19 September 2019 - Minutes of the meeting of the Board of Commissioners

Location: Victoria Square House, Birmingham (Boardroom)

Commissioners:

• Bill Moyes (Chair – from 09:40)
• John Baillie
• Carol Brady
• Stephen Cohen
• Sarika Patel
• Trevor Pearce
• Jonathan Scott
• Catharine Seddon

Executive directors:

• Sarah Gardner
• Paul Hope
• Neil McArthur
• Tim Miller
• John Tanner
• Helen Venn
• Richard Watson

In attendance:

• (REDACTED) (Board Secretary)
• Oliver Sweeney (Legal)
• (REDACTED) (notes)
• (REDACTED) (Ipsos Mori, item 7)
• Plus attendees for specific items

Apologies:

• None

Welcome, apologies and declarations of interest

Catharine Seddon took on the role as Chair in the absence of Bill Moyes who had been delayed due to travel issues. No decisions were taken until Bill’s arrival.
There were no declarations of interest.

Catharine Seddon welcomed back Sarah Gardner (REDACTED) and welcomed (REDACTED) to her first meeting as Board Secretary.

1. Minutes, rolling actions, forward look and Chair’s business

The minutes of the meeting held on 18 July 2019 were approved with no amendments.

The rolling actions were reviewed with no amendments. Concerning rolling action item 70(19)BA around stakeholder engagement, it was noted that Commissioners would like to be more involved and to have more exposure to high impact operators. It was also noted that there had not been adequate notice given to Commissioners invited to attend the CEO breakfast briefing on 2 October 2019.

The Board forward look was reviewed and updated.

Bill Moyes joined the meeting at 09:40, apologised for his late arrival and thanked Catharine Seddon for Chairing the meeting thus far. The minutes of the 18 July 2019 Board meeting were ratified upon the Chairman’s arrival.

Bill Moyes updated the Board on the Chair’s business, in particular:

• there was a good meeting with new the Secretary of State, Nicky Morgan MP, on 12 September 2019. The new DCMS Minister, Helen Whately MP, also attended
• operator meetings have gone well since the last Board meeting. The tone in general is calmer and there is a real sense that, in general, the industry is thinking and listening more. There is a need however, for the Commission to reinforce the message to NEDs of Operator Boards that they are accountable and responsible for compliance and for the Commission to draw their attention to the existing guidance as well as to possibly publish NED guidance for gambling companies. These strands will be pulled together in November’s Board workshop about assurance statements
• the meeting with Lord Currie on 12 September was productive, the Chair noting there is a large volume of work taking place between the Commission and the ASA.

Action: (REDACTED) to invite Lord Currie or his successor to a future Board dinner.

2. National Lottery Competition Committee update

The Board noted the update.

Highlights of the report included that the draft licence is currently being reviewed. There are still some gaps but there has been significant progress over the last month.

3. 4NLC: Draft Selection Questionnaire and Evaluation Process

The Chair welcomed Andrew Wilson, 4NLC Commercial Director.

The Board noted the Selection Questionnaire briefing pack and agreed the steer on the proposed approach, also noting that the final decision on timing of the Selection Questionnaire and Invitation to Apply stages will be informed by market engagement.

4. 4NLC: Retention Structure design principles

The Board noted the paper.

A discussion took place around specific points of the paper, noting in particular the specification of certain parameters. The item will return to Board in October 2019.

5. 4NLC: Change Control

The Board noted the paper.

The Board approved the 4NLC change control policy subject to the following. There will be a degree of discretion and flexibility around all change requests being reviewed by the SRO, as set out in 3.1 of the Schedule Change Control: ‘For changes of less than two weeks, the SRO will determine whether the change requires NLCC approval or Board approval. A change of two weeks or more always requires Board approval. A proposed change to a Programme Milestone will be discussed at Steering Group but this occurs in parallel to the formal approval route via NLCC or Board’. John Tanner will discuss in the first instance with the NLCC Chair to establish whether the NLCC needs to be informed or whether the matter should be escalated to Board level.

6. Finance report

The Board noted the report, the financial position and forecast out-turn at the end of August 2019, in particular the following:

• we have an underspend of £221k due to the recently announced contribution by HM Treasury towards the increase in employers’ pension costs in 2019/20
• the fees income looks in line with budget; the critical period for the bulk of our income of fees is August – November, which gives rise to a risk of not knowing the bulk of our fees income until end of November 2019 (Q3).

7. Proposed approach to October Board workshop on the next Corporate Strategy

The Board noted the paper.

A broad discussion took place, highlighting in particular the following:

• this is the first time the Board will have heard about Method for Assessing Priorities (MAP): using evidence to prioritise what we do to maximise impact for consumers. Feedback from the National Audit Office has been very positive so far
• the question arose as to whether we are wise to look at the next 5 years in such a fast-changing environment, focusing too much on aspirations rather than detail of delivery. Neil McArthur confirmed we are focused on the detail just scaling back commitments to take specific actions, rather identifying the outcomes we will achieve
• we will need to have continuous ‘in-flight’ re-evaluations of the strategy.

Action: Exec Group to further consider timings and process around the next Corporate Strategy.

8. Presentation of Phase 1 advertising research

The Board noted the paper.

Bill Moyes welcomed the Research Director at Ipsos MORI, and the Programme Director, Consumer Protection and Empowerment.

Sarah Gardner introduced the item and handed over the presentation to Ipsos MORI.

A slide presentation was given on the findings of the advertising research, reiterating this is the interim phase 1, focusing on advertising exposure, content and tone while the second phase, due to be published in January 2020, will focus on its impact on children, young people and vulnerable adults.

Highlights were presented as follows:

• overall, ad spend has increased by 24% from 2015 – 2018
• lottery tops spend across most platforms, internet stands out as being led by the sporting sector
• media monitoring is likely to be an underestimate of the true rate of exposure
• most participants in the research reported what they perceived as high levels of exposure to gambling and marketing advertising
• no examples of ad placement in children’s media was found although there was some evidence of content that may appeal directly e.g. graphic design that appeals, the use of cartoons and bright colours. It appears children are not screened out on AdTech and there is still more which could be done using existing technology
• children are following and engaging with betting related accounts on Twitter
• understanding of risk was mixed, with many under 16s admitting they did not understand how odds worked
• there is widespread use of enticing financial offers in ads, e.g. 47% of tweets contained free/match bets.

Three key take outs and considerations from the research can be summarised as follows:

• spend and volume of gambling ads is increasing, though this is likely to be an underestimate of true rate of exposure – what other context data is required? Outside of sports, what other forms of exposure are important to monitor?
• very limited evidence of strategies that may inadvertently appeal to children and young people, but more can be done to reduce risk of exposure and appeal – how can Regulators and Industry work best together to understand what is possible/is to be expected?
• risk is poorly understood, with widespread use of financial offers and content that may exploit susceptibility to risk – how can ads better convey risk to empower people to make informed decisions?

Bill Moyes invited the Board to ask questions, responses summarised as follows:

• currently, in impact research, we are not able to split out sponsorship separately from other forms of advertising, but we can look at the impact of glamour, group identity etc
• agencies do not have a consistent formula to access additional research however, you can examine data via click-through rates for example
• gambling companies engage with young fans following their teams through comments or tweets and more can definitely be done to stop this
• although this is the interim research phase, there are actions the Commission could take now. The Commission does not have to wait before taking a policy position and would not wish for decisions to be deferred in the absence of longitudinal evidence. There is also no need to be literal about advertising and marketing, it encompasses one’s presence across the industry
• it is important to work closely with service providers, for example to utilise filters already in use for preventing access to specific sites
• there is an open question as to whether the advertising issues which exist are due to poor compliance around existing regulations or if there is a need for further regulations.

Action: (REDACTED) to publish slides referring to 1) top tweets all referencing sports and 2) summary of prevalence of features, e.g. glamour, participants said were appealing, in the Diligent Board Reading Room for additional information.

The Research Director at Ipsos MORI, and the Programme Director, Consumer Protection and Empowerment, left the room at this point whilst a further discussion took place among Board and the Executive Group only. Key points as follows.

9. Action planning resulting from the Board Effectiveness Review

Not minuted.

10. Any other business

Resolution to approve revised membership of the Remuneration Committee. The Board noted the paper.

The Board approved the resolution as outlined in point 3 of the paper as follows: an amendment to the membership of the Remuneration Committee with effect from 20 September 2019 as follows:

• Trevor Pearce (Chair)
• Carol Brady.

11. Commissioner only SID session including review of the meeting

Not minuted.