David Clifton: Licensing Expert – Win or lose…do it fairly!

David Clifton

The Competition and Markets Authority and the Gambling Commission have been working together since October 2016 to stamp out unfair terms and conditions of, and misleading practices by, UK licensed online gambling operators.

As anticipated from a speech given by CMA Project Director George Lusty at last November’s Gambling Commission “Raising Standards” conference, things have now come to a head with an announcement on 1 February by the CMA that William Hill, Ladbrokes and PT Entertainment have each provided undertakings  to it, under which they formally commit to change the way they offer bonus promotions.

These undertakings are designed to ensure that customers can always access and release their own money. The three operators have also agreed to be more upfront and clear in the terms and conditions of their bonus promotions.

All other online gambling operators are going to have to do the same because the Gambling Commission is requiring them to make equivalent changes to their promotions in order to ensure compliance with (a) consumer protection law, (b) licence condition 7.1.1 (compliance with terms) and (c) LCCP social responsibility code provision 5.1.7 (marketing of offers).

The changes are designed to ensure that, amongst other things:

  • players will not be required to play multiple times before they can withdraw their own money,
  • operators must ensure that any restrictions on gameplay are made clear to players, and cannot rely on vague terms to confiscate players’ money, and
  • operators must not oblige players to take part in publicity.

The time limit within which the changes must be made is extremely short. They must all be completed by 28 February 2018, with the sole exception of the implementation of prompts for consumers when they are playing with restricted funds (i.e. those that are subject to promotional play restrictions and/or wagering requirements), in relation to which a deadline of 31 July 2018 applies. The Gambling Commission’s letter to operators can be viewed here

A complete list of changes required and additional information can be found here, but in summary the changes cover important issues of transparency, restrictions on withdrawing deposits and deposit winnings, promotional play restrictions, compulsory publicity (whether in relation to online gaming or otherwise) and specific requirements are imposed in relation to free bets and account restrictions in the context of sports betting.

In addition, operators are required to report by 31 July 2018 on:

  • the changes made to general and bonus terms and conditions, internal policies, marketing and technical practices to implement the specified requirements, and
  • how the changes have been embedded in internal policies, guidance and training materials for employees, providing copies of such documents.

The CMA has published a “60-second summary” list of “Do’s and Don’ts for the online gambling industry” arising from the above, which recommends the following:

Do:

  • regularly review your terms and practices to ensure they are fair and comply with consumer
  • clearly and promptly communicate terms and conditions so customers know what to expect
  • give customers the information they need to decide if a promotion is right for them
  • allow customers to exit promotions at any time with their remaining deposit, plus any winnings from play with their deposit, and make this opportunity clear to them
  • ensure customers can clearly distinguish between playing with bonus funds and playing with their own money.

Don’t:

  • if you offer customers a ‘free bet’, change the deal once they have started playing
  • deny customers access to their own money – including winnings earned from their deposits
  • attach complicated or unfair play restrictions to customer deposits
  • require customers to take part in publicity

The Commission has made it clear that, in the coming months, it will undertake compliance activity to test how operators are making the above-mentioned changes. It says that “where action is not taken or is insufficient, we will not hesitate to intervene further, including by taking enforcement action where necessary”.

Coinciding with the CMA’s announcement, Sarah Gardner, Gambling Commission Executive Director is quoted as saying: “As the gambling regulator, we will not hesitate to take action against those that do not treat their customers fairly. The principles set out by the CMA today make real progress in making gambling fairer and safer for customers. Gambling firms must now ensure that the terms applied to their promotions are clear, so that customers can understand the deals they are signing up to and what they need to do to fully benefit from promotions. We support the CMA’s findings and expect all online gambling businesses to take immediate action to review their practices in line with these findings, in the same deadlines outlined. If firms cannot comply, they must remove any promotions until they can.”

The CMA’s investigations continue into other areas of potential concern in the online gambling sector, such as terms and practices in respect of withdrawals.

The issue of unfair terms also forms a central part of the Gambling Commission’s recently launched consultation entitled Proposed changes to licensing conditions and codes of practice linked to the fair and open licensing objective – aimed at ensuring that gambling operators are being fair and open with consumers.

The Commission says that the consultation is “based on evidence of potential harm or unfair treatment to consumers, concerns about lack of compliance with consumer protection legislation, declining public trust in gambling, and concerns about the impact of gambling on children and young or vulnerable people”, all of which are by now very familiar themes emanating from the regulator. 

In relation to unfair terms, LCCP changes are proposed to:

  • make clearer that licence-holders must obey relevant consumer protection legislation at all stages of dealing with consumers, rather than merely when designing marketing materials, and
  • make it easier for the Commission to take action if it thinks a licence-holder is not following the relevant rules.

Changes are proposed to marketing and advertising requirements in the LCCP in order to ensure that licence-holders adhere to the UK Advertising Codes, minimise the risk of misleading advertising, introduce a new requirement to prevent consumers from receiving ‘spam’ marketing by email or SMS and to underline to licence-holders that they are responsible for the actions of any third party organisations that they use (including affiliates) if they do not abide by any of these requirements.

The consultation proposes the introduction of an eight-week time limit for licence-holders to deal with complaints and disputes. It also seeks views on whether the Commission should introduce a standard of “readability” that all licence-holders must meet when preparing consumer-facing material to make sure that they are clear and transparent.

Responses to the 17 questions posed in the consultation document are invited by 5pm on 22 April 2018, preferably by way of a response template that is accessiblehere, to be sent by email to  consultation@gamblingcommission.gov.uk, although it can alternatively be sent by post to: “Proposals linked to ‘Fair and Open’ consultation”, Gambling Commission, Victoria Square House, Victoria Square, Birmingham B2 4BP.

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David Clifton – Director – ‎Clifton Davies Consultancy Limited

The Betting industry’s regulatory agenda and current context will be discussed at the upcoming ‘Betting of Football Conference’ (#bofcon – Stamford Bridge London -20-23 March 2018). Click on the below banner for more information