The Gambling Act Review – what do we know so far?

Following the announcement on 8 December 2020 that the Government has launched its review of the Gambling Act 2005, the Terms of Reference and Call for Evidence have now been published, together with the Government Response to the House of Lords Gambling Industry Committee Report: Social and Economic Impact of the Gambling Industry.

So, what can we tell so far?

For those who are used in recent times to reading one-sided reports clearly designed to support a pre-determined position, it is worth noting that the Terms of Reference, the questions posed as part of the Call for Evidence and the Government Response to the House of Lords Gambling Industry Committee are refreshingly well considered, balanced and evidence-led. The Government has been generally non-committal in relation to the recommendations made by the House of Lords Report, instead highlighting the measures already in place and referring to the review that has now been launched. For the purposes of the review, the Government seeks broad evidence from all parties with an interest in the way that gambling is regulated, including for example broadcasters and sports bodies in relation to advertising and sponsorship. This should give some hope to anyone concerned that this exercise is a fait accompli.

The call for evidence is split into six categories:

1. Online protections – players and product: The areas of focus are:
   1. Greater controls at the product level, such as stake, speed, prize limits and pre-release testing.
   2. Greater controls at the account level, such as deposit, loss and spend limits.
   3. Universal limits vs player specific limits (based on affordability and other considerations)
   4. Better use of consumer data collected by operators.
   5. How gambling losses are split across the player cohort (e.g. what percentage of GGY do the top and bottom 10% account for and how does this vary by product).
   6. More effective use of player set limits and other existing controls.
   7. The risk posed by white label arrangements.
   8. The risk posed by blockchain and crypto currencies.

1. Advertising, sponsorship and branding. The areas of focus are:
   1. Benefits and harms of allowing operators to advertise.
   2. Effectiveness of safer gambling messaging.
   3. Benefits and harms of promotional offers.
   4. Impact of gambling sponsorship arrangements across sports, esports and other areas.

1. The Gambling Commission’s powers and resources: The areas of focus are:
   1. Evidence of a black market for gambling and the ease with which it can be accessed.
   2. Are the Gambling Commission’s powers for investigation, enforcement and sanctioning sufficient?
   3. Changes to the fee system.
   4. Barriers to high quality research.
   5. Effective systems to recoup regulatory and societal costs of gambling (e.g. fees, taxes, levies etc).

1. Consumer redress: The availability and suitability of redress arrangements for individual customers who feel they have been treated unfairly by gambling operators. (And here it is notable that the focus is on the mechanism for redress and there is no mention of the statutory duty of care recommended by the House of Lords Gambling Industry Committee.)
2. Age limits and verification: Children’s access to Category D slot machines, the effectiveness of age controls and the age limit for society lotteries. The areas of focus include extra protections for those aged 18-25.
3. Land-based gambling: The outcome of changes to the land-based sector introduced in the Gambling Act 2005, particularly for casinos, and whether they are still appropriate in the digital age.

There are 45 questions in total (set out in full below) and no real surprises in the areas being explored as part of the review.

Affordability

Less positive for the industry though, is that the Government appears to have confirmed (although it is not entirely clear) that the Gambling Commission’s consultation (including the implementation of any changes) relating to introduction of affordability checks will continue in parallel with the Government’s wider review.

In the Government’s response to the House of Lords Gambling Industry Committee Report, it states: “As part of the Review of the Gambling Act, we are seeking evidence on the case for further controls on online gambling accounts, including those based on affordability. However, we are not waiting for the Gambling Act Review to take action in this area. The Gambling Commission is, as recommended by the Committee, already consulting and calling for evidence on proposals to strengthen requirements on licensees to identify and interact with customers who may be at risk of harm.” In the Terms of Reference it states: “The Review of the Act is an opportunity to step back and take a wider look across the issues, but improvements can and will continue to be made separately to the Review as well. The Gambling Commission is currently consulting on tighter requirements for operators to protect customers, including on interventions and affordability checks.”

This seems strange given that the Government on the one hand is commencing a major and wide-ranging review of the primary legislation on which the gambling industry has operated for the past 13 years, whilst the regulator at the same time pushes on with arguably its most important and potentially significant regulatory change since the Gambling Act came into force. (The only comparable fundamental change in the basis of gambling regulation was to bring offshore-based operators within the Commission’s jurisdiction but that was of course achieved by legislation and not a mere change in the LCCP). The impact that the introduction of affordability checks at thresholds set by the regulator could have should not be under-estimated. It would constitute a fundamental shift in policy and have significant ramifications in a number of areas – indeed a number of the areas that the Government is considering as part of its review. But, as things stand, the Gambling Commission’s affordability consultation will end in January 2021 (with any changes taking effect in May 2021) – whilst the Government’s call for evidence concludes in March 2021 with a white paper expected later in the year. Some have argued such timing and implementation of the affordability checks could render much of the Government’s review redundant. The logic of running two separate processes almost in tandem – the subject matter of which are so intertwined and the output of which is so potentially fundamental and far-reaching – is far from clear, particularly given the statement by Nigel Huddleston, the Minister with responsibility for gambling, in the second paragraph of his foreword to the review that: “We respect the freedom of adults to choose how they spend their money”. Introducing affordability thresholds would be intended to have precisely the effect of restricting how consumers choose to spend their money.

Other areas of note

Duty of care: As mentioned above, the House of Lords Committee recommended that operators be subject to a statutory duty of care such that customers who suffer loss as a result of an operator’s breach of the LCCP could sue to recover that loss. In its response, the Government completely ignores the duty of care concept whilst emphasising that operators should be held accountable for their failings and that customers should have an effective means of redress; and in the Review, the Government seems to be thinking that an ombudsman would be the best means of achieving this. The questions posed by the Government as part of the Call for Evidence reference the dangers of providing problem gamblers with financial compensation, which gives a further indication of the Government’s current view on consumer redress arrangements for the industry.

Licensing of affiliates: Many commentators have felt that affiliates not being subject to regulation is one of the main lacunae in the 2005 Act and the House of Lords Committee agreed, recommending that affiliates should be licensed by the Commission and that operators should not deal with unlicensed affiliates. However, this was another recommendation not followed by the Government as it believes that the current system whereby operators are responsible for affiliates’ infractions is effective.

Sport and advertising: The House of Lords Committee recommended a hard line on sport and advertising saying that gambling companies should no longer be allowed to advertise on the shirts of sports teams or any other part of their kit and that there should be no gambling advertising in or near any sports grounds including in sports programmes. Whilst this is something on which the Terms of Reference call for evidence, the Government has not gone down the path of accepting these recommendations in its response. Rather, it points out that sponsorship is a significant source of income for British sporting bodies who are free to enter into commercial agreements with gambling operators “as long as these are carried out in a socially responsible manner”. This will give some comfort to the many sports teams (including football clubs outside the Premier League) for whom gambling sponsorship and advertising income is a key revenue source, particularly given the impact of Covid.

Bet to view: One of the more extreme recommendations of the House of Lords Committee was that online operators should not be able to offer live streaming of sports events conditional on a customer having an account or placing a bet with an operator and that a sports body should not be able to sell streaming rights to gambling operators. These recommendations came out of a media-induced hysteria surrounding early round FA cup matches being streamed by online operators where broadcasters had chosen not to cover those matches. The Government’s considered response is to reject this recommendation pointing out that “the requirement to have a funded – and therefore age and identity-verified- account to access the streams means that under 18s or those who have self-excluded are prevented from using betting websites to watch sports”.

Presumption in favour of gambling: The House of Lords Committee recommended that Section 22 of the Gambling Act should be amended to reverse the presumption in favour of granting gambling licences. Currently, Section 22 provides that the Commission shall “permit gambling insofar as the Commission thinks it reasonably consistent with pursuit of the licensing objectives”. The Committee recommended this should be changed so that the Commission should not permit gambling unless it believes that to do so will be consistent with the licensing objectives. The Government rejected this recommendation stating that “we have not seen evidence which demonstrates that the existing wording of Section 22 of the Act is a barrier to the Commission or the government’s efforts to minimise gambling harm”.

Evidence: Many commentators have remarked upon the paucity of a robust evidence base against which to assess and determine policy. Several of the Committee’s recommendations address this including: that the Gambling Prevalence Survey be reinstated; a longitudinal survey in relation to problem gamblers should be commissioned; and that independent research should be commissioned to establish links between gambling advertising and gambling-related harm. Without quite going so far as to accept each of the Committee’s research recommendations, the Government is broadly sympathetic to their concerns and says that it is “working with experts to develop a model that delivers the data and insights we need to more fully understand gambling in Britain” and that “The Government agrees that it is important to build the evidence base on gambling harms with high quality, independent research and is committed to working to this goal. We will be considering how to ensure the availability of high quality evidence to support policy making as part of the Gambling Act review”.

In more detail - Aim & Objectives

Setting out its aim for the review, the Government states: “The government wants all those who choose to gamble in Great Britain to be able to do so in a safe way. The sector should have up to date legislation and protections, with a strong regulator with the powers and resources needed to oversee a responsible industry that offers customer choice, protects players, provides employment, and contributes to the economy.”

The Government goes on to state that its objectives through the review are to:

• Examine whether changes are needed to the system of gambling regulation in Great Britain to reflect changes to the gambling landscape since 2005, particularly due to technological advances.
• Ensure there is an appropriate balance between consumer freedoms and choice on the one hand, and prevention of harm to vulnerable groups and wider communities on the other.
• Make sure customers are suitably protected whenever and wherever they are gambling, and that there is an equitable approach to the regulation of the online and the land-based industries.

Timing

The call for evidence will run for 16 weeks and end on 31 March 2021. Following which, the Government will then assess the evidence presented, alongside other data, and aims to set out its conclusions and proposals for reform in a white paper “next year”.

The questions posed in the Call for Evidence

The following questions are contained within six separate categories:

1. Online protections – player and products

• Q1: What evidence is there on the effectiveness of the existing online protections in preventing gambling harm?
• Q2: What evidence is there for or against the imposition of greater controls on online product design? This includes (but is not limited to) stake, speed, and prize limits or pre-release testing.
• Q3: What evidence is there for or against the imposition of greater controls on online gambling accounts, including but not limited to deposit, loss, and spend limits?
• Q4: What is the evidence on whether any such limits should be on a universal basis or targeted at individuals based on affordability or other considerations?
• Q5: Is there evidence on how the consumer data collected by operators could be better deployed and used to support the government’s objectives?
• Q6: How are online gambling losses split across the player cohort? For instance what percentage of GGY do the top and bottom 10% of spenders account for, and how does this vary by product?
• Q7: What evidence is there from behavioural science or other fields that the protections which operators must already offer, such as player-set spend limits, could be made more effective in preventing harm?
• Q8: Is there evidence that so called ‘white label’ arrangements pose a particular risk to consumers in Great Britain?
• Q9: What evidence, if any, is there to suggest that new and emerging technologies, delivery and payment methods such as blockchain and crypto currencies could pose a particular risk to gambling consumers?
• Q10: Is there any additional evidence in this area the government should consider?

1. Advertising, Sponsorship & Branding

• Q11: What are the benefits or harms caused by allowing licensed gambling operators to advertise?
• Q12: What, if any, is the evidence on the effectiveness of mandatory safer gambling messages in adverts in preventing harm?
• Q13: What evidence is there on the harms or benefits of licensed operators being able to make promotional offers, such as free spins, bonuses and hospitality, either within or separately to VIP schemes?
• Q14: What is the positive or negative impact of gambling sponsorship arrangements across sports, esports and other areas?
• Q15: Is there any additional evidence in this area the government should consider, including in relation to particularly vulnerable groups?

1. Gambling Commission Powers and Resources

• Q16: What, if any, evidence is there to suggest that there is currently a significant black market for gambling in Great Britain, or that there is a risk of one emerging?
• Q17: What evidence, if any, is there on the ease with which consumers can access black market gambling websites in Great Britain?
• Q18: How easy is it for consumers to tell that they are using an unlicensed illegal operator?
• Q19: Is there evidence on whether the Gambling Commission has sufficient investigation, enforcement and sanctioning powers to effect change in operator behaviour and raise standards?
• Q20: If existing powers are considered to be sufficient, is there scope for them to be used differently or more effectively?
• Q21: What evidence is there on the potential benefits of changing the fee system to give the Gambling Commission more flexibility to adjust its fees, or potentially create financial incentives to compliance for operators?
• Q22: What are the barriers to high quality research to inform regulation or policy making, and how can these be overcome? What evidence is there that a different model to the current system might improve outcomes?
• Q23: Is there evidence from other jurisdictions or regulators on the most effective system for recouping the regulatory and societal costs of gambling from operators, for instance through taxes, licence fees or statutory levies?
• Q24: Is there any additional evidence in this area the government should consider?

1. Consumer Redress

• Q25: Is there evidence of a need to change redress arrangements in the gambling sector?
• Q26: If so, are there redress arrangements in other sectors or internationally which could provide a suitable model for the gambling sector?
• Q27: Individual redress is often equated with financial compensation for gambling losses. However, there may be risks associated with providing financial lump sums to problem and recovering gamblers, or risks of creating a sense that gambling can be ‘risk free’. Are there other such considerations the government should weigh in considering possible changes to redress arrangements?
• Q28: Is there any additional evidence in this area the government should consider?

1. Age Limits and Verification

• Q29: What evidence is there on the effectiveness of current measures to prevent illegal underage gambling in land based venues and online?
• Q30: Is there evidence of best practice, for instance from other jurisdictions, in how to prevent illegal underage gambling?
• Q31: What, if any, evidence is there on the number of 16 and 17 year olds participating in society lotteries?
• Q32: What, if any, evidence is there to show an association between legal youth engagement in society lotteries and problem gambling (as children or adults)?
• Q33: Is there comparative evidence to support society lotteries and the National Lottery having different minimum ages to play?
• Q34: What are the advantages and disadvantages of category D slot machine style gaming machines being legally accessible to children?
• Q35: Is there evidence on how the characteristics of category D slot machine style gaming machines (for instance whether they pay out in cash or tickets) factor into their association with harm in childhood or later life?
• Q36: What, if any, is the evidence that extra protections are needed for the youngest adults (for instance those aged between 18 and 25)?
• Q37: What evidence is there on the type of protections which might be most effective for this age group?
• Q38: Is there any additional evidence in this area the government should consider?

1. Land based Gambling

• Q39: What, if any, changes in the rules on land based gambling would support the government’s objectives as set out in the document? Please provide evidence to support this position, for instance how changes have worked in other countries.
• Q40: What evidence is there on potential benefits or harms of permitting cashless payment for land based gambling?
• Q41: Is there evidence that changes to machine allocations and/ or machine to table ratios in casinos to allow them to have more machines would support the government’s objectives?
• Q42: What is the evidence that the new types of casino created by the 2005 Act meet (or could meet) their objectives for the sector; supporting economic regeneration, tourism and growth while reducing risks of harm?
• Q43: Is there evidence on whether licensing and local authorities have enough powers to fulfil their responsibilities in respect of premises licenses?
• Q44: Is there evidence that we should moderately increase the threshold at which local authorities need to individually authorise the number of category D and C gaming machines in alcohol licensed premises?
• Q45: Is there any additional evidence in this area the government should consider?