DCMS Has Launched Its Long-Awaited White Paper on “Gambling Reform for the Digital Age”

United Kingdom (May 19, 2023) — The Department for Culture, Media & Sport (DCMS) has launched its long-awaited White Paper on “Gambling Reform for the Digital Age”.

Its premise is that gambling has changed immeasurably since the last big piece of significant legislation in the space, the Gambling Act 2005, came to pass. At the time, the concept of a smartphone was, well, pretty much just that – a concept. Today, the majority of UK-based stakes are placed using them.

The Government called for evidence on the case for reform in the midst of the global pandemic in December 2020. The arrival of the dissection of the results has been promised several times only to be delayed, but now it has arrived, the question most stakeholders are asking is: what next?

The White Paper has been published as a Command Paper which often includes a draft version of the legislation it proposes to introduce, which can then be the basis of consultation before being presented to Parliament. This White Paper does not go that far.

Some changes have, it notes, already happened, or are already in motion. For example, the Gambling Commission has already strengthened restrictions on online VIP schemes and introduced rules to stop bonus offers from being targeted at people showing significant indicators of harm. It is also expected to release a statement on vulnerabilities to set out its expectations in line with its guidance on remote customer interaction shortly. The Commission has been given the mandate to start building capacity to require and analyse more data from online operators to identify non-compliance with licence conditions – albeit a full-scale review to ensure the Commission has the financial resources and statutory powers to deliver on the plans remains on the DCMS to-do list.

There are three other vehicles (with varying timelines) for further change.

The first is further anticipated changes to the Gambling Commission’s rulebook, via changes to Licence Conditions and Codes of Practice and/or associated guidance. The Commission will be consulting on the following matters in Summer 2023. Any changes decided upon post-Consultation can be implemented relatively swiftly. These are:

• More prescriptive rules around when online operators must check customers’ financial circumstances for signs their losses are harmful
• Mandating data sharing between operators on high-risk customers for collaborative harm prevention
• Changes to player-centric tools, e.g., the prospect of mandatory or opt-out deposit limits
• And continued work around ensuring incentives are constructed in a socially responsible manner and on making games safer by design, e.g., reviewing game speeds

The second is legislative change. DCMS is also running a consultation this Summer. The following proposals, which it expects can be delivered via secondary legislation (that is, delegated legislation made by a person or body, such as the Secretary of State, with authority under primary legislation – as to which, see below) may, again, happen relatively quickly; typically, with a 4–6-week warning.

• Stake limits for online slot games, to bring more in line with the land-based sector
• The statutory levy paid by operators in scope to fund research, education and treatment of gambling harms
• The possible removal of ban on cashless payments for gaming machines, subject to establishing appropriate protections
• And, relaxing the 80/20 machine rule to 50/50 so there can be an even split between low and medium maximum-stake machines

Other proposals in the White Paper are said to, again, subject to consideration of the imminent DCMS consultation, potentially representing a mix of primary (i.e., the main laws passed by legislative bodies such as the UK Parliament) and secondary legislation. Such changes would typically be expected to take longer as they travel through the relevant Houses of Parliament for close scrutiny, although some mixed legislation changes may come in incrementally. These include:

• Changes to gaming machines to ensure consistency in rules.
• Allowing smaller casinos to benefit from more machines on a pro-rata basis commensurate with size.
• Permitting sports betting in all casinos rather than just those licensed under the 2005 Act.
• Limited changes to high-end casinos and others transacting with the same group of wealthy overseas clientele to offer credit subject to protections.
• The prospect of removing the ban on cashless payments for gaming machines is subject to player protections being in place.
• Review of premises licence fees cap for local authorities. Aligning the gambling licensing system with that for alcohol by introducing new powers to conduct cumulative impact assessments.

Last but not least, other changes are planned via voluntary engagement by the industry, with the prospect of legislative change as a backup option, i.e.,

• Changes to close gaps so that under-18s cannot participate in any form of gambling (online, gaming machines or via scratchcards), to align with changes in the National Lottery last year
• And the establishment of an ombudsman for dealing with consumer complaints due to social responsibility failures. The expectation is that this appointment will be made this Summer, with the plan for the mechanics being in place to handle complaints from next Summer

There is clearly significant work to be done by the government, regulator and operator over the next 12 months to make change happen. And the response must be dynamic as we move (or have already moved) from cashless to crypto, VR to ER and smartphone to artificial intelligence – to ensure the landscape is fit for the current phase of the Digital Age.

[This article is our first in a TLT series reflecting on the High Stakes: Gambling Reform for the Digital Age proposed changes.]

By: Nicola Mead-Batten

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SOURCE: TLT LLP – Lexology.