Four tips for operators seeking to weather the current regulatory storm

I began practising gambling law in 1998. In other news that year, Google was founded, the Good Friday Agreement was signed and France won the World Cup. Meanwhile, the Gaming Board for Great Britain was grappling with what to advise the Home Secretary on the new phenomenon of internet gaming, the extent of which was unknown.

While considering the possibility (subsequently acted upon in 2005) of legislating to permit regulated and taxed internet gambling, the Board had this to say in its annual report for 1998-99: “This could … raise concerns about proliferation and consequential increases in problem gambling. The advantages of such legislation are that it would allow any safeguards (such as a bar on credit and limits on losses) believed to be essential and would protect the Government’s gambling revenues.”

Fast forward to 2018 and the Gambling Commission, the Board’s successor, has reviewed online gambling on the back of almost four years of point of consumption licensing and will be consulting soon on the potential introduction of a raft of significant measures. This includes whether players should be verified before they are allowed to gamble, limits on players’ spending without affordability checks and whether gambling on credit should continue to be permitted.

So there is nothing new about such concerns in the last twenty years, but more than ever they need to be taken extremely seriously. The Commission is pursuing safer gambling with, some might say, a missionary zeal, energised by poor industry performance in relation to AML and social responsibility. But I truly believe that the industry is learning the lessons, that changes in social responsibility cultures are being driven from the top and with most leading operators showing the way.

However, there is understandably some latency in higher standards being delivered, with the sheer volume of new technological requirements a factor.  It will be incumbent upon this more socially responsible sector to participate fully in the Commission consultation and help the Commission and Government to distinguish between sensible and deliverable actions flowing out of the Commission’s learnings, and measures which are not evidence based which may be unfairly and/or disproportionately damaging to an ever maturing, modern and successful industry.

Under the microscope

Is it really right, for example, that gambling should be one of the few online products which you cannot buy using a credit card, particularly given the importance of credit cards to user identification and verification? The advice from the Responsible Gambling Strategy Board to the Commission is that gambling online using a credit card should be prohibited. Is there any evidence that affordability checks will have a material impact upon problem gambling when set against the intrusiveness and inconvenience for the overwhelming majority of customers and when limit setting tools are already available?

More generally, the remote industry should be in no doubt that it is now its turn in the regulatory sun. It was more than happy to cede the newspaper headlines to “Super Casinos” during the progress of the Gambling Bill and to FOBTs for what now seems like forever. But as that political sideshow hopefully reaches a conclusion in the coming months, the Commission’s cold hard focus on the remote sector, as the gambling medium of choice for the most gamblers in the UK, comes into sharp relief. If the sector is to avoid potentially unpredictable and damaging regulatory or political consequences, it would be wise to:

1. Participate fully in the Gambling Commission consultation and not rely entirely on its trade association, the Remote Gambling Association. Weight of opinion and engagement will be critical;

2. Continue to raise its game on the obvious stuff. Customers are entitled to be treated fairly when it comes to terms and conditions, withdrawal of funds and dispute resolution. Marketing must be responsible and not misleading. And games which are of particular appeal to children should be behind the paywall; the industry genuinely has no interest in revenues from under 18s. Why has it taken regulatory action from the CMA and Gambling Commission acting in powerful tandem to make this happen? If operators focus on doing the right thing by their customers, they can minimise the impact on their business of even the most zealous Commission and Government;

3. Truly learn the lessons from the regulatory action taken by the Commission against remote operators; and

4. Learn the lessons from the politicisation of the FOBT debate and get ahead of the curve in the public debate. Set the agenda and lead the way from a position of strength.

In return, as in the Board’s Report from 1998, operators should “expect support from the [regulator]” in their endeavours to “rid themselves of needless regulatory shackles” provided that they “do not conflict with the principles underlying gaming regulations; that crime should be kept out of gaming; players should be treated fairly; and children and the vulnerable should be protected.”

These objectives remain as relevant as ever today and I sometimes wonder whether everything or nothing has changed in the last twenty years. Without getting into the whys and wherefores, however, the support of the Commission is arguably less obvious today than ever before and the coming consultation will undoubtedly merit the sector’s undivided attention.

John Hagan qualified in 1993, practising as a commercial litigator before specialising in gambling law from 1998. He has advised many of the world’s largest gambling operators as well as governments and trade associations. He is frequently instructed by other leading law firms, private equity firms and banks to provide specialist licensing and regulatory expertise in respect of corporate investments and transactions.