Hope For Gamblers Seeking Compensation? Gambling Law Reform and the Creation of a Gambling Ombudsman
On 27 April 2023, The Rt Hon Lucy Frazer- Secretary of State for Digital, Culture, Media and Sport (“DCMS”) – announced the Government’s long awaited proposed reforms of the gambling landscape: this followed a comprehensive Review and 16,000 responses to a Call for Evidence from key stakeholders including Operators, Gambling Charities and Research Groups.
Background and Balance- A Dichotomy
To say that reform of the gambling sector is overdue would be trite. The Gambling Act 2005 was enacted in a different world where land-based gambling in smoky bookies and casinos still predominated. Social and technological changes have disrupted this model with customers now able to bet around the clock on Smart Phones across a more diverse range of activities than ever before. This clearly increases risk to gamblers: for some betting on Olympic volleyball or the Czech Third Division on a Sunday night to try and recoup a weekend’s heavy losses has become a reality. And if a gambler loses again do they even bother with work on the dreaded Monday?
And that is where the challenge for law-makers lies: protecting consumer freedom of choice but also enshrining procedures to protect them from the perils of unaffordable losses and addiction. This quite rightly is at the kernel of the White Paper so has it been successful in establishing a balance of sorts? Or is it likely to?
Key Areas of Focus
The White Paper addresses the above issues across 6 key areas: Online protections for players and products, marketing and advertising, Gambling Commission powers and resources, dispute resolution and customer redress, children and young adults and land-based gambling.
I shall take each in turn.
Online protections for players and products
The Gambling Commission will consult on two forms of financial risk check. First, background checks at moderate levels of spend to check for financial vulnerability indicators such as County Court Judgments. It is proposed that these should take place at £125 net loss within a month or £500 within a year. Second, at higher levels of spend which may indicate harmful binge gambling or sustained unaffordable losses. Thresholds of £1,000 net loss within 24 hours or £2,000 within 90 days are proposed which should be the catalyst of a more detailed risk-based consideration of a customer’s financial position. It is also proposed that for enhanced checks should be halved for those aged 18 to 24 given evidence on increased risk within this demographic.
The new financial risk checks/limits will be delivered via Gambling Commission powers with initial Gambling Commission consultation due to commence in the summer of 2023.
Furthermore, a stake limit for online slots is proposed of between £2 and £15 per spin to structurally limit the risks of harmful play plus greater protections for the 18 to 24-year-old community. This will include option of a £2 stake limit per spin; a £4 stake limit per spin; or an approach based on individual risk.
The new stake limit will be delivered via secondary legislation with DCMS consultation to commence in the summer of 2023.
Marketing and advertising
The White Paper recognises that aggressive internal and external advertising can exacerbate gambling harms: especially in vulnerable gamblers. The Gambling Commission has been proactive in this area and has introduced restrictions on VIP schemes and free bets to make sure these are not targeted at gamblers demonstrating significant indicators of harm. The Gambling Commission will consult on strengthening these controls by reviewing the design and targeting of free bets and bonuses-and re-wagering and time limit requirements-so as to not precipitate excessive or harmful gambling. It is also intended that customers will have greater control of the marketing messaging they receive with ‘opt-ins’ for free bets and other gambling products.
The White Paper acknowledges the work that some major Operators have done through on-line platforms in seeking to reduce harms precipitated by marketing and advertising, including the facility for customers to opt-out of all marketing. It is considered that the Operators ought to go further by using technology to target marketing away from children and vulnerable people using the functionality and profiling available to exclude those under 18 and/or showing signs of harm.
The White Paper acknowledges that advertising rules have changed to prohibit prominent sportspeople, in particular Premier League footballers, from appearing in gambling adverts, on the grounds of their strong appeal to children. The Premier League has announced that it will remove gambling logos from the front of players’ shirts from the 2026/27 season. It is hoped that this will reduce children’s incidental exposure to gambling logos while watching football and particularly via products such as stickers and video games; as well as reducing the direct association with top players.
The changes proposed in the marketing and advertising space are to be delivered through a combination of Gambling Commission powers/consultation and voluntary action.
Gambling Commission powers and resources
The White Paper recognizes that the Gambling Commission- the Industry regulator- must be able to exercise its statutory powers to meet the challenges presented by gambling in the digital age: the size and scale of operators, technology, vulnerable customers. It is proposed that more powers will be given to the Gambling Commission through legislation to augment controls on operators and to enable it to use its enforcement powers to full capability where breaches are identified.
To combat the baleful prospect of black market gambling it is intended to provide the Gambling Commission with the statutory powers to pursue court orders requiring, for example, ISPs to block access to illegal gambling sites. A review of Gambling Commission fees to allow it to perform its enlarged function will take place in 2024 through DCMS consultation.
The government will also introduce a statutory levy paid by Operators and collected and distributed by the Gambling Commission to fund research, education and treatment of gambling harms. It will launch a consultation on the details of its design including proposals on the total amount to be raised by the levy and how it will be proportionately and fairly constructed. While the power to create such a levy has existed since 2005 no government has used it to date: with the betting industry providing financial support for tackling problem gambling on a voluntary basis.
Dispute resolution and customer redress
It has been a source of considerable frustration for many customers that they effectively have no route- save costly legal action- to pursue claims for social responsibility, gambling harm and safer gambling breaches committed by the Operators. An unfortunate lacuna has persisted in the law in that ADR providers do not have the jurisdiction to deal with such matters and the Gambling Commission cannot impel Operators to repay individual customers.
A Gambling Ombudsman is long overdue and the White Paper states:
“We will work with industry and all stakeholders in the sector to create an ombudsman that is fully operationally independent and is credible with customers. The body will adjudicate complaints relating to social responsibility or gambling harm where an operator is not able to resolve these.”
It is hoped that Operators will co-operate with the Ombudsman on a voluntary basis to achieve fair outcomes and redress to customers where required however if this is not forthcoming then it is stated that legislation will be introduced to ensure compliance.
The process for appointment of the Ombudsman is to commence spring/ summer 2023 with the expectation that the Ombudsman to be accepting complaints within a year.
Children and young adults
Safeguarding children from gambling-related harm is established as a clear priority. While it is noted that self-reported gambling participation by 11 to 16-year-olds has fallen substantially over the last decade (and most forms of gambling are already illegal for under 18s) protections will continued to be strengthened through a variety of means.
This includes working with the sector and closing remaining gaps so that under 18s can do no forms of gambling either online, via fruit machines that pay cash, or on widely accessible scratch cards. More robust age verification procedures are to be enshrined and additional protections for the 18-24 year old group for example (and as above) by a lower stake limit for online slots games.
The above will be delivered by a combination of voluntary action and secondary legislation, followed by primary legislation when Parliamentary time allows with initial DCMS consultation on secondary legislation on cash pay-out machines through the summer of 2023
The White Paper proposes that Land Based casinos of all sizes be permitted to allow sports betting and offer credit facilities to visitors from abroad subject to stringent checks to be established by the Gambling Commission. There will also be a consultation to develop options for cashless payments given the ban on the direct use of debit cards.
The White Paper proposed that the existing 80:20 ratio of category B and C/D machines in land-based venues, such as bingo halls and arcades, should be scrapped in favour of a 50:50 ratio.
This above will be delivered through a combination of legislation and Gambling Commission powers with a DCMS consultation on outstanding issues in summer 2023.
Comment: Has the right balance been achieved?
Many (the author included) consider that the changes- while establishing a progress of sorts- have not gone far enough in addressing gambling harm and addiction.
- Any meaningful affordability checks will only be precipitated when net losses are over £1,000 in 24 hours. Research shows that the average family disposable income in the UK is £500 per month so checks ought to carried out at lower levels. While ‘frictionless’ checks are to be established for lower level losses (£125 net loss within a month or £500 within a year) it is doubtful whether these will provide any meaningful interaction with the customer to establish risk of harm or vulnerability or financial hardship.
- The lower stake limit for online slots for the 18-24 year old demographic is welcome news but should it not apply to the 25-30 year old bracket too who may be equally vulnerable? And perhaps more groups besides? The distinction seems arbitrary.
- The damage caused by customers being afforded VIP status and allowed access to free bets and bonuses and gifts is incalculable in terms of creating and feeding gambling addiction. Consideration ought to have been given to outlawing these practices completely by legislation rather than continuing to allow the Gambling Commission to police this dangerous territory.
- The incidental exposure to gambling logos while watching football and particularly via products such as stickers and video games, as well as the direct association with star players cannot be underestimated. The Premier League has announced that it will remove gambling logos from the front of players’ shirts from the 2026/27 season. Why wait that long?
- The establishment of a Gambling Ombudsman is good news. However is relying on voluntary participation of the Operators a good idea? Providing the fledging authority with a statutory remit (akin to the Financial Ombudsman Service) would have been a better way to ensure compliance and fair outcomes for customers who have suffered losses as a result of social responsibility, gambling harm and safer gambling breaches by the Operators. Details are sketchy too: there is no indication as to what criteria will be established to determine the jurisdiction of the Ombudsman and the qualifying criteria of any claim.
- While on-line operators may be licking their wounds as a result of the proposals land-based casino owners are likely to be much more content with the position. Is there an inherent risk that irresponsible gambling may move back to the High Street?
- Many of the changes proposed in the White Paper are to be delivered by Gambling Commission powers. Are they fit for purpose? The David of 250 employees based in Birmingham against the Goliath of multi-national operators? Can the Gambling Commission effectively deploy any new powers they are furnished with?
- It is nearly 20 years since the Gambling Act 2005 was enacted and almost 3 years since the Gambling Review was announced. It seems risible that we are not in the advanced stages of establishing a new Gambling Act suitable for the modern gambling paradigm. This would establish legal duties and obligations on the part of Operators and put the position beyond doubt. If any new Act established the right for a customer who suffers a loss to seek compensation for a breach (analogous to the Financial Services and Markets Act) then much of the above would be unnecessary.