Industry Forum minutes for 3 May 2024

Minutes of the meeting of the Industry Forum, 3 May 2024.

Location: Virtual meeting on Microsoft Teams.

Members:

• Nick Rust (Chair)
• Tony Boulton
• Kirsty Caldwell
• Charles Cohen
• Ashley Padgett
• Mark Pearson
• Nigel Roddis
• Leo Walker
• Helen Walton
• David Williams.

In attendance:

• Helen Child
• REDACTED
• REDACTED (item 4 only)
• REDACTED (minutes)
• Tim Miller
• Andrew Rhodes (item 2 only)
• REDACTED.

Commissioners observing:

• Helen Dodds
• Lloydette Bai-Marrow (up to 3pm)
• Stephen Cohen (from 2pm).

1.0. Welcome, apologies, declarations of interest and minutes of the last meeting

The Chair welcomed attendees to the meeting.

There were no apologies.

There were no new declarations of interest.

The minutes of the meeting held on 21 March 2024 were approved as a true record of the meeting, to be published on the Gambling Commission’s (the Commission) website.

2.0 Communication between Operators and Consumers

The topic of communication between operators and consumers has been previously discussed with the Industry Forum (IF) Chair, and the item was welcomed being brought to today’s meeting.

It was noted that it might take a few attempts to get it right, but the real issue was to address the fact that there is currently a lot of confusion among consumers who have experienced very different interactions with operators.

A source of many complaints from consumers is the reason given to them by operators as to why their accounts have been restricted. Some consumers claim their accounts are restricted as soon as they start to win consistently. This can, in their view, lead some consumers to use the illegal gambling market, which brings a host of new risks.

Accounts can be closed or restricted due to other factors, such as due to a trading restriction, patterns of player behaviour, or a concern about potential political impact, for example:

• the Commission is interested to understand how operators could bring clarity and transparency to consumers – why are restrictions being put into place, why are accounts being closed, and what examples of good practice look like. There are some consumers who experience bad service from operators compared to other sectors, and it is, in general, an adversarial type of relationship
• officials commented that the the Commission receives the most complaints from consumers on identity documents being requested by operators for “regulatory reasons”. Consumers tell the the Commission this is a vague reason, and not even a ‘regulatory law’ reason.

Views shared in the room were that this terminology is not being used by all operators, but there is a lack of understanding and the narrative created by the words “regulatory reasons” is often stated as fact when it is not. How this could be made more transparent could really help communication with consumers. How could this be improved so that consumers know why things are happening and what are the unintended consequences? There are no reasons for operators not to be transparent with consumers other than when there are live anti-money laundering issues.

IF members asked questions and made comments:

Whilst the intensity of complaints being received by the Commission, specifically around account restriction, may have increased, the reasons for those complaints are not new. These reasons typically include trading restrictions and identity / financial document requests. It is thought that the increase in complaints is being driven by heightened (often negative) publicity around the gambling sector generally, increased document requests due to strengthened safer gambling and Anti Money Laundering (AML) processes in response to regulatory requirements and expectations, and the publication of the white paper on gambling reform.

Part of the issue is likely to be around terminology. For account restrictions, this can differ quite significantly between operators and so for consumers who have multiple accounts, messaging can be confusing. It was also mentioned that for land-based gambling, ensuring consistency of messaging and language can be very difficult when there is reliance on an operational member of staff engaging correctly with the consumer, often during a challenging situation.

There are occasions when the consumer thinks they are winning and do not know why they are being questioned around provision of extra documentation, including source of funds. However, customer thresholds are not based solely on loss, some are based on deposits, some stakes, some velocity, therefore they can hit a backstop trigger at any time. Moreover, customers are not usually made aware of what these triggers are and how close they may be to hitting them. It was noted that this can be even harder to deal with in the land-based retail environment.

The importance of ensuring that retail staff receive in-depth training for managing these conversations face-to-face was noted. It was also agreed that operators should work towards being as open, up-front and transparent with customers as possible, regarding verification processes. However, it was acknowledged that sharing internal thresholds and triggers could create unnecessary AML risk and therefore, it is important to maintain appropriate balance.

In terms of the onboarding process for a new consumer, this usually happens asynchronously and usually around 85% of online customers will be onboarded and verified immediately, without having to provide additional documentation. Throughout the lifetime of the business relationship, the majority of consumers participating in recreational gambling won’t be impacted by thresholds or operator applied account restrictions.

It was noted that operators are increasingly moving to more behavioural based indicators to help identify safer gambling and AML risks. For online operators using technology to support this approach, hundreds of indicators are considered and usually the customer will be assigned a dynamic risk score which in turn dictates account actions.

Land-based operators will often work on a case-by-case basis for communicating with consumers and there is a level of judgement involved. The way a customer is approached will usually be based on the behaviours that an individual is exhibiting, and it would be very difficult to develop a rigid ‘one size fits all’ procedure.

The actions operators take with customers whose risk profile is changing, usually escalate slowly – it is rare to suspend an account outright without first engaging with the customer or taking some other type of action, such as limiting losses or deposits.

Commission colleague commented that the language used by some operators such as ‘gambling law’ can inflame consumers. REDACTED.

Whilst trade bodies are in place, not all operators are engaged with them and the industry does not have a single spokesperson with which to engage the media. In some ways this is considered to be a weakness as individual operators are reluctant to address specific issues publicly. It was commented that the Commission is becoming more robust when highlighting where wrong statistics are being quoted, on whatever side and agreed that this is positive.

Attendees agreed the discussion today had been very helpful and the issue would be revisited at a future IF meeting.

3.0 Consultations and Financial Risk Checks (FRC)

A slide deck was presented on the summer 2023 consultation response highlighting key points as follows:

• the primary purposes of the changes announced were to: increase transparency and customer choice, remove risky product features, protect children, increase accountability of operators and build better approaches to identification of consumers at risk of harm
• the Commission has been criticised in the past for not actually wanting views – these are genuine consultations, and it can be evidenced that the responses have changed where the Commission has landed and there are several areas where the difference has been made
• the Commission has not made changes for Regulatory Panels, but will consult on changes at a later stage
• the Commission has changed the scope of some of the requirements
• the earliest provisions will come in four months’ time and others will take up to ten months
• the Commission has tried to reflect the fact that a larger number of changes are coming as well as changes from DCMS, which are separate. The Commission does not want to land all of the changes at once, so it has taken a staggered approach to implementation, which leads to a better evaluation
• on direct marketing, this is fundamentally about consumer choice and consent, where consumers are to be given more of a choice about the type of direct marketing they receive and the channel through which they receive it. These provisions will come into effect in January 2025
• REDACTED
• REDACTED
• For personal management licence holders (PMLs), the Commission has clarified points on Chairs and CEO’s (or the MD equivalent) of operators holding a PML, but are still looking into the different circumstances
• the Commission has taken the decision to proceed with a pilot of financial risk assessments (FRA) before making final decisions (FRA pilot). This led to a quite long and complex set of provisions, although in practice they should not be as complex as they initially seem, and the Commission will be working collaboratively with the parties involved. If the Commission required all operators to be involved in the pilot, it would be a regulatory burden, so the Commission has sought to strike a balance with the biggest three fee categories. The Commission will be taking quite a measured approach with the pilot and if it shows this approach does not work, we will advise the Government of that. REDACTED. It is important to note that consumers will not be affected during the pilot period
• on financial vulnerability checks, a light-touch frictionless check has been introduced, which will have a phased implementation and is not as complex or controversial as the enhanced checks.

It has been positive to see genuine consultations from the Commission this week and is the best evidence of that coming to pass

In autumn last year, the industry had some pre-meetings and realised that land-based operators were not included in the scope. Following on from that, the industry requested the meeting with the Commission. The industry would encourage the Commission to involve as many people as possible in the consultation period

Staggering timelines will help with the evaluation, which the industry appreciates, but there is some real concern with timelines, particularly regarding the timeline for direct marketing. The industry is concerned that it does not know to what extent compliance will be achieved by January 2025. The Commission does have flexibility in the compliance approach and can give some assurance that it can be reasonable in terms of that, but it cannot move the deadline date. The Commission also acknowledges that there must be realism around what can be achieved, but at the same time cannot give consumers false reassurance. There is no desire from the industry to go slowly, but it is still a big ask for operators, with a vast amount of back-end work to be completed. The Commission will be having conversations with the industry on direct marketing over the coming weeks

On remote gaming standards, this could decrease player choice and the changes on game speed could mean that for some smaller operators, some games would no longer be commercially viable; video bingo, was given as an example. The guidance is vaguely worded as far as the industry is concerned, in particular on side bets, multiple hands etc. and guidance needs to be aimed at game makers and game operators, with a lot more granularity on individual product types

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On direct marketing, there is concern from the industry on the deadline, which feels extremely tight. It will be very challenging for operators to comply in time. This is however one of the areas to implement coming out of the government’s White Paper and the ICO is keen to implement this more widely on marketing

On the frictionless risk checks pilot, consumers will not be affected. If operators were to come across information on consumers during the pilot that they deem to be a ‘red flag’ it would be quite likely that there is existing information which reflects the same, that is financial risk checks might not tell operators a lot more than they already know. The Commission will provide operators with the regulatory cover they require during this pilot and there will be no regulatory consequences for not acting on any key information that arises, although the existing social responsibility obligations for operators still apply. REDACTED This is a big move for the Commission who has never carried out any pilots so far.

4.0 Gambling Commission communications and tone of voice

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5.0 Any other business

The Chair advised IF members that all the Expert Group Chairs will be attending the 16 May the Commission Board meeting to give their input on ‘transparency’, which is linked to the commitment in the Commission’s Corporate Strategy on being transparent on what the Commission publishes. IF members are encouraged to share any thoughts with the Chair in advance of 16 May, for example, where there might there be any sensitivities on the Commission publishing more statistics on operator compliance.

Date of next meeting: To be confirmed.