The white paper – Proposals to update UK gambling legislation (VIII)

We continue to publish extensive extracts from an important project subject to public debate by the British Government, the so-called White Paper.

By Dan Iliovici, Vice-President ROMBET

Benefits of gambling
Gambling can be sociable, can help tackle loneliness and isolation, can enhance the enjoyment of other activities, and can be a valuable pastime in its own right, although quantifying these benefits is inherently difficult.
There are also economic benefits to having a well regulated industry to service this demand.
The gambling sector also contributes significantly to other industries, including sport, advertising and racing. (…)
Gambling can also contribute to tourism, for instance to seaside towns across the country, or high-end casinos attracting wealthy overseas visitors who spend across a number of other sectors while in this country.
Additionally, some gambling products enable charities and other non-commercial organisations such as sports clubs to raise valuable funds.”

After this clarification, we continue the detailed presentation of the document.

Our conclusions

51. Work to commence real-world trials of a SCV solution has been progressing alongside this Review through the ICO’s sandbox process and the sharing of real high-risk player data has now started. The government and Commission will review the outcomes of these trials, including whether the right individuals were caught by the system, whether the criteria above identifies enough gamblers at risk of harm, whether operators respond appropriately when information is shared, and whether an effective technical solution has been developed. If necessary, we will mandate a different or more comprehensive approach to ensure the system meets our objectives in a proportionate and safe way. Once we are satisfied, the Commission will consult on any outstanding details and on requiring all remote operators to integrate with the system. The intention is for this to be done through the Gambling Commission updating the licence conditions and codes of practice on all remote operators, but if necessary we would consider legislation.

52. The new requirements will include provisions to ensure any consumer data is effectively protected and only used for the purposes of harm prevention. We are clear it must never be deployed to further commercial objectives such as through marketing, customer segmentation or identifying winners.

Expected impact

53. The precise impact of data sharing depends on the nature of the system introduced following the trials, but it is intended to benefit a minority of online gamblers at particular risk of harm. People experiencing problem gambling are more likely to use multiple online accounts*1 and circumvent account restrictions*2 by moving to another operator, so we expect any enhanced protections to have relevance for limiting the harm suffered by this group. There will also be implementation costs for the industry.

Verification protocols

54. Given the risk of harm associated with gambling (especially to children) and the sensitivity of data held on online gambling accounts, it is important that those who are accessing accounts and the facility to gamble are verified as the account holder.

55. In April 2019, the Commission strengthened the rules, requiring online operators to verify a customer’s age and identity before allowing them to deposit funds, play free-to-play games or gamble with their own or bonus funds. These new rules have effectively prevented illegal underage gambling online using a child’s own details or invented identities. Gambling Commission research*3 shows online gambling is experienced by fewer 11 to 16 year olds than other forms of gambling. However, 5% of 11 to 16 year olds reported using parents’ and/or guardians’ accounts to play on gambling websites or place bets online with their permission, which can be difficult to prevent from a regulatory perspective.

56. We see great potential in the provision of digital identity technologies to drive further progress in this area and for a range of other age restricted products. The government is working to establish a common baseline standard that assures trustworthy and consistent identity checks and attributes sharing and enables interoperability of digital identity technologies. The Gambling Commission will continue to monitor that market and consider where and when it could be leveraged to further the government’s objectives for the gambling sector, including the prevention of underage gambling. In the meantime, there are other controls which can be explored.

57. Specifically, there are currently no provisions to verify that payment information used by online gamblers matches the account holder’s identity. This gives rise to at least two distinct issues, each presenting risks:
Individuals may open an account in another person’s name and gamble with their own funds; and
Individuals may use another person’s payment information on their own account.

58. The first leaves open the possibility for individuals to continue gambling when their legitimate account has been restricted, either by the gambler themselves (for instance because of self-exclusion or pre-commitment tools), or by the operator (for instance because of commercial or safer gambling risks). Where restrictions are to safeguard against harm, any circumvention by the customer may exacerbate the risk.

59. Equally, allowing gamblers to use another person’s funds (such as friends, family members, businesses or potential victims of theft) comes with clear risks as operators cannot easily ascertain whether the funds are being used with or without permission. There may also be regulatory risks in several critical areas, including financial risk assessments, anti-money laundering compliance, and the prevention of illegal underage gambling. We recognise that identity theft or stealing funds is a criminal matter, and the evidence we received, including from a police organisation, demonstrated the significant harm this can and does inflict on both the gambler and affected others. Safeguarding against this risk through regulatory change will benefit both parties and reduce the burden on public services.

60. These risks have been recognised by the regulator for some time. As part of its wider 2019 consultation on age and identity verification procedures online, the Gambling Commission proposed requiring online operators to verify that payment information matches an account holder’s identity. Despite support among consumers and some licensees, the proposal was not technically feasible at the time, since online retailers could not access verified cardholder details when processing a payment.

61. However, the Commission’s response noted that new payment regulations were expected and might bring improved verification capabilities for merchants processing payments. The Commission committed to reviewing this issue, once the second Payment Services Directive (PSD2)/Payment Services Regulations had taken effect and merchants were compliant with Strong Customer Authentication (SCA). SCA has now come fully into force, so card-based e-commerce transactions that are non-compliant should now be declined.

Our conclusions

62. With new payment regulations now in force, the Commission can reassess this issue and determine whether new requirements for licensees might be justified to address the risks identified above. Given the variety and technical complexity of the payments sector, the Commission will work with relevant organisations to help understand the issue and assess whether any new requirements are appropriate. The Commission will consult before introducing any new controls it considers may be justified.

63. Additionally, we recognise the broader risks posed by individuals seeking to gamble online using another person’s details, and that this could undermine harm detection, self-exclusion and legal age restrictions. All operators should continually explore how they can further mitigate these risks through new technologies or procedures. For instance, we welcome the steps taken by some operators to introduce enhanced security measures, such as multi-factor authentication.

Expected Impact

64. While we cannot preempt the outcomes of the Gambling Commission’s review, strengthening the verification procedures for gambling accounts (for instance by matching payment information) should bring benefits for all parties. This would reduce the opportunity for those experiencing gambling problems to exacerbate harm by avoiding safer gambling controls and limit the scope for potential harm to affected others. For operators, clearer obligations and greater confidence in the identity of the account user will support more effective prevention of harm, while closing off compliance risks around the prevention of illegal underage gambling and anti-money laundering due diligence. Any future Gambling Commission consultation will consider the risk of unintended consequences.




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