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Changes to the UK Gambling Act 2005 that you need to know

Changes to the UK Gambling Act 2005 that you need to know
Sep 29, 2023 Erin Fogarty Updated On: September 29, 2023

In recent years multiple gambling operators have been dealt huge fines for AML non-compliance and failures in protecting customers. As a result of these failings, the UK government has decided to uphold their 2019 manifesto pledge and review the UK Gambling Act 2005 with measures that are more suitable for today’s technologies.

What is the UK Gambling Act 2005?

The UK Gambling Act 2005 replaced the Gaming Act 1968, the Betting, Gaming & Lotteries Act 1963, and the Lotteries and Amusements Act 1976, consolidating this existing legislation and removing some of its anomalies.

The act sets different types of operating licenses that cover the full spectrum of commercial gambling activities conducted in the UK, as well as allowing the Gambling Commission powers of entry and inspection to regulate gambling.

The act has three main objectives:

  • Keeping gambling free from crime.
  • Ensuring that gambling is fair and open.
  • Protecting children and vulnerable adults.

A summary of what will change

These are the most comprehensive changes to the gambling sector since 2005 when the act was introduced.

Changes include:

  • A mandatory levy on betting firms to pay for treatment of addiction, new player protection checks, and stake limits for online slots.
  • Tougher and extra powers for the Gambling Commission.
  • A levy on statutory gambling operators to ensure that operators help fund treatment services and research, including through the NHS.
  • New stake limits for online slot games will be between £2 - £15 per spin.
  • Frictionless player protection checks to protect those most at risk of harm before unaffordable or harmful losses are incurred.
  • Rules to prevent bonus offers from harming vulnerable people.
  • Closing loopholes to make sure under-18s, including bringing football pool betting in line with National Lottery play for over-18s only.
  • A new industry ombudsman to deal with disputes and rule on redress where a customer suffers losses due to an operator failing in their player protection duties.
  • Review of the current horserace betting levy.

Why was it changed?

The act will change to better protect people at risk of gambling-related harm. Going forward the government plans to continuously review and update these rules to account for rapidly evolving technology.

Problem gambling affects an estimated 300,000 people and can lead to people losing life-changing sums of money. One issue is that rates are significantly higher for problem gambling players in online casino games than those playing physically, such as in a casino or on a pub machine. The measures set out recently will hold gambling firms to account when they fail in their responsibility to protect players.

Whilst most people play without an issue, there are too many cases of addiction, catastrophic financial loss, and related suicide. In the most recent investigation following players, one was allowed to lose £70,000 over 10 hours, and another placed a £100,000 bet immediately despite having a £70,000 credit limit.

New measures and what they hope to achieve

Statutory gambling operator levy

This will replace the current voluntary levy.

Not all betting companies pay their fair share, and some have only paid as little as £1. Currently, many NHS or researchers do not take funds from the voluntary levy due to concerns over the source of funding.

The new levy will be paid by gambling companies, and the proceeds will be ring-fenced for funding gambling-related research, education, and treatment (including through the NHS).

Funds are to be collected by the Gambling Commission and spending will be government-approved. Rates will be subject to further consultation to consider factors e.g., business size, operating costs, and problem gambling rates.

The priority of this levy is to ensure sufficient long-term funding for high-quality research and treatment of gambling harm and addiction.

New online stake limit

There will be a new stake limit for online slots. The default maximum stake will now be between £2 - £15 per spin (subject to consultation).

This measure will help prevent drastic and life-changing losses, and to level the playing field between online and land-based sectors. Currently, there is no limit on bets for online slots whereas in-person slot machines in pubs, arcades, bookmakers have a limit of £2 and casinos have limits up to £5.

Public Health England has shown younger adults are the most vulnerable to gambling harms, and with a problem gambling rate of 8.5 per cent for online slots, casinos and bingo, the government will launch a consultation on options for specific protections for those under 25, including a lower stake limit or other controls.

Player protection checks

Gambling operators will now be required to do more to protect customers.

Aiming to support those who are classed as vulnerable, betting companies will be required to conduct player protection checks on the highest-spending gamblers to check they’re not incurring harmful losses.

These checks will happen instantaneously and will not impact gameplay unless there are signs of financial harm, such as people declaring bankruptcy or racking up debts to fund gambling. Around eight in ten players will never undergo checks.

Checks will happen in the background against information already available online, so those who are checked will not notice. Only around 3 per cent of the highest spending accounts will have more detailed checks.

New powers for the Gambling Commission

The Gambling Commission will be given new powers and work in partnership with ISPs to tackle and block unlicensed black-market gambling from operating in the UK.

Illegal operators often try to subvert the system, including player protection requirements so this move with strengthen the regulatory environment protecting those most at risk.

While the Commission continue to take strong action against operators who break the rules, cases with devastating financial harm are still occurring, and lives are being lost from gambling harm/addiction.

Restricting bonus offers

Evidence showed that while millions of people enjoy an occasional bet without issue, particular groups e.g., those suffering addiction and harm, are at greater risk from aggressive advertising practices.

Bonus offers, such as free bets or spins, can drive harmful behaviour and trigger people to spend more than intended.

The Gambling Commission will take a closer look at how bonuses are constructed and targeted to prevent them from being used in harmful ways, its work will inform new rules to stop dangerous practices.

Horseracing levy

The knock-on impact of these measures on the horse racing industry will be minimal, however, there will be a review of the current horserace betting levy to make certain racing continues to be appropriately funded for the future.

Additional measures

The government confirms it will:

  • Prevent under-18s from accessing any form of online gambling, cash prizes, fruit machines, or scratch cards by removing loopholes.
  • Review the fees that local authorities can charge for premise licences and create new powers for local leaders to conduct impact assessments when considering new applications.
  • Review online game design rules to look at limiting the speed of play and other characteristics which exacerbate risks.

William Hill fined over £19 million.

At the start of 2023, William Hill (and sister brand Mr Green) was fined £19.2 million for social responsibility and AML failures.

Research from the Gambling Commission found they allowed a customer to spend £23,000 in 20 minutes, another to spend £18,000 in 24 hours, and a third to spend £32,500 over two days, all without any checks.

They admitted to a string of transgressions, including allowing customers to lose tens of thousands of pounds within minutes of opening an account. The most extreme examples can be traced back to during lockdown when to Gambling Commission warned against exploiting vulnerable people shut indoors for long periods.

AML failures included allowing customers to deposit large amounts without conducting appropriate checks.

£19.2 million is the largest penalty in the commission’s history however only equates to less than four days of revenue for their parent company 888 which won £1.6bn from punters in 2022.

Betfred was fined £3.25 million.

Similarly, in July 2023, Betfred paid £3.25 million after a Gambling Commission investigation revealed social responsibility and AML failure.

Social responsibility failures included:

  • Insufficient controls in place to protect new customers/monitor high velocity spend/duration of play exposing the customer to the risk of substantial losses without safer gambling interaction.
  • Assuming customers were not at risk of harm because they were winning customers. Failed to carry out any safer gambling interactions on one customer who staked £517,499 over two months.
  • Lack of evidence on the evaluation of the effectiveness of individual customer interactions and a lack of record keeping which limited the effectiveness of future interactions.

AML failures included:

  • Poor record keeping and financial alerts were set too high.
  • Failing to consistently obtain appropriate KYC identification and SoF documents from its customers when thresholds were met.
  • Placing an undue reliance on open-source information and should have taken further steps to corroborate customers’ SoF information.

All these failures occurred over various periods between January 2021 and December 2022.

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