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May Brings Various Changes to Gambling Advertising

The Committees of Advertising Practice (“CAP”) are responsible for writing and maintaining the UK Codes of Non-broadcast and Broadcast Advertising, (“the CAP Codes”), administered by the Advertising Standards Authority, which govern all advertising campaigns in the UK.

As of 8 May this year, the Gambling Commission’s (“GC”) Licence Conditions and Codes of Practice (“LCCP”) have been amended so that all gambling operators are explicitly required to comply with the CAP Codes. A further amendment from the same date expressly requires all licensees to comply with the provisions of the Codes that relate to “misleadingness” and free bets.

This serves to highlight the importance that the GC accords to protecting the public from misleading gambling advertisements, particularly those offering free bets. This results, at least in part, from the relatively high volume of consumer complaints that the GC receives in this area.

Section 3 of the CAP Codes deals with misleading advertising generally, and Section 16 specifically with gambling. Marketing material must not mislead and must contain all material information enabling the consumer to make informed decisions in relation to a product. It must also state any significant limitations and qualifications clearly. The importance of this for free bets is clear – any limitation on benefitting from a free bet, such as a requirement on the customer to first stake a certain amount of his own money or to stake a certain amount before claiming a prize– must be clearly set out.

A further amendment to the LCCP which, again, took effect on the 8 May, bolsters the prohibition surrounding portraying children and young persons in gambling advertising. This prohibition was already laid down in paragraph 16.3.14, but the LCCP now repeat it, as Ordinary Code provision No-one who is, or appears to be, aged under 25 may be featured gambling or playing a significant role in gambling marketing. However, the new LCCP go on to clarify the exceptional circumstances in which children or the young may be shown, and reiterate the provisions that Section 16 of the CAP Codes make about this.

In short, the restriction on allowing people who are, or who seem to be, aged 18-24 to feature in marketing of online gambling does not apply to images that appear “in a place where a bet can be placed directly through a transactional facility”. This will include images on a gambling operator’s own website. This is subject to the further qualification that the individuals concerned may only be used to illustrate specific gambling selections where they are the subject of the gambling transaction offered. That is to say that they may only be shown in the context of the event being gambled upon, and not in a gambling context.

It is worth noting that the LCCP changes relating to the application of the CAP Codes retain the requirements as Ordinary, rather than Social Responsibility, Coder provisions. The effect of this is that they do not have the force of Licence Conditions as such, rather they represent the GC’s view of best practice. This means that a breach of them will not, of itself, lead to the GC instigating a review of an operating licence or a prosecution. That said, breaches will be admissible as evidence in criminal or civil proceedings and must be taken into account in any case in which a court or tribunal thinks them relevant, and by the GC in the exercise of its functions. Any departure from Ordinary Code provisions must also be taken into account by the GC in the context of any ongoing licence review.

To coincide with the increased focus by the GC on the CAP Codes, the CAP themselves have been reviewing and amending their rules insofar as they apply to sales promotions. These are defined as a campaign providing an incentive for the consumer to buy a product using a range of added direct or indirect benefits, usually on a temporary basis, to make the product more attractive. Operators need to exercise some care to ensure that such promotions do not fall to be classified as gambling – in some circumstances they may, for example, where an inflated price for the product is charged to reflect the chance to enter into the promotion.

The changes to the CAO Codes surrounding running sales promotions follow a public consultation which was held in late 2014, and came into force on 1 May.
In common with all forms of marketing communications, sales promotions must not mislead, harm or offend their audience, and promoters must ensure that consumers are dealt with fairly at each stage. In addition, Section 8 of the Non-broadcast, or CAP, Code, sets out the rules applying specifically to sales promotions.

Section 8 was last reviewed as long ago as 2008, just after the Unfair Commercial Practices Directive (“UCPD”) came into force in the UK by means of its implementation by the Consumer Protection Regulations (“CPR”).

The CAP decided that it was time to review Section 8 again, to take into account developments in the interpretation of the UCPD in case-law surrounding its enforcement and, in particular, an appreciation of the impact of the Directive’s maximum harmonisation requirement .The implication of this is that the CAP Codes cannot create banned practices which go above and beyond those stipulated in the Directive itself.

The CAP review of the CAP Codes’ requirements surrounding sales promotions therefore focussed on amending them to ensure consistency with the CPR in light of increased clarity surrounding their interpretation. In essence, the changes confer greater flexibility on promoters to enable them to plan their promotions, while at the same time protecting consumers by ensuring that all information that they require in order to make a decision on whether or not to participate, is provided at each relevant stage. The CAP will develop supporting guidance n the new rules as required, and this is awaited.
Many of the new rules surround the requirements on promoters in cases where it is predicted that response might outstrip supply. Such promotions are now permitted, as long as the promoter can demonstrate that he has made a reasonable estimate of the likely uptake for the promotion and either that they were capable of meeting the response or that consumers had sufficient information, presented clearly and in timely fashion, to make an informed decision on whether or not to participate. In addition, if the promoter relies on an ability to meet anticipated demand but becomes unable to do so because of an unexpected high or demand or other unanticipated factors outside his control, he must ensure relevant and timely communication with applicants and consumers and offer a refund or suitable substitute product where harm to the consumer is otherwise likely to occur.

Promoters will therefore need to give consideration to the need to establish that they have undertaken due process in all these respects, if ever challenged.

The amendments to the CAP Codes also reflect an increased flexibility in the time limits for delivering prizes and for entry. Again, this move is to ensure consistency with the UPCD and CPR. The requirement to award prizes within 30 days is no longer set in stone, as long as the relevant marketing communications make the arrangements plain. In addition, promotions where the only limit is the availability of the pack may now be run, but ordinarily not of they are addressed to or targeted at children. As a general rule, the promotion will still need to stipulate a closing date.
Whilst the changes to the sales promotions will be of interest to some remote gambling operators who also offer such products, the changes to the LCCP are of more significance, applying as they do to all gambling operators. Operators should therefore familiarise themselves with both the general Sections of the CAP Codes that apply to all forms of advertising, and with the Sections specific to gambling advertising. They should be aware of the need to ensure that their marketing complies with all relevant provisions of the Codes, in light of the GC’s ever-increasing focus on this area.