Ofcom publishes new regulations for transactional TV gambling channels

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

We reported in a previous update that Ofcom had written to TV gambling channels and other interested stakeholders in February 2008 proposing to re-categorise TV gambling channels and programmes as "teleshopping" services. The change to the licensing of these services has now come into effect.

On 1 June 2009, Ofcom published a "regulatory statement on the position of TV channels and programmes that offer gambling services to viewers" (click here to view) ("Statement"). The Statement stated that all programming and channels that comprise transactional gambling (typically roulette, bingo, card games and virtual horse and dog racing) would be treated as providing teleshopping services rather than editorial output and licensed accordingly. The same applies to "windows" of transactional gambling within what is otherwise an editorial service.

This is a change from the situation until that date, under which transactional gambling service providers could choose to apply for either an "editorial" or "teleshopping" Television Licensable Content Service licence from Ofcom. Licensees remain able to choose what output they wish to provide and, specifically, whether they wish to provide a purely editorial gambling-themed service or a transactional teleshopping service. However, to qualify as editorial, a service must provide genuine programming and not include transactional gambling in which (express or implied) offers or direct calls to action (e.g. "bet now") are made to viewers to participate in the services on screen. It should also be noted that Ofcom's licensing guidance states that "teleshopping services may not broadcast material (other than permitted advertising) which does not contain direct offers to the public. A teleshopping service may therefore not contain any conventional programme elements such as news, sport, films, documentaries or drama, etc)". This means that if any channel wished to be reclassified as a teleshopping service so that it could offer transactional gambling, this may require wholesale changes to the type of content it offers under an existing editorial service licence.

The Statement also sets out specific exemptions for certain kinds of services. For example, horse racing programming (where the inclusion of references to odds, form and the like remain a conventional and subordinate element of the programming), sports channels that provide the opportunity to bet interactively (where the sporting event is the principal content) and "quiz TV" programming remain editorial services rather than teleshopping. Where it is unclear whether a channel or programme should be judged as a teleshopping or editorial service, decisions will be made by Ofcom on a case by case basis.

The rationale behind this reclassification is that content which seeks to "sell" to the viewer is more appropriately regulated as advertising. The Broadcast Committee of Advertising Practice Television Advertising Standards Code ("BCAP Code") regulates teleshopping services and offers greater consumer protection than the Ofcom Broadcasting Code, which regulates editorial programming. In addition, the change aligns Ofcom policy with the broad definition of advertising set out in the Gambling Act 2005 (which would include transactional gambling channels and programming).

There was some concern amongst service providers that the reclassification of transactional gambling content would impact on revenues generated from simulcasting such content on editorial services, as channels with editorial licences were limited to no more than three hours of teleshopping content per day (with no teleshopping content permitted on PSBs). In response, Ofcom has introduced the Code on Scheduling of Television Advertising (COSTA), which replaces the Rules on the Amount and Distribution of Advertising and specifies increased maximum daily allowances for teleshopping content. From 1 June 2009, COSTA abolished the maximum daily allowances for teleshopping content on non-PSB channels and limited PSB channels to showing up to six hours of teleshopping content each day between midnight and 6am.

The relaxation of the teleshopping allowances under COSTA has already seen Five sign a deal with NetPlay TV, the interactive gambling group. The RTL–owned PSB will broadcast NetPlay TV's "Supercasino.com" show three nights a week between midnight and 4am from 17 September 2009, rising to six nights a week in October 2009 and nightly in 2010. It is likely that other non-PSB and PSB broadcasters will seek to increase the amount of transactional gambling programming available to viewers as they seek to mitigate falling advertising revenues and the squeeze on carriage fees by Sky and Virgin Media.