UK White Paper outlines overhaul of online gambling legislation

April 27, 2023 8:44 PM
Photo: Shutterstock
  • Hannah Gannagé-Stewart, CDC Gaming Reports
April 27, 2023 8:44 PM

The UK government has launched a raft of player protection reforms, primarily aimed at online gamblers, as part of its long-awaited review of gambling legislation.

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Among the biggest changes are the proposed introduction of maximum stakes for online slot machines, which echo similar legislation introduced on fixed-odds betting terminals (FOBTs) in the UK in 2019.

The long-awaited White Paper moots the introduction of a limit of between £2 and £15 ($2.50 and $18.75) per spin for online slots, pending consultation. Further consultation will determine whether it is appropriate to introduce more robust protections for 18- to 24-year-olds.

The options include a £2 limit per spin, a £4 limit per spin, or an approach based on individual risk. The consultation by the government’s Department for Culture, Media and Sport (DCMS) is scheduled to kick off this summer.

Current estimates suggest that the new limits will cost around £710 million ($888 million), 11% of the current UK online industry.

Anti-gambling campaigners are unlikely to be happy with the White Paper’s stance on bonusing, which again throws the subject open to further consultation. Rather than proposing outright bans, it calls on the Gambling Commission (GC) to consult on how bonuses and free bets can be constructed in a socially responsible manner.

Protection of minors is also an area of ongoing work. The White Paper pledges to work with the sector to close “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.”

Greater oversight

Elsewhere, the GC is tasked with exploring an overhaul of game-design rules, removing particularly harmful features and imposing new obligations on operators to prevent unchecked and unaffordable spending.

Affordability checks have been a critical part of the debate throughout the long gestation of this reform paper, with the industry concerned about added friction being applied to player-registration processes and whether such checks are technically possible or legal under data-protection rules.

The White Paper states that the GC will consult on two forms of financial-risk checks. First, background checks for financial-vulnerability indicators could use County Court judgments to check for history of bankruptcy, for example. These are recommended to kick in at a net loss of £125 within a month or £500 within a year.

More detailed checks are proposed for those spending at higher levels with gambling firms, for example when a net loss of £1,000 is detected within 24 hours or £2,000 within 90 days.

House of Commons (screen grab)

Addressing the House of Commons this morning, Culture Secretary Lucy Frazer said these thresholds, which remain subject to consultation, were arrived at in consultation with gamblers.

However, there was scepticism from the backbenches when Conservative Member of Parliament Philip Davies implied they were arbitrary figures with little bearing on the spending ability of individual gamblers.

“The Conservative Party used to believe in individual freedom and responsibility, but that seems to have gone out of the window with these affordability-check proposals,” he said.

“When an affordability check is made, who decides whether or not an individual can afford the amount that they’re gambling? Will it be the government? Will it be the Gambling Commission? Will it be the bookmakers? Will it be the banks? Do the punters themselves get any say at all over how they can afford to spend their own hard-earned money?”

In response, Frazer cited “400 meetings on this issue” and noted that in most cases, checks would be entirely frictionless, without punters even being aware that they’re taking place.

She estimated the checks would affect around 20% of gamblers and added, “I should emphasize, those checks are already taking place. Gambling companies already have a responsibility to ensure protection of those that gamble with them.”

The creation of an independent ombudsman for the gambling industry comes as little surprise to those following the reform process since its outset in December 2020.

The body will handle disputes that cannot be resolved directly with the operator. It should provide appropriate redress where a customer suffers losses due to failings by the operators to provide adequate protections. Data from the ombudsman will be shared with the GC to help it plan enforcement activity.

A process for appointing an ombudsman is set to kick off this spring or summer and the government aims to see it accepting complaints within a year.

Statutory levy

While many operators have been making voluntary contributions to fund harm-prevention and treatment initiatives for some time, the White Paper for the first time proposes a statutory levy on all licensed operators.

This is again subject to consultation by the DCMS over the summer and despite some reports that the levy has been set at 1%, the amount to be paid remains undecided and will be determined via the consultation process.

The White Paper raises an ongoing concern that “treatment services and research in other public-health areas are not generally funded through hypothecated taxes,” posing questions over whether the money will be used as intended.

However, during a press briefing Thursday, Gambling Minister Stuart Andrews acknowledged a reticence to accept money from operators in the past, but told CDC Gambling Reports, “This is now a statutory obligation — in essence, a sort of tax, specifically ringfenced for this area of work, whether it be health care, education, or research. We have had conversations with organizations that have been reluctant in the past. The fact that this is on a statutory level means that they will feel comfortable taking that money to provide the services.”

He also indicated that the ongoing reform process would identify areas that need more funding, such as deeper research into the nature of gambling-related harm, and that the levy would enable that to be funded.

Land-based

Finally, the reform review is good news for the land-based sector, which the government seems keen to acknowledge has lost ground to its online counterpart, due to regulation being out of kilter with where the bulk of gambling activity is actually taking place.

As such, several proposals have been made to redress that balance, all of which will be consulted on from this summer.

These include relaxing the 80/20 machine rule on low and medium maximum-stake machines to 50/50, allowing smaller casinos to benefit from more machines, permitting sports betting in all casinos rather than just those licensed under the 2005 Act, and beginning a review of the horse-race betting levy to ensure the appropriate level of funding for horse racing is maintained.

All in all, the arrival of the White Paper finally offers the industry some certainty on the government’s priorities for reform, but with so much still open to consultation, it will be a few months yet until we learn exactly how the dice will fall.

Despite this, Frazer and Andrews both indicated an intention to pass new legislation as quickly as possible, hinting that the references to secondary, rather than primary, legislation throughout the White Paper are precisely because secondary legislation can be passed more quickly.