New VIP Rules for UK Gambling Operators

The UK Gambling Commission (UKGC) is continuing to push for new standards in the UK regulated gambling sector, and its latest move sees the Commission focusing on VIP policies.

The rules will require licensees to carry out enhanced affordability and responsible gambling checks, with the warning that the use of loyalty schemes may be banned if operators don’t comply.

Under the newly announced rules, operators will have to establish that spending on the part of any customer is both affordable and sustainable and will also have to carry out a check on a customer’s source of funds. Past gambling behaviour will also need to be checked for evidence of gambling related harm before any customers can be considered a VIP.

This will mean operators having up-to-date evidence of the player’s identity, their current occupation, and an indication of where the money used in their gambling comes from. These checks, together with gambling harm assessments are to be carried out regularly on VIPs.

Speaking about the new rules, the Chief Executive of the Gambling Commission, Neil McArthur, said that the future of VIP schemes was in the balance and that if there was no sign of significant improvement in this area, they would have to take the step of banning such schemes.

The new rules are set to take effect from October 31 and follow a consultation carried out on the issue of high-value customers. According to the UKGC, respondents in its consultation generally agreed that the additional checks were necessary.

Some respondents pointed out that additional funds check for all VIPs would exceed the Betting and Gaming Council’s (BGC) voluntary code, as it would require checks on a significant number customers who were below the anti-money laundering threshold. But the UKGC argued that these checks were still necessary as customers are likely to be incentivised to spend more when they become VIPs.

The UKGC have also made it clear that each source of funds check has to be supported by evidence provided by the individual, and cannot be based on data such as property values or other open-source information. The rules will also require operators to take what the UKGC describes as ‘significant steps’ to confirm that a player has not previously self-excluded. The Commission noted that some had concerns this rule would dissuade some potential problem gamblers from taking the step of self-exclusion, it emphasised that there was no outright ban on self-excluders.

In addition, operators will have to ensure greater oversight of VIP schemes. This includes the maintenance of a full trail of information, covering all stages of the relationship with the customer, while one specific individual should be in charge of the scheme’s compliance. The rules also call for supervising managers to be rotated so that objectivity is retained.

To support staff in managing VIP programs, the UKGC rules call for VIP managers to be given greater training, both on safer gambling and anti-money laundering issues, along with job descriptions that reflect the nature of their compliance duties. In addition, such staff should not be given

Bonuses or remuneration that is based on a customer’s losses or overall spend. They also emphasise that incentives in any VIP scheme should not encourage customers to undertake significant risk behaviours, such as spending excessive time on gambling or chasing losses.

The UKGC rules will be in addition to the existing BGC voluntary code, which already restrict VIP schemes to those who are aged 25 or over. In its rules, the Commission said that they recognised that those customers aged 18 to 24 are more likely than other age groups to be problem gamblers and so urged operators to take extra care with younger VIP customers.

Addressing the reasons for the new rules, McArthur said that they came about in response to an awareness of VIP abuses and failures on the part of industry incumbents:

“Our enforcement work has identified too many cases of misconduct in the management of VIP schemes and this is the last chance for operators to show they can operate such schemes appropriately.”

He went on to note that there had been some improvements, undertaken by companies themselves, and that the number of customers who had signed up to VIP schemes over the last year had dropped by 70%. But although he said that this was a positive, the new rules would help to ensure that there is continuing progress to help vulnerable customers.

A significant number of the new rules came out of a working group that was set up at the start of the year, led by major gambling firm GVC, and have already been incorporated into their industry code by the BGC.

That working group was itself a response to pressure on the industry from politicians and media outlets. VIP schemes have become controversial after a series of investigations, both by the UKGC and the media, found that operators were failing in their responsibilities to some VIP customers.

For instance, the House of Lords’ gambling select committee, which looked into regulatory changes, found that data from nine betting companies showed that while only 2% of customers were considered VIPs, they accounted for 83% of all deposits. The All-Party Parliamentary Group on Gambling-Related Harm has also called for these schemes to be banned completely.

As well as pursuing changes to the way that VIP schemes are administered, UKGC have also called for comments on plans to revamp game design, which has become another area of concern in recent months. Last week, the BGC said that its members would limit the spin speed on slot machines to 2.5 seconds per spin, and would ban both turbo play, which allows customers to play games faster, and multi-slot play, which involve playing on more than one slot game at a time.

Despite these announcements however, the UKGC have said that there was more to be done in this area and have proposed the banning of the Auto Spin feature among other changes.

Downing Street to Take Lead on Gambling Reform

Reports in the UK media suggest that the Prime Minister Boris Johnson and his close advisors will take the lead on the upcoming review into the gambling industry.

The news is apparently in response to a growing mood for reform of the gambling sector among the upper echelons of the government. The Department of Digital, Culture, Media and Sport (DCMS) is expected to launch the long-awaited review later this autumn but according to sources in the government, Boris Johnson and his closest advisers were taking the lead.

According to reporting by the UK newspaper, the Guardian, Johnson’s closest adviser Dominic Cummings and Munira Mirza have taken a personal interest in a push to overhaul the 2005 Gambling Act. This law, introduced under Tony Blair, liberalised regulation of the gambling sector, leaving the UK with some of the world’s most relaxed gambling laws.

It is understood that leading figures in the government are pushing for a wide-ranging review that could include the rolling back of large sections of the 2005 act, including potential new curbs on advertising. Some advocates of reform are reportedly also concerned that the DCMS is conflicted over advertising due to the financial contributions to sports teams and broadcasters made by the gambling sector. While the Sports Minister Nigel Huddleston is believed to be in favour of a wide review, Lady Barran, who serves as a minister at the DCMS, last week said that the link between problem gambling and advertising was not clear.

One significant development in recent months has been the emergence of cross-party support for gambling reform, which has coalesced around the All Party Parliamentary Group on Gambling Harm which is led by Labour MP Carolyn Harris, but also includes former Tory leader Iain Duncan Smith and Ronnie Cowan of the SNP. This cross-party agreement also extends to the Lords where a new group called Peers for Gambling Reform was launched this week.

The group is chaired by Lord Foster of Bath and is pushing for new measures including affordability checks on gamblers as well as a duty of care on the part of gambling companies to prevent harm, which could lead to legal consequences if they don’t protect the vulnerable. The Lords are also pushing for limits on stakes, a reduction in online casino game speed and a new testing regime that will more effectively measure the risks of new gambling products.

Speaking about the need for reform, Lord Foster said that a third of a million UK citizens were classed as problem gamblers and that online gambling companies had increased profits and put more lives at risk during the pandemic. He also described the existing legislative framework as ‘wholly outdated’.

In response, the gambling industry has also been attempting to influence the process. The Chief Executive of the Betting and Gaming Council is former Labour MP Michael Dugher, whose close political friend, former Labour Party deputy leader Tom Watson, has recently joined the online gambling giant Flutter Entertainment as an adviser. Watson had previously been known as a stringent opponent of many gambling industry practices and played a leading role in the campaign to reduce the maximum stakes of Fixed Odds Betting Terminals from £100 to £2.

New Jersey Betting Industry Sets Record

The betting sector in the US state of New Jersey is continuing to flourish despite the impact of the Covid-19 pandemic and August saw the state set a new national record for single sports betting.

According to figures from the Division of Gaming Enforcement the state produced a legal sports betting handle of $668 million during the month. This figure is over twice the $315 million that was placed in bets in the state during July 2020, and surpasses the previous single-state record that stood at $614 million, set by Nevada during November 2019. Gross revenue from sports wagering in August reached $39.5 million, representing the third best total ever.

The record figure appears to be the result of a busy month of sports, that including a full Major League Baseball schedule, and a packed calendar of events in the NBA and NHL. All three professional leagues had previously seen their fixture lists disrupted by the pandemic.

As well as being at the forefront of the sports betting revolution in the US, New Jersey was also a leading force in the push for legal mobile sports betting, and this platform has come into its own at a time when many customers are reluctant to visit physical betting locations.

The figures show that over 90% of the state’s sports wagering handle came from mobile betting during August. Another factor in New Jersey’s favour is the relatively slow progress of neighbouring New York state, where sports betting is currently limited to land based casinos in the north of the state, making it more convenient for sports betting fans in the New York City area to bet with New Jersey betting firms.

And the signs are that September could rival August when it comes to sports betting take, thanks to the start of the new NFL season, as the NFL remains a key betting medium for punters. September will also see a number of days in which all four of the major US leagues have games on the same day, which has historically been a rare event. While the pandemic and associated lockdown has proven to be a challenge for the US betting sector, New Jersey, which was one of the first states to legalise and introduce regulated sports wagering, back in the summer of 2018, has been in a stronger position than most other regions.

In fact, the good results from August are the latest stage in an ongoing battle between Nevada and New Jersey, in which the eastern state, which benefits from its proximity to New York and high population density, is increasingly dominant. The leading betting companies in New Jersey, including well known firms DraftKings and FanDuel, have been advertising heavily throughout the state, and the return of sports action has led to an increasingly intense competition for business, which is good news for punters

La Liga Signs with M88

Following the news that European gambling giant Betway has extended its football sponsorship reach with a deal to sponsor Hertha Berlin, there has been another big football and gambling tie-up.

Top Spanish competition La Liga has struck a deal with the well known online gambling platform M88, recruiting the betting company to be its newest sponsor in the Asian region. The four-season deal will involve the betting brand sponsoring La Liga throughout Asia until the end of the 2023-24 season. M88 have been recruited in place of ManBetX, whose relationship with La Liga has ended.

According to the terms of the deal, M88 will promote exclusive digital content and competitions from La Liga across the Asian continent. One example of this promotional work is a planned weekly video series that features analysis from La Liga ambassadors, with the aim of increasing interest in the league in Asia. And through the competitions, fans in Asia will have the chance to win LaLiga merchandise, as well as match tickets and other La Liga experiences.

The previous ManBetX deal had kicked off at the beginning of the 2019-20 season and had been due to continue until the end of the 2020-21 campaign, but it has now been terminated early. That deal was believed to be worth up to $7 million per season.

La Liga has made the signing of regional sponsorship contracts a big part of its international growth strategy for four years. The deal with M88 follows on from their signing of a content and sponsorship agreement with sports streaming organisation Fanatiz in North America. They have also struck their first regional agreement in Argentina; a tie-up with oil lubricant company Total.

La Liga has also recently appointed the former senior global partnership director at Liverpool FC, Simon Li, to be its commercial director for Southeast Asia, Japan, South Korea and Australia. Li is one of five regional commercial heads working for La Liga, with others working to cover the US, Africa, India and Mexico.

Speaking to the media back in June, Fergus Geekie, who works as international commercial and marketing director for La Liga, explained the league’s aims:

 “It’s about communicating a central strategy from HQ and then sharing it out among the regional markets – them understanding what we’re driving. The markets can then work to develop and localise our strategy and drive commercial opportunities from there.”

But the deal also represents a significant vote of confidence in the online betting sector at a time when Spanish authorities are introducing new layers of regulation.

Google Hit by Italian Gambling Probe

Internet giant Google is set to come under investigation from the Italian Federal Communications and Advertising Authority (AGCOM) according to reports from Italy this week. The investigation will seek to determine whether Google has been in breach of the country’s online gambling ad ban.

The company’s subsidiary operators Google Ireland Limited, Google Inc and Google Italy are all set to come under the microscope, following evidence that adverts for foreign operators were appearing in Italian search results.

The Lega-5Star government in Italy has brought in a complete ban on all forms of marketing related to betting and gambling, including affliliate marketing, sponsorships and promotions. In response to the hardening stance of the Italian government, Google announced back in 2018 that it was intent on removing all gambling-related services and content from Italian search results.

At the time of the Decree’s introduction, Deputy Minister Luigi Di Maio was quoted as saying that the rules were to protect Italians from the potential harms associated with gambling, and that they were supported by all political groups and businesses.

The investigation by AGCOM will specifically be looking at whether the adverts are a breach of Article 9 in the country’s Dignity Decree. The ban on gambling marketing applies in cases where foreign gambling operators are placed at the top of a search through promotions.

The investigation marks an interesting departure for AGCOM. Much of their effort in enforcing the gambling ban so far has related to bonus offers, which the law regards as a type of advertising.

Many expected that AGCOM might not seek to take action against Google. But in pushing ahead with the investigation, it has shown a willingness to take on one of the world’s biggest online operators.

The development may also reflect some changes to the AGCOM leadership. Earlier this year, Giacomo Lasorella took over as the new President. He wasted no time in clarifying that he intended to take a tougher approach in ensuring that the gambling advertising laws are enforced. His appointment was also a clear message to senior executives, football clubs and others, who have spoken out against the gambling ban in recent months. Although many of these stakeholders have pushed hard for a review of the law, it seems that the government and AGCOM are instead doubling down.  

New Finland Gaming Venue Announced

Casino gaming fans in Finland will be able to enjoy a new gaming location from the end of 2021, after news that gaming operator Veikkaus hopes to complete its Uros Live Arena by December 2021.

The venue, which will be home to Veikkaus’s Casino Tampere operation is designed to be a pioneering entrant into the European gaming space, focusing on providing a new type of casino arena. It is expected to employ 80 staff members with recruitment due to start at the end of the year.

All of the staff at the venue are to be trained with extra focus on responsibility and personalisation, and all of the slots and table games at Casino Tampere will feature full authentication. An identical system, including self-control tools, will be trialled at Casino Helsinki next spring.

According to Sami Aiho, who is General Manager at Casino Tampere, the new casinos will lead the way on responsible gaming, by offering customers use of tools that they can use to manage their gaming by, including a ban on certain games or gaming limits.

At present, all customers who enter the Casino Helsinki venue are required to register themselves, but the new measures will mean that individuals must also always show their personal casino cards when they are playing slots or table games. The authentication system is different to Veikkaus’ other arcades and retail sales points, which are restricted to members of its customer loyalty programme.

In addition, customers can only belong to the loyalty programme if they are living permanently in Finland, so authentication, linked to a customer’s Veikkaus Card is compulsory.

Veikkaus has been proactive in pushing for greater responsibility in the gaming sector. Last week the operator called on Finland’s government to bring forward the launch date for a series of new measures supporting compulsory authentication in all gaming arcades. As it stands, mandatory ID checks at these venues are due to commence at the start of 2023, but Veikkaus say they  will bring in the new rules at their Pelaamo and Feel Vegas arcades before the end of next June.

According to Aiho, the new Casino Tampere operation will combine traditional Finnish elements and modern technology for a new type of gaming experience:

“The interior design of the casino will be a combination of Finnishness – wood and forest – with digital personalised experience surfaces. The special areas for lounge and social gaming will live to the pace of the events at the Uros Live Arena, offering new kinds of products and ways of responsible gaming. 

“Throughout the experience arena, you can also take part in real-time mobile games if you are a registered loyal customer of Veikkaus.”

Online Gambling Thriving in Portugal

The online Portuguese gambling sector appears to be thriving, despite the coronavirus pandemic, according to figures released this week.

Gaming revenue for the first half of 2020 is up 44.2% year-on-year according to figures released by Servico de Regulacao e Inspecao de Jogos (SRIJ), the Portuguese regulator. Online gambling brought in record of €138.9 million in revenue during the period. This followed first quarter results that showed that online gambling had overtaken retail in terms of revenue size.

The figures showed that online casino revenue rose dramatically by 74.1% to €83.7 million, while sports betting revenue also saw in increase of 15.9% year-on-year to €55.2 million. Total stakes rose by 62.5% to €2.53 billion, and online casino stakes climbed to €2.29 billion, which was roughly in line with revenue, while sports betting stakes fell 1.5% to €239.9 million.

But the figures also show that this may be a short lived online gambling boom, particularly when it comes to sports betting. Sports betting stakes were at their highest in January and February before falling from March onwards in line with the cancellation of sporting events due to the pandemic, though they subsequently recovered to something like pre-pandemic levels in June.

Online casino stakes rose from €286.5 million in February to a record of €479.3 million in April and €468.3 million in May, before they fell back to €371.9 million in June. Online poker accounted for a bigger share of online casino revenue in April and May, but that share has since fallen.

Speaking about the findings, the SRIJ said that the closure of land-based casinos led to an increase in the volume of online gambling, though this gradually stabilised:

“This reality seems to indicate a preference of the players to bet in a regulated and controlled environment, because even though they are ‘used’ to frequenting physical spaces to play, they chose, instead, to play on legal online sites. The increase in the volume of bets on online games of chance was observed in all types of games, keeping the relative weight of each game stable over the period.”

Although revenue was up across the board, interestingly there seems to have been no corresponding increase in the extent of new account registrations. Registrations climbed from 53,500 in January and 43,900 in February this year to 60,000 in March, but in April the figure was 53,200 and in May it fell to 33,500. At the same time, the number of licensees able to offer online casino games has climbed from 10 during the same period last year to 13.

Chinese Crackdown Hits Gambling Hub

Recent measures by the Chinese government to tackle online gambling are having a significant impact on Macau, the world’s largest gambling hub. The crackdown is part of the Chinese government’s efforts to tackle capital outflows, but it could not have come at a worse time for the Macau gambling sector, which has already been struggling under the impact of sluggish economic growth, the online Chinese-US tensions and the coronavirus lockdowns.

Back in June, Beijing started focusing the cross-border flow of funds used for gambling as a potential national security risk. The result has been that most of the financing channels used in the online gambling industry, along with many cryptocurrency lending platforms, have had the plug pulled. Arrests have been made, numbering in the tends of thousands, while authorities have frozen thousands of bank accounts. According to statements by the Chinese government, they have also seized over $32.95 billion, and there has been an ongoing purge of illegal gambling rings.

According to casino executives in Macau, the crackdown is having a big impact on high spending VIP customers who are finding their financing channels restricted. The director of the Macau Junket Association, Lam Kai Kuong, said that the VIP sector may never return to the levels of revenue it saw two years ago unless Beijing changes its approach to VIP gambling.

Macao junkets operate in a legal grey area, enticing big spending gamblers through luxury perks and credit lines, which often depend on underground payment networks and channels. But it has been estimated that the VIP junket sector is worth almost half of Macau’s $36.5 billion revenue. Although many of the leading junkets are not themselves involved in gambling, many of the agents working for them are using the cover of the junkets to settle debts and arrange credit for VIP gamblers.

The crackdown adds to the difficulties that Macau faces as casinos struggle with the significant reduction in travellers caused by the coronavirus restrictions. China has said that tourist visas to Macau will be issued from September 23. But according to some analysts, even if there was a significant demand from big spending Chinese players, the new restrictions on the junkets’ ability to finance gambling would put casinos themselves under more pressure.  

GVC Issue German Warning

A leading European gambling operator has issued new warnings about the risks to the German betting market caused by new regulatory restrictions.

Martin Lycka, the Director of regulatory affairs at GVC Holdings, has warned that the rules could lead to an increase in use of the black market by German customers.

The warning is the latest in a series of concerns expressed by operators in the German market in recent weeks. Last month, the European Gaming and Betting Association urged policymakers in Germany to consider a simplification of the country’s complicated framework.

The backdrop to these concerns is the launch of a new regulatory framework for the gambling industry in Germany, which will come into effect from next July. These rules will allow for the registration of an unlimited+ number of sports betting operators, online poker games and virtual slot machines, along with a limited number of online casinos.

But writing in a European journal, Lycka focused on areas of concern, including a ban on live streaming of sport on betting sites and the outlawing of advertising before 21:00. In addition, the rules also enforce a one-minute delay for customers on each occasion when they switch between different games using the same site; a €1 stake limit for all virtual slot machines and the limitation of in-play sports betting to the final score. Lycka said that the new rules had the potential to drive German gambling customers to illegal sites:

“Due to the many restrictions surrounding the new rules, licensed products will be much less attractive and less competitive than their unlicensed counterparts. There is, therefore, a huge risk that customers will move to the black market, where there is zero responsibility, zero protection and zero tax being paid.”

He went on to add that the risk was being exacerbated by some federal states, such as Lower Saxony, who have attempted to impede gambling firms and payment providers. He warned that there was likely to be considerable inconsistency between states, particularly when it came to casino table games, which lead to an uneven playing field. He also contrasted the regulations’ approach to table games with the more lenient rules on slots, online poker and sports betting. It seems unlikely, however, that there will be significant changes to the proposed rules, which make up the Fourth State Treaty on Gambling, which were arrived at after many months of negotiations.  

Betting Companies Strike Football Sponsorship Deals

Betting Companies Strike Football Sponsorship Deals

Two leading European betting companies have continued to strengthen their links with high profile football clubs, despite the generally hostile sponsorship climate in many European countries.

Betway has lined up a sponsorship extension with Spanish club CD Leganes which will see the gambling firm continue as the club’s main sponsor for the new season, while fellow gambling operator W88, which previously had a deal with Aston Villa, has signed up with another Premier League club, Crystal Palace, to provide shirt-front sponsorship.

The deal between Betway and Leganes was originally signed in 2018, but the football sponsorship climate has become more difficult in Spain in recent months. The Spanish Ministry of Consumer Affairs is currently weighing up proposals which would toughen up regulations on betting firms, including new restrictions on sponsorship agreements and other forms of advertising exposure.

For that reason, the contract extension reportedly includes an exit clause which will trigger if the new Spanish government proposals come into effect next season.

Under the terms of the deal, Betway will continue to be the main front-of-shirt sponsor for the team. This deal was reputedly worth as much as €1 million while Leganes were in the top flight, though their relegation means it is likely to be less lucrative in the coming season.

Besides Leganes, there are seven clubs in La Liga which have a gambling company as their leading shirt sponsor, including Valencia, Granada, and Sevilla. All these deals will be under threat if the Spanish government successfully implements a ban on shirt sponsorship by betting companies. Such a ban already exists for youth teams in Spain.

There is currently no ban on gambling company sponsorship in the UK, and W88 have moved to secure a Premier League partnership, following the end of their £6.5 million one-year contract with Aston Villa. The new deal with Palace will see W88 replace ManBetX as main shirt sponsor at Selhurst Park, an arrangement that ran for three years.

But, as in Spain, the new deal could be overtaken by political events. Gambling companies operating in the UK have already voluntarily agreed to tighter advertising restrictions, but a House of Lords report recently proposed an end to all gambling sponsorship in UK sport. The UK government is also looking at a full review of gambling regulations in the country.