David Clifton: Licensing Expert – Changes loom on the horizon

David Clifton

As I write this, we are just two weeks into the new year – or indeed the new decade, as some would have us believe. Either way, what a start it’s been for the UK gambling industry!

We ended 2019 with confirmation that the newly elected Conservative Party government intends to act speedily to fulfil its General Election manifesto promise – set out in my last Licensing Expert article for SBC News – to review the Gambling Act 2005, which it described as “increasingly becoming an analogue law in a digital age”.

I’m not alone in querying how accurate a criticism that is, but that’s not the point. What is more to the point is that it seems inevitable that the review will be considerably wider-ranging than the limited issues identified in the background briefing notes to the Queen’s Speech, namely online loot boxes and credit card misuse.

In fact, the issue of credit card use for gambling should now be completely off the parliamentary agenda following the Gambling Commission’s decision on 14 January to ban the use of credit cards for all forms of remote gambling and for non-remote betting with effect from 14 April 2020, but more on that later.

However, it seems clear from the furore that arose from the Urgent Question on the deal between the Football Association and bet365 (for media rights for screening FA Cup matches) raised in the House of Commons on 8 January by Carolyn Harris MP (Chair of the Gambling Related Harm All-Party Parliamentary Group that there are more choppy waters ahead in Parliament for the industry.

Philip Davies was the sole MP who spoke otherwise than in damning criticism of the industry, when he suggested that “what is important are measures that actually tackle problem gambling, rather than virtue signalling in this House”.

One MP expressed “anger and utter disgust at the greed and immoral behaviour of the gambling companies”. Another spoke about “the cynical way bet365 hook people into placing bets and gambling during matches, almost grooming people into becoming gamblers” and others added that “betting companies disproportionately target low-income demographics and working-class communities” and “the online environment remains like the wild west”.

Picking up on a story about VIP gambling schemes featured in The Guardian on 2 January, another MP described as “the biggest area of risk” the drive by gambling companies “to get more and more people into VIP rooms, where they give them incentives, such as tickets for football matches …. The biggest abuse takes place in that process, whereby companies drive people who gamble a lot into higher levels of gambling because that is where their profits lie”.

The BGC was quick to respond to certain of the criticisms with the publication of a statement supported by bet365, GVC, Flutter, William Hill and Kindred, saying: “Our members did not seek exclusivity for the rights to screen FA cup games. They are therefore happy for IMG to offer the rights to screen these games to the Football Association or another appropriate body so that the games can be viewed for free by the public with immediate effect”.

 Nevertheless, comment by the Minister responding to the Urgent Question that “nothing is off the table” for the forthcoming review of the Gambling Act should of itself serve as a warning to the industry that it needs to start preparing now its arguments for all of the criticisms that will inevitably be levelled against it once the formal parliamentary review process commences. Come what may, it is likely that a series of legislative changes are looming on the horizon.

As I have already mentioned, the Gambling Commission has announced imposition of a ban on the use of credit cards for all forms of remote gambling (i.e. betting, gaming and lotteries) and for non-remote betting, that will take effect on 14 April 2020.

That came as no surprise to me. Indeed, in my August 2019 Licensing Expert article for SBC News, I forecast that, in the absence of a good convincing argument otherwise being advanced in response to the Commission’s consultation on the subject, a credit card ban was likely to be imposed.

The consultation process has revealed that credit card gambling is disproportionately associated with those at higher risk of gambling harm. The Commission was not persuaded by arguments from some in the industry that “the loss of ‘credit card use’ as a variable in operators’ risk detection algorithms is an adequate reason to continue to permit credit cards for online gambling”.

A new licence condition will be imposed, stating that Licensees must not accept payment for gambling by credit card. This includes payments to the licensee made by credit card through a money service business”. 

The Commission says that “the condition will impose a responsibility on operators to only accept payments via e-wallets in circumstances where the wallet provider can assure the operator that they can prevent payment for gambling by credit card”. It, therefore, urges operators “to make contact with their third-party wallet providers whose payment facilities are made available through the operator’s website or app, to ensure they understand how the wallet provider intends to proceed”.

I know that some online operators have already voluntarily imposed a ban on credit cards. Others will need to take note of the Commission’s expectation that three months’ notice of the compulsory ban will be sufficient for them “to deliver technical and systemic changes to prevent gambling by credit card”. 

The Commission is also maintaining that the credit card ban must “form part of a wider challenge to reduce harms from unaffordable gambling, requiring a holistic approach”. It expects “both remote and non-remote operators, as part of their customer interaction and ‘know your customer’ procedures, to consider factors that might indicate that a customer is spending more money on gambling than they can afford” and that they “should continue to work with financial services to understand what measures can be used to better identify customers who may be gambling beyond their means”.

It has confirmed that “pre-paid cards will not form part of the scope of the ban on gambling with credit cards, insofar as the ban will not extend to pre-paid cards as a payment instrument distinct from credit and debit cards” even though “a pre-paid card could in some circumstances be loaded via funds obtained from a credit card”.

Albeit slightly overshadowed by its credit card ban announcement, the Gambling Commission has also announced that, by no later than 31 March 2020, all UK licensed online gambling operators must participate in GamStop.

Coming 19 weeks after The Guardian mistakenly stated that GamStop “has finally been approved by the industry regulator 18 months after it was supposed to be ready”this latest announcement by the Commission has nevertheless arrived rather sooner than the one month’s formal notice (required under LCCP social responsibility code provision 3.5.5) that all online licence holders are required to participate in a national online multi-operator self-exclusion scheme.

If all of that wasn’t enough for operators to get working on, those who operate casinos (both remote and land-based) have had to jump to action to ensure compliance with the requirements of additional new Money Laundering Regulations and updated Gambling Commission AML/CTF guidance, that came into force on 10 January.

Of crucial importance is that they act immediately to ensure that their risk assessments and AML/CTF policies, procedures and controls are updated. In so doing, they should specifically note that whilst the Commission recognises (and will take into account) that it takes time to implement changes, it nevertheless expects affected operators to (a) invest appropriately (if technology is required to accommodate the changes) and (b) implement the required changes “with the requisite urgency”.

In the absence of any specific such indication from the Commission itself, and in the hope that it might assist casino operators to implement the required urgent AML changes, we have identified the precise changes that have been made to the Commission’s AML/CTF guidance that you can access here.

Finally for this month’s article, operators should remember that the Gambling Commission has now published its initial list of organisations to which its licence-holders may direct their annual financial contribution for gambling research, prevention and treatment. This is important because, with effect from 1 January 2020 all such annual financial contributions (as required by the LCCP social responsibility code provision 3.1.1) must be made solely to organisations that are on such a list.


David Clifton – Director – ‎Clifton Davies Consultancy Limited

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