Last year saw industry advertising come under increased political, regulatory and public scrutiny. Chris Elliott and Beth French of Wiggin LLP look at the main developments and how these are set to impact stakeholders in 2017.
Gambling advertising in the UK was a key discussion topic in 2016, and continues to attract major political, regulatory and public scrutiny. The industry witnessed a multitude of developments over the past 12 months which indicate gambling advertising practice will remain a core item on the industry's agenda. Here we look back at the developments of 2016, and examine some of the key trends in the gambling advertising space
1. CMA launches investigation into online gambling
The Competition and Markets Authority (CMA) announced in October 2016 that it would be investigating possible unfair terms and practices in the remote gambling sector, following concerns raised by the Gambling Commission that some operators may be breaching consumer law.
Among other things, the CMA, together with the Commission, will be looking at how clearly and effectively operators communicate what can often be complex promotional terms, and whether the average consumer is able to make a properly informed choice about whether or not to gamble.
To date, the CMA is known to have issued numerous Information Notices under consumer protection legislation requiring evidence from online gambling companies in order to establish whether remedial action is necessary.
The investigation is in its early stages, but will prompt (one would expect) operators to review their promotional terms and current marketing practices to ensure terms are fair and transparent.
Certainly an area to watch as the relatively well-entrenched “industry standards” come under wider legal and regulatory scrutiny.
2. Advertising Standards Authority complaints/adjudications
A series of adjudications issued by the Advertising Standards Authority (the “ASA”) in respect of gambling advertising provide some direction as to the recurring themes which are seen by the ASA to fall foul of the advertising regulations.
- Free bets / enhanced odds
The majority of ad-specific complaints received by the ASA refer to potentially misleading content, in particular to concerns about 'free bets', 'enhanced odds' or other promotional offers.
This despite a four-strand review into gambling advertising that commenced in 2014 and focused on misleading content and 'free bets', leading to subsequent revisions of related licensing conditions.
Operators should remain mindful that the advertising codes are phrased in such a way so as to facilitate a broad interpretation to assist the regulators.
The issues around “free bet” promotions are likely to shift and develop for as long as they remain a contentious subject of discussion for the industry.
- The Iron Man decision – 'Of particular appeal to children'?
On 24 August 2016, the ASA upheld its complaint against a Ladbrokes email advert featuring an image of Iron Man, a decision which has confused some and simply bemused others.
The ASA stated the ad was “of particular appeal to children” despite only being sent to registered customers; so, people verified by Ladbrokes as being over 18 years of age. The ASA took the view that the 'comic book nature' of the character meant it did indeed have 'particular appeal' to children.
The decision appears to directly contradict earlier rulings in which complaints were not upheld on the basis that, despite containing characters likely to be of particular appeal to children, the advertisement was not accessible to those under 18 years of age.
The lack of clarity has caused confusion amongst the industry regarding what “of particular appeal to children” actually means, and one can envisage industry bodies mounting pressure on the ASA to publish clear guidance.
The decision will be of particular importance to brand owners and game suppliers to the industry as these games are vital parts of the core business of many B2C casino operators.
3. New licence condition 16 – Responsible placement of digital adverts
Amid concern that websites offering unauthorised access to copyrighted content (e.g. illegal file-sharing websites allowing users to download/stream films for free) were being partially funded by affiliate gambling advertising, the Commission decided to introduce a new standalone licence condition (LCCP 16.1.1).
This requires operators to ensure they do not (and must take all reasonable to steps to ensure that their affiliates do not) place digital advertisements on such websites. In addition, affiliate terms should reflect this obligation, and provide an ability to terminate in the event that it is breached.
The success of the industry's implementation of this requirement remains to be seen, particularly due to the difficulties they cite in curbing the behaviour of their affiliates who may place ads with such illegal file sharing sites.
The response from the Commission (and the Police) has been less than sympathetic – if the industry's business model incorporates risk of assisting illegal enterprises, this needs to change.
4. Regulatory scrutiny
At ICE 2016, and at the Commission's Raising Standards conference in November 2016, Sarah Harrison, chief executive of the Commission, explained that gambling advertising will continue to be a specific area of focus for the regulator, in particular with regards to the placement of socially responsible advertising and the fair treatment of consumers, which aligns with the themes raised by the ASA adjudications on gambling advertising throughout 2016.
The Commission has previously shown limited desire in taking further action against an operator following an ASA adjudication. It did however remind licensees in 2015 of the requirement to comply with relevant advertising standards and codes of practice.
With their advertisements increasingly under the spotlight, operators should be way of regulatory action where they continue to promote marketing communications which fall foul of the Codes.
In particular, continued breach of the advertising codes could see clause 6.6 of the Memorandum of Understanding between the Gambling Commission and the ASA invoked, which states “if the advertiser refuses to comply with the codes or an ASA adjudication, or has repeated breaches of the codes, the ASA will consider referring the case back to the Commission for possible regulatory action under the Gambling Act 2005.
The ASA will consider whether referral to the Commission would be most likely to lead to a cessation of advertising”. Sarah Harrison's speech alluded to the Commission's intention to take enforcement action, so it is certainly a possibility for industry stakeholders to be conscious of this year.
In recent months, the Commission has increasingly looked to the holders of Personal Management Licences to explain shortcomings in related operators' compliance, a trend envisaged to continue as the Commission looks to hold senior management accountable for the conduct of the operations they nominally oversee.
5. Government review
The Department for Culture, Media and Sport launched its industry consultation in October 2016 which included, among other things, a consultation on social responsibility measures to minimise the risk of gambling-related harm.
As part of the consultation process, the government announced it will be considering the removal of the pre-9pm watershed exemption for sports betting advertising during live sporting events. The call-for-evidence period ended in early December, leaving the government to consider submissions made.
Whilst the consultation may not result in a blanket ban on pre-watershed gambling advertising (which would include the removal of the exemption for bingo), it is indicative that broadcast advertising for gambling could face more onerous restrictions.
Where talks of such restrictions will perhaps drive marketing efforts towards the use of alternative digital outlets such as viral videos and video content via social media, operators should be mindful that the CAP Code for non-broadcasting advertising will apply to such videos, covering advertising on websites, banners, emails and social media posts.
6. Affiliate advertising
Finally, gambling affiliates are being targeted by the Information Commissioner's Office for investigation into the potential non-compliance with data protection laws. The ICO is writing to companies identified as being involved in affiliate marketing demanding they set out how they use people's personal details and send marketing texts.
This includes where the personal information was obtained from and how many texts they sent. Gambling affiliates are not within the regulatory remit of the Commission and do not require a licence to provide marketing services for operators.
However, UK-licensed operators have a duty to KYC all of their customers, including those provided through their affiliates, and therefore remain responsible for any affiliates acting on their behalf.
As such, it is important that licensed operators enter into agreements with affiliates which require them to adhere to specific compliance-led obligations so as to avoid falling foul of their own licensing obligations.
7. Conclusions and the year ahead
Developments last year showed that 2017 is likely to be another busy and fast-moving period for those involved in gambling advertising. The competitiveness of the British market means the issues surrounding gambling advertising are unlikely to go away soon.
Operators and suppliers should be conscious of the heightened political and regulatory scrutiny of gambling advertising, and will need to respond to any regulatory changes introduced as a result of current reviews/investigations.
Beth French works within the Betting and Gaming at Wiggin law firm focusing on regulatory and commercial matters.