Volume: 16 Issue: 7
The UK’s Competition and Markets Authority (‘CMA’) announced on 23 June 2017 that it is launching enforcement action against a number of online gambling operators suspected of contravening consumer law in connection with their gaming promotions for new players and certain aspects of their free bet promotions. The CMA has also opened a new line of enquiry into possible obstacles that consumers face when trying to withdraw funds after gaming or betting online and has identified concerns relating to ‘dormancy’ charges some firms apply to players’ accounts after a period of inactivity, or terms which remove funds from inactive accounts.
The CMA’s announcement is part of a joint programme of work carried out with the Gambling Commission to address concerns about whether consumers are being treated fairly by online gambling operators. Gambling Commission Chief Executive Sarah Harrison, commenting on the launch of the CMA’s enforcement action, said that “Whilst the CMA takes enforcement action on how consumer legislation is followed, the gambling industry should be under no illusion that if they don’t comply with consumer law, we will see this as a breach of their operating licence, and take decisive action.”
The CMA opened the investigation into possible unfair practices around gaming sign-up and free bet promotions in October 2016. “Given the backdrop, the CMA’s decision to take enforcement action against a number of operators should not itself be surprising. Nevertheless, its recent announcement appears significant for a number of reasons. First, the list of those under investigation appears to include a number of household name brands; this is not simply an issue of those operating at the margins of the industry,” explains Dan Waugh, Partner at Regulus Partners. “Second, as well as the CMA’s apparent determination to pursue enforcement, the Gambling Commission has joined the dots between consumer law and licensing requirements and indicated that it is prepared to take robust action. Third, the expansion in scope of the CMA’s investigation to incorporate fund withdrawals may mean that other firms are drawn into this - and quite possibly wider business practices.”
Relating to the launch of the enforcement action, the CMA has stated that it is especially concerned that gamblers may be losing out because of inadequate or unclear information about the restrictions and conditions that apply to promotions before sign-up, making it difficult to evaluate whether they should take it up; restrictions on the consumer’s right to withdraw winnings made from gameplay with their deposit unless they meet extensive wagering requirements; and potentially unfair rules that restrict certain play strategies, on which firms rely to deny customers a pay-out when they come to claim their winnings.
The CMA states in its press release that on completion of its enforcement action, it will continue to work with the Gambling Commission to deliver sector-wide change in the areas of concern identified and will work with the Commission to drive improved compliance with consumer protection law more broadly.
Professor Pablo Cortés, Chair in Civil Justice at the University of Leicester, believes that a related issue that needs to be tackled is how gambling operators deal with consumer complaints, both internally and when outsourced to an independent alternative dispute resolution (‘ADR’) provider. The Gambling Commission published its report into Complaints Processes in the Gambling Industry in March 2017 following an investigation into the ADR scheme used by the industry. Amongst the findings was the revelation that the information supplied to customers concerning dispute resolution varies widely between operators and that some customers are unable to pursue complaints that focus on the operation of a gambling business rather than the outcome of a transaction.
“Currently gambling companies can choose, and pay for, one of the ADR providers certified by the Gambling Commission. This choice leads to forum shopping and to a race to the bottom on redress standards as gambling companies choose the less expensive ADR option and the one that is more likely to decide in their favour, raising questions about the independence and impartiality of these ADR providers,” adds Cortés. “I believe that the gambling industry, like the financial industry, should be monitored by a single ADR provider akin to the Financial Ombudsman Service, which should not only offer effective redress but it should also cooperate with the regulator and the industry to improve standards and compliance with consumer protection laws.”
According to the CMA’s timetable, the next update on the investigation that has instigated the enforcement action against a number of operators will be released in December 2017. “It is not clear where or when the CMA’s investigation will end - but at a time when gambling is under intense political and media scrutiny, the damage to the industry’s reputation may have long-term repercussions,” concludes Waugh.