UK: Radar - December 2016: games/eGaming

Last Updated: 4 January 2017
Article by Taylor Wessing

Legislative Reform (Exempt Lotteries) Order 2016 made

In February, the government made an order deregulating incidental non-commercial and private society, work and residents' lotteries. The Legislative Reform (Exempt Lotteries) Order 2016 (SI 2016/124) came into force on 6 April 2016, and removes restrictions that apply to such lotteries under the Gambling Act 2005. Key changes include expanding the exemption for each of the following:

  • incidental lotteries, so that it applies to lotteries that are incidental to commercial events (provided the other conditions applicable to incidental lotteries are still met);
  • private society lotteries, so that it applies to any private society lottery promoted wholly for a purpose other than that of private gain. So it will no longer be limited to the purposes for which the society is conducted; and
  • work and residents' lotteries, so that it applies to any work and residents' lottery promoted wholly other than for the purpose of private gain, or organised in such a way that no profits are made.

The Order will make it easier to use small scale lotteries to raise funds for charities and good causes.

Upper Tribunal ruling clarifies Gambling Commission's licensing powers

The Upper Tribunal upheld an appeal by the Gambling Commission ruling that the Commission may refuse a licensing application which is inconsistent with the licensing objectives of the Gambling Act 2005, even where all other criteria for obtaining a licence are met. The Commission has a statutory duty to promote the three licensing objectives of preventing gambling from being a source of crime or disorder or being associated with or used to support such an activity; to ensure gambling is conducted in a fair and open way; and to protect children and other vulnerable people.

The Tribunal commented that primacy had to be given to the Commission on licensing issues and that the Commission should not have to lobby local licensing authorities on a case by case basis where it did not think a licence should be issued.

Gambling Commission discussion paper on virtual currencies, e-sports and social gaming

The Gambling Commission warned, in a discussion paper, that online platforms that facilitate bets on e-sports or which allow gamers to gamble virtual items obtained when gaming, may require a gambling licence.

The Commission said its preliminary view was that "a person who is offering facilities for match ups, by introducing participants who bet against each other about who will win, is providing a service designed to facilitate the making or accepting of bets between the others...If this is the case then the person offering those facilities may be acting as a betting intermediary and would need a licence".

The Commission recognised it was not always a clearcut situation and said it would consider a number of factors including the number of people involved in the competition. It went on to consider the rise in the trade of in-game items which can sometimes be converted into virtual currency and used for gambling.

The paper underlined recent changes to its licensing code, confirming that gambling operators wishing to accept payment in digital currencies must comply with anti-money laundering and social responsibility requirements.

CMA investigation into online gambling

The CMA and Gambling Commission agreed a joint initiative to help ensure online gambling sites are fair and transparent. As part of this, the CMA launched an investigation into online gambling firms following concerns raised by the Gambling Commission about consumer protection issues. Evidence is being gathered from users as well as businesses. An initial CMA review highlighted the following issues as warranting further investigation:

  • complex and strict requirements around gaming promotions which are difficult to understand and, in some cases, unachievable, e.g. requiring users to play for longer in order to withdraw money or preventing withdrawal of winnings and remaining deposits;
  • wide discretion to cancel bets or alter odds after bets have been accepted where a mistake was made in setting the original odds; and
  • terms restricting the ability of a player to challenge a decision or seek redress.

Online gambling operators have been issued with notices demanding they share information about their use of potentially unfair terms and misleading practices. Licence reviews of offending operators may well follow.

DCMS review of gaming machines and social responsibility

The DCMS launched a review on gaming machines and social responsibilities in October, with a view to possibly updating the Gambling Act on gaming machines. It has issued a call for evidence looking at whether changes to rules on maximum stakes and/or prizes across different categories of machines should be made. It is also asking for views on whether measures introduced on gaming machines have mitigated harm to consumers and communities or improved player protections, and whether rules should be changed.

Gambling operators face new AML obligations

The Licensing Conditions and Codes of Practice were revised towards the end of the year to update anti-money laundering (AML) measures. Gambling operators will be required to conduct an appropriate assessment of the risks of their businesses being used for money laundering and terrorist financing and then implement appropriate policies and procedures to prevent such use. Gambling operators are also required to put in place policies and procedures relating to payments in digital currencies as well as cash and other cash equivalents and to account for the use of digital currencies. Summary of key changes.

ICO focus on use of personal data in online gambling sector

The ICO announced in November that it will be scrutinising the use of personal data to promote online gambling websites in an exercise targeting more than 400 companies. As part of an investigation into the large number of spam texts sent in connection with the gambling sector, the ICO will be writing to companies to ask them to set out their use of personal data and marketing texts, including the source of the data and the number of marketing texts sent. This is not just relevant to online gambling companies but to companies identified as being engaged in affiliate marketing in the sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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