Published: 11 August 2023 by Felix Faulkner, Imogen Moss, David Inzani & Richard Bradley
As stated in a previous news item, the Gambling Commission (GC) and the Department for Culture, Media & Sport (DCMS) have released three significant consultations following on from the long-awaited White Paper.
Our specialist betting and gaming solicitors have analysed these consultations and this article focuses on the significant parts of the proposed changes to Licence Conditions and Codes of Practice (LCCP). This includes the somewhat controversial financial vulnerability check requirements, Remote Gambling and Software Technical Standards (RTS), and arrangements for Regulatory Panels.
In the first pieces of analysis, we focused on the DCMS’s consultation on proposals for the Land-based gambling sector, which can be read here.
In the next couple of weeks, our solicitors will also release analysis on the DCMS consultation relating to online maximum stake limits.
If you would like us to help you draft a response to any of the consultations, email licensing solicitor, Felix Faulkner who will be more than happy to help you.
This analysis is split into the following 6 topics:
The Gambling Commission is aiming to provide customers greater control over any marketing communications they receive from operators.
The background comes from both research and surveys undertaken by the Commission on free bets and bonuses scheme marketing practices. The GC identified flaws and inconsistences in approach and states that proposals are ‘anchored on the principles of empowerment and choice’.
The biggest concern the Commission is trying to overcome is ‘cross selling’, where customers receive direct marketing about products or offers they have not opted-in to.
Proposals aim to ensure consistency and clarity for both industry and consumers alike, by requiring licensees to make the following options available for opt-in marketing (where relevant):
Licensees should also be clear on the type of products that marketing relates to including:
For clarity, the betting option includes virtual betting, gambling on betting exchanges, betting on lottery products as well as all real event betting. Casino includes slots, live casino, poker and all casino games. Bingo includes only games offered in reliance on a bingo licence e.g., not casino products. Lottery covers any lottery product offered in reliance on a lottery licence.
The Commission acknowledge that some non-remote sectors do not offer account-based play for gambling, which presents additional difficulties as to how direct marketing preferences could be presented to customers.
The rationale behind these changes is to allow existing customers the same opportunity as new customers to manage their marketing preferences and ensure consistency across the industry. The proposals suggests that licensees must be directed to an area of the webpage/app, where they can decide whether to opt in or opt out of offers at the first opportunity after the implementation date, for example upon the next login. By default, the options should be set to opt-out and not pre-selected. Marketing options must be updateable should customers’ change their preference.
The Government White paper set out a clear expectation upon the Gambling Commission to make current test purchasing across the industry more consistent and provide all parties with a better understanding of the risks involved with underage play in smaller venues.
The Commission have acknowledged these concerns, and are proposing three possible changes.
The first, is to remove the current exemption for age verification test purchasing applied to both Category A and B licensees. This exemption currently applies to qualifying betting premises, bingo premises, family entertainment centres and adult gaming centres.
Test purchasing requirements currently apply to a minority of gambling Commission licensees, although, due to the scale of operation of licensees with multiple premises, around 80% of licensed venues are already subject to the requirements. This does of course leave a gap with some venues not caught by the requirement and a potential risk.
The Commission has considered the relatively low cost of test purchasing, around £50 for an individual test, and are proposing to close this gap to help assess the industry’s safeguards to prevent underage gambling.
The second of the changes proposed is to consult on changing the ordinary code of the LCCP to outline that licensees have procedures requiring their staff to check the age of any customer who appears under 25, rather than the current age of 21.
This change is one that the Commission has toyed with for a few years, noting in 2015 when introducing test purchasing as a requirement that “… the retention of the ‘Think 21’ code at this juncture is dependent on the gambling industry continuing to deliver improvements in their ability to prevent access to gambling by children and young persons, in line with the Commission’s strategic goal.”
Although the Commission acknowledge the overall pass rates across the industry is positive, they have concerns with a percentage of results where testers were not challenged at all.
Many operators, as noted in the White Paper, have gone beyond the requirements placed on them and implement ‘Think 25’ voluntarily, and there have been calls within the industry for the Commission to make this change formally across the board.
In implementing both the above proposals, the Commission would alter the wording of the relevant Social Responsibility codes, ordinary codes and update the guidance to operators.
The third and final proposal under this sub-heading is to seek views on how operators make sure their premises have effective age verification procedures when the premises is not directly supervised. The proposal does not have much guidance or direction to consultees on this topic, but merely requests general views and supporting evidence on how licensees meet the requirements in the LCCP through effective policies and procedures.
The Gambling Commission is proposing to make online products safer by reducing the speed and intensity of those products and increasing consumer understanding about game play through a series of changes to existing Remote gambling and software technical standards (‘RTS’) and new requirements. The consultation includes six proposals in this area:
Player-led “spin stop” features
The first proposal is to widen the existing RTS requirement 14E that prohibits features designed to reduce the time for a result to be displayed in online slots (e.g. quick spin, turbo and slam stop) to apply to all online gambling products.
The proposal is based on the Commission’s market impact data and the Patterns of Play Research which shows that the average stake on casino games is higher than it is on slots (although the average monthly amount wagered is higher for slots) and gambling on casino games had the highest loss per minute.
Speed of play
The Commission is proposing to add a new section 14G to RTS 14 Responsible product design, which would require a minimum spin speed of 5 seconds on all casino games (excluding slots and poker).
This follows the implementation of a minimum speed of 2.5 seconds for slot products. The Commission’s intention is to reduce the risk and intensity of non-slots casino games, particularly those that currently play faster than slots. Research cited by the Commission indicates that faster game cycle speed is associated with increased risks to customers.
Instead of applying the same minimum speed of 2.5 seconds that already applies for slots, the Commission is proposing a minimum spin speed of 5 seconds for these games based on sample data on online roulette, blackjack and other games which included virtual, mechanical and ‘live’ versions which are dealt by a croupier. The majority of games in the sample data had a minimum game speed slower than the 2.5 seconds minimum that applies to slots, so the Commission considered that whilst 2.5 seconds would address the issue of a small minority of products playing faster than slots, it would not reduce the intensity of these games overall.
The Commission proposes to extend existing RTS requirement 8 that prohibits autoplay in online slots to include all online products.
Although industry data shows that autoplay is less used for non-slots products, the Commission is concerned that the feature still has the potential to speed up play and remove important opportunities for thought and reflection from customers in other online products.
The Commission also acknowledges that consumers with disabilities or other physical conditions may be affected by the proposal to remove autoplay and invites views and evidence in the consultation.
Effects that give the illusion of “false wins”
The Commission proposes to widen existing RTS requirement 14F that prohibits celebrating wins less than or equal to stake in online slots to include all online casino products.
The prohibition on slots was introduced due to the risk associated with losses designed as wins increasing the enjoyment of non-win game outcome. The consultation acknowledges that the average speed of non-slots products is higher than slots, and losses designed as wins are seen less often in non-slot products. However, the Commission considers that the difference between the speed of casino games and slots is close enough that there is still the risk of positive reinforcement in non-slot products, where customers may be misled into thinking their losses are lower than they are or are encouraged to feel more positively about losing.
Operator-led simultaneous products
The Commission proposes to extend existing RTS requirement 14C that restricts operator-led functionality to play multiple simultaneous games in online slots to all online gaming (including bingo) and betting on virtual events.
The proposals would mean that operators could not offer functionality designed to allow customers to play multiple versions of a game at the same time, such as two roulette tables, or multiple games of different types to be played at the same time, such as roulette while playing poker. The proposals would not prohibit customers from playing multiple poker tables at the same time or from purchasing multiple bingo entries.
The proposals are based on the health survey and Patterns of Play research that show customers gambling on multiple products scoring higher on the Problem Gambling Severity Index and customers gambling on both sports betting and gaming products being found to lose more than accounts that only gambled on one or the other. The Commission highlights the reduced thinking time and increased risks to customers caused by gambling on multiple products at once.
Display of net position and time spent
The Commission proposes to widen existing RTS requirements 2E and 13C for online slots displaying net time and spend to apply to other casino products (excluding peer to peer poker).
Following the introduction of the existing RTS requirements for slots, the intention of the proposals is to empower consumers by having information upfront. Peer to peer poker has been excluded from the proposals based on the Patterns of Play research identifying poker as a lower cost activity over time compared to slots and other casino products.
Possibly one of the most controversial elements of the current consultations, which could have a significant impact on the obligations placed on remote operators.
The Commission states that it has identified three key risks of gambling harm in the remote sector connected with matters such as binge gambling, unaffordable losses over time and financially vulnerable customers.
Key proposals are: –
Financial vulnerability check – Triggered by a net loss of £125 in a rolling 30-day period or £500 net loss in a rolling 365-day period
The Commission expects that approximately 20% of customer accounts will be caught by the ‘light touch’ checks, which include:
Financial risk – enhanced assessment: Triggered by a net loss of £1,000 in a rolling 24-hour period (£500 for under 25s)
Financial risk -enhanced assessment: triggered at a net loss of £2,000 in a rolling 90-day period (£1,000 for under 25s)
Further considerations and actions
Following any assessment, operators must take proportionate action where risk is identified, record the rational for any decisions made and any action taken must be completed manually rather than solely by automated means.
Net loss is defined as the loss of deposited money and does not include the loss of re-staked winnings (from the particular operator, not other operators) or the loss of accrued bonus funds.
In the context of betting transactions and assessment of net loss, the loss would be assessed at the point the bet is settled. Whilst this does allow for customers to be potentially exposed to significant losses where there are multiple live bets in play, operators are already required to consider such behaviours within the existing customer interaction requirements of the LCCP.
Licensees must be transparent with their customers by informing them where they will obtain information from third parties to support their understanding of financial risk and such details must be contained within relevant terms and conditions.
Consideration must also be given to data protection principles, by providing clarity within Privacy Notices and Ts and Cs. Importantly, any financial data collected must only be used for the purpose of completing financial checks.
5. Extending Personal Management Licences requirements
Under the current LCCP requirements, unless an operator falls within the small-scale operator exemption, an individual is required to hold a Personal Management Licence (PML) if they are responsible for one or more of the following specified management functions:
The consultation seeks to clarify and extend the roles that would be caught under the requirement for a PML, in order to drive personal accountability and responsibility at senior levels of management structures.
The consultation includes:
6. Changes to Regulatory Panels
Although not contained in the Government’s White Paper, the consultation proposes changes to the composition and decision-making process of the Commission’s regulatory panels.
Two changes are proposed:
The consultation runs until the 18th of October 2023 and the Commission has stated that the majority of the proposals considered will provide a minimum of a three-month notice period between publication of its findings and a deadline for any implementation.
How to respond
The consultation will close at 18th October 2023 and can be responded to here Summer 2023 consultation on proposed changes to Licence Conditions and Codes of Practice (LCCP), Remote Gambling and Software Technical Standards (RTS), and arrangements for Regulatory Panels – Responding to this consultation – The Gambling Commission – Citizen Space
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