Gambling White Paper Consultations: Improving Consumer Choice on Direct Marketing

On 26 July 2023, the Gambling Commission (GC) published their first set of consultations on the Gambling White Paper, which cover four key areas:

• Improving consumer choice on direct marketing
• Strengthening age verification in premises
• Remote game design
• Remote gambling: financial vulnerability and financial risk

This note focuses on improving consumer choice on direct marketing.

Background

In the Government’s call for evidence published in December 2020, questions on advertising and sponsorship attracted the highest number of responses, with particularly polarising views.

The White Paper states that “there is good evidence that [advertising and marketing] can have a disproportionate impact on those who are already experiencing problems with their gambling”, with particular concern around online advertising that has a strong appeal to children (under 18s) and young adults (18-24). The Government also advised its evidence “suggests that bonuses, general promotional offers, and direct marketing communications are the forms of advertising most likely to impact an individual’s gambling behaviour”. In support of this, the GC’s survey on consumer attitudes to Free Bets and Bonuses recently found that whilst some consumers (39%) liked receiving free bets/bonus offers, 41% did not. In addition, 48% indicated they would prefer not to receive free bets and bonus offers, suggesting that more can be done to protect consumers who may not be fully aware of their opt-out rights.

Currently, consent to direct marketing is regulated by the Privacy and Electronic Communications (EC Regulations 2003 (PECR) and the Data Protection Act 2018, which implements the UK General Data Protection Regulation (UK GDPR). Compliance with these laws is enforced by the Information Commissioner’s Office (ICO). Pursuant to these laws, companies must (save for in limited circumstances) obtain prior consent before sending direct marketing to individuals by electronic means (e.g. by email or text). The ICO advises that the best way to obtain such consent (which must be “informed”) is through an “opt-in” tick box. However, one exception to the opt-in requirement (known as “soft opt-in”) allows companies to send direct marketing messaging to existing customers to advertise their goods or services, where they have obtained such customers’ contact details in the course of selling similar goods and services (and provided the customer was given the opportunity to opt-out of marketing at the time). Whilst many operators obtain opt-in consent, it is not uncommon for operators to rely on this exception.

Also, operators – when giving customers the option to opt-in to marketing consents – do not typically differentiate between their different products; they only provide the option to opt-in to marketing for all products.

New Social Responsibility Code

As a result of the risks highlighted in the White Paper, the government proposes tougher restrictions on bonuses and direct marketing as a key reform to protect vulnerable consumers. The principles proposed in the White Paper include:

• “Opt-in to marketing and offers should be clear and separate options at sign-up, not bundled with other consent such as broader terms and conditions and privacy policy.
• Customers should be able to change preferences at any time through their account settings.
• Operators must offer the opportunity to opt-in and out of different forms of communication (e.g. text vs email vs push notifications).
• Customers should be given the option to opt-in to bonuses and promotional offers separately from other marketing, and to set controls regarding which products they receive offers on. Specifically, there should be no ‘cross-selling’ without user opt-in.”

The final principle – in respect of cross-selling – does not form part of the GC’s consultation, but will be consulted on later. The GC state:

“We acknowledged in our advice to government that there was a gap in research on the impact of cross-selling and the potential impact on vulnerable adults. We are currently conducting additional consumer research on the topic of bonus offers and incentives, which will provide further insights on the role of cross-selling in the consumer journey and the possible impacts on play behaviour. This work is due to complete in autumn 2023 and will inform a future consultation on how marketing incentives are structured and targeted.”

In the consultation, the GC proposes to introduce a new Social Responsibility Code (SR 5.1.12) to its Licence Conditions and Codes of Practice, which will apply to all licensees. The GC’s proposed draft of SR 5.1.12 effectively prohibits use of ‘soft opt-in’, providing as follows:

• Operators must give customers the ability to opt-in to direct marketing both for different channels, and for different products. Operators must cover all products and all channels that they provide in doing so. Where applicable, channel options must be delineated as SMS notification, social media (direct messages), post, phone call and a category for any other direct communication method, and product options as betting, casino, bingo and lottery.
• Where an operator seeks an additional step for customers to confirm their chosen marketing preferences, this must be presented in a manner which only asks for confirmation to progress those choices with one click to proceed. There must be no encouragement or option to change selection; only the option to accept or decline their selection.
• Customers must not receive direct marketing that contravenes their channel or product preferences.

The GC suggests that if the new SR 5.1.12 is introduced, at the first opportunity after implementation (e.g. on next log in to their account), consumers should be directed to their communication preferences page, with all communication options as default being set to opt-out (rather than ‘pre-ticked’).

Our thoughts

The consultation proposals relating to direct marketing seem to be particularly onerous in that they restrict gambling operators from using a perfectively legitimate mechanism (used across industries) of sending marketing communications, in the form of soft opt-in. The introduction of the GC’s proposal would put the gambling industry in a unique position, being the only commercial industry not able to benefit from soft-opt in consent. Operators, as well as their affiliates, would be required to complete the arduous process of re-visiting all consents currently obtained and would likely face a substantially higher burden to prove informed consent has been freely given going forward.

Obliging operators to seek consent on a per product basis is also restrictive. However, it should be noted that requiring consent per channel is nothing new. Whilst it has not been an LCCP requirement to date, the ICO advises that consumers should be able to opt-in to direct marketing on such basis for sufficient consent to have been obtained.

We would strongly recommend operators respond to this consultation to ensure all concerns raised can be considered in implementation of this proposal.

The GC’s first set of consultations closes on 18 October 2023. Please click here to provide a response.