Misleading the way

Recently, BGO Entertainment became the first online gambling company to be fined for misleading advertising in Great Britain – a concrete example of the Gambling Commission’s new approach to
enforcement of the rules relating to marketing offers which were introduced in May 2015.
The Commission ruled that BGO advertisements for promotions such as free bets were misleading, citing nine examples on BGO’s own website and a further 14 on associated third party sites, and fined it £300,000 for breach of its marketing obligations under the Licence Conditions and Codes of Practice (LCCP).
The LCCP stipulates that adverts and offers, including “free bet” offers, must not be misleading, and in particular must clearly state significant limitations and qualifications. This covers all forms of marketing communications, including social media. Operators are required to take responsibility for third parties with whom they contract for the provision of any aspect of their business which is related to licensed activities; this includes marketing and advertising networks such as affiliates.
Back in June 2015 the Commission found BGO was one of a number of licensed online operators whose advertisements failed to give sufficient information about conditions restricting its promotions. Although BGO assured the Commission it would take action, the Commission continued to find advertisements which it regarded as potentially misleading. Last summer BGO made changes in its own website but the Commission continued to find non-compliant advertisements on third party websites advertising on BGO’s behalf, and in September 2016 the Commission began a formal review of BGO’s licence. The Commission found that some BGO advertising, in its own and third-party websites, was misleading and so in breach of the LCCP; BGO’s failure to take timely and effective actions to address these breaches and its inaccurate assurances that the problem had been addressed cast doubt on its suitability to carry out its licensed activities.

Susan Biddle

The Advertising Standards Authority (ASA) and the Commission have been clear for some time that gambling operators need to take responsibility for the activities of their advertising networks and marketing affiliates. This was emphasised at the Commission’s “Raising Standards” conference in November 2016 and repeated at the ICE Gaming Expo in February 2017, when the Commission also stressed that:

• operators’ duty to treat consumers fairly will be an important theme for the Commission;
• advertising and marketing are among the top areas for consumer concern in relation to the gambling industry and are a key part of the fair treatment of consumers;

• the Commission was determined to use all its enforcement powers to drive a culture where the operator must put consumers first and create credible deterrents; and

• penalties are likely to be higher, particularly where the Commission finds systematic and repeated failings.

These themes were confirmed again on 6 July 2017 when the Commission published its revised enforcement strategy. The key take-aways are:
• operators must put the consumer first;

• there will no longer be a bias in favour of settlement, so licence reviews are more likely; and
• financial penalties will be increased, particularly for repeated non-compliance

It’s not just the Commission and the ASA who are concerned. The Competition and Markets Authority has also conducted an investigation into whether online gambling operators are failing to comply with consumer protection law by not treating customers fairly, and at the end of June announced it is taking enforcement action against a number of online operators in relation to the terms of promotions and pay-outs.

So what does this mean for the gambling industry? To ensure they are compliant, organisations need to keep the consumer, as well as the detail of the LCCP requirements, front of mind when creating ads or instructing advertising or marketing partners. Operators cannot “turn a blind eye” to their marketing partners’ activities.

For example, gambling advertising must not be likely to appeal to under 18s. In particular operators should not include a child or a young person (under 18) in marketing communications, and no-one who is, or seems to be, under 25 years’ old must be shown gambling or play a significant role in marketing material (with a limited exception for 18-24 year olds who are the subject of a bet such as young sports players).

Gambling operators must also ensure that they do not place digital advertisements on any websites “providing unauthorised access to copyrighted content”, and must “take all reasonable steps” to ensure that contracted third parties, such as affiliates, also comply with these rules. Operators must be able to terminate the appointment of any affiliate or other marketing agent whom it reasonably believes has failed to comply.

With intense competition in the gambling industry, there may be a temptation for advertising and marketing sometimes to push the boundaries. But operators also have a clearly defined social responsibility, one which the regulators are keen to enforce. Indeed, the Commission has repeatedly said that “mere” compliance with the letter of the LCCP is not sufficient – operators need to be seen to be putting the consumer’s interests first. With operators vying for any advantage, one thing that definitely won’t help is falling foul of the rules around advertising leading to a significant financial penalty.

Susan Biddle

Susan provides commercial, IP and IT advice to a variety of businesses, particularly those in the online/mobile gambling, retail, leisure, technology and media sectors. Clients in the gambling sector include those offering casino games, poker rooms, betting services and bingo, software developers, and those providing essential back office services. She also advises both gambling operators and brand owners on white-labelling arrangements for remote gambling. Her detailed understanding of the particular needs of the gambling sector, together with her long experience of complex IT and commercial projects, is a powerful combination for her clients, who range from listed multi-national companies to early stage new businesses. She has particular experience in advising on the revenue sharing and exclusivity supply arrangements which are often key to contracts in the online/mobile gambling sector. She is an active member of the GB Gambling Commission’s invitation-only industry lawyers group, and is regularly quoted by online gambling publications such as eGaming Review, Gambling Compliance and Online Gambling Lawyer (previously World Online Gambling Law Reports).

Susan advises clients in all sectors on prize draws and promotional competitions, ensuring these fall outside or comply with the relevant gambling regulatory regimes and also comply with advertising codes, data protection legislation and relevant social media requirements. Her experience of the issues enables her to combine a practical commercial approach with the speedy response often required for this advice.

She also advises a wide range of businesses on IT and commercial contracts, content supply arrangements, and structuring and implementing contractual and commercial joint ventures and industry-wide co-operation agreements. Susan is co-author of the IT contracts chapter of the Encyclopaedia of IT Law.