Gambling Commission ups the ante

Gambling Commission ups the ante for online gaming sites

Topic: Gambling

Who: Gambling Commission, DCMS

Where: London

When: March 2006

What happened:

The Gambling Commission and the Department for Culture, Media and Sport have issued joint guidance on advertising by remote gaming operators.  The guidance focuses specifically on the application of section 42(1)(c) of the Gaming Act 1968 to the remote gaming industry.   It adopts a much stricter position that guidance previously provided by the Gaming Board.

S.42(1)(c) states: "…no person shall issue, or cause to be issued, any advertisement…inviting the public to subscribe any money or money's worth to be used in gaming whether in Great Britain or elsewhere, or to apply for information about facilities for subscribing any money or money's worth to be so used".  Breach of these requirements gives rise to a criminal offence.

The view now taken by the Gambling Commission and the DCMS is that "inviting" for these purposes extends to any inducement, enticement or encouragement to take part in gaming.

Their guidance identifies some examples of advertising message that they believe would be caught by s.42(1)(c).  Broadly speaking these black-listed statements fall into two categories:

However the guidance also goes further and suggests that any statement above and beyond the name and address/website address of the operator could amount to a breach of s.42(1)(c).  The list of statements that the DCMS and the Commission consider could "in some cases…be construed as encouraging persons to gamble" includes the following:

• "Daily jackpots"
• "Weekly tournaments"
• "Poker games to suit everybody"
• "Up to 100,000 players online"

Why this matters

The new guidance will raise considerable issues for those involved in advertising online gaming, and in particular for UK ad agencies with online poker and gaming clients.

Until the Gambling Act 2005 comes into force (expected to be September 2007), the Gaming Act 1968 continues to apply to the advertising of gaming.

And with online gaming advertisers generally based off-shore, and media owners and media-buyers potentially able to take advantage of an "ignorance" defence under s.42(5) Gaming Act 1968, UK-based ad agencies will find themselves very much in the front line as the Gambling Commission moves to enforce its new position.  Given that the sanctions available include fines of up to £5,000 for each day that each ad is published, and jail sentences of up to 2 years for directors, managers and officers of the agency, the stakes are certainly high.

Of course, the DCMS and the Gambling Commission are not able to give a definitive interpretation of the law.  It is for the courts to interpret the relevant provisions and decide whether a particular ad is in breach.  It is by no means clear whether a judge would agree, applying the criminal evidence standard of "beyond reasonable doubt", that a factual statement like "weekly tournaments" would amount to "inviting" members of the public to gamble.  However the new guidance does indicate clearly the approach that the Government and the Gambling Commission will take when considering whether to pass a matter to the Crown Prosecution Service. 

So even though the scope of s.42(1)(c) is probably not in reality as wide as the DCMS and the Commission have sought to describe it, nevertheless it is likely, in light of the potential for fines and custodial sentences, that many media owners and agencies will wish to play it safe and follow the new guidance.

Unfortunately, even for those trying to play it safe, the new guidance leaves a number of key questions unanswered.  Given that the purpose of advertising is generally ultimately to encourage consumers to purchase the product, most advertising messages for poker/gaming sites will necessarily be open to an argument that their content encourages people to gamble (even if the encouragement is not necessarily a direct exhortation).  Advertisers will therefore have to grapple with a number of issues, such as:

• Would the use of colours, graphics or moving/flashing elements be seen as "enticing" and hence "inviting" for these purposes?
• Would the use of button-shaped graphics or other visual elements designed to encourage a click-through fall foul of these new guidelines?
• What kind of factual information can be included safely without incurring a risk of prosecution?
• What happens if the gaming operator's name or website address contains an invitation to play, eg if there was a "playpokernow.com"?

Note that the restrictions in the Gaming Act 1968 apply to online gaming but do not apply to the advertising of online betting activities, which are covered by a separate regime.  Many forms of pay-to-play online amusement are operated as fixed odds betting mechanics rather than being gaming.  Single player roulette and slots games in particular are likely to fall into the "fixed odds betting" category.

Note also that the restrictions apply to invitations to "the public".  Arguably (see for instance Severn View Social Club and Institute Limited v Chepstow Licensing Justices (1968)), email and/or direct mail distribution of marketing material to existing account holders may not amount to an invitation "to the public" and the restrictions in s.42(1)(c) may not therefore apply to that kind of limited circulation to current members.

20 March 2006
nick.johnson@osborneclarke.com
+44 (0)20 7105 7080
www.marketinglaw.co.uk