Changes in gambling and gambling regulation in the UK – lessons learned? By Andrew Tottenham, Managing Director, Tottenham & Co August 14, 2019 at 2:45 am Much in the news recently has been about the fines doled out by the UK gambling regulator. The amounts are not insignificant – from January through May the UK Gambling Commission levied £19.6 million in fines. And in July, recently-acquired GVC subsidiary Ladbrokes Coral was fined £5.9 million for lapses in duty of care to its customers and anti-money laundering procedures. The fine was for deficiencies during the period from 2014 to 2017, which makes me wonder what the Commission was doing during this period, allowing this to go on for four years without comment until recently. It is true that much of the Commission’s enforcement activity has taken place since Jenny Williams resigned as Chief Executive in 2015. She was replaced by Sarah Harrison, who resigned two years later, to be replaced by the Commission’s Legal Counsel and Executive Director, Neil McArthur. Sarah Harrison started the ball rolling with a crackdown on gambling operators, but since Neil McArthur’s appointment the number and pace of investigations and adjudications have accelerated considerably. So far to date, perhaps stung into action by the furore around FOBTs and that the Commission’s recommendation to reduce the maximum stake to £30 was ignored, the Commission has been driving the agenda. Operators are trying to get ahead of the curve and get control of the debate. Having been heavily criticised for the amount of advertising on television, the Remote Gambling Association announced, in December, a voluntary whistle to whistle ban on television advertising during sports events, which took effect on August 1st. In addition, the five large betting companies, GVC, William Hill, Bet365, Flutter Entertainment, and Sky Bet, announced a much-increased voluntary contribution of 1% of revenue for research, education, and treatment to tackle problem gambling. The move was described as a “bribe” in the media, demonstrating that some arguments you cannot win. Sponsorship of football teams by betting companies has come in for much criticism from politicians and the media. Seven of the twenty UK Premier League teams have front of shirt sponsorship deals with gambling companies, so the logos of betting companies are prominently displayed on players’ shirts. Children are the biggest consumers of team kits; such sponsorship has meant that children have become advertising hoardings for betting companies. To combat this, Flutter Entertainment, formerly Paddy Power Betfair, announced a shirt sponsorship deal with Premier League team, Huddersfield Town. The sponsorship was part of the Save Our Shirt campaign, which meant that although Flutter is the team’s sponsor, Flutter’s logo will not appear on the players’ kit. Four other clubs have since joined the Save our Shirt campaign. The Commission has recently launched a consultation about the use of credit cards for online gambling. Credit is currently allowed for land-based betting but not for machine or casino gambling. It does appear anomalous that credit cards can be used for online casino games but not for land-based casino games, especially when you consider that the land-based games have stake and prize limitations which do not apply to online. Will credit cards be disallowed for online gambling? My best guess is that new regulations will be introduced to forbid them and this, due to single wallets will have to apply to online betting too. How that will be applied to land based betting, I am not sure. This month the Commission announced changes to the licensing conditions and codes of practise. Operators should focus on more than just monetary indicators to determine if a gambler may be experiencing problems; they should use a range of tools and indicators to determine if an intervention is required. Fines, advertising bans, and other restrictions are not just a UK phenomenon. There have been fines and revocation of licenses in Sweden, where Svenska Spel, the former gambling monopoly, has announced a voluntary advertising ban. Italy has implemented an advertising ban, although how it works is somewhat confusing. Spain is currently mulling over a ban on all gambling advertising. The challenge for operators is that gambling regulations throughout Europe are not consistent, and even less so regarding how they are applied. Companies from one jurisdiction who get licenced and start operating in another country can quickly find themselves falling foul of their new regulator, even though they are operating exactly as they do in their “home” market. Part of the problem is that regulators often act retroactively – they will not be definite as to what is acceptable and what is not, but will tell licensees after the fact that they have been deficient and a fine is likely. Online gambling presents a significant challenge for the regulator too. In July, 1xbet announced a sponsorship deal with two UK premier League clubs, Chelsea and Liverpool; 1xBet was already Tottenham Hotspur’s betting partner for Africa. The arrangement with the three clubs was short-lived. On Monday, all three clubs pulled away from their deals after a Sunday Times investigation found that 1xBet, a Cyprus-based but Russian owned online gambling operator, was accepting bets on cockfights and under-19 athletics events, as well as promoting a live online casino with topless dealers, all activities which are strictly forbidden under UK regulations. (I should add that none of these activities were promoted on the UK-facing site, UK-1xbet.com.) 1xBet has a white label agreement with FSB, a UK-based and licensed online gambling operator, which allows 1xBet to enter advertising and sponsorship arrangements with UK football clubs. UK Premier League matches are shown around the world and this is the same arrangement that SportPesa, the Kenyan-based betting company has, with Everton, albeit with an Isle of Man licensed operator. I would be surprised if 1xBet or SportPesa were much interested in their white labelled, UK-facing sites; rather their interest is that their name gets broadcast around the world in markets where they are dominant, and they do not have to compete in highly-competitive markets. The Gambling Commission has announced an investigation of both 1xBet and FSB. 1xBet’s UK-facing site is now closed. The Commission could learn from Nevada regulators. Whilst it might not be illegal for 1xBet to offer the bets on cockfights, or to promote topless live casinos where they have chosen to market that, Nevada makes it a condition of licensing not just how you do business but also who you do business with. If I were the Commission, I would make it a license condition of white label operators that they are responsible for the activities of their clients, just as operators are deemed responsible for the activities of their marketing affiliates. However, I do not only believe the Commission is to blame for the situation the UK industry finds itself in; far from it. In many respects the industry has only itself to blame. In some parts of the gambling world there has been an arrogant attitude towards regulation, trying to push the boundaries to see how much operators can get away with. A change in the Chief Executive at the UK’s gambling regulator has led to a significant internal change of culture and expectation. If the UK’s gambling industry is to thrive again, then just as the regulator went through a cultural change, so must the industry.