Moving towards a European framework - the European Commission publishes its Recommendation on consumer protection in online gambling

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

On 14 July 2014, the European Commission ("Commission") adopted its pithily titled recommendation on the principles for the protection of consumers and players of online gambling services and for the prevention of minors from gambling online (the "Recommendation"). This is the first to be published in what was initially envisaged as a series of three recommendations proposed in the Commission's 2012 communication, Towards a comprehensive European Framework for online gambling. This communication sets out the Commission's action plan for improving the regulation of online gambling across the Union with recommendations on player protection and the regulation of gambling advertising. The Commission is due to publish a final recommendation on the prevention of sports-betting related match-fixing later next year.

Measures proposed

The Recommendation focuses primarily on consumer protection and the prevention of minors from gambling. Key measures proposed include:

1. Information requirements: key information should be prominently displayed on the landing page of an operator's website, including company details, a "no underage gambling" sign, "responsible gambling" message, and link to at least one organisation providing assistance for gambling-related disorders. Operators' terms and conditions should also be clear, and websites should indicate the regulatory authority under which the operator is licensed.
2. Protection of minors: operators should have procedures in place to prevent minors from gambling, including age-verification checks, links to parental controls and clear "no underage gambling" signs. Gambling advertising must also avoid encouraging minors to gamble and must be displayed only in media and at times when minors are not expected to form a significant part of the audience.
3. Player accounts and registration: Member States must ensure operators have appropriate player registration methods in place (including age and identity verification checks) and that online gambling is only permitted to registered players. The Commission stressed, however, that this process should not be "unnecessarily burdensome" for consumers or operators, and that players should, for example, be allowed to open temporary accounts whilst verification checks are taking place. Registration should be completed in reasonable time, and should allow the use of alternative methods of identity verification for customers without a national ID number or where databases are temporarily unavailable.
4. Player funds and activity: operators should ensure players funds are ring-fenced, and that players are prevented from collusion or direct inter-player monetary transfers. Players should also be able to set deposit and time-limits on their account, and be able to access key account information (such as remaining balance and time-spent), and player support services (such as links to gambling-disorder related websites and live-chat assistance) at all times.
5. Time out and self-exclusion: players should be able to impose time-outs of at least 24 hours, or self-exclude for at least 6 months, either in relation to a particular gambling service or for all forms of online gambling. Member States are also encouraged to form national registries of self-excluded players and should facilitate the access of operators to these to ensure their efficacy.
6. Advertising and sponsorship: advertising should carry clear information about the operator and the potential health risks of gambling and should not misrepresent or seek to put pressure on consumers to gamble. Advertising should not target vulnerable players or players who have deliberately self-excluded; similarly sponsorship must be transparent and not targeted at events aimed at minors.
7. Education and supervision: Member States are invited to organise education and public awareness events in relation to online gambling, and should designate competent gambling regulatory authorities to ensure effective compliance with any measures taken pursuant to the Recommendation.

Whilst the measures are non-binding and do not carry the force of law, Member States are expected to implement them as far as possible. They have been invited to report back to the Commission on any such measures taken within the next 18 months, following which the Commission will evaluate the success of the proposals. Member States have further been invited to collect "reliable annual data" including on the number of player accounts, self-excluded players and those experiencing gambling disorders, which they may communicate to the Commission within 24 months following publication of the Recommendation in the Official Journal.

Comment

The Recommendation is largely industry-friendly and highlights the Commission's awareness of the potential benefits of a well-regulated online offering, including the role of online gambling as a "source of entertainment" for consumers. This is especially crucial considering the revenues generated by the industry, which totalled EUR 10.54 billion within the EU in 2012, and that providing an attractive regulated offering remains key to diverting customers away from unlicensed sites with lower levels of player protection. Whilst the Commission advocated a "high level of protection" across the Union, it acknowledged the importance of working with operators to improve the attractiveness of regulated offerings, and that appropriate commercial communication of online gambling services could, for example, be beneficial in "directing consumers to an offer which has been allowed and is supervised".

Whilst the Recommendation was largely well-received, both industry associations and regulators stressed that it should not mark a relaxation in standards. Secretary-general of the European Gaming and Betting Association ("EGBA") Maarten Haijer noted his support for the measures, stating that "we firmly believe that an attractive and responsible gambling environment are two sides of the same coin." However the European Lotteries Association stressed the continuing importance of "effective enforcement… at… national level", noting that the Recommendation should not prevent Member States from maintaining more stringent measures if appropriate. Michael Burkert, president of the German lottery association stated similarly that it was important consumer protection levels go "upwards" rather than being "softened down."

Overall, this marks a first step in the Commission's plans to outline a new common framework for online gambling. Member States now have a period of 18 months after publication of the Recommendation in the Official Journal in which to implement the proposals, as well as a further 6 months in which to submit any statistical data collected. Following this, the Commission will evaluate the Recommendation's success over the next 30 months, and may then propose such further measures as are required. Until this point the Recommendation is useful in serving to consolidate recommended practice across the Union, where the lack of pan-European regulation means that practice often diverges across the different Member States.