Gambling Commission – Written evidence (GAM0071)

 

1              Executive summary

 

1.1      The Gambling Commission (the Commission) regulates commercial gambling in partnership with local authorities. We also regulate the National Lottery. Whilst taking a risk-based approach to regulation we have become increasingly robust in the action that we take against both licensed operators and the key individuals who work for them.

 

1.2      The current gambling regulatory framework has been capable of being flexed to meet new and emerging risks. It is, of course, important to keep that framework under review to ensure that it continues to provide that same responsiveness to future challenges.

 

1.3      We have a very clear focus on addressing and preventing the harms that can come from gambling. The National Strategy to Reduce Gambling Harms, that was published in April 2019, provides a roadmap for action over the next three years. It aims to coordinate efforts across a wide range of bodies to focus on those priorities which will have the most impact in reducing gambling harms.

 

1.4      Protecting children and young people is a particular priority. Gambling companies offering facilities in Great Britain are subject to stringent age-verification controls underpinned by the potential for regulatory and criminal sanctions. Our continued success in addressing underage gambling faces challenges from outside our statutory remit, as for example the lines between video gaming (which we do not regulate) and gambling become increasingly blurred.

 

1.5      We understand DCMS, our sponsor department has provided the committee with a detailed overview of the architecture of the regulatory framework and the activity currently being taken to address the Committee’s areas of interest. Much of this draws upon our data and research and so to minimise the risk of duplication we have focused our submission on providing the Commission’s perspective on key issues. We are happy to provide the committee with any additional information it requires.

 

2              Gambling Act 2005

 

Gambling regulation

 

2.1      The Commission regulates commercial gambling in Great Britain in accordance with the Gambling Act 2005 (the Act). We also regulate the National Lottery under the National Lottery etc. Act 1993. We are an independent public body funded by licence fees paid by the gambling industry, and a grant in aid for the regulation of the National Lottery. Our expenditure for 2018/19 was £27.58m, of which £2.89m related to the regulation of the 3rd National Lottery licence and £4.01m related to the development of the competition for the award of the 4th National Lottery licence in 2021.

 

2.2      In exercising our functions under the Act, the Commission has a statutory duty to aim to permit gambling, in so far as we think it reasonably consistent with pursuit of the licensing objectives. The licensing objectives are to prevent gambling being associated with crime, ensure gambling is conducted in a fair and open way, and to protect children and vulnerable persons from being harmed by gambling.

 

2.3      The ‘aim to permit’ distinguishes the current framework from its predecessor devised in the 1960s, which treated gambling as something to be tolerated but not encouraged. The Act passed by Parliament in 2005 which took effect in 2007, is based on the recommendations of the Gambling Review Body chaired by Sir Alan Budd. It updated and consolidated gambling legislation under an overarching public policy that gambling is a legitimate and mainstream leisure activity, but one which must be licensed and regulated.

 

2.4      The UK gambling industry is large and diverse with c. 2,800 operating licenses issued to companies who, when combined with the National Lottery operator generated £14.6bn Gross Gambling Yield (GGY) from consumers in 2017/18.

 

2.5      No regulatory model, including prohibition, can be applied to gambling to completely remove the risk it can pose. The Act creates a system of regulation which seeks to mitigate the inherent risks in a manner which balances the freedom of the 24 million adults who chose to gamble, to continue to do so, whilst protecting the 340k people classed as problem gamblers and further 1.7 million who are at some risk of gambling harm.

 

2.6      Internationally the UK approach is considered a leading example of modern gambling regulation, with Ireland being the latest jurisdiction to adopt a similar model. Our Corporate Strategy 2018-21 sets out those areas where we are working to ensure the industry is fairer and safer for consumers. Success for the Commission is to have a responsible and responsive market, free from crime where consumers are as far as reasonably possible protected from harm.

 

2.7      Regulation has evolved, and must continue to evolve, to keep pace with the rapid advances in technology which now means that more than 50% of online gross gambling yield is derived from mobile devices such as tablets or mobile phones. The gambling industry is developing new innovative business models and products which can challenge traditional gambling definitions and risks.

 

2.8      The Act provides flexibility for Ministers and the Commission to adapt to emerging technologies and risks without necessarily requiring changes to primary legislation. Whilst the overall architecture of the framework and key definitions are enshrined in primary legislation the Act empowers the Secretary-of-State, the Commission and local authorities to use their respective powers to act subject to appropriate safeguards. For the public to retain confidence in the regulation of gambling it is important it continues to evolve to new and emerging risks, and this requires regular review to ensure the powers and resources available to the Commission and others remain appropriate.

 

2.9      The Gambling (Licensing and Advertising) Act 2014 closed a significant gap in the regulatory framework by addressing the issue of offshore companies providing online gambling to British consumers without requiring a Commission licence. Now any company wishing to transact with consumers in Britain must obtain an operating licence from the Commission, meaning we now regulate 100% of the legal British market.

 

Unlicensed/illegal gambling

 

2.10 In addressing the illegal market, the regulatory framework needs to be flexible enough to reflect the changing dynamics of technology and media that unlicensed illegal operators and consumers use. The Commission gives priority to issues based on the level of risk they pose to the licensing objectives, including establishing the number of customers in Great Britain that may be visiting the unlicensed operator. To date, the activities the Commission has undertaken have been effective and we have not seen widespread illegal gambling in the UK.

 

2.11 That said, we are experiencing increasing volumes of small-scale illegal gambling offerings via social media such as unlicensed lotteries. We are engaging with social media platforms and payment providers to disrupt such activity.

 

2.12 We take seriously attempts to offer gambling to children and continue to disrupt those who offer illegal products such as skins gambling. Where we suspect individuals or companies are illegally interacting our initial action is to issue cease and desist demands. Should these not be complied with, we can and have escalated matters by opening a formal criminal investigation and in parallel with use of disruption techniques. Our methods have included utilising our relationships with web hosts, payment providers and social media sites.

 

2.13 We have a range of investigatory powers available to us, but this type of criminal investigation is challenging, resource intensive and expensive with little case law for precedent. We continue to work with overseas regulators and law enforcement to identify how they manage similar threats and the most effective tools for prevention and disruption.  We acknowledge these are global challenges and there are limitations to what can be achieved by individual domestic regulators. Our international partnerships are therefore key to our strength as a national regulator.

 

2.14 The option to block domains, was discussed in developing The Gambling (Licensing and Advertising) Act 2014. This remains a further option to consider and if necessary, the Commission would engage with DCMS to discuss viability as we would if we identify other techniques being used, which we regard as necessary to remain effective.

 

Licensing

 

2.15 The Commission uses the full range of regulatory and criminal powers to licence and regulate the gambling industry. Our first line of defence is a robust licensing process to ensure companies and individuals who pose undue risk to the licensing objectives are not able to operate in the UK. Our assessment of applications scrutinises an applicants suitability to hold a licence taking into account identity and ownership, finances, integrity, competence and any relevant prior criminality. Applicants must submit policies and procedures as part of the assessment undertaken to evidence how they will uphold the licensing objectives. At present the Commission has approximately 2,800 licensed operators and 20,000 licensed individuals.

 

2.16 Whilst we have seen a decline in new operating licence applications in recent years, the overall demand on our licensing functions has increased as demonstrated in figure 1, which shows the number of key individual licensing requests handled in each of the last three years. Key individual requests consist of new licence applications, changes in corporate controls and applications to vary licences, for example an operator expanding the scope or scale of their business.

 

2.17 The Commission’s risk-based approach at application or when a licence is varied (for example, following a change in corporate control) has been praised in the Treasury Report on anti-money laundering.

 

 

Figure 1: Number of key individual licensing requests handled annually

Line graph showing the increase in annual individual licensing requests from 2016 to 2019

 

Compliance and enforcement

 

2.18 Once licensed, operators and key personnel are subject to our ongoing programme of risk-based compliance activity to ensure licence holders understand and are compliant with the law and with the licence conditions and codes of practice (LCCP). We conduct full assessments of the operators we licence as well as targeted and thematic assessments. Our compliance activity is supported by proactive engagement and the sharing of guidance to assist the industry to meet its responsibilities and to raise standards. In 2018/19 we have undertaken approximately 1,200 compliance assessments, 38 corporate evaluations and hosted 21 workshops or webinars for licensees.

 

2.19 In a limited number of cases where compliance interventions prove insufficient to address identified risks, the Commission has regulatory powers including the ability to issue formal warnings, impose additional conditions on the licence holder, levy financial penalties and suspend or revoke licences from companies or key individuals within companies.

 

2.20 The Commission deploys its enforcement capability to protect consumers and uphold the Licensing Objectives. We use our enforcement powers in accordance with our published Statement of Principles, the Licensing, Compliance and Enforcement Policy Statement, the Statement of Principles for Determining Financial Penalties and the Indicative Sanctions Guidance.

 

2.21 Our resources are focused on the areas which have the greatest impact, such as the large-scale review of the online casino sector last year. That work identified significant failings in anti-money laundering and social responsibility controls at several operators, which has so far resulted in nearly £18 million in penalty packages and action being taken against some of the senior management who hold personal management licences. We expect this work will result in a significant and lasting changes for the whole of the online sector.

 

2.22 We have made effective use of public statements in a number of concluded enforcement cases both as a means of deterring further non-compliance by the licensees involved but more importantly to share learnings as we seek to raise collective standards. Our view is that we cannot simply enforce our way to a safer and fairer gambling industry. Enforcement action is a necessary step where other initiatives led by regulators, industry or third parties are not sufficient to protect the public. Unfortunately, we have in recent years had to resort to an increased use of enforcement powers as demonstrated in figures 2 and 3 which show the increase in incidents or issues subject to internal escalation and the number of occasions where this has resulted in a regulatory or criminal investigation being conducted.

 

Figure 2: Total number of incidents referred to our Issues Management Group

 

Line graph showing the increase in incidents referred to their Issues Management Group from 2016 to 2018

 

Figure 3: Number of regulatory and criminal investigations conducted

 

Line graph showing the number of regulatory and criminal investigations conducted from 2016 to 2019

 

 

2.23 Working in partnership with other regulators is a key part of our approach. We work closely with the Advertising Standards Authority on gambling advertising to ensure that marketing is socially responsible. We have also worked with the Competition and Markets Authority on unfair terms and misleading practices in the online sector, and the Information Commissioners Office on responsible use of player data. Incorporating key legal requirements into our own licencing requirements has enabled us to act against our licensees following notification of breaches from other regulators who may not have equivalent enforcement powers.

 

2.24 The Act introduced a co-regulatory system for the licensing and oversight of premises-based gambling. The Commission issues operating and personal licences whilst local licensing authorities license and regulate individual gambling premises and issue permits for gaming machines in pubs and clubs. The fees that local authorities charge to license premises are intended to resource their local regulatory activities. The most recent Licensing Authority Statistics report (April 2017 – March 2018) showed that 259 of the 380 licensing authorities at the time undertook gambling inspections.

 

2.25 The licensing conditions, codes of practice and accompanying technical requirements which are imposed on Commission licensees create a comprehensive suite of regulatory requirements. These relate to the way facilities for gambling are provided at all stages of the consumer journey including advertising, age-verification, complaint handling and self-exclusion. There are also various monitoring and reporting requirements on operators to ensure the Commission has the necessary information to enable us to assess regulatory risk. Where licensees fail to act in accordance with their licence, the Act allows for regulatory or criminal sanctions to be imposed, including ultimately revocation of licence. Our focus has and will continue to be on evolving those requirements to manage the risk to the licensing objectives.

 

Consumer redress

 

2.26 In the civil sphere, licensees have legal duties of care to customers insofar as these are included as part of, for example, generally applicable consumer law or data protection law. Separately, the Commission’s approach in recent times to make greater use of our powers to impose financial penalties (or in the alternative, regulatory settlements which include a requirement for operators to divest profits) has, as well as increasing compliance, drawn the attention of some gamblers to the possibility of obtaining voluntary refunds from the industry upon the threat of a complaint to the Commission.

 

2.27 The current gambling regulatory framework requires licensees to demonstrate how they take care of the consumers who use their products and services. It imposes a responsibility on licensees to deliver the outcomes we require to uphold the licensing objectives. Our focus has been on making use of our statutory powers to raise standards and protect consumers. We have not committed resource to explore in-depth how imposing further civil duties of care to consumers could operate as we do not consider that the existence or lack of such a civil duty impacts upon our ability to deliver our regulatory objectives.

 

2.28 We recognise that there isn’t a comprehensive solution for individual consumer redress. We have recently strengthened the rules around Alternative Dispute Resolution which can be used if consumers are not happy with how an operator has handled their complaint. It is a requirement that all gambling companies are signed up with an ADR provider we approve. Whether the introduction of an ombudsman-style organisation in the gambling sector is appropriate is for Government to decide, but we welcome the debate on how that could improve outcomes for consumers and how that might work.

 

2.29 As we seek to improve the way we regulate on behalf of consumers and the wider public it is important we find ways to tap into consumer and public issues to inform action. We are exploring innovative ways to engage with consumers and reflect on the views of those with direct experience of the industry. We also operate an in-house consumer contact centre which manages an increasing number of consumer contacts as demonstrated in figure 4 below which shows that contacts to the Commission have doubled since 2015.

 

 

 

Figure 4: Number of contacts handled by Commission’s Contact Centre

 

Line graph showing the number of contacts handled by the Committee's Contact Centre

 

 

3              Social and economic impact

 

3.1      The gambling industry provides direct and indirect employment and generates economic activity - In 2018, there were 106,670 direct jobs in the gambling sector, accounting for 0.3% of all UK employment. The HMRC betting and gaming statistics show that in financial year 2018-2019, the gambling sector contributed £2,985m in duties. Primary contributions[1] to good causes from The National Lottery were £1,500m (Oct 2017 – Sept 2018) and contributions to good causes from large society lotteries during the same period were £314m.

 

National Strategy to Reduce Gambling Harms

 

3.2      In April we launched the National Strategy to Reduce Gambling Harms, which replaced the National Responsible Gambling Strategy published by the former Responsible Gambling Strategy Board. Progress under previous strategies had been too slow and so we concluded that it was necessary for us to take on ownership of a national strategy that would identify strategic priorities to inform the use of available resources. By tracking the efforts across a range of bodies it is hoped the strategy will bring a greater focus and identify any gaps on the two strategic priorities of (i) prevention and education (ii) treatment and support. As part of those efforts we can exert direct influence on the gambling industry which has a critical frontline role to play in reducing gambling related harms.

 

3.3      A key action under the National Strategy to Reduce Gambling Harms is to progress the framework for measuring harms under the Commission’s research programme. Current screening tools that measure the prevalence of people identified as problem gamblers provide a useful insight, and will continue to do so, but they fail to capture the full scale of harms that are caused by gambling.

 

3.4      We are also working to align this work to that being carried out by others. This includes: the work which has been commenced by Public Health England (PHE) and the National Institute of Health Research (NiHR) to conduct evidence reviews on gambling harms; the work being undertaken in Wales, building on the Annual Report 2016/17 by the Chief Medical Officer for Wales, Gambling with our Health’; and the work in Scotland to scope, develop and implement a whole population approach to prevention and reduction of gambling harms being progressed by the Scottish Public Health Network.

 

3.5      Earlier this year, we commissioned the London School of Economics (LSE) to recommend suitable metrics and methods to progress this work. They led a team that has surveyed academics from a broad range of countries.

 

3.6      The team from LSE have recommended an economic assessment incorporating conventions used in assessments for other public health issues, such as quality adjusted life years (QALYs), whilst confirming the need for longitudinal evidence to generate data for harms caused at all levels. Methodologies that deal with the issues of causality are recommended, as is development of a simulation model for calculating long-term costs.

 

3.7      The report will be made available in late September this year and we will continue to progress this important work to measure harms. This will build on other aspects of the Commission’s research programme such as work to understand the links between suicide and gambling. We will also seek to ensure that our work is aligned to the work which may come out of the PHE and NiHR evidence reviews. In addition, we are progressing and supporting work with partners to further measure harms and identify where prevention activities will have most impact – an example of this is the Howard League’s Commission on Crime and Problem Gambling.

 

4              Research, prevention and treatment

 

4.1      Further to the oral evidence we provided on 23 July 2019, we have three key messages in relation to research, prevention and treatment:

 

 

 

 

4.2      There have been great strides to improve the research structures, but in the National Strategy we publicly state that there is a need for further improvements in five areas: 

 

 

  

 

  

 

5              Advertising

 

5.1      We share concerns that gambling advertising and marketing, including sponsorship, could lead to gambling-related harm for children and other vulnerable people but the current evidence is not clear on this matter. This is why we are working with our expert advisors, the Advisory Board for Safer Gambling and GambleAware to gather new evidence to explore these issues further.

 

5.2      The Gambling Act 2005 removed the previous restrictions, to permit the advertising of gambling products and services provided that it is legal and there are adequate protections in place to prevent such advertisements undermining the licensing objectives.

 

5.3      The rules for gambling advertising are written by the Committees of Advertising Practice (CAP) and enforced independently by the Advertising Standards Authority (ASA). We can take action, including fining, if there are serious or repeated breaches of the rules. The rules are designed to ensure that gambling advertisements are socially responsible, with particular regard to the need to protect under-18s and other vulnerable persons from being harmed or exploited by advertising that features or promotes gambling. Gambling ads must never appear in children’s media, be directed at children, or contain content which is of particular appeal to them.

 

5.4      Broadcast Audience Research Board (BARB) statistics show that between 2008 and 2017, children’s exposure to gambling ads on TV increased by 25% from an average in 2008 of 2.2 ads per week (the first full year in which ads for gaming and betting were allowed on TV) to 2.8 ads per week in 2017. In 2013, children’s exposure to gambling ads on TV peaked at an average of 4.5 ads per week. Most TV gambling ads seen by children are for bingo and lottery products.

 

5.5      We know that children’s media viewing habits are changing though, and the multiplicity of online marketing and advertising methods increases the exposure of children to gambling ads. For example, our statistics show that 12% of 11-16-year-olds follow gambling companies on social media, 59% have seen gambling ads on social media websites and 53% on other websites.

 

5.6      The interim research report on the volume, exposure and features of gambling advertising, published in July 2019, found no evidence of gambling adverts appearing to be targeted directly at children but that children and young people reported high levels of exposure, and spoke of the ubiquitous nature of gambling advertising, across multiple formats, and at different times of the day. It also found clear evidence of children following and engaging with betting related accounts on Twitter. However, the research also notes that advertising is not the only route of exposure to gambling. Participants noted the role of family and friends in introducing them to gambling, often at a young age.

 

5.7      A final report, which considers the impact of gambling advertising on children, young people and vulnerable adults, is due to publish by the end of the year. We will continue to work closely with the ASA and CAP, taking account of the research findings to ensure the gambling advertising rules and accompanying regulation are effective.

 

6              Gambling and sport

 

6.1      Our official gambling participation statistics show that 7% of adults have placed a sports-related bet within the past four weeks (and 6% have placed a bet on football, by far the most popular type of sports betting).  In addition, recent qualitative research by 2CV on behalf of the Commission explored why people gamble and how gambling fits into their lives.  One of the key findings of the research was that whilst most people perceive there to be minimal conscious cross-over between their passions/interests and their gambling behaviour, the primary exception to this is the overlap between gambling and passion for sports betting, which can be powerfully and consciously linked. Some football fans now feel the need or choose to place bets on matches to maximise their enjoyment of the game or feel socially included.  Some of the social groups that form around watching football have developed an increasing focus around competitive social gambling.

 

6.2      The research also demonstrated that consumers see football and gambling as having more touchpoints than ever before, for example through mobile and in-play betting, advertising, sponsorship and social media.  Research participants recognised how technological innovation is helping to fuel the rise in sports (and especially football) betting through increased access and expanded product opportunities.  Also, gambling advertising in sport was perceived as a problem due to it potentially reinforcing the sense of social acceptability around gambling and nudging risky play behaviour.

 

6.3      The Gambling Act 2005 permits commercial sponsorship arrangements, but the advertising rules apply meaning the promotion of such arrangements must be socially responsible and must not target or be of particular appeal to u18s. For example, replica sport shirts designed for children must never carry gambling brands, and sponsor logos must never appear on the children section of football club websites.

 

6.4      We note the concerns expressed about the “gamblification” of sport and the associated risk of excessive exposure to gambling among children and young people. Last year we called for a proper and constructive debate about sponsorship arrangements in sport and warned industry that it would be unwise to ignore the hardening public mood. We therefore welcomed the industry’s decision to introduce a voluntary whistle-to-whistle ban on betting advertising around live sport and highlight shows.

 

6.5      The research project on gambling advertising includes a focus on sport sponsorship. A final report, which considers the impact of gambling advertising, including sponsorship, on children, young people and vulnerable adults, is due to publish by the end of the year. We will work with all interested parties to consider the research findings and reflect on the effectiveness of current controls.

 

Sports betting integrity

 

6.6      The Commission is at the heart of Britain’s betting integrity national platform. Working collaboratively across the betting industry, sport, regulators and law enforcement, we protect sport and sports betting from the risks of match fixing and other betting integrity issues.

 

6.7      The Sports Betting Intelligence Unit[2] (SBIU) is the platform’s intelligence hub, with the strategy driven by the Sports Betting Integrity Forum[3] (SBIF). Along with managing day to day operational issues, the platform also works together to identify emerging risks, agree on priority actions to mitigate these risks and promote education programmes. It is also responsible for delivery of Britain’s Sport and Sports Betting Integrity Action Plan.

 

6.8      Operators are obliged under the Licence Conditions and Codes of Practice to report suspicious or irregular activity to the SBIU, who gather intelligence from a number of sources to decide on the most appropriate course of action. This action could include, but is not limited to, a criminal investigation, a sports investigation or passing intelligence onto national and international partners. Figure 5 below shows the volume of reports received by the SBIU for analysis has more than doubled since 2015 reflecting the improved understanding of reporting requirements and also the growth in the number of betting markets offered to British consumers or on British events.

 

Figure 5: Total reports received by the SBIU

 

Line graph showing the increase in reports received by the SBIU

 

6.9      Operators and sport also collaborate directly on cases where the input of the SBIU is not appropriate, such as breaches of a sports betting rules (i.e. many Sports Governing Bodies prohibit participants betting on their sport as part of their terms and conditions). These positive relationships have been developed through the work of both the SBIU and the SBIF.

 

6.10 We are held in high regard globally and our model is the blueprint for a national platform as set out in the Macolin Convention[4].

 

7              Gambling by young people and children

 

7.1      The protection of children and young people from being harmed or exploited by gambling is a cornerstone of the regulatory framework. This is reflected both in the strict licence conditions we impose to prevent underage gambling and the specific criminal offences which are set out in Part 4 of the Act.

 

7.2      In May 2019 we used our powers to strengthen the age verification requirements for online gambling websites. Licensees are now required to verify the age of customers before allowing them to deposit money, gamble or access play-for-free versions of gambling games.

 

7.3      The existence of robust age-verification and ‘know your customer’ controls for online gambling means as a sector the licensed gambling industry is better placed to address the challenges the government is currently wrestling with in relation to wider online harms, where anonymity or self-certify age controls present regulatory challenges. Such challenges have been a feature of the work of the Commission and others to effectively tackle the risks associated with new forms of gambling or gambling-like activities associated with video games and social media.

 

7.4      To help inform the Government’s work we commissioned advice from the ABSG in relation to the White Paper on Reducing Online Harms. This advice made a case for gambling-related harms to be more clearly recognised within the scope of the work that follows and specifically highlighted issues related to: 

 

              children and young people.

 

 

 

7.5      We support the approach taken by ABSG in this advice to the Commission and have submitted the advice to Government for further consideration.

 

7.6      For premises-based gambling, test purchasing is one approach by which the Commission or licensing authorities can test the effectiveness of operator’s controls. In 2018 licensing authorities led on test purchasing exercises to check age verification compliance levels on gaming machines in 61 pubs which resulted in nearly 90% failure rate.  Tests by licensing authorities are ongoing whilst we continue to work with the pub sector to improve this situation. A recent joint exercise between the Commission and a licensing authority identified age verification failings by bookmakers at a racetrack and the Commission is taking enforcement action as a consequence.

 

7.7      Test purchasing is also an effective means by which licensees may seek assurance on the effectiveness of their controls. Since 2015 we have required those licensees who operate the largest number of gambling premises to conduct their own test purchase exercises, whilst trade bodies operate equivalent schemes for smaller businesses.

 

Category D machines

 

7.8      The Commission does have concerns about Category D fruit machines which are typically found in premises catering for children and young people – it is confusing for children and parents when products for children look and feel exactly like those which are limited to adults, and we do not know enough about the long-term impacts.

 

7.9      This is one of the reasons we asked ABSG to advise us on gambling by children and young people. ABSG considered this issue, and concluded There is, as yet, no conclusive evidence of harm resulting from such play.’ However, they also state that ‘In our view, the precautionary principle should give pause for thought about the continued availability of Category D fruit machines, and possibly other category D products.’ 

 

7.10 We responded to that advice agreeing that low stakes should not automatically lead us to assume that risks associated with these activities are also low. We expect operators selling products to under- 18s, regardless of stake level, to consider what further proportionate actions could be taken to reduce the risk of harm. The Commission will work with the industry and others to identify what activities should be prioritised for piloting and evaluation.

 

7.11 We will work with industry (including trade bodies such as BACTA) to explore what more they can do to improve standards of player protection – particularly those parts of the industry who (legally) sell their products to under-18s as customers, such as the arcade sector and the National Lottery operator.

 

7.12 As a result of our work with the industry, BACTA (the trade association for the arcades sector) has recently announced a voluntary commitment that arcades will no longer permit children under 16 to play on Category D cash pay-out fruit machines unless accompanied by an adult.  We are monitoring these developments carefully – we see this as an initial step, and it may be that further action on either a voluntary or regulatory basis would be appropriate.  

 

Minimum age - National lottery

 

7.13 Responsibility for setting the minimum age limits for playing the National Lottery lies with the Government. In July, DCMS announced plans to hold a consultation on whether the age limit should be raised to 18 for some or all National Lottery products.

 

8              Lotteries

 

8.1      In July the Government published its response to the consultation on society lotteries, signalling an intention to raise the society lotteries’ annual sales limit to £50 million, and the maximum per draw prize to £500,000.

 

8.2      Charities and other good causes acting as society lotteries play a vital role in fundraising through lottery products. By increasing the annual proceeds limit society lotteries will benefit from greater flexibility to raise more funds for good causes.

 

8.3      Any money generated by ticket sales for society lotteries can only be returned to the good cause, used to pay prizes, or to fund reasonable expenses. Commercial lotteries – those run for commercial or private gain - are not permitted.

 

8.4      Whilst the fundamental purpose of lotteries is to raise funds, there is a commercial element to the sector. Society lotteries are permitted to employ licensed external lottery managers (ELM) to run all or part of their lotteries. Often ELMs will charge a fee to do so with the society benefiting from the experience of the ELM and often from the economies of scale it can offer. ELM fees form part of the expenses of the lottery. The Commission has issued advice on the role of ELMs, including our expectation that the fees paid remain reasonable. Where we have concerns, this is not the case, we can act.

 

8.5      In making the decision that society lottery limits should be increased, the Government also announced our intention to review the regulation of society lotteries to ensure controls are strengthened where necessary. We will be working with Government to ensure the regulation of society lotteries is consistent with their planned reforms.

 

8.6      Society lotteries operate under the regulatory framework created by the Gambling Act 2005. The National Lottery operates under a separate statutory regime set by the National Lottery etc Act 1993.

 

8.7      In respect of the National Lottery our focus (subject to ensuring player protection and all due propriety) is that the current licence holder maximises returns to good causes in accordance with our statutory duties. The current licence runs until 2023.

 

8.8      We are currently prioritising plans for the competition to award the next licence to operate the National Lottery and do not envisage any short-term desire or motivation in Government to legislate to consolidate the different statutory regimes. We currently apply the different frameworks in pursuit of their respective objectives, and any plans for fundamental legislative change could create uncertainty for potential bidders in the licence competition.

 

6 September 2019


[1] Primary contributions include returns generated by game sales, but excludes certain other contributions and adjustments, most significantly the payment of unclaimed prizes to good causes.

[2] Sports Betting Intelligence Unit

[3] Sports Betting Integrity Forum

[4] The Macolin Convention (The Convention on the Manipulation of Sports Competitions)