UKGC Moves to Increase Consumer Protections in Online Gambling

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The gambling regulator in the United Kingdom has found that under its rules, consumer protections and social responsibility measures around the use of gambling…
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The gambling regulator in the United Kingdom has found that under its rules, consumer protections and social responsibility measures around the use of gambling machines could be significantly improved.

In a report issued this week, the UK Gambling Commission (UKGC) made recommendations that would harden protections for gambling consumers (including those participating in gambling over the internet) following a thorough review of the gambling industry in the country.

The purpose of the review was to “reduce the risks that consumers, especially those that are vulnerable, face from gambling,” and the report calls upon industry stakeholders including the government, the UKGC and gambling providers to play a role in the achievement of the stated initiatives.

Many of the headlines coming out of the UKGC’s review focus on recommended changes to range of acceptable stakes for fixed odds betting terminals (FOBT), electronic gambling games that return a predetermined percentage of the overall money wagered to the consumer as winnings over the course of time.

Examples of FOBTs include roulette, slot machines, bingo and simulated horse and dog races. FOBTs are traditionally found in land-based betting shops, but with the growing popularity of online gambling, and in particular online gambling that takes place on mobile devices, the recommendations made by the UKGC will likely have a much broader impact on the gambling industry in the United Kingdom.

Stake Limits for FOBTs

In conjunction with making a recommendation regarding stake limits for FOBT, authorities sought the input of other stakeholders including local authorities, political organizations, faith groups and licensed gaming operators.

Gaming operators suggested keeping the current stake levels and enhancing responsible gaming measures as a way to further protect consumers. However, other stakeholders proposed lowering the maximum stake levels as their preferred strategy.

The report recommends a sharp reduction in stake limits for FOBTs. Currently, these betting devices have a maximum stake limit of £100 and a limit of £500 on the amount of the prize a consumer can win from their wager. The report suggests reducing the stake limit to £2 for FOBT slots games and £30 for other FOBT games.

In addition to revising the allowable stake levels, the regulator also recommends measures that would further limit the amount that a player can lose over a certain period of time by adjusting the volatility of returns and the speed of play.

The United Kingdom’s Light Touch Approach to Online Gambling

Traditionally, the UKGC has been known for its “light touch” approach to online gaming regulations. Compared to other gaming regulators round the world, The UKGC has imposed fewer restrictions on online gambling operators.

One such example is the way the UKGC treats online poker player pools, commonly referred to as “liquidity.” Most other major online gambling regulators around the world have limited the players that can be included in an online poker operators’ games by creating regulations that require operators to segregate their player pools in their jurisdiction from the companies’ other operations in other countries.

This closed liquidity model has proven detrimental to online poker, and while regulators in jurisdictions such as France, Spain, Italy, Portugal and New Jersey have learned their lesson in this regard and have moved away from the closed liquidity model, current regulations still restrict the sharing of player liquidity to other jurisdictions that have similar regulatory requirements and have established a formal agreement between the government authorities in those jurisdictions.

In contrast, the UKGC allows online poker operators to offer games to those in the UK that include players from outside of the country. This is of particular value to players that choose to play on sites that have a large global presence, as it provides a wider choice of games, stakes and far bigger prize pools for poker tournaments than operators in a closed or limited liquidity jurisdiction.

However, as part of its review, the UKGC has recognized a number of areas in the online gaming sector in which it can implement improvements to further enhance the effectiveness of the protection of consumers.

Unfair Practices in Online Gambling Promotions

The online gambling market in the UK was established in 2014 and represents the largest regulated online gambling market in the world. In the UK, the industry now generates £4.7 billion gross gambling yield (GGY) per year and growth in the sector is expected to continue. Considering the size of the market, it is no wonder that the regulator paid particular attention to the igaming side of the industry.

The UKGC made recommendations for policy changes in several areas of online gaming.

One area that the UKGC is looking to shore up its regulations is around unclear and/or unfair terms and conditions on gambling sites. A review by the regulator found “widespread instances of unfair terms and practices in relation to promotional offers.”

These days, at many online casinos no deposit is required to be able to play for real money, but the significant restrictions that accompany some of these promotional offers have angered consumers, which in turn has put the issue on the radar of the gaming regulator.

Warnings have been issued to some licensed operators, and the UKGC has already begun consulting on amendments to the regulations. “We will also publish guidance for operators and ADRs on unfair terms, and provide more information to consumers about the treatment they should expect to receive,” the regulator stated in the report.

Underage Consumers of Online Gambling

Making sure that underaged people are not engaging in online gambling is an area of particular interest to the regulator. A recent study found that 3% of children ages 11 to 16 years old claimed to have gambled on the internet.

In addition, broader concerns were raised about the availability of some online social games. While these games are not technically considered gambling, in part because they are free and provide no monetary prize, “they may encourage young people to gamble,” the regulator contends.

As of now, there are no requirements for playing social-style casino games offered by licensed operators, but the regulator has flagged this issue and plans on possibly amending its regulations to require age verification for those seeking to play those games. The UKGC is also concerned about “gambling-style games that are offered by non-gambling operators” which fall outside of the purview of the regulator.

March 20, 2018
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