UK Law: Operators need power to terminate affiliate rights

In a series of articles, David Clifton, director at licensing and gambling consultancy Clifton Davies, takes a look at the changes to the UK’s gambling licensing laws which are due to be in place by October.

How will the forthcoming changes affect affiliates? Will they have to remove any adverts from non-UK licensed operators? What about editorial-led content about non-UK licensed bookmakers?

 It is already now an LCCP requirement that existing holders of Gambling Commission operating licences take responsibility for third parties (including affiliates) with whom they contract for the provision of any aspect of their business related to licensed activities and ensure that the terms on which they contract with such third parties:

• require the third party to conduct themselves insofar as they carry out activities on behalf of the licensee as if they were bound by the same licence conditions and subject to the same codes of practice as the licensee,
• oblige the third party to provide such information to the licensee as they may reasonably require in order to enable the licensee to comply with their information reporting and other obligations to the GC and
• enable the licensee, subject to compliance with any contractual dispute resolution provisions, to terminate the third party’s contract promptly if, in the licensee’s reasonable opinion, the third party is in breach of contract or has otherwise acted in a manner which is inconsistent with the licensing objectives.

A similar requirement will apply to all applicants under the transitional process when their new licences come into force on 1 October this year.

All holders of remote licences must ensure in particular:

• that contracts with third parties who provide user interfaces enabling customers to access their 
remote gambling facilities:
  • include a term that any such user interface complies with the Gambling Commission’s technical standards for remote gambling systems; and
  • enable them, subject to compliance with any dispute resolution provisions of such contract, to terminate the third party’s contract promptly if, in the licensee’s reasonable opinion, the third party is in breach of that term.
• that the terms on which they contract with their affiliates enable them to terminate the affiliate’s rights promptly (subject to compliance with any contractual dispute resolution provisions) if, in the licensee’s reasonable opinion, the affiliate is in breach of a relevant advertising code of practice.

The above said, the Commission has indicated that the ability to terminate does not mean that contracts should be terminated in trivial situations or where unforeseen errors are swiftly put right and contractual language will need to be phrased carefully to reflect this.

Affiliates seeking to drive traffic to non-British licensed operators after 30 September 2014 will need bear in mind that:

• the definition of advertising in section 327 of the Gambling Act 2005 is very broad,
• section 330 of the 2005 Act provides that “a person commits an offence if he advertises unlawful gambling” and
• gambling is unlawful if it requires a licence in order for the gambling to take place, but at the time of advertising no such licence is in place.

The above said, in my view the 2005 Act was not intended to stifle editorial-led content about non-British licensed bookmakers or other gambling operators and as long as such content does not include anything which is blatantly designed to:

• encourage British consumers to take advantage of facilities for gambling offered by operators unlicensed by the Gambling Commission or
• bring information about such gambling facilities to such people’s attention with a view to increasing the use of those facilities,

it should be possible to argue that it escapes classification as advertising under the statutory definition of that word.

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Anyone wanting to contact David about the issues raised in this week’s series of Clifton Davies’ articles can email him at [email protected] or via the website at www.cliftondavies.com