Consultation response
Autumn 2023 consultation – Proposed changes to LCCP and RTS: Consultation Response
This response sets out our position in relation to the consultation on the proposed changes to LCCP and Remote Gambling and Software Technical Standards.
Contents
- Executive summary
- Summary of topics
- Customer-led tools - Consultation Response
- Improved transparency on customer funds in the event of insolvency - Consultation Response
- Removing obsolete Gambling Commission requirements due to the government's upcoming statutory levy - Consultation Response
- Evaluating the impact of relevant changes
- Annex
Summary to the consultation on improved transparency on customer funds in the event of insolvency
During autumn 2023 we consulted on proposed changes to Licence Conditions and Codes of Practice (LCCP) and Remote Gambling and Software Technical Standards (RTS) (opens in new tab). To ensure it is clear to consumers throughout their relationship with a gambling licensee with a ‘not protected’ rating that their funds are not protected in the event of insolvency, we proposed that such gambling businesses should actively remind customers that their funds are not protected.
We proposed 2 options for the consultation – option A would make this subject to the value of funds reaching a threshold amount (the ‘threshold approach’), and option B would not include a threshold (the ‘no threshold approach’). Both options would require a reminder to be sent to the customer once every 6 months (although option A would be subject to the threshold amount being reached), and for that reminder to be acknowledged by the customer before being permitted to use the funds for gambling.
The majority of respondents agreed with the proposal. More respondents favoured option B (where a reminder would be sent to all customers irrespective of the value of funds held). Responses were divided for the proposal for licensees to remind customers once every 6 months that their funds are not protected. The majority of respondents agreed with the proposal for an acknowledgement.
Following careful consideration of the responses received during the consultation we have decided to proceed with our proposal to improve the transparency requirements for customer funds. We decided that the requirement will follow option B (the no threshold approach). It provides a uniform approach which means that all customers should be made aware irrespective of the value of funds held. This, in turn, provides a greater degree of transparency than option A. It is a less complex and onerous process for licensees to issue notifications to all customers who hold customer funds, particularly for smaller licensees who may need to develop systems to comply with the requirement (and could, therefore, be considered to be a more proportionate approach). This change to the Licence Conditions and Codes of Practice (LCCP) will apply to all Gambling Act 2005 operating licences1, apart from society lotteries and/or External Lottery Managers (ELMs) that do not conduct high-frequency lotteries or offer instant win games.
With regard to the frequency of notifications, we decided that the reminder is to be sent once every 6 months. We consider this to be a proportionate, risk-based approach which strikes a balance between protecting against communication fatigue and/or annoyance versus ensuring a greater level of transparency to consumers. We decided that the new provision will also require licensees to obtain an acknowledgement from the customer before permitting them to gamble. It is an important part of the proposal, which ensures that customers provide confirmation that they are content with the arrangements in place. It is consistent with the overall proposal which is designed to aid a greater level of transparency to customers.
In general, society lottery respondents and/or ELMs did not agree with the proposal and requested an exemption. They considered that it would be an undue administrative burden, where non-remote society lotteries would need to use email or post. They also claimed it would increase costs, reducing funds to good causes, and have a significant impact on the sector. Overall, they considered the proposed requirement to be disproportionate. Having considered these representations, we decided that the requirement may have a disproportionate impact on the lottery sector, without bringing significant consumer benefits, and therefore granted an exemption for the sector. However, high-frequency lotteries2 and instant wins3 will not be exempt from the code provision as these are much more likely to involve funds being held on account.
One trade body, on behalf of its members, requested an exemption from the requirement for land-based casinos (or for the provision of a reasonable alternative), on the grounds of logistical impracticalities. However, given that licensees are holding funds for customers, and are required to establish and verify the identity of their customers for anti-money laundering purposes, licensees should already hold current residential addresses for those customers which could be used for the proposed communication if required. Further, we consider that it would be reasonable and proportionate for licensees to obtain customer email addresses in addition to postal addresses, where available, to assist with sending the proposed communication. Although we do not hold data on the range of funds held, it is reasonable to assume that, due to the nature of the casino sector, the amounts held per customer have the potential to be significant and more than those held per customer for society lotteries and/or ELMs. The sector, or individual licensees, could also choose to offer some protection of the funds that would avoid the need to provide notifications in a manner which they consider to be difficult to implement. We have therefore decided not to exempt land-based casinos from the requirement.
The new requirement, to be included within Licence Condition 4.2.1, will come into force on 31 October 2025.
References
1 Except gaming machine technical, gambling software, host, ancillary remote bingo and ancillary remote casino licences.
2 A high frequency lottery is defined as "A lottery in which any draw takes place less than one hour after a draw in a previous lottery promoted on behalf of the same non-commercial society or local authority or as part of the same multiple lottery scheme." (Remote gambling and software technical standards (RTS)).
3 An instant lottery is defined as "A lottery in which every draw takes place either before, or at the point of, purchase of tickets by participants in the lottery" (RTS).
Last updated: 4 February 2025
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