June 19, 2020

In a significant week:

• the APPG has published its Final Report;
• the Gambling Commission has published an update on progress made by certain industry working groups; and
• the Commission also opened a consultation into VIP schemes.

As has been well documented, the British Government has committed to undertaking a complete overhaul of gambling legislation and regulation in the UK during the lifetime of this Parliament.  Given the obvious distractions it currently faces, it is unlikely that the Government’s review of the Gambling Act 2005 would be a priority at present. However, with regular output from a small number of Members of Parliament, willing supported by a cohort of media outlets (particularly the Daily Mail, The Times, The Guardian and the BBC), and collaborating with influential lobby of current and ex-gamblers, it really does feel like there is momentum building that may push such changes further up the agenda once the Government has some breathing space.

It is with that backdrop in mind, that we have seen a significant week of developments in the UK with the publication of two reports.

The first, the final report from the Gambling-Related Harm All Party Parliamentary Group (APPG), was published earlier this week and followed a lengthy enquiry by a cross-bench committee. Over the course of the 12 months the APPG held a number of sessions that sought to assess the impact of gambling on society and understand more about how it was operating and how it was regulated.

The second report, published today, is a ‘progress update’ by the Gambling Commission where it summarised the progress made by the industry in responding to the ‘three challenges’ that the Commission set them in October to look at the notable areas of VIPs, game design and the use of adtech.

It is difficult for the industry not to feel that something akin to ‘battle lines’ being drawn here with both the APPG and the Gambling Commission indicating where they believe changes need to be made.  It is clear they agree on certain things, but not everything and that is even before the industry’s voice is heard.

Taking these reports in turn: –

APPG report

For anyone who had attended any of the APPG sessions or had at least read the transcripts of them, the key recommendations published this week are of no surprise.  The tone of the sessions, accompanied by a succession of social media and mainstream media forays by various members of the Committee during the pendency of the process pointed to a very clear likelihood that the recommendations had already been written and that it was simply a case of looking for justification for them.

A succession of news stories from the aforementioned media outlets during the twelve month duration of the committee hearings serves to remind any observer that change in the way the gambling industry was regulated in the UK was at least up for debate, even if the vast majority of recreational gamblers in the British market could not relate to such stories and such experiences.

The key recommendations of the APPG are as follows (and there are others):-

• Stake limits for online slot content of no higher than £2 given the potential to cause harm
• A ban on all VIP schemes and inducements
• A ban on all gambling advertising
• A ban on in-play betting
• A ban on all gambling advertising
• A requirement that Commission licence holders apply British regulatory standards to their global businesses
• The assumption of a statutory duty of care
• A complete overhaul of gambling regulation in the UK (with the APPG stating “The Gambling Commission is not fit for purpose”
• An “urgent” review of stakes, deposit and prize limits online as well as a complete review and classification of online products
• Affordability limits set and imposed by the Gambling Commission
• A Gambling Ombudsman for consumer redress
• A mandatory ‘smart’ levy paid by gambling operators to fund independent research, education, prevention and treatment
• A new Gambling Act

It is likely that were the man or woman in the street to be asked about the recommendations they would almost certainly uniformly support (most of) them, not least due to the way that some of them have been presented.

Furthermore, to the relatively informed eye, a number of the scenarios and issues presented in the APPG report can be described as somewhat knee-jerk and any representation that the industry may have made to dispute some of the findings are generally omitted the final report to give the very clear impression that the industry is simply trying to protect its revenues rather than trying to seek regulation that is actually backed up by proper empirical evidence and fact.  It has been reported that certain sections where learned academics have contributed to the committee process will have found their statements to have been selectively quoted and certain phrases, that were unhelpful to the APPG’s cause, actually removed.

The industry’s response to the APPG report will be interesting, to say the least.  A coordinated response to the points raised in the report is needed.  A number of the proposals do have merit or at least are worthy of debate.  However, a number of the proposals (such as banning in-play betting online) may be easy to suggest but require a much more sophisticated debate than the APPG has hitherto allowed the industry to have with it.

It is doubtful that the recommendations in the APPG report will be enacted in their entirety.  But they should stimulate an informed debate into how gambling regulation should now evolve some 15 years after the Gambling Act 2005 was enacted.  It is undeniable that in the fifteen years since, the way in which online gambling has developed in the UK is not to everyone’s liking and also that the risks associated with it are now far better understood than they ever before.  On the basis that regulation must be designed to protect the consumer (surely the central plank of any regulatory system), then the extent to which it does so needs proper re-evaluation.

However, the industry really needs to step up to ensure that any regulation that ensues is proportionate, consistent and justifiable in light of the risks identified and the mitigations currently in existence.  The recent episode where the Gambling Commission unilaterally imposed restrictions under a Covid banner, overnight, without any consultation as is required under the legislation shows how far the industry has to travel in order to ensure that there is a proper, informed debate.

Gambling Commission progress update

Some three months after the last update given by the Gambling Commission into the industry’s collaborations (see our coverage here) to address a number of systemic issues the regulator identified in its compliance and enforcement casework, a further update was published today.

In the foreword to the update, the Commission dealt head on with the criticisms it had been receiving from the APPG and certain lobby groups about the way it had, in effect, “handed to the industry” these challenges and implored it to resolve the issues identified.  With the intention that any identified improvements would ultimately be enshrined into regulation, it was felt by such critics that the industry could not be trusted to have such a role.

On the basis that any regulatory change really should have the input of the affected industry (procedurally required by the Gambling Act but also generally present in all regulatory debate in the UK, regardless of the industry), we feel such criticism to be short sighted.  The Gambling Commission would struggle to grapple with the technical implications of some of the issues that it has identified, whereas the industry is far better placed to do that.  Furthermore, with the intention behind the initiative clear, the industry should be given the opportunity to identify the most efficient way to address the issues rather than continue to face ‘outcome-based regulation’ which leaves uncertainty and confusion in the market in the absence of any sophisticated accompanying guidance.

Reading Neil McArthur’s foreword in today’s update, when compared to his statements made in April, one is drawn towards a change in tone away from what was an overtly aggressive and confrontational presentation to one which would appear to recognise the collaborative nature of the work being undertaken and the progress made thus far.

Taking the three initiatives in turn: –

VIP Scheme/incentives

In contrast to the APPG’s intention that all VIP schemes and inducements should be banned, the Gambling Commission have assessed the work undertaken by the industry working group, chaired by GVC and the Betting & Gaming Council and the draft code that they have developed, they have listened to a number of “Experts by Experience” (“EbE”) and then assessed both, following feedback from other interested parties such as GamCare.  The result is the Commission’s view that ‘for tailored incentives and bonuses to continue to have a place in the industry’ but in order for that to happen the Commission needs to be “satisfied they are being offered in a manner which is consistent with the licensing objectives”. Where a licensee cannot provide that assurance, they should not be offering such schemes/incentives’.

The industry code developed by the working group will now be consulted on by the Commission, which commenced the consultation process today. This will form part of a LCCP change with the industry being given a relatively short period of time (less than three months) to implement these changes.  Clearly, there will then be ongoing monitoring to assess the effectiveness of the scheme to understand whether it addresses the issues that have been raised.  On the basis that both the Commission, the APPG, the press and lobbyists all point to the disproportionate risk to the consumer that VIP schemes have created in the past, this does seem like an opportunity for the industry to justify its belief that loyalty schemes do form part of any commercial relationship with a consumer but they need to find the tipping point at which a loyalty scheme becomes problematic for a relatively small number of people that are harmed by gambling and whether the solution is tailored restrictions rather than an outright ban.

Game design

This comprises of two working groups, chaired by Scientific Games and Playtech, with the focus being currently on online only due to the closure of land-based gaming but that will now resume.

The BGC will publish a code at the end of the Summer which will include core elements around spin speeds, removal of certain types of game features and the banning of multi-screen gaming.

The expert groups, notably the Commission’s ‘Digital Advisory Panel’ and the EbE group provided their input. The latter raised the issues of stake restrictions, mandatory time limits as well as other consumer protection initiatives.  They also advocate for gambling products to be classified according to their “addictiveness” similar to Class A, B and C drugs.

The Commission’s assessment of the work done so far by the working groups and by the input from the expert groups have led to its view that “changes represent some initial tangible actions which are likely to move the debate on at least partially’ and that ‘if delivered within a quick timeframe, these changes would make slot games partially safer for consumers”. However, the Commission does “feel that [the work so far] falls significantly short”.

Furthermore, the Commission feels that the proposed timetable of actions (culminating in the potential release of a report of recommendations by the industry in September) “does not seem fit for purpose, especially against the backdrop of a shift to online gaming slots as a result of the Covid19 crisis”.  To the extent the Commission believes that the current pandemic has led to increased risks, it would be helpful in the circumstances for them to explain exactly how they have come to that conclusion based upon the data that they have been procuring from the industry during the last two months.

Use of advertising technology

This working group, led by Sky Betting & Gaming, has established a new industry code for responsible advertising to be effective by July 2020. The industry’s reaction to the challenge has been to take immediate voluntary steps such as introducing common lists of negative search terms to help shield vulnerable groups, proper age gating of YouTube and content and better use of customer data to ensure paid for ads are targeted away from vulnerable groups.

The response from the Commission to the industry’s efforts appears positive which is heartening in relation to a matter which is particularly emotive for wider British society who continue to lament about the impact of gambling advertising on their lives and particularly the visibility of it on their children’s screens.

Of course, this all flies in the face of the APPGs intentions which is to ban advertising of gambling entirely.  Ultimately, that would be a call for the legislature.

Next Steps

Reading the progress update today, one is drawn towards a mixed conclusion.  It is notable how collaborative the industry has been and how innovative it has been in suggesting solutions to some of the issues and the challenges that it has been presented.

It is also notable that the Expert by Experience group is so prominent in the Commission’s output today, with relatively less prominence given to the Commission’s Digital Advisory Panel and the Advisory Board for Safer Gambling, both Panels which have clear visibility of membership, terms of reference, potential conflicts etc.

The Commission also published a statement, today, about it “working with an interim Experts by Experience Group who will provide advice, evidence and recommendations to the Commission to help inform decision making and raise standards, along with co-creating a permanent Experts by Experience Advisory Group to advise the regulator on a more established basis”.

It is extremely important, in our view, that when the debate develops as to how gambling regulation should operate in the UK in the future, that it is not only those that have significantly suffered from gambling related harm whose voices are heard by the legislature.  The industry continues to point to the fact that over-regulation will damage the consumer ultimately and potentially drive problematic gamblers to the black market.  Whilst both of those have an element of truth to them, it is notable that the voice of the regular, recreational punter is nowhere to be seen.

The Commission and the APPG are being significantly influenced by the EbE Group, which is understandable on the basis that the number of their experiences certainly point to an industry that needs to think carefully about the way that it goes about its business.  But when we are faced with a period of significant legislative and regulatory upheaval, it is important that the debate is an informed one with the views from all affected parties being heard.  The EbE group is anonymous in the context of the Commission output yet visible and vocal on Twitter. In our view, EbE have a fundamental and justifiable role to play in the debate.  To avoid undermining their participation, it is our view that more transparency and visibility of their participation is warranted but also that they are not the only consumers whose voices are heard.