Gambling White Paper Review

United Kingdom

On 5 June 2023 we held the CMS Gambling White Paper Webinar, with special guests Tim Miller (Executive Director, Gambling Commission), John O’Reilly (Chief Executive Officer, The Rank Group plc), Brigid Simmonds (Chair, Betting and Gaming Council), Dan Waugh (Partner, Regulus Partners), and Joanne Whittaker (Chief Executive, BetFred).

The White Paper sets out the policy for the Gambling Act review and also confirms which policy issues are in (and out) of scope. However, the real detail of the vast majority of the policy issues is yet to be determined, with a significant number to be delivered through changes to the licence conditions and codes of practice, following a series of consultations by the Gambling Commission (GC) and Department for Digital, Culture, Media & Sport (DCMS).

The GC published their first tranche of consultations on 26 July 2023. These look to bring a balance between measures that are aimed at greater protection of customers, and some that are deregulatory in nature, with one of the most significant things addressed being the newly proposed financial risk checks (otherwise known as  “affordability checks”). Whilst the DCMS are consulting on a range of issues alongside the GC, the GC’s consultations will focus on how the White Paper should be implemented (rather than reopening debates made before its publication). The GC also plans to publish its response to the Remote Customer Interaction consultation (which closed in January this year) this autumn.

First Impressions

On the whole, the White Paper has been welcomed by the industry, with the general consensus being that it is drafted coherently and logically. Dan Waugh argued that the DCMS has done well to restrict its commentary to things that it knows are demonstrably true, whilst remaining neutral and refraining from getting sucked into debate on contentious issues. With a myriad of ministerial changes over the passage of its review, the White Paper was fortunate to have a consistent team of officials ensuring it was well constructed, thought through and as evidence-based as possible.

From the Betting and Gaming Council’s (BGC) perspective, Brigid Simmonds argued that this is an incredibly important industry, generating £7.1bn to the economy and raising £4.2bn in tax every year. Simmonds continued that any measures implemented should focus on protecting jobs and sustaining the vital contribution that the industry makes. She believes that the government has listened to the evidence given during the drafting of the White Paper, and this has, as a result, produced an important package of balanced measures.

The next hurdle for the government is to ensure that the White Paper is implemented within a reasonable timeframe; its intention is to do so as soon as reasonably possible.

Financial Risk Checks

One of most contentious issues to come out of the White Paper has been the new financial risk checks proposed. In the White Paper, the government agrees with the principle that consumers should be free to spend their money how they see fit, and envisages a targeted system of financial risk checks that is proportionate to the risk of harm occurring. The White Paper proposes that the assessment should firstly be “unintrusive” checks at moderate levels of spend (either net losses of £125 in a rolling month or £500 within a rolling year, with lower limits for under 25s), and if necessary these should escalate to more detailed, but still “frictionless”, checks at higher loss levels where the risks are greater (with net losses exceeding £1,000 in a rolling 24 hour period, and then net loss of £2,000 in a rolling 90 day period, again reduced for under 25s).

One perceived benefit of a more prescriptive approach is greater certainty and a level playing field. However, it is not currently clear how these “frictionless” checks will work in practice, and more importantly, what action operators are expected to take if a check cannot be completed or if the information received raises concerns. The White Paper simply states that operators should consider applying limits to accounts where serious concerns are present, but establishing what those concerns are and what an appropriate limit might be was not apparent.

The consultation published by the GC in July did provide some guidance. The lesser financial vulnerability check would need to include “at a minimum a customer-specific public record information check for significant indicators of potential financial vulnerability”, including whether the customer is subject to, amongst other things, a bankruptcy order, county court judgment, or individual voluntary arrangement. The more detailed financial risk assessment must include review of “data from a provider, or obtain a risk assessment from a provider, which includes credit performance data, and income and expenditure data, including current account turnover data”. When conducting this check, operators must act in line with data protection principles and “only use the data obtained to consider the risk to the customer and decide what proportionate action to take and it must not be used for any other purpose”. Further, the consultation provides examples of types of action operators can take to address concerns, but stresses that this is not a “detailed decision-matrix” that needs to be strictly followed. The examples include:

  • “No further action – in many cases, the financial vulnerability check will show no risk flags. Similarly, following a financial risk assessment the gambling may not represent a risk flag in the context of the individual’s financial situation, especially where there are no other indicators of harm;
  • Enhanced monitoring of account activity for further identification of further risk flags in cases where there is a low level of risk, or in combination with other actions;
  • Contact with the customer to discuss their gambling or encouraging a customer to set deposit limits;
  • Signposting to help and support, or encouraging self-exclusion;
  • Setting a deposit or loss limit on behalf of the customer;
  • Cessation of targeted marketing to customers showing strong indicators of harm;
  • In some cases, stopping gambling temporarily or ceasing the customer relationship”.

Tim Miller encouraged stakeholders to provide responses to the summer consultations and use them as an opportunity to advise the GC what would help them the most moving forward. He raised the difficulty of conflicting views, with some operators wanting a prescriptive approach whilst others arguing that they need freedom to operate in the best way they see fit. The responses to the summer consultations will play a vital role in striking a balance between these approaches.

The GC is working closely with DCMS, UK Finance, the ICO, alongside a number of credit reference agencies to develop frictionless checks. In a letter published on 12 July, the ICO confirmed to UK Finance that data protection laws would not prevent operators conducting financial risk checks on customers, and that lenders would be allowed to share customers’ personal information, provided this is done “transparently and proportionately” (our LawNow on this is available here).  Tim Miller advised that in the meantime, current rules and guidance regarding affordability checks remain in place. He acknowledged that the thresholds suggested in the White Paper are, in some instances, less restrictive than some operators have in place today. When asked if operators with more restrictive limits than those proposed in the White Paper are free to align their limits downwards, Miller stated that “operators have to comply with the rules as they are at the time, and if the rules specify that checks have to be undertaken starting at a particular threshold and they meet those rules, then they are compliant”. It is, therefore, still not certain whether operators who currently have more restrictive thresholds in place can lower these in line with the White Paper proposals.

Joanne Whittaker stressed the importance of frictionless checks being available for land-based operators, pointing out that conducting affordability checks in a retail environment has always been challenging. Whittaker also raised concerns over which data points will be used in frictionless checks to ensure the best information is given. For example, discretionary income can often not be as useful an indicator as first believed.

Another concern for the industry is customer reaction to the proposed checks. In BCG’s YouGov survey, only 16% of respondents who enjoyed placing a bet said they would submit to affordability checks, with 58% saying they would be unwilling to allow betting companies to carry out these checks. Brigid Simmonds strongly believes that imposing such checks would lead to a substantial risk of customers moving to unlicensed sites. Simmonds cites Europe as an example of the consequences of regulation that is too strict. In Europe, the amount of consumers using the black market reaches up to 29%, which is significantly higher than the 2.3% that studies show use this in the UK. Simmonds argues the importance of the industry being heavily involved in the creation and implementation of the financial risk checks to ensure they work in practice.

Claims and Misinformation

The debate around gambling and its harm has become incredibly fractious in recent years, with polarising positions and a lack of nuanced or “grey” views. It is likely that the summer consultations will be approached by all stakeholders as mini battles to win, to ensure their viewpoint prevails.

Dan Waugh argues that a helpful development in the climate would be to have a mechanism by which claims can be verified and validated. He continued that “one of the great tragedies in the last few years is that so much energy that could have gone into problem solving has been diverted to winning arguments”. Regulus research has revealed that reports by Public Health England and the Office for Health Improvement Disparities on the Economic and Social Costs of Gambling, have included a number of alarming claims (including around suicidality) which have proved to be unscientific and factually incorrect. This year, the GC’s business plan stated that the GC wished to be the authoritative, trusted and impartial voice on gambling. Waugh argues that if the GC is sincere in this objective, it needs to be more proactive in challenging misinformation.

Tim Miller recognises that  misinformation has been an issue in recent years, and expressed the importance of the GC taking an increasingly robust approach in addressing and defending instances where official statistics have been misused. However, Tim conceded that beyond official statistics, the GC simply does not have the resources to vet every claim that is made by the industry’s stakeholders. It is particularly important, Miller argued, as the industry moves forward with rolling out new methodologies to measure participation and prevalence, that statistics are properly compared. New methodologies that may show higher problem gambling statistics must be evaluated in context, considering the change in methodology.

On 14 August 2023, Andrew Rhodes (CEO of the GC) penned an open letter to the industry (available here), stating that the Commission is “very concerned at the significant increase in the misuse of statistics around gambling as different parties seek to make persuasive arguments for or against different proposals”. To address the misuse, Rhodes states that “where Official Statistics have been used inaccurately, the Commission will generally assume the misuse was accidental and ask the party to correct the record. If the party fails to do so, or declines, then the Commission will consider referring the matter to the Office for Statistics Regulation”. Rhodes also warned that the GC “reserves the right to publicly challenge the misuse of statistics by any party, if they fail to correct their misstatement”.

Gambling Ombudsman

The White Paper has proposed the introduction of a gambling ombudsman to adjudicate on customer complaints about safer gambling and gambling harm. It is thought this will “plug the gap” in the existing arrangement whereby safer gambling is out of scope of the existing ADR provision, and the GC does not hold powers to require operators to remedy consumers. The logic behind the ombudsman is clear, however the concept raises a number of questions around how an ombudsman would make determinations given how subjective safer gambling issues can be, and what remedies/sanctions it should be able to impose.

The BGC has worked alongside the government to achieve clear rules surrounding all aspects of an ombudsman’s role. Brigid Simmonds raised the importance of ensuring that highly complex cases are not caught within the scope of the ombudsman, and have their own method of recourse to ensure balance and fairness.

The main concern of operators, Joanne Whittaker argues, is situations arising in which customers bypass operator terms and conditions, creating a second account or circumventing self-exclusion. In these instances, consumers will often complain when making losses, but accept wins. In such a situation, it is up to operators to decide how to respond to customer complaints. Whittaker’s concern is a difficult one to regulate, and presents an important point around the amount of discretion an ombudsman would be afforded when a customer believes that an operator’s risk appetite is too high.

Advertising and Safer Gambling

Advertising and safer gambling have received a significant amount of attention in the White Paper. The government welcomed recent voluntary action by the industry (e.g. the Premier League shirt sponsor ban) but concluded that it has not gone far enough. Particular areas of concern raised were cross-selling and free bets/bonuses.

The panellists had mixed views on recent messaging from the industry, with the BGC arguing that evidence shows recent efforts (“take time to think”, “when the fun stops, stop”) have been successful. Dan Waugh, however, believes that the focus has been in the wrong place.

As a fast-growing industry, Waugh argues that operators have historically been focused on growth, which has pushed things like free bets, bonuses and cross-selling. As the industry matures, Waugh believes that operators should move to focus on outstanding service and customer retention. Messaging should be redirected, for example, to encourage customers to set deposit limits because they want to, not because they may be a “problem gambler”. Dan considers that by the industry shifting focus to customer service, issues with messaging should  begin to fall away.

There is scepticism around how the GC, DHSE, and DCMS will manage the issue of messaging. The DHSE has a notoriously prohibitionist attitude when it comes to gambling, whilst PHE has admitted it would like to treat gambling like tobacco. Left to the DHSE alone, critics can envisage unpalatable and potentially negative messaging being pushed which would negatively impact the consumer. It will be imperative for the GC to adopt a strong stance to ensure messaging remains neutral and valuable to consumers.

It is vital that all stakeholders in the industry engage with the consultations currently open to ensure that all voices are heard. Those wishing to respond should ensure to do so soon, as the consultations will close as follows: