Following the recent cancellation of almost all sporting events, and with future cancellations and postponements looking inevitable, licensees may be considering diversifying their product offerings in order to provide betting on virtual events and/or eSports. The Gambling Commission (the “Commission”) has emphasised that notwithstanding these unprecedented times, all licensees are expected to comply with the LCCP and the Gambling Act 2005 to ensure licensing objectives are upheld, and that consumers are protected. Therefore, any diversification of product offerings will require careful planning and consideration of the following key issues. 

Licensees must ensure that they are appropriately licensed to provide their product offerings. Licensees who hold a remote betting (standard) (real events), or remote casino, operating licence, or the equivalent host versions, will not be licensed to provide betting on virtual events, and an application to vary will need to be submitted, and granted, before offering such activities. 

The Commission’s guideline service standard on applications to vary, which it regularly failed to meet pre-pandemic, is “up to eight weeks”.  However, as the Commission’s entire workforce is now working from home, it has warned its application processing times may be longer than usual.  Furthermore, the Commission has stated:

“We are also unable to fast track applications. We will continue to monitor the situation and will communicate any changes to our expectations accordingly.”

Licensees should, therefore, be prepared for delay.  How long is anyone’s guess!

Operators should also be aware of the potential attraction of eSports and betting on virtual events to those who are underage, paired with the potential, with children no longer at school, for increased attempts by the underage to access gambling products. Operators must ensure that they have controls in place which ensure that at the very least, the customer’s name, address and date of birth is verified before they are able to gamble.

Operators should bear in mind the potential for cheating in eSports, with participants able to cheat in order to win or to deliberately underperform in order to lose. Operators who provide betting on eSports must satisfy themselves that the competitions and events upon which customers are able to bet are effectively managed to ensure their integrity and fairness for customers who gamble on those events.

Operators must also carefully consider the risk presented by customers who would usually gamble on sports betting products moving to alternative products, and the effect that this may have on their gambling. The constant and immediate availability of betting on virtual events has the potential to encourage such customers to gamble beyond their usual limits and what they can afford.

In the light of the health crisis, social distancing measures and potential disruption to players’ income, the Commission has reminded “online operators [they] must continue to act responsibly, especially in regard to individual customer affordability and increased social responsibility interactions.  As a reminder, [the Commission] expect[s] licensees to:

• Assess individual affordability on an ongoing basis – customers may be experiencing disrupted income
• Increase social responsibility interactions and intervene where customers are showing signs of gambling related harm
• Onboard new customers in a socially responsible way and not exploit the current situation for marketing purposes
• Refresh the information they have on customers regularly
• Review the levels which trigger interaction for AML and SR
• Ensure that your gambling products have been tested by a test house before they are released to the market.”

More generally, operators should be conscious of the need to reassess the risks of their business being used for money laundering and terrorist financing in the light of the introduction of any new products. The AML risk assessment will need to be reviewed and, if required, updated to reflect any changes in risk resulting from the product diversification. New products may necessitate updates to AML and safer gambling policies and procedures, and this should be carefully considered in the light of any updates to the AML risk assessment.

It is important to ensure that the marketing of any new products is carried out in a socially responsible manner and complies with the CAP and BCAP codes. All advertising must also be carried out in compliance with the Gambling Industry Code for Socially Responsible Advertising. The Commission has also emphasised that licensees must not exploit the current situation for marketing purposes. Operators must also ensure that any direct marketing conducting conforms to data protection legislation and that customers are only contacted about virtual event betting or eSports if the required consents have been secured.

Product diversification may well prove to be a useful tool to ease commercial pressures for many licensees in these unprecedented times. However, careful consideration must be given to the gambling legal, regulatory and licensing requirements, and associated risks.

If you would like to discuss any of these issues, including assistance with an application to vary, please do get in touch with us.