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ADR Requirements For Gambling Operators

The Gambling Commission’s Licence Conditions and Codes of Practice (LCCP) require gambling operators licensed by the Commission which contract directly with consumers to have arrangements in place for customers to be able to refer any dispute to an independent person offering alternative dispute resolution services, or ADR.
This requirement appears as Social Responsibility Code 61.1. and has the force of a condition on the operating licence, so any failure to comply can place that licence at risk. From 1 October, the EU’s Trader Information Requirements come into force in the UK and the Commission has underlined the need for all operators – and the ADR entities they use – to be fully compliant, so now is a good time to check the arrangements that you have in place.

Since 31 August, you can only use an ADR that has been authorised by the Commission to handle customer disputes. A dispute in this context is defined as a complaint from a customer concerning the outcome of a gambling transaction, that you have been unable to resolve in-house.

The EU’s ADR Directive and its separate Regulation on consumer online dispute resolution, the ODR Regulation, are at the root of the obligations surrounding the use of approved ADR entities. They oblige EU Member States to ensure access for consumers to ADR that meets certain standards, by designating competent authorities to approve, monitor and maintain lists of ADR entities. The Commission is the competent authority designated by the Government under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015, approved by Parliament in March, as having responsibility for authorising ADR entities to deal with disputes in the gambling sector.

Applications for approved ADR status have been accepted by the Commission since April this year, with the deadline for obtaining authorisation in time for the end of August falling at the end of May. It is still possible to apply, so if you are currently using an ADR entity which isn’t Commission-approved, you must stop immediately and make arrangements with an entity which is – this can be on a temporary basis until your current provider gets approval.

At present, there are some 11 approved ADR entities listed on the Commission’s website, some of which, such as the National Casino Forum and the Tattersalls Committee, act only in certain sectors of the gambling industry (casino and bingo, and betting, respectively). Others, such as the ADR Group, work across all sectors, and still others act only for certain operators, such as the Isle of Man Gambling Supervision Commission, which only provides services to operators who are also licensed there. The Commission allows operators to have arrangements with more than one ADR entity and to direct customers to different entities, depending on the nature and subject matter of the dispute.

The Commission is still working on the Regulations that will determine its fees for carrying out its authorisation function, but it is envisaged that these will be based on a cost-recovery system and on a daily rate in the region of £750.

EU law aims to ensure that ADR entities overseeing disputes have the necessary expertise, and that they are independent and impartial. Here is a snapshot of the information that an ADR must submit to the Commission when seeking approval:

• Its name, contact address and website address ;
• Information on its structure and funding;
• Its procedural rules;
• The average length of its ADR procedures;
• The language(s) in which disputes can be submitted and conducted;
• The type(s) of dispute covered;
• The grounds on which it may decline to deal with a dispute; and
• A reasoned statement setting out how it will ensure independence and impartiality.

In order to obtain approval, the ADR entity must maintain an up-to-date website that provides information about its procedure. It must enable parties to file an initial complaint online and to upload documents electronically. The procedure must also be available by paper or email if requested, though, and be generally available and easily accessible such that parties are not obliged to obtain independent advice or be represented, unless they so choose.

The ADR entity’s website must display certain information in a clear and easily understandable manner, including:

• Its contact details, with postal and email address;
• A statement that it has been approved by the Commission;
• Details of its ADR officials, how they were appointed and the duration of their appointment;
• The name of any network of bodies of which it is a member that facilitates cross-border ADR;
• The type(s) of dispute it is competent to deal with, including any financial thresholds;
• The procedural rules it operates and the grounds on which it can refuse to deal with a dispute;
• The language(s) in which disputes can be submitted and conducted;
• The principles it applies in resolving a dispute;
• Any preliminary requirements the parties have to meet before the procedure can begin;
• Whether or not a party can withdraw from a dispute;
• The costs to the parties, if any, including any rules on awarding costs at the conclusion of the procedure;
• The average length of each of its ADR procedures;
• The legal effect of the outcome of the ADR procedure, whether it is binding on the parties, its enforceability and the penalty for non-compliance; and
• Whether the procedure can be conducted by oral or written means, or both.

Customer-facing gambling operators must make sure that the ADR providers they choose to use are fully compliant in all of the above respects, by 1 October, when the Trader Information Requirements come into force. The Commission requires all ADR in gambling to be provided completely free-of-charge to the consumer, and expects operators to offer ADR which is binding on them (if accepted by the consumer) for all disputes which would otherwise be taken to the small claims court (currently, claims for not more than £10,000). For disputes over £10,000, the ADR need not be binding – this allows for mediation to be used in such cases, or for adjudication decisions to be non-binding on the operator.

As well as ensuring that its ADR entity is compliant, there are various obligations relating to ADR that rest upon gambling operators themselves. They must display information about the ADR entities they use on their websites and in their sales contracts. In addition, they must keep all information and records relating to any dispute for a minimum period of 12 months – that is the minimum period that must elapse after the operator has notified the customer that it has been unable to resolve a complaint internally, before its ADR entity can decline to deal with the dispute when it is subsequently presented to that entity, on grounds of delay.

The Regulations implementing the ADR Directive require ADR entities to publish annual activity reports on their websites, and to submit two-yearly reports to the Commission. However this does not absolve gambling operators from their responsibilities arising from the LCCP concerning reporting disputes to the Commission. They must submit a copy of the decision on, or note of the outcome of, each dispute referred to an ADR entity to the Commission, or arrange for this to be submitted by the ADR entity. The Commission expects such reports to be submitted electronically, and to include, as a minimum:

• A summary of the dispute, including the parties to it and their views on it, the subject matter, the amount in dispute and the dates of the events leading to it;
• A note of the dispute outcome, including whether the decision was in favour of the customer or the operator and whether the operator was directed to settle the amount in dispute;
• The reasons for the decision, including the rules or provisions applied and supporting evidence; and
• Other basic information including details of the Commission licence(s) to which the dispute relates and the identity of the ADR entity.

The advent of the Trader Information Requirements presents the ideal opportunity for operators to review how they deal with customers’ complaints and any ensuing disputes. If you have any questions about how to handle these, or any concerns about whether the ADR entity you are using is compliant, contact one of our team, who will be happy to advise you.