New UK Gambling Act 2021
The Gambling Act 2005 was the first significant piece of legislation to regulate gambling since the legalisation of betting shops and off-track gambling in 1961. It was established to regulate all forms of gambling (except spread betting) under one roof and part of the 2005 Act was to create the Gambling Commission, an independent regulator part of the UK government department of culture, media and sport.
The main objectives of the legislation in 2005 was to create a landscape that promotes fair and safe gambling by protecting the underage and vulnerable, ensuring responsible advertising and practices and preventing the industry being used for criminal means. Most would agree that the establishment of the UKGC and licensing for operators has driven the industry to be more responsible and across the world the UK is regarded as one of the safest places to bet.
Since 2005 though the industry has changed a lot, particularly with the growth of online and remote gambling. In the past five or so years calls for tighter regulations and restrictions have grown louder resulting in new rules and limits in an attempt to make an even safer industry, such as the £2 stake limit on fixed odds betting terminals and new verification rules online, both brought in in 2019. The UKGC, however, has received a lot of criticism from charities, public forums and MP advisory groups that it is not doing enough to help the most vulnerable in society.
In response to this the commission has dramatically increased the number and size of the fines it issues and has released a steady stream of new rules designed to help problem gamblers in particular. New bodies have also been created, such as the Betting and Gaming Council, an industry group established to promote values within the industry with a single message.
Despite these changes pressure for a new gambling act continued to mount with many suggesting the UK Gambling Commission was no longer fit or funded sufficiently to regulate, what is now, an industry worth close to £15 billion with most of that revenue now generated online. When the UKGC came into being betting was still heavily weighted to the high street and perhaps they did not envisage quite how big and fast remote betting and gaming would grow.
External factors have also contributed to calls for a new gambling act, such as the general election in 2019, which had gambling high on the list after Brexit, forcing the debate about a new act into the political chambers. This resulted in a number of reviews and proposals by MP's and the Lords. The unexpected corona virus pandemic has also heightened the debate around problem gambling, advertising and general practices that has further propelled the need for a new Act.
Gambling Act 2020? 2021?
A new gambling act was expected in the autumn of 2020, however, delays largely caused by the disruption from corona virus means a new act is now more likely in early 2021. Then again given past experiences with such things no one would be surprised if it dragged on to 2022 with Brexit likely to dominate time in parliament at the end of 2020 into 2021.
This does not mean most of the laws around gambling will change overnight, rather it will set out a landscape for future regulation. For example, in the 2005 act created the UKGC but the body did not become active until 2007 as it took two years to for the commission to assume full powers from the Gaming Board for Great Britain.
Once we have more details about the new act we will discuss them here and explain exactly what the act entails, what has changed, what is new and how this will impact operators and customers. Below we look at some of the major points likely to be included in the new act.
What Will Be In The 2021 Gambling Act?
Of course no one can be certain what new rules and changes will be included in the new act but we can assume some things based on what the UKGC has been doing of late as well as proposals from parliamentary and industry groups:
VIP programs offered by bookmakers and casinos are likely to be curbed or eradicated completely. Several studies and reports have shown that problem gambling and fraud is far more likely with VIP players (naturally) and changes or restrictions are highly likely.
Although loyalty schemes and points have not been cited directly many are linked to VIP schemes and share many of the issues in terms of customer profile that VIP programs do. It is possible loyalty schemes will be curbed or at least they will have to be more transparent about the amount of betting that is required relative to the value of the rewards.
Self Exclusion Rules
Currently self-excluding from one site does not mean you will necessarily be excluded from all. You can sign up to an exclusion database that companies are supposed to check but there are still plenty of instances where problem gamblers have got around this.
Expect any new act to mandate that self-exuded player details be shared automatically with other operators and relevant bodies to treat harm. This is expected to help reduce the amount of addiction.
Responsible Gambling Tools
Operators are currently expected to offer several tools to help people gamble responsibly, such as deposit limits, time limits, activity warnings, loss limits, product exclusions, etc. Most of these are optional for a punter and we can expect that under a new act this will be reversed. Customers may have limits automatically imposed and will then need to opt-out of these (which in itself will flag that customer for closer monitoring).
New tools may also be added to the list, such as shared data between operators to allow customers to see how much they are gambling across all brands not just the one site.
Deposit Protection For Customer Funds
Deposit protection is included as part of the 2005 gambling act, however, it does not currently force companies to protect funds in case they go bust. At present there are three levels, no protection (funds held in separate accounts but part of the business), medium (insurance or similar to cover customer funds) and high (customer money held in an account that is a separate legal entity to the business).
The clear majority of UK licensed betting companies currently fall under the 'no protection' level and this means if they go bust there is no guarantee users will get their money back. This has happened several times in the past few years as operators have gone under.
It is likely that a new act will insist that at least a medium level of protection is held to operate in the UK. This will not come in immediately but will probably be phased in over the course of a few years.
Ownership Rules and Company Structures
Currently the brand owner and license holder do not have to be the same people. This is common for white labels, where the operator holds the license and the brand owner holds the rights.
Ultimately it is the license holder that is responsible for customers safety and deposits, however, it is the brand owner that is often responsible for marketing, acquisition and retention. This creates an obvious mismatch in responsibility and therefore any new act may include restrictions on how companies are structured in this regard.
Deliberately convoluted ownership rules will also probably be looked to ensure customers know who it is ultimately that they are betting with.
Online Stake Limits
Limits are already in place for games on physical fixed odds betting terminals and it is expected that similar rules will now be rolled out online. This also includes a potential £2 limit for online slot and table games (per hand/spin) with overall limits also proposed (£100 in one day, for example).
Of all the potential new rules this is the one the industry will rebuff the hardest given it will have a severe impact on revenue. Many expect a stake limit to be enforced but at the same time it is a fair bet it will be raised above £2.
Online Game Timings
Time between spins/hands on online games is another area that has come under pressure in recent years. Even with stake limits it is possible to spin the reels in some games every few seconds in turbo mode, potentially meaning customers can stake £1000's in an hour even at relatively low stakes for each spin/hand.
An enforced break between spins may be part of a new act, perhaps 30 seconds, for example. This will mitigate the amount of loses someone can make within a given time while also giving additional time for the customer to reflect on their betting.
TV and Sport Advertising and Sponsorship
It is the cash rich industries that provide the most sponsorship for sport, football in particular. In the past sport had been heavily sponsored by tobacco and alcohol before these were banned or curbed in the late 1990's and 2000's and it is the gambling industry that has filled most of that niche.
Sport and football is watched actively by younger audiences and it is felt the number of adverts and amount of sponsorship is at dangerous levels. This has been compounded by the amount of live sport that is now on TV and the number of adverts this now attracts.
One aspect a new act may look at, in cooperation with the ASA, is reducing the number and type of ads on TV. A total ban is unlikely but we could see rules that restrict when adverts can be shown, perhaps after 9pm. There will also be possible rules around advertising on football shirts specifically.
The gambling levy currently is voluntary and only applies to those operators that sign up to it, which at present is mostly the big names only. Any new act is almost certain to introduce a mandatory levy, the money from which will be used for services that prevent harm from gambling.
The industry does not want to increase the number of fines as that in itself is a sign that the regulation is not working. What we can expect though is the level of fines will rise to ensure operators follow the rules.
Money from fines will also be looked at, presently this is largely given to a handful of charities as well as paying for the UKCG itself. Fine money is likely to now be handled by an independent body who will allocate it accordingly.
Reverse Withdrawals and Pending Periods
In response to a rise in online gaming during the corona virus outbreak the UKGC initiated a raft of emergency measures to help reduce problem gambling, one of which was to ban reverse withdrawals. It is almost guaranteed this will be part of the act in 2021.
Reverse withdrawals allow plays to cancel a withdrawal they have made while it is in a pending period (the time it takes for the site to process the withdrawal). Pending periods can last days, sometimes up to one week, and of course encourage those with addictive gambling to continue playing.
Within that the pending periods themselves may also be looked at given many brands have an unreasonable amount of time to process a withdrawal, which really should take less than 2 days.
Payment Methods and Credit
The use of credit cards for gambling was banned in April 2020 but many want further restrictions. For example, you can still use 'credit' through pay by phone bill methods or to purchase cash vouchers, therefore, rules around this will probably be tightened further.
eWallets such as Skrill and Neteller, which have historically been abused to for fraud purposes by creating duplicate accounts, may also be looked at as part of a new act. These could be banned or at the least providers will be asked to perform additional verification when these methods are used.
Cash can also be used for some transactions, either by funding directly through a betting shop or through cash voucher systems, such as PaySafeCard. This again may be looked at due to the links between cash and fraud.
Some sites have very low withdrawal limits (e.g. £10,000 / month) and this can be very unfair for those that win big, such as a jackpot slot win. It can take years to get your money out of some sites, during which time there is always a risk of them going out of business.
It is possible a new act may insist on minimum withdrawal levels to allow users to be able to retrieve large winnings more easily.
Source of Funds Checks
If a customer makes a large deposit or a deposit that is out of character compared to their usual activity then operators are required to check the source of funds to ensure they are legal and the customer can afford it (e.g. not money from a personal loan as this is credit).
One of the most severe failings over the last ten years has been in this area and companies have been repeatedly fined for not checking where large deposits (or a series of small deposits) comes from. This is an area that a new act is certain to cover with more detailed guidelines and lower thresholds.
Like it or not every single click you make on a betting website is tracked and recorded. Operators are obliged to monitor your activity and to intervene if they think you are displaying signs of problem gambling although in reality asking the brands to do this themselves always raises a conflict. The more they intervene the less money they will make.
Most of the information that is gathered about your betting activity is not actually used to protect you, rather in many cases it is used for the opposite to profile you so they can send you appropriate offers, etc. Any new act is likely to insist on closer monitoring, possibly through an independent body.
New Customer Thresholds
Part of the emergency measures that were brought in alongside limits on reverse withdrawals during the virus outbreak in 2020 was to limit the amount a new customer could deposit and bet. This was done on the basis that operators have no historical data on new customers and therefore cannot know their affordability.
This is something, again, that is likely to go straight into a new act. New customers may be limited to say £100 initial deposit until further checks have been completed. This will also change the welcome bonuses that are offered, such as the headline grabbing £500 or £1000 deposit bonuses you now see for casinos.
Operators are private companies and their ultimate objective is to make profit and one way they do this is to limit or close accounts for players that win. This practice has been going on since the advent of online gambling, indeed prior to that bookie shops would ban people who won too much.
Some account limiting is genuine, often due to bonus abuse or hedging, but in reality it is used by companies to improve profits. There has been little said on whether this will be addressed in a new act but if the UKGC are listening to punters this will be an area they may look into. This may include a minimum bet guarantee (e.g. any customer must be able to stake up to £100).
Imagery In Games
The use of images that appeal to children has come under intense scrutiny over the last few years. There are already rules in place stating that companies and advertisers should not display 'childish' images where they can be seen by children but in reality these rules are vague and not very well defined.
The nature of slot games is they appeal to peoples passions and fantasies, many of which naturally would appeal to children. You could say in many ways slots are designed to appeal to the inner child in people. Therefore the types of imagery that can be used will be reviewed in detail.
This may actually impact how games are made. The software companies themselves that make games also need to be licensed and this means any new act may stipulate more stringent rules around the game design.
Loot Boxes and Gambling Products In Games
In game spending for games not restricted to adults will also come under the spotlight in any new legislation. In many games users can buy 'loot boxes' without knowing what is inside them, this in effect is gambling according to several parliamentary reviews on the subject.
Games will therefore need to either stop undisclosed purchases or will require age verification to do so along with appropriate gambling warnings. This is also something that will likely be mirrored by the EU as a whole.
Spread betting is classed as a form of trading and so was never part of the remit of the 2005 gambling act, instead it is regulated by the Financial Conduct Agency. Spread betting is seen as one of the most dangerous forms of gambling because it does not use fixed odds, instead you take a 'positions' on an outcome (e.g. number of cards in a football match) and the more accurate your 'position' the more you can win but the further away that guess is the more you can lose. A result of this is you can lose far more than you staked meaning you can end up owing a company a lot of money.
Nothing has been said as to whether this form of gambling will now be assessed as part of the 2021 act or not but given the potential for harm from this form of betting it is probable that it will be included in some form in the new legislation.
Free Bets and Bonuses
Incentives are one of the main methods used by companies to encourage people to join and to continue betting. These incentives, however, can be dangerous for those addicted to gambling and so we can expect curbs on the size and types of promotions betting companies can run for new and existing companies.
Free bets and bonuses have already been curbed to a degree as the government now taxes these in the same way they do real money bets, which is why you may have noticed the size of welcome offers has decreased in recent years. Still, many believe more can be done and so tighter rules around this may come into force, including on the terminology used, for example, the term 'free bets' itself may no longer be allowed.
Exiting The UK
The UK has seen a lot of brands pull out of the UK recently driven by high competition, Brexit, higher tax and more regulation and this will likely be exasperated as more restrictions are announced in the new act.
Brands will likely be told they have to now provide a minimum amount of notice to leave the UK and part of this will be guaranteeing ante-post bets for a certain period.
Companies That Become Insolvent (Go Bust)
Far too many brand owners have gone bust in the last decade putting customer funds and bets at risk. We've already mentioned that the deposit protection scheme will probably be upgraded but alongside this companies are likely to be told to build in insurance or larger reserves to maintain their license.
The ownership structure of companies will also come under the spotlight to ensure those that own the brand can afford to operate.
One of the major talking points since the 2005 act came is is why lotteries have a minimum age of 16 yet gambling as a whole has a standard minimum age of 18. The age limit of 16 was brought in for the National Lottery partly to drive sales and tax revenue when it was first launched but this is now incompatible with the idea of responsible gambling.
In addition to an age limit rise to 18 the gambling act is also going to look at so called 'low risk' council and charity lotteries that have been cited as a gateway to gambling.
For the FA-Cup in 2020 many were outraged that one of the only ways people could watch a lot of sport was through bookmaker streaming services. Campaigners believe this encourages gambling and promotes adults to allow minors to watch bookmaker streams.
In response to this the companies in question made the games they stream available to other platforms but that will not make the discussion go away. Streaming is unlikely to be banned but there may be rules that mean that streamed content must be available on other non-gambling platforms and operators may be told they have to offer streams for free (currently to access streams most brands require you to have money in your account, deposit or bet).
Black Market Gambling
You cannot stop illegal betting but a lot of people think more can be done. As things stand now it is illegal for companies to offer gambling services in the UK if they do not hold a UKGC license, however, the UKGC does not actively stop illegal sites from taking UK customers, rather the onus is on the customer to ensure they are betting with a licensed brand.
The government can't close down all illegal sites as many are based in places, such as Curacao, where they have no powers. They could certainly do more though to at least inform customers about the risks as well as trying to take more action to close down the worst offenders.
More regulation as part of a new act will also naturally increase any black market and so it would be foolish if this were not addressed in a new act.
Affiliates and Advertising Partners
Operators are licensed although they can work with affiliates and advertising partners who are not licensed. Currently it is on the operator to enforce UK gambling laws with their partners but this has resulted in several failings, driven in part by the fact the individual brands do not often have the resources to monitor all of their partners.
One suggestion is for affiliates themselves to be licensed, which means they will be answerable under the law for the content they provide and the brands they advertise. The trick any new act will have to balance is appropriately regulating advertisers while preventing corporate domination of the sector. Independent advertisers are critical to maintaining competition.
Betting On Underage People
Sweden has banned betting on sports matches that include under 18's, such as commonly seen in tennis. This in principle seems like a good idea but it will be difficult to see how it could work in practice. Take a football match for example that starts with all 22 players over the age of 18 with a substitute under 18 coming on later in the game. It is hard to see how this could be enforced.
It is unlikely to be included as part of a new act.
Will It Be The End For The UKGC?
There are lot of people that think the UKCG and the 2005 act is toothless and so we could see a new regulatory body formed as part of a new act, in the same way the UKGC was established in 2005.
Any new body will however do pretty much what the UKCG does now but may be given a new name to reset trust in the organisation. What we can guarantee is the remit of the UKGC or new body will be larger with greater powers to fine or suspend companies.
There is also likely to be a lot more funding for the regulator than there is now. Currently the UKGC operates using the few million it generates from license fees and fines, however, this is seen as inadequate for an industry worth £15 billion and growing.
Other Considerations For A New Act
One thing that any new act has to be careful to balance is competition in the industry to prevent a monopoly. Several mergers of the biggest betting brands over the past decade has now lead to colossal betting groups worth billions (such as Entain, owners of Gala, Ladbrokes & Coral and Flutter/Stars, owners of Paddy Power, Sky Betting and Betfair). These companies are already creating a monopoly within the industry driving down competition and value for the customer.
The nature of the regulations discussed on this page requires brands to invest a lot of resources to meet them, unfortunately those brands with bigger budgets will of course be able to meet regulations more easily, which could kill off a lot of smaller companies.
A new act also has to balance freedom of choice for the customer with regulations designed to protect them. If the market becomes too regulated and as a result users notice a considerable drop in value there will be more incentive to gamble illegally.
The EU is also looking into how they handle gambling laws across the block and the UK would be wise to consult with them first to align any new act with EU policy. Most brands are based in the EU these days and so making rules consistent will aid their ability to meet them.