Government White Paper promises long-awaited reform of the UK gambling sector

More than two years after promising a review of the UK's gambling regulations, in April 2023 the British government published the Gambling Act Review White Paper in the House of Commons.

The White Paper set out a series of proposed reforms, some of which will mark a significant shift in the way gambling is regulated in the UK going forwards. The road to reform In the UK, gambling is largely regulated by the Gambling Act 2005 (the "Act"). At the time of its introduction, the Act introduced substantial reform of existing gambling laws that were, at the time, several decades old.

However, fifteen years on, in December 2020 the government announced it was reviewing gambling laws once again and issued a call for evidence from industry participants. In particular, the government's review was to focus on making sure gambling regulations are fit for the digital age and to address concerns that the harm caused by gambling remains too extreme.

The White Paper was originally intended to be published in 2020. However, it was postponed a number of times, for reasons ranging from political reshuffles, the pandemic and even an awaited decision on the next operator of the National Lottery. Almost three years after announcing its review, in April 2023 the Government finally published its White Paper, setting out its proposals for reform.

The key proposals

The proposals set out in the White Paper span a number of topics, including consumer protection, advertising, regulation, dispute resolution, children and young adults and land-based gambling.

In relation to consumer protection, the White Paper included a number of proposals relating to affordability checks (or, as the Government refers to them, "financial risk checks"). The first proposal is that for moderate losses (of £125 per month or £500 per year), operators should conduct financial vulnerability checks that are "frictionless" for the consumer.

For "binge gambling", where an account suffers losses exceeding £1,000 in a 24-hour period, operators should conduct enhanced spending checks, which would involve assessing a consumer's financial situation by accessing more personalised data, potentially through the use of credit reference agencies. The same enhanced spending checks are also proposed where consumers suffer more than £2,000 worth of losses over a 90-day period.

Another way the White Paper seeks to reduce losses suffered by consumers is by introducing limits for certain "high-risk" products. The Government is of the view that online slots are particularly associated with large losses and binge play and, as such, propose to introduce stake limits of between £2 and £15 per spin.

In recognition of the fact that young people are at higher risk of loss when playing online slots, the Government proposes a lower limit of between £2 and £4 for people aged 18 to 24 or, alternatively, a variable limit based on individual risk factors.

On the topic of regulation, the White Paper states that the Gambling Commission will take a more ambitious approach to enforcement, using data from operators and more specialist staff to improve industry governance.

To help fund the additional resources needed for this, the Government intends to introduce a statutory levy paid by operators and collected by the Gambling Commission. The rate of the levy is subject to consultation but is expected to be set at around one per cent of profits. The Government also intends to give the Gambling Commission additional powers in the future, to assess and regulate the compliance of gambling firms more effectively.

For advertising and marketing, the White Paper sets out that the Gambling Commission will look to further strengthen consent for direct marketing for online gambling, with both new and existing customers given more choice on what offers they want and how marketing is sent to them.

Reactions to the White Paper

The Government stated that the proposals in the White Paper "strike the right balance between consumer freedoms on one hand and protection from harm on the other". However, there have been mixed reactions from those in the industry and beyond.

Some campaigners and public health experts have criticised the White Paper for failing to implement an absolute prohibition on advertising gambling products to vulnerable customers. Others have criticised the White Paper's focus on what it terms "vulnerable people" which, they say, ignores the fact that gambling is a fundamentally addictive product that anyone, not just the vulnerable, could fall victim to.

A significant number of gambling companies have spoken out in support of the White Paper, which may indicate that the proposals were not as draconian as some firms had feared. Firms seem, at least publicly, in favour of raising industry standards, prioritising responsible play and the proposed levy to fund research, education and treatment relating to gambling.

Next steps

Many of the proposals in the White Paper are subject to a further round of consultation. Most of the consultations, including those on the Gambling Commission levy, the limits for online slot games and the affordability checks are planned to commence in the summer of 2023.

Where legislation is required to implement the proposals (e.g. in order to give the Gambling Commission new powers) timeframes will be dictated by parliamentary priorities. With a UK general election likely to take place in 2024, it is possible that a number of the legislative changes will be dependent on the support and implementation of a new government.

However, with the reform of gambling laws having broad, cross-party support, we expect that the majority of the proposals will survive any potential changes in the country's political leadership and be implemented in the coming years.

By Sean Curran

Sean Curran is a Partner at Arnold & Porter. Sean practice encompasses the representation of both corporates and individuals in regulatory and economic crime matters. He has deep experience advising on investigations, regulatory and legal compliance, civil matters involving accusations of fraud and related crisis management and reputational damage.

In addition to working on matters involving various UK prosecutorial and regulatory bodies, including the Serious Fraud Office, Crown Prosecution Service, Financial Conduct Authority, HMRC and Financial Reporting Council, Sean is regularly instructed on cases with cross-border or multi-jurisdictional aspects, dealing with matters investigated by the US Department of Justice and the European Anti-Fraud Office.