October 21, 2016

What has happened?

The Competition and Markets Authority (“CMA“) has announced an investigation into how online gambling companies contract with their customers.

All British-licensed operators must:

• “satisfy themselves that none of the terms on which gambling is offered are unfair terms within the meaning of the Consumer Rights Act 2015” (Licence Condition 7.1.1);
• “be able to provide evidence to the Commission, if required, showing how they have satisfied themselves that their terms are not unfair”. (Social Responsibility Code provision 4.1.1);
• “satisfy themselves that their marketing communications, advertisements and invitations to purchase, including free bet offers do not amount to or involve misleading actions or misleading omissions within the meaning of the Consumer Protection from Unfair Trading Regulations 2008”. (Social Responsibility Code 5.1.7); and
•  “ensure that information about their complaints procedure is set out in the terms and conditions” (Social Responsibility Code 6.1).

The Gambling Commission (the “Commission“) has become increasingly irritated by the adverse publicity around operator’s refusing to pay out punters and the spate of Advertising Standards Authority (“ASA“) adjudications which have upheld complaints against the industry’s promotional terms. Both issues have potential gambling regulatory and wider consumer protection implications.

The CMA has also cited a trend within the industry to make complaints procedures obstructive by imposing certain restrictions on how a player can complain and a lack of clarity around what players’ rights actually are.

The CMA’s investigation will take the form of it issuing “Information Notices”, pursuant to consumer protection legislation which will require certain operators to respond with evidence as to how they believe they are fulfilling their regulatory requirements.

Comment

The online gambling industry’s contractual relationship with its players is a complex one. It remains subject to gambling regulatory requirements and wider legal/consumer protection requirements whilst the industry seeks to balance those obligations with the need to protect itself commercially.

It is undeniable that the legislative changes in Great Britain that required the bulk of the industry to obtain and maintain licences from the Commission has led to reassessment of the contractual relationship between operators and players.

The Chief Executive of the Commission, Sarah Harrison, has made no secret about her priorities since taking over the role around a year ago. For her, the effect the industry has on consumers individually and British society as a whole is driving a re-evaluation of the industry’s approach to social responsibility. To the extent that the Commission feels that the industry is falling short then it will intervene as it has clearly done so here. The Commission is working in tandem with the CMA and it remains to be seen what the outcomes are of the various Information Notices that have been issued.

Once these procedures have been finalised, we expect there will be additional guidance issued to the industry which may well take the form of additional or augmented licensing conditions. Whether there are any additional consequences for any of the operators involved by way of sanctions, issued by the CMA itself, again remains to be seen.

The CMA’s announcement can be read here.

If you wish to discuss any of the implications of this, please contact any of the team members listed below or email our general address at gambling@wiggin.co.uk and one of the team will respond to you.