• Home
  • Latest
  • Gambling Commission updates guidance on fair terms and practices

Gambling Commission updates guidance on fair terms and practices

Posted on 22 April 2022

On 16 February 2022, the Gambling Commission ("the Commission") published updated guidance on fair terms and practices.

The updates can be summarised as follows:

  • Transparency – licensees are reminded that consumers must be able to understand all the terms that govern their play. Licensees are further reminded that literacy levels vary significantly across the population and some consumers may not have English as their first language. The guidance indicates that there are freely available tools that can assess the reading level required to understand a piece of text (e.g. T&Cs). The Commission stops short of suggesting specific tools but we are aware that Microsoft Word has a readability scoring tool which can be activated via Options > Proofing > Show readability statistics. Once enabled, one can run a spelling and grammar check and once completed, information about the reading level of the document will be displayed. Information includes the Flesch reading ease score (which grades the text out of 100 whereby the higher the score, the easier it is to understand) and the Flesch-Kincaid Grade Level (which grades text on a US school grade level). A helpful document summarising how the Microsoft Word tool works is available here.
  • Undue discretion – the guidance indicates that a term that gives a licensee the discretion to decide when and how a term is applied would be unfair under the Consumer Rights Act 2015 (with which licensees are required to comply by virtue of licence condition 7.1.1 of the LCC). In particular, the guidance indicates that licensees should not have terms that say the licensee "may" or "reserve[s] the right" (or similar) to void or withhold a customer's winnings in certain situations including for suspected illegal, irregular or fraudulent play, use of multiple accounts and third party use or funding of accounts. The guidance indicates that the wording in italics is problematic and that consumers should know exactly what action the licensee would take in those circumstances. The Commission is likely to criticise operators if they are unable to demonstrate that the decision was justified by reference to the operator's AML obligations. As such, it is important that operators keep a written record of the rationale for enforcing such terms against consumers in case they are asked to justify their actions in the future.
  • Confiscation of un-staked deposits – licensees are reminded that customers' un-staked deposits remain their property and licensees must not have terms that allow them to confiscate un-staked deposits, other than where necessary to comply with licensees' regulatory obligations.
  • Reducing winnings on open bets must not be unfair – the guidance states that terms designed to permit a licensee to reduce potential winnings on open bets must not be unfair within the meaning of the Consumer Rights Act 2015. It further indicates that the Commission would consider that terms that oblige consumers to accept reduced benefits in the form of lower pay-outs would create a significant and unfair imbalance between consumer and operator. The guidance indicates that operators must not use terms that permit the reduction of pay-outs in exceptional circumstances" or those linked to commercial success. However, the guidance does acknowledge that terms capturing Rule 4 and situations where these is a clear and obvious error in the odds offered may fairly amend potential returns on open bets. Rule 4 is a general rule of betting which relates to the reduction of winnings when a horse that is backed wins or is placed. Reductions are made when a horse is withdrawn from a race because it becomes easier for the other runners to win and an amount of money is taken out of winnings to balance the effect of the non-runner.
  • Dispute resolution – the guidance warns against obstructive behaviours or incorrect assumptions the Commission is aware of, including suggestions by licensees that: the Commission has 'approved' their T&Cs (on the basis that no issues were raised during a recent compliance assessment); they are not a party to any undertaking with the CMA so their terms must be satisfactory; and adjudicating disputes based on fairness or transparency is outside the remit of ADR providers.

We recommend that you make all necessary amendments to your T&Cs and rules of play, whilst bearing in mind the requirement under licence condition 7.1.1 to notify customers of material changes before they come into effect.

If you do not consider any updates to be necessary, we recommend that you keep a note outlining the reasons for this in case the Commission asks for evidence that the updated guidance has been considered.

How can we help you?
Help

How can we help you?

Subscribe: I'd like to keep in touch

If your enquiry is urgent please call +44 20 3321 7000

Crisis Hotline

COVID-19 Enquiry

I'm a client

I'm looking for advice

Something else