UK
Lottery-style commercial
gambling products: GB clarity
In late July the GB Gambling
Commission published a
Communication, ‘Betting on
lotteries and lottery themed gaming
products: being clear to
consumers,’ which highlights to
operators that when presenting or
advertising betting on lotteries or
lottery-themed gaming products,
consumers must be aware that they
are not, in making such bets or
playing such games, participating in
a lottery. Andrew Danson, Partner at
K&L Gates, follows his previous
article on the tension between the
lottery and commercial gambling
sectors from March’s edition of the
World Online Gambling Law Report
with a closer look at the
Commission’s Communication, in
the context of other developments
relating to the lottery market, such
as the Call for Evidence published
earlier this year by the Department
of Culture, Media and Sport
(‘DCMS’).
In March’s edition of the World
Online Gambling Law Report in the
article entitled ‘“Lottery creep” and
the threat to online gambling
operators,’1 I reported on the
threats to commercial gambling
operators from Camelot and the
potential encroachment of the UK
National Lottery monopoly into
the commercial market. Whilst we
still await the outcome of the
DCMS Call for Evidence discussed
in that article, a recent
Communication from the
Gambling Commission has created
hope that a sensible, lawful
solution can be found.
Those expectations are now
higher than they were a few
months ago, when the UK’s House
World Online Gambling Law Report - August 2015
of Commons Culture, Media and
Sport Committee (‘Select
Committee’) published its preelection report into the society
lottery market. In responding to
the Select Committee’s inquiry,
Camelot made three suggestions to
address what it perceived to be
competition from the commercial
gambling sector. The Select
Committee essentially copied and
pasted those suggestions into its
report, and recommended that the
Gambling Commission advise the
Government on which of the three
would be most effective in
reducing consumer confusion.
Camelot’s suggestions were as
follows:
(1) prohibit betting on lotteries;
(2) improve the clarity of
marketing of lottery betting
products; or
(3) re-define all bets on lotteries
as ‘pure’ lotteries.
Options (1) and (3) would, in all
likelihood, amount to the same
thing - the abolition of the
regulated commercial lottery
betting market and the effective
extension of the National Lottery’s
monopoly. As outlined in March’s
article, any such measure could
face potential EU law challenges on
the basis of Article 106(1) of the
Treaty on the Functioning of the
European Union (‘TFEU’)
(measures contrary to Treaty
rules); Article 102 TFEU (abuse of
dominance); Article 56 TFEU
(freedom to provide services); and
Article 4(3) TFEU (duty of sincere
cooperation)2.
Against that background, it is
encouraging that the Gambling
Commission has now published a
communication based on the
principle that: “Betting on the
outcome of lotteries and other
lottery themed gaming products
must be presented and advertised
in a way that makes it clear to
consumers that they are not
entering a lottery and that allows
them to easily identify what
product is being offered” (the
‘Communication’).
Whilst the Commission does
state in the Communication that it
does not preclude any action by
DCMS in the future, one would
have thought that, if the Gambling
Commission was about to advise
the Government to abolish the
commercial lottery betting market,
it would be unlikely to provide
guidance on its expectations for
clarity of marketing by that sector.
Commercial lottery betting
operators will be heartened by the
collaborative tone of the
Communication, which
encourages “discussion and action
from the industry, which may
prevent the need for future
regulatory intervention.”
All in all, this provides a good
indication that, at least as far as the
Gambling Commission is
concerned, Camelot’s suggestions
(1) and (3) of excluding its
perceived competition from the
market should be off the table for
the time being. Whilst this would
be a relief for the lottery betting
industry, it should also be seen as a
victory for Camelot, which has
succeeded in having its suggestion
(2) adopted by the regulator.
Contents of the
Communication
The Communication sets out the
Commission’s concerns and
expectations in the context of the
applicable law and regulation in
this area.
The Commission states its view
that operators of lottery betting or
other gaming products with a
lottery theme should satisfy
themselves that the type of product
being offered is sufficiently clear to
the “average consumer,” as defined
in the Consumer Protection from
Unfair Trading Regulations 2008
(‘CPRs’). The CPRs contain a very
detailed definition of the ‘average
13
UK
consumer,’ which might be
summarised (in this context) as the
average consumer likely to view
marketing for lottery betting or
other gaming products with a
lottery theme, taking into account
the material characteristics of such
a person, including their being
reasonably well informed,
reasonably observant and
circumspect.
This statement by the
Commission is a further indication
of how it will interpret the ‘fair and
open’ licensing objective, which is
one of the three key objectives
underpinning its licensing
decisions.
As identified in the
Communication, the UK’s
advertising codes administered by
the Advertising Standards
Authority (‘ASA Codes’) include
rules stating that advertising must
not be materially misleading. It is
an ordinary code provision of the
Gambling Commission’s Licence
Conditions and Codes of Practice
(‘LCCP’) that licensees adhere to
the ASA Codes.
The Commission refers in the
Communication to a recent ASA
adjudication relating to a television
advertisement for a gaming
product with a lottery theme,
supporting the view that operators
should make it clear to consumers
whether or not they are
participating in a lottery. This
adjudication was made under the
ASA’s broadcast code, whereas
advertising on websites or in other
non-broadcast media is regulated
under its non-broadcast code.
Although the wording of the two
codes is similar, the regulatory
approach may differ, since
broadcast disclaimers may be
displayed only momentarily and
are often less effective than on a
website, where the consumer has
more opportunity to review and
absorb disclaimers and additional
information.
14
The
Commission
states its
view that
operators of
lottery
betting or
other gaming
products with
a lottery
theme should
satisfy
themselves
that the type
of product
being offered
is sufficiently
clear to the
“average
consumer,”
as defined in
the
Consumer
Protection
from Unfair
Trading
Regulations
2008
It is a social responsibility code
provision of the LCCP that
licensees satisfy themselves of their
compliance with the CPRs. The
elevated status of this requirement
as a social responsibility code
provision (which, in effect, is
equivalent to a licence condition)
reflects the higher threshold for
breach of the CPRs, when
compared to the ASA Codes.
In order to breach the applicable
provisions of the CPRs, it is not
enough for marketing to be
insufficiently clear to the average
consumer. That lack of clarity must
also cause, or be likely to cause, the
average consumer to take a
different transactional or economic
decision than that which they
would otherwise have taken. For
example, it is not in itself a breach
of the CPRs if the average
consumer believes a bet to be a
lottery. For that to be a potential
breach of the CPRs, it would also
be necessary to show that the
average consumer would not, or
would not be likely to, place that
bet if they knew it was a bet
instead of a lottery. Given that, in
this example, some of the essential
characteristics of a bet on a lottery
draw are likely to be similar to an
actual lottery draw (both are likely
to be heavily regulated, low-stakes
high-prize forms of gambling with
similar or identical - and low risks of problem gambling), that
may not be straightforward to
demonstrate.
compel its licensees to do so, for
example by requiring prominent
messaging at the top of web pages.
The ball is in the commercial
operators’ court. The initial
reaction from the industry - which
was already beginning to take these
steps prior to the Communication
- suggests that it will remain
proactive and will seek to provide
the improved transparency that the
Commission is seeking without the
need for formal regulatory
intervention. If that happens, it
would seem to constitute a sensible
and positive solution for
consumers, the commercial
gambling sector, the lottery sector
and the good causes involved.
Andrew Danson Partner
K&L Gates LLP, London
andrew.danson@klgates.com
1. http://www.e-comlaw.com/worldonline-gambling-law-report/article_
template.asp?from=woglr&ID=2163&Sea
rch=Yes&txtsearch=lottery
2. The European Commission has
recently sent an EU Pilot communication
to Germany raising concerns about its
gambling laws on a similar basis.
Next steps
In the ‘next steps’ section of the
Communication, the Commission
states that it expects affected
operators to take steps to address
the concerns expressed about
clarity of marketing. In the event
that operators prove unwilling to
alleviate those concerns, the
Gambling Commission states that
its next move would be to consider
introducing licence conditions to
World Online Gambling Law Report - August 2015