specialists can be of assistance in respect of any of your current or future partnerships in this sector.