ElectraWorks fined for advertising failings as CAP releases new gambling guidance

United Kingdom

On 14 February the Gambling Commission announced that gambling operator ElectraWorks Ltd – part of the GVC Group – was set to pay a fine of £350,000 for breaches in relation to marketing. The fine – following on from similarly large settlements reached with BGO, Lottoland and Broadway Gaming – is yet another example of the Commission’s increasing willingness to use the full extent of its regulatory powers for advertising failings. On the same day as the Commission’s announcement, the Committee of Advertising Practice (CAP) published two new pieces of guidance on advertising gambling. Both serve as a reminder of the pitfalls of advertising gambling in Britain.

ElectraWorks falls foul of the Commission

On 4 October 2017 the Commission commenced a regulatory investigation of ElectraWorks’ licence. The review came in the wake of a complaint upheld against the operator (on 17 August 2016) by the Advertising Standards Authority (ASA) relating to an advert for a free bonus. The ad appeared on www.bwin.com and was found to be misleading, and in breach of the CAP Code, on the basis that it failed to adequately communicate that the bonus was subject to wagering requirements. A week after this ruling, on 24 August 2016, the Commission identified another similar advertisement relating to a free bonus on the same website, which was also in breach of the CAP Code. The Commission then discovered further non-compliant ads in April, June and August of the following year.

Despite the offending ads being removed after the Commission alerted ElectraWorks, the Commission commenced the licence review procedure under s.116(2) of the Gambling Act 2005. As a result of the review the Commission found that between 24 August 2016 and 31 August 2017 ElectraWorks published 14 advertisements on its website which did not state significant limitations and qualifications despite there being space to do so. This was in breach of the CAP Code and in turn a breach of social responsibility code provision 5.1.7 of the Licence Conditions and Codes of Practice (LCCP). The latter stipulates that all licensees must abide by any relevant provisions of the CAP Code and BCAP Code, which relates to ‘free bet’, ‘bonus’ or similar offers.

As well as its advertising failures, between June 2016 and April 2017 the individual responsible for advertising and marketing at the operator had not held a personal management licence (PML), contrary to licence condition 1.2.1 of the LCCP. This was also investigated as part of the licence review and the Commission issued a formal warning to ElectraWorks for its failure in this respect.

The fine imposed on ElectraWorks stands as yet another example of the large fines that the Commission is willing to impose, in line with its more hard-line enforcement strategy, and in particular the risk of gambling ads being found non-compliant. Richard Watson, Commission Programme Director, highlighted that the fine should “serve a warning to all gambling businesses that we will not hesitate to take action against those who mislead consumers with bonus offers or fail to ensure they are correctly licensed”. The Commission also emphasised that the notice should act as valuable learning to the wider industry, to consider when promoting free bets or bonuses and to ensure that individuals hold the requisite PML when in a specified management office.

Click here to view the Commission’s full public statement.

CAP Guidance

On the same day as the publication of the ElectraWorks fine, CAP published new guidance on responsibility and problem gambling in advertising, and specific guidance for advertisers of free bets and bonuses. Whilst neither piece of guidance alters the underlying rules, they both serve as useful tools for operators looking to stay within the lines.

The responsibility and problem gambling guidance is of particular use as it offers CAP’s views on certain rules that it has to date not produced any specific guidance on. In particular:

  • there is guidance on the advertising of live odds and avoiding creating a sense of urgency. CAP states that “offers such as live odds or in-play betting – where time limits exist naturally due to the nature of an event – should not be presented in such a way that creates an unjustifiable sense of urgency…In such instances, urgent calls to action (for instance, “Bet now!”) or creative approaches, such as those that place emphasis on time running out, are likely to be regarded by the ASA as a breach of these rules because they could pressure consumers into participating when they otherwise would not”.
  • CAP clarifies that marketing communications that portray or otherwise refer to individuals displaying problem gambling behaviours or other behavioural indicators linked to problem gambling (even if this is only be implication) are likely to be regarded by the ASA as non-compliant;
  • the CAP Code and BCAP Code requires that marketing communications must not suggest that solitary gambling is preferable to social gambling. CAP state that portraying or encouraging people gambling alone at inappropriate times or in inappropriate environments, such as late at night, are likely to breach these rules;
  • the CAP Code and BCAP Code provide that marketing communications must not suggest that gambling can be a solution to financial concerns, an alternative to employment or a way to achieve financial security. The guidance states that marketing communications that unduly emphasise financial motivations for gambling are likely to be regarded by the ASA as a breach of these rules. Portrayals of the rewards of gambling should be reasonable and indicative of the rewards that can be obtained through responsible play; and
  • marketing communications should avoid portrayals that could be interpreted as reckless gambling behaviour such as a character betting all their remaining chips. CAP states that operators should also avoid portrayals of other reckless behaviour that might imply a link to gambling.

The free bets and bonuses guidance meanwhile is similar to previous guidance issued by CAP. It does, however, muddy the waters slightly in respect of what information must be included in adverts “significantly limited by time or space”.

The CAP Code provides that “marketing communications that include a promotion and are significantly limited by time or space must include as much information about significant conditions as practicable and must direct consumers clearly to an easily accessible alternative source where all the significant conditions of the promotion are prominently stated”. This has generally been construed to mean that, if an advert is significantly limited by time or space, as many significant conditions as possible must be stated in the advert itself. By implication, this means that some significant conditions might not appear in the ad itself, as long as they are easily accessible and as many have been included as practicable.

In its new guidance, however, CAP explains that “if a term or condition alters a consumer’s understanding of the offer and is deemed significant it should be stated within the ad itself”. CAP essentially distinguishes between a ‘significant condition’ and a ‘significant condition that alters a consumers understanding of the offer’. In respect of the latter, CAP has made its position clear that it expects all adverts, irrespective of whether they are limited by time or space or not, to include such terms in the ad itself.

What is clear from the guidance is that CAP does not see adverts on an advertiser’s own website to be significantly limited by time and space, diverging from the treatment of such ads by much of the industry. It is evident from recent enforcement action that not only are the ASA continuing to scrutinise advertising in the sector, but that the Gambling Commission is willing to take action too in this area. In such a climate, operators would be wise to err on the side of caution in this respect.