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October 2019: Industry Challenges

Phase one of the Gambling Commission’s Industry Challenge initiative, set at our industry briefing in October 2019.

Published: 2 October 2019

Last updated: 19 August 2021

This version was printed or saved on: 15 June 2024

Online version: https://www.gamblingcommission.gov.uk/standards/october-2019-industry-challenges

Foreword

We exist to safeguard consumers and the wider public. We do that by regulating gambling, including the National Lottery, and giving advice and guidance about how to make gambling fairer and safer.

We put consumers at the heart of our approach, which requires us to strike a balance between the enjoyment people get from gambling and the risks that gambling can present. Managing those risks is not just the responsibility of the individual consumer. That is why we assess risks by looking at the providers of gambling, the products that are offered and the places in which people gamble.

Our approach allows us to respond to emerging risks and issues, whilst constantly seeking ways to drive up standards. This is especially important due to the challenges and opportunities online gambling and smartphone technology are bringing and the effect that is having on consumer behaviour.

We must ensure consumer safety remains a number one priority by working with the industry, service providers for people affected by gambling related harms and people with lived experiences to maintain high standards for consumers to enjoy gambling at their leisure and safely at all times. Therefore, in October we set out three challenges to the industry. This report provides an update on those challenges and explains our next steps.

We invited operators to participate in an ambitious program of collaboration in the hope that we could raise standards for consumers by bringing a more diverse range of perspectives to bear on some difficult issues. This initiative concerned some commentators, for reasons I understand. It was an experiment, but we judged it to be worth trying if it resulted in improvements that would better protect consumers.

Whilst there is much more to do, which we will address, we judge the experiment to have been a partial success, as in some important areas the result of the challenges will help us make gambling safer, faster.

Over recent years, the Commission has raised standards both through a much tougher compliance and enforcement regime and through changes to the Licence Conditions and Codes of Practice (LCCP). However, to make gambling safer at pace, last October we challenged operators to tackle three key areas that had the potential to make gambling safer for consumers, including vulnerable groups.

Those areas were:

For collaboration to be successful it requires a full diversity of opinions. Before setting the challenges, we took advice from our Digital Advisory Panel and the Advisory Board for Safer Gambling on online harms. Their advice was grounded in evidence and experience and understanding of where the risk of harm lies. We chose the areas that we considered would address significant risks to vulnerable groups and adopted a new approach, based on industry collaboration, in order to see where improvements could be made more quickly.

We also engaged with other stakeholders, including with GamCare (opens in new tab) who ran a survey with their users on each of the areas of work and met with Experts by Experience to talk in general terms about the issues associated with the challenges, before final proposals from industry were formed. The work on these challenges is far from done and further involvement from Experts by Experience will be vital as we move to a connected set of consultations.

Since our announcement at the end of April, we have continued to engage with experts by experience, who have provided further feedback and challenge as the industry proposals were published.

Ahead of that, a range of steps are underway, such as elements of the ad-tech work like the adoption of a common list of industry negative search terms, which will help shield vulnerable groups from online gambling ads. All of that can and will happen in parallel with the Commission’s plans to consult in order to ensure that standards are raised, and operators are pushed to go further than the current proposed actions go.

In these unprecedented times caused by the impact of Covid-19, we have pushed the industry to make necessary changes to keep consumers safe from harm. We have seen that changes can be made speedily. There is no reason why the industry can’t up the momentum to make lasting changes for safer gambling, and we will ensure they do.

Much more work remains to be done. Gambling can and must be made safer and we are determined to build on the progress that has been made and introduce other changes in the near future. So, thank you to those who have worked with the Commission to make the progress discussed in this update and thank you to those who will be helping us as we go forward with the next steps. Working together, I am sure we will continue to make gambling safer.

Foreword by Neil McArthur, the Gambling Commission’s Chief Executive.

Background

This paper reports on phase one of the Gambling Commission’s Industry Challenge initiative, set at our industry briefing in October 2019. It details our assessment of the different rates of progress by industry. It also provides an outline of our plans for phase two, where the Commission will look to incorporate the positive steps made by industry into the regulatory framework, so that good practice standards are applied to all operators. We will be consulting on where we think industry needs to go further or faster to keep consumers safer.

The challenges we set in October 2019 were on:

These areas were chosen with reference to advice given on tackling online harms from both the Advisory Board for Safer Gambling and the Commission’s Digital Advisory Panel. Read the independent advice from our expert advisory groups to reduce online gambling harm.

We set industry a deadline of 31 March 2020 to set out its proposals – this was a challenging timeline but an important part of testing an approach, which we thought could bring real change for consumers, faster than traditional policy development approaches.

The Commission facilitated the formation of industry working groups to address the challenges, supported them with input on our regulatory perspective, but also monitored them closely to ensure timely delivery. We held a workshop with Experts by Experience, those who have experienced harms as a result of their or someone else’s gambling, to gain some initial input to emerging ideas. This included 28 attendees across four separate sessions.

To further add to this perspective, the charity and service provider GamCare ran a survey with 75 of its service users via its online forum, as well as providing views from staff.

We see this engagement as crucial to the effectiveness of the changes we are seeking to bring about and have introduced some changes to our structures to deliver expert by experience input more effectively.

The output from the industry working groups was taken by the Betting and Gaming Council (BGC) (opens in new tab) to its membership and the BGC is now responsible for delivery of the commitments made by its members.

Our intention was to update on progress and discuss next steps to implement the necessary action at our Raising Standards conference. Unfortunately, that event was cancelled due to Covid-19.

To maintain progress on benefits for consumers we made an announcement on 1 April 2020 of our initial appraisal of operator progress. As a result, some outcomes, particularly in relation to ad-tech use, are already being developed or put in place by operators, ahead of becoming part of the formal regulatory framework.

This update clarifies our approach to date and how we aim to take this work forward. We want to reiterate that this is the first step in the process and by no means the end of the conversation on any of these challenges. As a result of this initial work, we will now conduct a formal consultation to provide further opportunity for the widest input

Phase one: Update on industry progress

Incentives for High Value Customers

We asked industry to work together to develop a code of conduct that ensures the incentivisation of high value customers also known as ‘VIPs’ is offered in a safe and responsible way. This was because the Commission’s casework had uncovered ways in which incentivisation and VIP schemes were offered, acted as a barrier to identifying people who are experiencing harm. In some cases, we had seen evidence of such schemes encouraging harmful play. This needs to stop.

Industry progress

An industry working group chaired by GVC, the large sports betting and gaming group, and BGC developed a draft code. This included a number of actions and related guidance, specific for high value customers compared to the current generic requirements.

It contained the following commitments:

  1. Undertake full customer assessments before offering any high value customers (HVC) incentives, rewards or special treatment. These checks will be regular and ongoing and commercial pressures will never override welfare considerations. Assessment includes checks on the sustainability of their spend, a safer gambling check, a negative information review, and Know Your Customer check. Further detail will be in the published code.
  2. Licensees will maintain full audit trails relating to their HVC reward programmes including information collected and decisions taken.
  3. Licensees will identify a senior executive or board member who will have accountability for how HVC schemes operate.
  4. Operator teams that offer High Value Customer (HVC) Rewards Programmes will not receive remuneration or bonuses based on an individual’s loss and/or spend.
  5. Restricting access to HVC schemes for 18 to 24-year olds.
  6. HVC reward programmes will be conducted with consistent, clear and transparent good practice to prevent gambling related harm. A number of positive and negative behaviours are identified in the guidance to ensure operators are not acting in a predatory or exploitative manner.

Expert Groups’ input to Commission thinking

Feedback from experts by experience highlighted the risks that incentives pose to vulnerable groups and questioned the ability of the industry to self-regulate. The dominant view was that HVC schemes should be banned altogether as they acted as an accelerant in their own personal gambling behaviour. For the Expert by Experience Group it is a unanimous view.

Of the 26 former HVCs who contributed to the GamCare Forum survey, half stated the HVC schemes caused them to spend more on gambling. The EbE group saw no evidence from their own experience or wider research and practice to suggest that HVC schemes are “safe” at any age and that the restriction to over 25s was wrong and in their view schemes are either safe or they are not.

Short of a ban, suggestions for additional controls included robust affordability and safer gambling checks and a requirement to establish a customer’s source of funds. GamCare staff highlighted the importance of progressing a single-customer view solution to avoid circumvention of these controls.

A single customer view solution is where it would be possible to understand a customer’s holistic gambling activity across all operators to enable a more informed and consistent interaction when appropriate.

The feedback identified heightened risks associated with social isolation and the sense of status associated with being treated as an HVC. At the Expert by Experience workshop, the use of knowledge of customers’ preferences, habits and vulnerabilities by HVC staff to offer incentives, which encouraged increased gambling or a recommencement of gambling after a period of inactivity was highlighted.

In feedback from GamCare staff, this point was also linked to the question of VIP staff remuneration and the risk of incentivising commercial targets to the exclusion of player protection.

Transaction or monetary based customer incentives were identified as more common than hospitality or gifts, and there was concern about the impact of customers striving for a higher tier of HVC status or gambling beyond their means to receive specific incentives.

Aside from HVC schemes, the use of monetary incentives more widely to promote gambling services was cited, such as free bets, as problematic and something the Commission should address.

Commission Assessment

The approach to so-called VIP programmes intended for high value customers (HVC) has been the focus of attention given the tension between commercial objectives and customer safety. The question of incentives more widely is a complex one that we need to consider further.

The success criteria for this challenge was for the industry to recognise and rapidly bring a halt to irresponsible behaviours that have grown up around HVC schemes.

If implemented quickly, the measures in this code could address the challenge set. We want to see these additional protections implemented as soon as possible and believe this is achievable given a number are based on existing regulatory requirements. Highly engaged customers are at greater risk of gambling related harm. That is why thorough checks, additional controls and clear Executive oversight and accountability are required in this area.

Our view is that for tailored incentives and bonuses to continue to have a place in the industry, we need to be satisfied they are being offered in a manner which is consistent with the licensing objectives. Where a licensee cannot provide that assurance, they should not be offering such schemes or incentives.

Next steps

We note that the BGC has published the new code. The restrictions on 18 to 24-year-olds from inclusion in HVC schemes is already in place.

We will use this code as the basis for an LCCP consultation in June to ensure these minimum requirements are enforceable across the whole industry. We have made clear our expectation that the measures within the code should be implemented within 3 months given a number of these commitments are based on or expand upon existing regulatory requirements.

Once new requirements are in place, we will measure their effectiveness through targeted compliance assessments and by monitoring the volume of enforcement casework related to HVC from the point at which the requirements take effect. We will also explore what metrics can be collected to monitor the number of HVC, their contribution to operator gross gambling yield (GGY) and how many customers are subject to and fail to meet the new due diligence criteria.

Game design

Introduction

We know that the success of many technology companies, digital content creators and gaming machine games designers depends on their ability to establish and maintain the engagement of their consumers on their web, mobile apps and – in premises – gaming machines.

We also know that speed of play, frequency of betting opportunities, as well as other factors on offer to players can increase addiction and risk of harm. We challenged industry to work together to consider what responsible innovation looks like in terms of game design, including the introduction of friction at points of the customer journey. Friction describes ways in which online activity can be slowed down though technology in order to ensure that customers are given sufficient time to make informed choices.

Industry progress

Two groups chaired by Scientific Games and Playtech considered different ideas around online and land-based game design and then brought those together in a draft code. As a result of the Covid-19 outbreak this work currently refers to online only, but it will also look to apply to retail in the future.

The BGC is now developing a plan around the measures suggested in this draft. As some of these commitments require re-engineering of games and gaming devices as well as covering a large back-catalogue of games, the BGC is committed to publishing the full Code by 30 September 2020.

The core elements being taken forward currently by industry are:

The BGC also suggested that they wanted to establish a Sustainable Product and Game Design Working Group to explore in-game features such as volatility and innovations. Part of this effort will be a BGC Testing Lab, which shall review game characteristics and test them for markers of harm. We will engage on this when there is further detail.

Their suggestion involved a phased implementation approach for new games with more straight forward improvements implemented first and Key Performance Indicators which can be tracked. Timings on introduction and detail on how it will be done are not yet clear.

A fully industry-agreed code will be published by the end of September, but there is a commitment that some of the items listed in the code will be implemented by then. In addition, the BGC has noted that it may be possible to implement some of the items ahead of that date but could not offer any immediate guarantees.

Expert Groups input to Commission thinking

Expert input was sought from various groups, each with a particular focus for areas which would need to be included in a successful code. BSG analysed the available research in the area of game design and pointed to a number of specific areas, including jackpots and split screen-games, in addition to reverse withdrawals8.

The input from the Commissions’ Digital Advisory Panel focussed on the need to introduce points of friction to the app and website customer journey. Especially as channel-shift to online increases in all aspects of life, and at a time when the potential impacts are not well understood.

You can read the Digital Advisory Panel's advice on the impact of online platforms on gambling related harm.

The Expert by Experience event and subsequent reflections from the Experts by Experience Group shared the following conclusions.

Conclusions

Speed of play was identified as one of the most important factors in making a gambling product addictive and dangerous. As a precautionary measure, there should be a reduction in speed of play across all products.

There should be strict limits on both stake sizes and prize sizes participants talked about a negative intensity driven by both these factors, along with speed of play.

Participants advised that mandatory limits should also apply to the amount of time gamblers were allowed to spend within games, as well as the speed of play.

While there should be strict limits in terms of time and affordability, these should not be different for those “more” or “less” at risk as ultimately, anyone can become at risk.

Original products should be designed from the beginning to be safe and that a proactive and precautionary approach should be taken, including on limit setting, with markers of harm acknowledged in the public domain

Independent research needs to be commissioned immediately to establish the relative importance of different factors in the addictiveness and danger of any gambling product. Meanwhile a precautionary approach must be adopted since we know that there are addictive products already on the market.

It is not appropriate for any ‘testing lab’ to be run by the BGC or industry body. There must be independent input into any ‘Sustainable Product and Game Design working Group’ and a ‘Testing Lab’ needs to be run independent from the industry.

No new product should be allowed onto the market without having been approved as safe by an independent authority. All existing games should be subject to similar approvals and licensing.

All gambling products should be classified according to their addictiveness – similar to class A, B or C drugs or green, amber or red labelling on food.

Analysis of the responses to the GamCare Forum Survey showed that the following were associated with excessive play:

There was a broad support for a maximum stake limit per spin, with the modal number given at £1 (£2 and £5 also figures given by a number of respondents) and also support for different stake or loss limits or different approaches set for consumers subject to their personal circumstances. In terms of support for tools to limit harm, the most popular options were being required by the design to take a break and a maximum stake per spin and ease of withdrawal.

Commission Assessment

We are concerned that as technology and digital approaches evolve rapidly, the techniques that the industry plans to use when designing products and apps, and online games in particular, must be designed with consumer safety at the heart.

Questions around game design can be complex but we think there are opportunities around intensity, stake and time, which a pro-active industry should be keen to grasp, especially in light of the current reliance on slots and on line with the advice we have received from the ABSG and DAP referenced at the start of this report.

Industry has produced a draft code which includes some positive suggestions around removing game cycle intensity, particularly by implementing a minimum game speed and removing features designed to make play faster such as turbo or slam-stop. In addition, the code will remove split-screen slots games, which have been associated with intensive play and highlighted as a potential risk.

In our view, these changes represent some initial tangible actions which are likely to move the debate on at least partially. If delivered within a quick timeframe, these changes would make slots games partially safer for consumers.

We do however feel that it falls significantly short in the following areas.

No firm commitment to immediately start using demographic or behavioural proxies to identify those at greater risk of gambling harm and setting differential limits (such as stake, time or spend) for those groups as a result.

This should include the following in the shorter term:

Next steps

We will use the commitments made as the basis for an LCCP consultation before the end of June 2020 but will add proposals around the following areas, while also seeking wider input to the debate.

Proposals that we are considering are split into three broad areas, some of which may be dependent on existing risk factors about consumers known to the operator. For example, whether the consumer falls into a category with or displays behaviours indicating higher risks of harm.

Proposal areas

Measures to ensure enhanced control

Examples include mandatory loss limits and incorporation of the working group suggestion which removes split-screen slots games.

Reason: these are partly based on available research to indicate harm. For example, the removal of split-screen games, and partly on a precautionary basis such as mandatory consumer loss limits.

Measures to ensure safe and fair game characteristics

Examples include a working group suggestion around:

Reason: These are partly based on available data to indicate potential harm from long sessions (session length) and partly on a precautionary basis, such as celebrating wins below stake.

Measures to ensure informed player choice

Examples include:

Reason: These are partly based on available research to indicate relative understanding concept of return to player versus house-edge, and partly on a precautionary basis, such as provision of relevant information on play.

Once new requirements are in place, we will measure the effectiveness of them by monitoring game data with some of the following potential examples.

Short term: within 3 months

Longer term: within 6 months

We would expect the following to decrease after the code is introduced:

We would also expect the average duration per spin to increase after the code introduced, while the average stake per spin to decrease.

Use of advertising technology

Introduction

GambleAware’s Interim Synthesis Report (opens in new tab) on ‘The effect of gambling marketing and on children, young people and vulnerable adults’ shows that children, young people and vulnerable adults reported exposure to significant levels of online gambling adverts - including via social media.

This report was complemented by the final report, The effect of gambling marketing and advertising on children, young people and vulnerable adults (opens in new tab), published on 27 March 2020.

The report recommended that the gambling, advertising and tech industries should:

“Explore making better use of technology to minimise the risk of exposure of gambling advertising content to children, young people and vulnerable adults. This could include using adtech to positively exclude certain online profiles from seeing gambling ads (including those with child-like persona and those who have sought help for problem gambling), and working with platforms such as Twitter to make use of features that allow better age verification for account followers.”

We set the challenge for industry to work together to demonstrate tangible progress on a plan to set out new standards for how industry will embrace online ad-tech for social responsibility purposes – actively targeting away from vulnerable audiences.

Industry progress

The industry working group was led by Sky Betting and Gaming. The immediate voluntary steps the industry working group committed to include:

  1. A common list of negative search terms, for example, 'how do I self-exclude from gambling' and suppression websites, which will help shield vulnerable groups from online gambling ads.
  2. Better and more consistent use of customer data to ensure paid-for ads are targeting away from vulnerable groups across social media platforms, instead of targeting for business.
  3. Implementing an approach which means that advertising is only targeted at people over 25 years of age in social media and explore the potential around “Pay Per Click” advertising where platform facilities permit. This will protect young people an increase confidence in the social media platforms’ own age-gating.
  4. Age-gating YouTube channels and content.
  5. Producing and sharing with operators’ industry-wide good practice guidelines for responsible digital marketing.
  6. Adopting and rolling out to all affiliates a code of conduct which will be amended and updated on a regular basis to ensure all measures undertaken by the industry will be implemented equally by affiliates.

These measures will be adopted across the industry as soon as possible and in any event enshrined in the Gambling Industry Code for Socially Responsible Advertising (subject to consultation with Bingo Association and British Amusement Catering Trade Association) and will be effective by July 2020.

The Betting and Gaming Council (BGC) working group will:

Expert Group input to Commission thinking

The Committees of Advertising Practice (CAP) and Advertising Standards Authority (ASA) provided input and steer to the Ad-Tech Working Group. They welcomed the commitments, which are likely to help inform ongoing work to update CAP’s guidance on online advertising and targeting.

Attendees at the Experts by Experience event were supportive of the aims of the AdTech Challenge. However, as engagement has continued, they have expressed much more concern about the volume and content of advertising across other media, including sport sponsorships. In summary, Experts by Experience attendees feel that:

  1. There needs to be a much better balance of ads and messages – fewer product ads and more gambling harm messages and stories. Attendees were very critical of ‘When the Fun Stops, Stop’ campaign and believe that this should no longer be used but replaced with the gambling equivalent of “smoking kills”.
  2. There must be much stricter limits to ensure that children and those who have self-excluded in any way are not exposed to gambling adverts – until operators and platforms can guarantee this, then all general placements of online ads should be banned.
  3. Gambling harms awareness and safer play ads must be much tougher and not associated with any individual operator, which actually continue to promote a brand or company.
  4. There should be more ads to raise awareness of how to get help.
  5. There should be more promotion of blocking software, which should be available direct from any gambling site.
  6. Gambling-style Apps and games should be regulated.

Under current legislation we do not regulate social casino gaming. We have urged the social casino industry, and the platforms through they are accessed, to explore what steps they can take to ensure games that are described as “frequent and intense simulated gambling” do not result in gambling-style harms.

Analysis of the GamCare Forum survey showed support for relevant initiatives including:

Commission assessment

The key with this challenge was to embrace online Ad-Tech for social responsibility purposes – using it to actively target away from vulnerable audiences. It is not enough to be reactive. Pro-active action must be taken to keep consumers safer.

We appreciate the input of the CAP and ASA here as key regulatory partners on this subject. We recognise that in the area of advertising, some progress will be limited by the extent of influence over third parties, such as platform providers. However, ongoing engagement with these providers is essential in order to ensure further improvements are made.

We welcome the wider work on reducing online harms by the following organisations:

We will continue to provide input to this work in relation to gambling activity.

We are satisfied with the approach taken here and welcome the fact that those commitments to be codified via the Gambling Industry Code for Socially Responsible Advertising, will effectively enshrine the commitments immediately into the LCCP. However, like other areas, progress will need to be carefully monitored.

Next steps

The Commitments will become a formal part of the regulatory framework when they become part of the Gambling Industry Code for Socially Responsible Advertising in July. We welcome the fact that industry is already developing work in this area.

We will continue to monitor the evolution of ad-tech with our regulatory partners and the BGC working group to ensure that all opportunities are taken and where appropriate help to facilitate dialogue with platforms and partners.

In terms of measuring impact we will look to: