UK LEGAL COMMENT
Upcoming changes to the regulation of online games
Impending reforms over the course of the next 1-2 years will affect online slots games, other gambling games and also some games that fall just outside the definition of gambling. Northridge Law’s Melanie Ellis explains.
T
he boundary between games that meet the Gambling Act ‘s definition of “gaming” and those that do not will remain unchanged, with the Gambling Act White Paper confirming that the Government would not take any action to adjust the legal of definition of
gambling to bring loot boxes and similar products within it. The Gambling Commission’s position has always been that the law is clear that provided products do not offer a prize of money or money’s worth, they will not be classified as gambling. It has drawn a line between products where the prize can easily be converted to real world money (which could constitute gambling) and those where the game provider has taken action to prevent prizes being converted to cash (for example making it clear in T&Cs that loot box contents cannot be sold to another player and taking action against unauthorised third party marketplaces). Despite this distinction, concerns about loot boxes posing similar dangers to gambling products, particularly to children, led to a Government call for evidence, resulting in the formation of an industry working group, which recently published new industry-led guidance, to be implemented over a 12 month period. The guidance borrows somewhat from gambling protections, including a requirement to provide information to customers on how to play responsibility and manage spending, a requirement to design and present loot boxes in a way that promotes fair and responsible play and restrictions to prevent under 18s purchasing without parental consent. While the boundaries of which products do and do not meet the definition of “gaming” will remain unchanged, the Gambling Act White Paper has set out two proposals for reform of games that do meet that definition. The imposition of maximum stakes for online slots games will be led by the Government, rather than the Gambling Commission as they require legislative change. A DCMS consultation is expected to commence by the end of the summer. In its advice to the Government for the Gambling Act Review, the Commission recommended that it consider tailoring stake limits to individual risk, with different tiered limits applied to customers based on their level of risk, as identified by the operator. The regulator suggested that limits might be removed or raised based on a financial vulnerability or affordability assessment. However, it seems that the Government’s only concession to
this suggestion will be lower stake limits for customers aged under 25. For those aged 25 and over, a limit of between £2 and £15 was proposed in the White Paper. The final figure for the slots limit will be crucial to licensed gambling operators, affecting somewhere between 4.4% of spins (currently above £2) and 0.2% (currently above £15). The Government used a midpoint of £8.50 to conduct its
assessment of the likely financial impact of the proposed stake limit on GGY, although an £8.50 limit would only affect around 0.4% of spins and sits towards the top of the curve of potential impact. The midpoint in terms of impact is far lower, at around a £3.50 stake limit. Given that the Government estimates the £8.50 limit affecting 0.4% of spins would reduce GGY by between £135m and £185m, a lower limit, such as £5 to match maximum stakes in land-based casinos, would likely cause a much larger GGY reduction. The greater the impact of the proposed stake limit the greater the incentive on operators to focus on other types of games; the Commission recognised this, advising the Government to ensure
28 AUGUST 2023
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