On the 29 November 2023, the Gambling Commission (“GC”) released its second set of consultations on the Gambling White Paper which covers five key areas:
This note focuses on socially responsible incentives.
Background
The White Paper highlighted that a key aim for the government is “to reduce the potential risks of bonus offers”, tasking the GC with “consult[ing] further on appropriate action, considering issues such as maximum caps on wagering requirements and minimum time limits before offers expire”.
The Gambling Act 2005 permits the offering of incentives in the gambling industry, subject to rules to align with the licensing objectives. Incentives, ranging from sign-up offers to competitions, play a key role in attracting and retaining customers. The GC’s Consumer Voice research in 2023 revealed that a significant portion of respondents actively sought out incentives, viewing them as a way to enjoy gambling without risking personal funds. Current rules require gambling licensees to treat consumers in a “fair, open and transparent way” and further provisions[1], introduced in February 2023, prevent marketing to individuals displaying indicators of harm. Despite acknowledging the benefits of incentives, the GC is concerned that complex promotional offers potentially lead to excessive or harmful gambling. In conjunction, the GC’s consultation from July 2023 addressed how to improve customers choice on direct marketing.
This consultation aims to address potential harms caused by certain mechanics and features of incentives to ensure they are “constructed in a socially responsible manner and do not encourage excessive or harmful gambling.”
The primary concerns and main focus of the consultation are wagering requirements and the mixing of products in incentives. The GC’s goal is to enhance customer protections, promote fairness and transparency and align with licensing objectives to prevent harm and exploitation in gambling.
The GC’s consultation focuses on three key proposals in relation to incentives:
- a proposal to ban or limit the use of wagering requirements in promotional offers;
- a proposal to ban the mixing of product types (e.g. betting, bingo, casino, and lotteries) within promotional offers; and
- proposed changes to Licence Conditions and Codes of Practice (LCCP) Social Responsibility (SR) Code 5.1. (Rewards and Bonuses) to make the structure and wording clearer.
1. Ban or limit wagering requirements
Wagering requirements dictate the number of times customers must play through bonus funds before withdrawing associated winnings. For example, a customer using a £5 free bet with a 10 times wagering requirement would have to play through £50 before being able to access any winnings. The consultation emphasises the important role that these requirements play in fostering player engagement and enhancing the appeal of incentives.
The GC does not currently set a threshold for wagering requirements. Under marketing rules, wagering requirements must be prominently displayed in ads to prevent consumer misperception. Wagering requirements are typically set between 20-30 times, with occasional instances of extreme requirements reaching up to 100 times. Jurisdictions globally have implemented different measures, such as Denmark's 10 times maximum wagering requirement.
A more complex incentive is matched deposit bonuses, which provide for a customer’s initial deposit to be matched by the operator up to a specified amount or percentage, with variations in mechanics across promotions. Typically, higher value offers come with higher wagering requirements and a timeframe for completion, often within 7 to 14 days. For instance, a £100 deposit matched at 150 percent (resulting in a £150 bonus) may require a customer to play through £7,500 with 50 times wagering requirements before withdrawing winnings. This leads to customers having to spend significant amounts of their own money before accessing any winnings at all.
Evidence from the Consumer Voice 2023 study suggests that customers may struggle to comprehend the cumulative impact of these deposits, potentially leading to harmful gambling behaviours, as demonstrated by prolonged gambling sessions in attempts to meet wagering requirements.
The GC is consulting on two alternative proposals:
- “A proposal to ban wagering requirements applied to all bonus funds in promotional offers”; or
- “A proposal to set a cap on wagering requirements to all bonus funds applied to promotional offers. We are consulting on three alternative thresholds:
- Wagering requirements set up to a maximum of 1 time.
- Wagering requirements set up to a maximum of 5 times.
- Wagering requirements set up to a maximum of 10 times.”
The first proposal advocates an outright ban on wagering requirements for all bonus funds, “offering clear guidance to both licensees and customers and potentially curbing exaggerated claims of winnings in promotional headlines”. Evidence indicates that certain licensees already employing a 'you get what you bet' approach have experienced minimal impact on customer uptake, although it is acknowledged that such practices are more prevalent among operators with a substantial market share. However, this proposal may cause concerns to operators, who may be worried about customers making use of free bets without staking any of their own money, leaving operators paying out more than they are taking.
The second proposal suggests implementing a cap on wagering requirements. Evidence cited by the GC shows that the impact of wagering requirements varies based on individuals’ gambling experience, with some gamblers resistant to structural changes in incentives. Acknowledging the necessity of some wagering requirement to prevent the extraction of 'free' money with potential commercial consequences for the operator, the consultation suggests an alternative proposal to cap wagering requirements at either a maximum of 1 time, 5 times, or 10 times. Drawing on international comparisons and engagement with gambling licensees, theGC’s provisional view suggests that a cap of up to 10 times aligns with practices in other jurisdictions. However, recognising the need for consumer protection, lower thresholds of 1 or a maximum of up to 5 times are also under consideration.
2. Mixing of products within incentives
The GC proposes to ban the mixing of product types (for example, betting, bingo, casino and lotteries) within promotional offers. Some promotional offers are structured to combine different product types, primarily for new customer sign up offers. The rationale behind this proposal lies in evidence suggesting that such mixed offers can cause consumer confusion, elevate the likelihood of harm, and prompt customers to engage in unfamiliar or uncomfortable forms of gambling, thereby increasing the risk of negative consequences.
To support this proposal, the GC states that consumers that gamble on multiple products have higher scores on the Problem Gambling Severity Index. According to the Health Survey for England 2018, the proportion of problem gamblers increases from 0.2 percent for single product gamblers to 15.1 percent for those involved in seven or more activities. In addition, quantitative data from the GC’s 2021 release ‘Consumer experiences and attitudes to Free Bets & Bonuses’, reveals that 28 percent of respondents began gambling on a new activity due to cross-selling bonus offers. Qualitative evidence from the Lived Experience Advisory Panel indicates that users signing up for one product quickly receive offers for riskier products, leading to potential harmful gambling experiences, particularly for those unfamiliar with products beyond their primary gambling activity.
Therefore, the GC is currently seeking input on the potential implementation of a ban on combining product types within promotional offers for both new and existing customers. For example, gambling licensees would not be able to offer an incentive containing both a betting and a casino product, but they could offer an incentive containing more than one type of the same product, such as a betting offer combining different sports or markets. Additionally, the inclusion of lotteries aligns with broader advice on offering lottery, gaming, and betting products under common branding, emphasising clarity to protect consumers and uphold licensing objectives.
3. Changes to drafting and structure of the LCCP
The GC is proposing modifications to the Licence Conditions and Codes of Practice (LCCP) Social Responsibility (SR) Code 5.1. (Rewards and Bonuses) with the aim of enhancing clarity in structure and wording. While LCCP SR Code 5.1. establishes guidelines to ensure incentives are socially responsible, the GC has concluded through compliance engagement and casework that certain aspects of the provision lack clarity. As a result, the GC is seeking input on a revised structure and wording. The new approach aims to explicitly emphasise that incentives should be designed to prevent excessive or harmful gambling.
The proposed changes involve reorganising the code to outline licensee obligations, making minor adjustments to existing requirements, and removing language that prohibits incentives tied to predetermined gambling durations or frequencies, as it has caused confusion among gambling licensees. The revised code emphasises clear terms, fair conditions, and prevention of harmful gambling behaviours, aligning with the overarching goal of safeguarding consumers and upholding licensing objectives.
Next Steps
The consultation on incentives is part of the GC’s broader package of work to make gambling safer and fairer, in line with the government's White Paper and the GC’s licensing objectives. The consultation invites all stakeholders to share their views on whether they support or oppose the proposed changes, as well as any other suggestions or comments they may have. It is open until 21 February 2024.
The Gambling Commission’s First Set of Consultations
The GC released its first set of consultations in July 2023, which ran to October that year. The GC has confirmed that the responses to the first set of consultations are currently being analysed. Further information on these consultations can be found through the following links:
[1]Social Responsibility Code provision 3.4.3 (Remote Customer Interaction) requirement 10
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