CMA investigates online gambling industry for consumer law compliance

United Kingdom

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

The Competition and Markets Authority (“CMA”) has announced that it is launching an investigation into online gambling operators amidst fears of consumer law breaches. The investigation will form part of a joint programme of work with the Gambling Commission (the “Commission”), following in the wake of concerns raised by the Commission earlier this year surrounding the fairness of licensees’ consumer-facing terms. 

Exercising its power to do so under the Consumer Rights Act 2015, the CMA will today (21 October) issue Information Notices to operators requiring them to provide evidence of their compliance with consumer law. Following this process, the CMA will establish whether or not it will pursue further enforcement action against such operators, as it is empowered to do so under the Enterprise Act 2002. Simultaneously, the CMA is reaching out to consumers for feedback on any experiences they have had of unfair terms and practices.

Such action from the CMA follows an initial investigation into the industry, in which the CMA raised the following key concerns:

  • That promotions and offers include complex and strict requirements which are difficult to understand and may be unachievable, and must be satisfied before a consumer can withdraw his or her deposits and winnings.
  • That operators have the right to cancel bets or alter odds following acceptance of bets in instances where they have made a mistake at the point of initially setting the odds.
  • Terms restricting consumers’ ability to challenge the operator’s decisions. The CMA gives examples of imposing short time limits for making complaints or inaccurately suggesting that other means of redress are not available to the consumer.

Nisha Arora, CMA Senior Director of Consumer Enforcement stated: “Gambling inevitably involves taking a risk, but it shouldn’t be a con. We’re worried players are losing out because gambling sites are making it too difficult for them to understand the terms on which they’re playing, and may not be giving them a fair deal. We are now investigating to see whether firms are breaking the law…We’ve heard worrying complaints suggesting people may be lured into signing up for promotions with little chance of winning because of unfair and complex conditions. We’re now working closely with the Gambling Commission to examine this more closely”.

The Gambling Commission’s focus

As reported back in February, the Gambling Commission had already signalled in various announcements that one of its main focuses for 2016/2017 is ensuring that terms and conditions of gambling products offered to consumers are fair and open. Sarah Harrison, Chief Executive of the Commission, announced in her speech at the 2016 ICE Totally Gaming conference that the Commission was particularly interested in ensuring that terms provide consumers an accurate and intelligible summary of terms, satisfy the Consumer Rights Act 2015 and that operators comply with their own terms in practice. In her statement Harrison suggested that the Commission would be working with various partners, including the CMA, but the extent of the CMA’s involvement has only now just become apparent. For our full article on Harrison’s speech, see here

On the subject of the CMA’s investigation, Harrison has commented: “we expect the gambling industry to ensure terms and conditions are not unfair. However, operators are still not doing enough. I continue to have concerns that many of these appear to bamboozle rather than help the customer make informed choices. Gambling, by its very nature, is always going to involve risk but customers must have faith that if they win, they will not end up feeling that the deck is stacked against them because of an obscure condition that they did not properly understand. We approached the CMA to work with them to address issues in the gambling sector and we are delighted to have agreed a joint programme of work to ensure terms are fair and transparent”.

Next steps for operators and how we can help

Operators should be wary of the firmer approach that the CMA is likely to take than a Commission-led investigation, with the CMA taking a notoriously strict interpretation of consumer law requirements. Whilst the CMA may pursue enforcement action, however, ultimately only a court can decide whether a term or practice breaches consumer law. As seen in its action against cloud storage operators and ticket re-sellers it may also be that the CMA seeks to secure undertakings from operators, however with growing public and political pressure to crack down on the gambling industry, a more hard line approach may be taken in this instance. Operators should also take note that, as compliance with consumer law is a licence condition under the Commission's licence conditions and codes of practice (LCCP), the Commission may take action in its own right as well.

Operators should be aware that it can constitute a criminal offence for them to discuss their involvement in a CMA investigation (or even confirm their receipt of a notice from the CMA) with anyone outside their organisation, other than their legal advisors. As such, operators are advised to take legal advice and not discuss the investigation even with their trade associations such as the RGA. 

The CMA is expected to provide an update on the investigation early next year. Further information regarding the investigation can be found on the CMA’s case page.

Olswang’s specialist consumer protection team has a strong track record of advising clients in relation to CMA action, regularly delivering positive results for clients through tactical assistance. Clive Gringras - who heads this team – recently delivered a practical presentation on the powers and approaches of the CMA to some of Olswang’s clients. He will be hosting an emergency repeat of this session ("The CMA's investigation into the online gambling industry: tactics and what it could mean for your business") for all interested gaming companies on Thursday 27 October at 2pm GMT via webinar - by invitation only. Any operator having received or expecting to receive a letter from the CMA would benefit from joining Clive and Olswang's gaming team at this session. If you would like to receive an invitation to the webinar, please email events@olswang.com.  

For more information, please contact Clive Gringras or Anna Soilleux-Mills.