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Public statement issued by the Gambling Commission in relation to TGP Europe Limited and Fesuge Limited

The Gambling Commission (“GC”) has issued a public statement following its investigation into the activities of TGP Europe Limited (“TGP”) and Fesuge Limited (“Fesuge”). This statement identifies various failings in compliance in relation to the GC’s fairness and openness requirements, obligations surrounding consumer rights and the standards expected in relation to marketing. The statement is of significance because the GC has stated that the issues identified are likely to form the basis for future compliance assessments of other gambling operators.

TGP and Fesuge are both part of a single group of companies and are based in the Isle of Man, licensed by both the Isle of Man Gambling Supervision Commission and the GC. Both companies promoted various bonus offers during the Cheltenham festival in March 2016 under various brands: FUN88, TLCBet, 12Bet and Those offers were subject to their own specific terms and conditions, as well as to the general terms and conditions of TGP and Fesuge. Bonuses for new sign-ups and existing customers were offered, but none of the brands allowed customers to have a multiple accounts.

The GC investigation follows hard on the heels of the GC announcing that it is cooperating with the Competition and Markets Authority (“CMA”) in its campaign to ensure that the terms and conditions of gambling operators are fair to consumers. This has resulted in the CMA issuing Information Notices, as previously reported here, under Part 3 of Schedule 5 to the Consumer Rights Act 2015 (“CRA”) to a range of gambling operators. This initiative has largely concentrated on potential breaches in the betting sector, focussing on misleading terms and conditions, promotions that are difficult to understand or that may be unachievable, players being blocked from collecting their winnings, bets being cancelled or odds altered, and terms unreasonably restricting players’ rights to challenge operators’ decisions. It also comes after the announcement by the GC that it will place all of the regulatory tools at its disposal on an equal footing, and will no longer favour voluntary settlements over formal licence reviews. In this respect, it is interesting that this case has resulted in a voluntary settlement being reached, rather than a formal licence review being launched.

The case arises because TGP and Fesuge assessed the take-up of their bonus offer and concluded that a large number of bets had been placed in contravention of Clause 15.2 of their Terms and Conditions, which provides:

in the event that we suspect that you or any other player is abusing or attempting to abuse a bonus or other promotion, or is likely to benefit through such abuse we may block, deny or suspend, withhold or cancel the account of any such player, including your account if we determine that you are involved in such.”

 TGP and Fesuge took the decision to suspend more than 5,000 players’ accounts because they considered them to be in breach of this rule. Of particular concern to them was that it appeared that existing customers had set up multiple accounts in order to avail themselves of the bonus offer several times over. Some existing customers had also tried to benefit from the new sign-up bonus by setting up new accounts in different names.

As a result of their investigations, TGP and Fesuge took the decision to suspend the relvant customer accounts and, correctly, notified the GC of their concerns as a Key Event. As a result of the suspension of these accounts, the GC and the Independent Betting Adjudication Service (“IBAS”) received over 1,000 complaints from around 800 separate customers. The majority of the complaints referred to IBAS were settled prior to adjudication, and in the small number of outstanding cases which were adjudicated, the IBAS Panel accepted that both TGP and Fesuge had acted reasonably in connection with the majority of cases.

At the crux of the matter was the fact that the relevant terms and conditions were unclear and ambiguous, something which was accepted by TGP and Fesuge. They acknowledged that they did not handle the case in an efficient way and that their terms and conditions did not provide a clear definition of bonus abuse. In addition, both companies cooperated fully with the GC throughout the investigation, and took its advice. They identified serious shortcomings in their original assessment of the problem, acted promptly after the initial suspension on withdrawals by releasing funds to players on a case-by-case basis, and did not benefit financially from the situation, because stakes to all affected customers were refunded, whether or not they had won or lost. In addition, they instructed external solicitors to undertake a full review of their Terms and Conditions to ensure compliance with the CRA.

The GC’s principal criticisms of TGP and Fesuge’s practices were that they had failed efficiently to deal with the volume of new accounts being opened and that their systems had failed to identify, at the point of registration, people opening multiple accounts. Their approach was reactionary, as opposed to proactive. In addition, the companies conceded that their Terms and Conditions did not make it sufficiently clear to customers that an existing customer could not sign up and take advantage of the bonuses for new sign-ups.

As a result, the GC convened a meeting with the operators and, after considering the evidence, officers concluded that they had breached licence condition 7.1.1B (fairness and openness) and Social Responsibility Code Provision (rewards and bonuses). These provide:

Licensees must satisfy themselves that none of the terms on which gambling is offered are unfair terms within the meaning of the Consumer Rights Act 2015 and must comply with those terms (section 62(4) of the Consumer Rights Act 2015 provides that: “a term is unfair if contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”)

 “if a licensee makes available to any customer or potential customer any incentive or reward scheme or other arrangement under which the customer may receive money, goods, services or any other advantage (including the discharge in whole or in part of any liability of his) the scheme must be designed to operate, and be operated, in such a way that the circumstances in which, and conditions subject to which, the benefit is available are clearly set out and readily accessible to the customers to whom it is offered”

The GC stressed that, where operators offer bonus promotions in the normal cause of their business or at major events, they must ensure that their Terms and Conditions comply with the requirements of the CRA and the LCCP. The approach must be proactive. Here, the affected operators accepted that their Terms and Conditions were unfair and proposed a voluntary settlement, which was accepted by the GC. This included agreeing to the publication of a public statement, changing their Terms and Conditions in order to address the failings identified, engaging a firm of solicitors to ensure compliance with the CRA, improving their anti-fraud measures and paying the GC’s investigation costs in the sum of £7,000.

As part of the public statement, the GC has identified a number of questions for operators to consider, namely:

  • Are you satisfied that none of the terms on which gambling is offered are unfair within the meaning of the CRA?
  • Once you have satisfied yourself that none of the terms are unfair, make sure that you comply with those terms.
  • Ensure that an accurate summary of a contractual terms on which gambling is offered is available to customers and is set out in plain and intelligible language.
  • Are the circumstances in which, and conditions subject to which, the benefit is available clearly set out and regularly accessible to the customers to whom it is offered?

Is your position on bonus abuse, and how it will be applied, clear and transparent to consumers?

This case confirms our instinct that the GC will be focusing on the betting sector in the foreseeable future, particularly in relation to its joint initiative with the CMA to ensure that terms and conditions are fair. It is interesting that this case has resulted in a voluntary settlement rather than a formal licence review. Doubtless, co-operation and a willingness promptly to acknowledge and rectify failings, together with the fact that the operators concerned did not financially benefit from those failings, have played a large part in the GC feeling able to proceed via the public statement route. Other operators should take note of the importance of such a collaborative approach and scrutinise their Terms and Conditions and other practices in line with the questions posed of them by the GC, as set out above.