Betting and Gaming horizon scanning: UK regulatory roadmap: Spring 2023 edition

Paul Scully gave a speech at the BGC's AGM in which he addressed the Government's approach to, and possible content of, the White Paper.  At the time he was the DCMS Minister with responsibility for gambling.

He talked about the need to "get the balance right" between respecting people's choice to gamble on one hand, and on the other "follow[ing] the evidence and address[ing] the products and practices which increase the risk of harm".

Scully indicated that the Government does not plan to limit how much people are "allowed" to gamble; he suggested that instead of "affordability checks", the checks envisaged by the Government would more accurately be described as "financial risk checks", which would involve "checking that a higher than usual level of spend is not itself an indicator of harm".

Scully recognised the industry's economic contribution and the social and entertainment benefits of gambling.  However, he was also clear in his speech that there are still too many failings by gambling operators. He indicated that the Government is taking an approach that has a focus on balance and evidence-led changes. 

The fact that he wanted to change the narrative from "affordability" is to be welcomed, albeit that there is still no clarity on what 'financial risk checks' might consist of.  It does appear, however, that the Government intends to avoid "unnecessarily restrictive controls".

Following the cabinet reshuffle in February 2023, Paul Scully is now the Under Secretary of State at the DSIT (Department for Science, Innovation and Technology). The DCMS has now announced (as of 7 March 2023) that Stuart Andrew is the new government minister overseeing UK gambling policy.

The DCMS Committee has launched an inquiry into the Government's approach to the regulation of gambling.

A DCMS Committee member, Julie Elliott MP, has stated that "The DCMS Committee’s inquiry will look at the scale of gambling-related harm in the UK, what the Government should do about it and how a regulatory regime can best adapt to new forms of online gambling, based both in and outside the UK."

As part of its inquiry, the DCMS Committee has put out a call for evidence. The terms of reference of the call for evidence are as follows:

1. What is the scale of gambling-related harm in the UK?
2. What should the key priorities be in the gambling White Paper?
3. How broadly should the term, ‘gambling’, be drawn?
4. Is it possible for a regulator to stay abreast of innovation in the online sphere?
5. What additional problems arise when online gambling companies are based outside of UK jurisdiction? 

Copies of written evidence submitted to the inquiry were published on 21 March 2023.

The DCMS Committee is a cross-party Select committee, tasked specifically with scrutinising the work of the DCMS and its associated public bodies.

The Committee's terms of reference for the inquiry are broad, and the questions posed in its call for evidence go to the content of the White Paper and beyond, including to the definition of gambling in the UK. While DCMS will be required to respond to the recommendations that the Committee ultimately produces, it is under no obligation to delay the publication of the White Paper pending the conclusion of the inquiry.

Even if the results of the inquiry do not directly affect the content of the White Paper, at the very least, the recommendations will have an impact on public and political discourse.

The call for evidence was launched in December 2022 and closed on 10 February 2023. There are a number of procedural stages to an inquiry of this nature, including the gathering of both written and oral evidence. Written evidence was published on 21st March.

Our Politics & Law team have reviewed other recent DCMS select committee inquiries, and found that the length of time between launch and publication of the Committee's report ranged between 3 months to 16 months. The average length of time was roughly 10-11 months. Another important factor to note is the current workload of the DCMS Committee – there are currently 7 inquiries which have been opened but for which no report has yet been published; as such, publication of a report is unlikely to be a quick process. We estimate that publication may take between 9 and 16 months.

The time for the Government to respond to the report may then take between 2 to 5 months.

The Malta Gaming Authority (MGA) is in the process of developing a voluntary Environmental, Social and Governance (ESG) Code of Good Practice for the remote gaming sector (the Code). The Code would document common priorities and good practices for ESG in gaming, setting a voluntary standard for MGA-licensed entities. 

This follows the Maltese Government's recent launch of a voluntary ESG reporting platform, designed to encourage companies to publicly report on their ESG performance and to help drive investment towards sustainable businesses.

From 2024, all large or listed companies in the European Union (EU) will be required to report on social and environmental issues affecting their businesses under the EU's Corporate Sustainability Reporting Directive.  In this context, the MGA has been developing the Code to provide guidance for the remote gaming sector, to prepare local licensees for upcoming ESG regulations and to ensure that operators are proactive in achieving their ESG targets and can derive the benefits of running a sustainably conscious business model.

In establishing the Code, the MGA is aiming to capitalise on, and to help businesses to achieve, an increased focus within the gaming industry on promoting positive change in respect of societal and environmental impact.  This is important to the investment community as well as to consumers, and is of increasing significance for employees who wish to understand what their employers are doing to improve their sustainability and impact.

The MGA will hope that the Code enhances Malta’s reputation as a leading gaming jurisdiction, building on Malta's progress in improving its AML/ CFT regime, which saw the jurisdiction being removed from the Financial Action Task Force's grey list in 2022.

The MGA added: “Looking ahead, we expect to see more and more companies taking concrete actions towards becoming more sustainable, and we believe that reporting such efforts contributes positively to implementing change within the sector and improving its overall perception, while also addressing the increasing demand for transparency and accountability in the industry.

Leading livestreaming platform Twitch has announced via Twitter it will  ban streaming of certain specified gambling sites that (a) include slots, roulette or dice games, and (b) do not hold a licence in the US or in jurisdictions that provide "sufficient consumer protection".  At present only four such gambling sites have been specified as prohibited, but the policy makes clear that others may be added. Twitch's decision raises a number of potential questions on licensing and advertising rules for livestreaming and video platforms.

On 18 January 2023, the European Parliament voted in favour of a report asking for harmonised rules in the video games sector to protect consumers.

The adopted text of the report covers several areas including child and online safety, monetisation practices (loot boxes and in-app purchases) and data protection. Examples of specific proposals set out in the report include:

• requiring clearer information regarding the content of games (potentially along the lines of the PEGI system which is already commonplace across Europe);
• greater protection for minors regarding prompts for in-game purchases and 'gold-farming' (selling in-game items for real money); and
• greater transparency on the probabilities and algorithms behind loot box mechanisms.

To recognise and support the potential of the video games sector, the report also proposes the creation of an annual European online video game award and calls upon the European Commission to put forward a European Video Game Strategy.

At the time of writing, the European Commission has yet to put forward any legislative proposals to implement suggestions in the report.

The Commission is consulting on three proposed changes to the LCCP:

1. Extending the requirement to participate in the GAMSTOP scheme to betting operators who take bets via telephone and email.
2. Requiring all licensees to inform the Commission when they become aware that a person who has gambled with them has died by suicide.
3. Updating the references in the LCCP to ‘payment services’ and ‘payment services providers’ so that they refer to the most recent UK legislation.

The consultation closes on 23 May 2023.