A recipe for bad regulation

There are many reasons to be alarmed about the UK Gambling Commission’s (UKGC) consultation on proposed Customer Interaction: formal guidance for remote gambling operators, but the principal concern is that it is so obviously bad regulation. It may have been inspired by noble intentions, but a combination of loose drafting, weak evidence, legislative incompatibility and a failure to think through consequences threatens to result in a costly, ineffective and incoherent regime.

The drafting of the updated guidance is hopelessly ambiguous. This creates scope for wildly divergent interpretation, market distortion and basic confusion about what constitutes compliance. Licensees are required to consider both ‘young adults’ and ‘older adults’ as vulnerable, but without any definition of age. A customer using ‘multiple products’ is said to be displaying an ‘indicator of harm or potential harm’ – but the guidance is silent on what a ‘product’ is or what timeframe should be considered.

The guidance offers few clues as to what specific actions licensees should take in response to such ‘indicators’ and proposes a distinction between what operators ‘should’ and ‘must’ do, a distinction that is likely to elude most compliance officers. Little evidence is presented by the UKGC to explain the basis for selection of the ‘indicators’, and much of what is provided is faulty; the classification of in-play betting as an ‘indicator’ is an obvious example of this. The effect is that the regime appears arbitrary and deprives those licensees who attempt to understand it of important context.

Too little, too late

Whereas the Gambling Act 2005 recognises vulnerability as an exceptional state applicable to people unable to make properly informed or adult decisions, the guidance conceives vulnerability to harm as being universal, with consumers divided between the victims and the vulnerable.

The UKGC’s revisionism has enormous implications for the functioning of the market and the interests of consumers as well as parliamentary sovereignty. It is not the regulator’s role to twist the law to accommodate moral inclination. The consultation itself raises questions of process, with certain aspects of the guidance seemingly inviolate. The Social Responsibility Code will be implemented in full from 12 February 2023, less than three weeks after the UKGC’s consultation closes. This is an indecently short period for the UKGC to weigh opinion and evidence, and leaves licensees with little time to align safer gambling systems to the new rules.

The guidance conflates ‘indicators’ of harm or vulnerability with actual harm or vulnerability. In consequence, licensees are required to demonstrate impacts on behaviour, even where the customer is gambling without issues. This risks trampling on consumer autonomy.

Finally, there is the potential for the guidance to encourage unlawful behaviour by licensees. Its characterisation of vulnerability based on broad generalisations about age, disability (‘poor physical or mental health’) or educational attainment (‘poor literacy or numeracy skills’ and ‘knowledge’) could be interpreted as unfairly discriminatory and introduces issues of privacy and data protection.

There is a modicum of common sense at the heart of the guidance, but common sense tends to be context-dependent and often resists codification. The UKGC’s approach reflects a philosophy of market regulation by rules alone, something that is guaranteed to result in bad regulation and negative outcomes for consumers.

Dan Waugh (left) is a partner at research and advisory firm Regulus Partners. He founded the charity YGAM in 2014.

David Whyte is a senior associate at Harris Hagan which specialises in online and land-based gambling law.