A Gambling Bill report by a joint Parliamentary Committee criticizes many of the Bill’s proposals for reforming the law affecting prize draws and competitions. For some of its forthright views and recommendations, go to
Topic: Games of chance and skill
Who: House of Lords/House of Commons Joint Committee on the Draft Gambling Bill
When: April 2004
The joint Parliamentary committee on the draft gambling bill was appointed by the House of Commons and the House of Lords in September 2003 "to consider and report on any clauses of the draft Gambling Bill" and to report by 8 April 2004. That report has now been published and it includes helpful comments and recommendations on the parts of the Bill of relevance to advertisers and marketers.
Gambling product advertising
The committee says that it is undeniable that as a result of the Bill, gambling advertisements will become more visible and accessible than they are at present and if successful will stimulate consumer demand for gambling.
The government's broad policy on advertising under the Bill is clear. This it to replace the current piecemeal rules with new provisions reflecting the changed status of gambling as an acceptable leisure activity. The committee agrees with this general policy, but comments that many of its details remain unclear.
Some offences relating to advertising and the protection of children are included in the Bill, but other key provisions, such as the offence of advertising unlawful gambling products, are still absent. Other important information such as codes of practice will apparently be left to the Gambling Commission to determine and all in all, the committee recommends that further detail on the proposed regulation of gambling advertising, including additional clauses of the Bill, should be published as soon as possible for consultation.
Advertisements directed at children
The current Bill creates an offence of inviting children to gamble. This has wide-ranging support, the committee records, but its viability is questioned. Many in the industry feel that despite making best efforts to prevent minors from trying to access their sites, many advertising media cannot distinguish between adults and minors.
The committee tends to agree and recommends that any guidance or codes made should not penalise operators that have taken all reasonable steps to prevent children receiving gambling advertisements.
The Committee reports there has been strong lobbying for the inclusion of health warnings such as "Stay in control of your gambling" in all advertising for gambling products.
On the other hand the Advertising Association has commented that the value of health/wealth warnings could be over estimated and that they are unlikely to be of much benefit. Interestingly, the ASA informed the committee of research indicating that the public usually see warnings in advertisements as a way of protecting the advertisers, not the punters. Chris Graham of the ASA commented: "One cannot assume that people will read these and think "gosh, thank you so much, I had not thought of that.""
Other submissions indicated that advertisements might helpfully contain information about sources of help available for those who are concerned about their gambling.
All in all, however, the committee concludes here that it is not convinced that health warnings like those used for tobacco products would be appropriate in this context. Nevertheless, it recommends that gambling advertisements should include information about sources of help for problem gamblers and that any future codes drawn up should reflect this.
Who should regulate?
Gambling advertisements are currently regulated by the Advertising Standards Authority ("ASA") outside of the broadcast arena, where Ofcom regulates. For the future, the Department for Culture, Media and Sport has suggested a departure from the existing system so far as non-broadcast advertising is concerned. Instead of the ASA continuing to have 100% control it proposes that the Gambling Commission will instead be given the power to set and enforce its own set of requirements by way of operating licence conditions and codes of practice for advertising.
Before the committee, the ASA and the AA objected to this, saying that it created double jeopardy for those in the industry required to follow the Gambling Commission's codes as well as the ASA's more general rules, caused potential confusion for consumers as to who to complain to and incur needless additional public expense when the ASA already had the relevant expertise.
The committee takes these criticisms on board and recommends that the ASA should continue its current role, with no separate and parallel code and control system operated by the Gambling Commission. However, the Gambling Commission might have a longstop obligation to step in if self regulation proved to be ineffective in any particular case.
Prize draws and competitions
Under current UK law, purchase to enter/ pay to enter prize draws are illegal lotteries unless there is a genuine, realistic and unlimited alternative free entry route. However, the committee reports that over the years there has been a lamentable lack of enforcement of the existing law here. There is no single national agency with the remit and resources to take action. The Gaming Board for Great Britain for example does not have the power to initiate public prosecutions and has to rely on the police to do so, who have not historically prioritised enforcement of the law in this area.
Given the lack of resources and hundreds of illegal lotteries that are currently conducted in the UK, something clearly had to be done and under the Bill the Gambling Commission will be responsible for enforcing the law against unlawful gambling, including unlawful lotteries, with the power to initiate public prosecutions direct.
Here the committee simply recommends that adequate resources should be available to the Gambling Commission to enable it to initiate prosecutions against those conducting illegal lotteries.
For the first time in UK legislative history, the Bill includes a statutory definition of "lottery". One of the requirements of this definition is that individuals are required to pay in order to enter the lottery, but the committee received a number of adverse comments on aspects of the definition and related proposals.
Particularly criticised is wording in the Bill designed to ensure that if you have to make a premium rate telephone call to enter a draw, this will be regarded as pay to enter. The Bill does this by a different route, by stating that a "normal rate" telephone call will not be regarded as requiring a payment. Concern has been expressed that "normal rate" can be misinterpreted and abused and the committee recommends here that great care is taken in the drafting of the final statute so as to ensure that all premium rate calls continue to be regarded as involving a payment to enter.
Normal retail price
Under current UK law, if a purchase has to be made in order to enter a prize draw, this will be regarded as involving a "contribution" and therefore render the event illegal. The Bill recommends a relaxation of this rule to follow New Zealand law.
This means that if the product in question is at normal price, with no premium to reflect the fact that a prize draw is involved, then it will be possible to operate a purchase to enter prize draw within the law.
Concern has been expressed to the Committee, however, about establishing what the "normal price" of a product is. Another comment is that provisions along these lines would put the UK out of step with the rest of Europe and prejudice the development of pan-European promotional marketing strategies.
In its recommendation, the committee ignores the pan-European strategy point, but does strongly urge the avoidance of possible abuse of the "normal price" provisions. This could be dealt with by way of guidance from the Gambling Commission on the meaning of "normal price".
Payment to take possession of a prize
An explanatory note to the Bill states "a payment required to take possession of a prize or to find out what a person has or might have won in a lottery counts as if it were a payment to enter it".
Concern was expressed to the committee that this might operate to criminalise otherwise free to enter prize draws offering prizes such as cars where there was a payment required by the winner (eg road tax and insurance premium) before he or she could drive the car away.
The Committee takes this on board and recommends clarifying wording in the Bill.
Under current UK law, any promotional prize event in which there is an element of skill needed to win will be illegal unless winning "depends to a substantial degree on the exercise of skill."
The Bill currently proposes to scrap this altogether and replace it with the following:-
"a system relies wholly on chance despite the fact that persons are required to exercise skill in order to enter a lottery, if the requirement is not likely to prevent persons who wanted to enter the lottery from doing so."
So where a "competition" includes a skill requirement that is not in fact likely to prevent persons who want to enter the event from doing so, it will constitute a lottery under the Bill and most likely be illegal in a marketing context.
In front of the committee, great concern was expressed about this form of words. On the one hand there were those who wanted no statutory test for when the introduction of skill prevented a prize event from being a lottery. Perhaps not surprisingly, these lobbiers included the television industry, who have historically, within programmes, persistently and with apparent impunity run events which are blatantly illegal by mixing a low level skill question and a second stage draw.
The committee rejected these submissions, but did agree with those who were concerned with the lack of clarity in the drafting of the current clause.
Exactly how does one establish whether a skill requirement is "not likely to prevent persons from entering a prize event?" Is the test subjective to any degree or is it clearly objective? In conclusion, the committee agreed with the concerns expressed here and did feel that more clarity was required. It also felt that this could be best achieved by including a legal definition of a prize competition. This would make it easier to distinguish these from lotteries on the grounds of their skill element. As for how to define this skill element requirement, however, the committee does not offer any ideas.
Why this matters:
This report offers some very helpful and illuminating comments both on the current state of UK law and its enforcement in this area, and on the issues that continue to be very much alive and under debate so far as the proposed new law is concerned.
As regards the regulation of advertising for gambling products, it must be right that the Gambling Commission only has longstop powers, leaving the ASA a clear run in the area as it already has. So far as promotional prize events are concerned, all the committee's recommendations seem entirely sensible and will we trust be taken on board.
For those marketing lawyers who are very sadly obsessed with these issues, a read of the DCMS' comments on the various issues covered in the report at Annex 1 is also a recommended read!