UK LEGAL COMMENT
Whilst the outcome of the Commission’s customer
interaction and affordability consultation is yet to be published, it seems reluctant to comment in too much detail on affordability expectations. There is reference to limits being placed on what a customer is “allowed to” spend from an AML perspective, but the Commission has not made a similar statement here in relation to unaffordable spending. Rather, affordability assessments continue to be referenced as part of the customer interaction framework – a way to identify a customer who may be at risk of harm (due to unaffordable spending) and interact with them to minimise that harm. Nevertheless, operators continue to be criticised for “allowing” customers to spend sums which are clearly unaffordable.
Football Index
BetIndex Limited (the operator of the Football Index site) was first licensed by the Commission in 2015, but the exact nature of the Football Index product changed over time, incorporating features and terminology resembling investing in a football stock market. In May 2020, the Commission decided to review the company’s licence, but this review had not been completed when the company went into administration in March 2021. This timeline is not atypical for a licence review, but is
arguably unacceptable when there are significant ongoing concerns about the operation of the licensee’s business. The review was not able to reach any conclusions as to whether different regulatory approaches would have prevented the company from going into administration and customers suffering financial losses, due to the range of factors involved (including the pandemic and business decisions taken by the company). However, the Commission was criticised for failing to identify the growing mismatch between the product being operated and that for which the licence was granted. The review also concluded that the Commission could have taken a stricter approach once it noticed the discrepancy and prioritised it for scrutiny. Finally, the Commission was found to have allowed the engagement with the FCA over the correct regulatory regime to drift for too long. In response to the report, the Commission agreed that it should have “drawn a line under our efforts sooner” but stated that it “sought the best outcome for consumers within the scope of our regulatory powers”. The difficult question of whether the Football Index
product should have been regulated by the Gambling Commission or the Financial Conduct Authority remains unresolved, likely to be considered as part of the Government’s review of the Gambling Act.
APBGG Review
Firstly, it is worth clearing up that the APGGB conducting the review into the Gambling Commission’s effectiveness and competence is different to the Gambling Related Harm APPG which published a report last year, calling for urgent reform of gambling laws to protect gamblers from harm. The APGGB states that it believes gambling should be legal and well-regulated and acts as a go-between for the industry, Parliament and the government.
In a welcome move, the group is asking gambling
operators to come forward with evidence that the Commission has acted beyond its powers, in breach of the Regulators Code and/or provided poor service. Particularly when they are the subject of, or threatened with, a licence review, operators understandably feel reluctant to refuse requests from the Commission or complain about requirements being imposed “by the back door”.
The issue of affordability checks appears to be a
particular area for the group’s review and it is very positive that this is going to be examined in a critical light. The APGGB indicates that it will be looking at whether this type of requirement should be imposed by Parliament rather than the Commission, on the basis that making such significant changes to gambling regulation goes beyond the Commission’s delegated powers. Also of concern in relation to affordability checks is the fact that the Commission has imposed a requirement without providing sufficient detail on how the requirement is to be met. It remains reluctant to issue any public guidance to operators on what they are required to do with the results of affordability checks (especially whether they should be limiting play to what the operator determines is affordable), so operators have needed to put arrangements in place of their own devising, piecing together expectations from a range of statements, publications and speeches. The Commission’s failure to specify detailed requirements for everyone in the LCCP has created something of a two tier system, with those operators who have been subject to recent regulatory scrutiny (or who are most concerned about it) having in place more restrictive approaches than others.
The inevitable result is that
higher spending players are taking their business to the operators requiring the least documentary evidence of affordability and imposing the least restrictions on their play. Operators have until 31 October 2021 to submit
evidence to the enquiry and I would be delighted to assist with preparing submissions on behalf of operators.
Melanie is a gambling regulatory lawyer with 13 years’ experience in the sector. Melanie advises on all aspects of gambling law including licence applications, compliance, advertising, licence reviews and changes of control. She has acted for a wide range of gambling operators including major online and land-based bookmakers and casinos, B2B game and software suppliers and start-ups. She also frequently advises operators of raffles, prize competitions, free draws and social gaming products. Melanie has a particular interest in the use of
new technology for gambling products and novel product ideas.
OCTOBER 2021 31
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