The UK and Sweden – Setting the Regulatory Standard

Posted by Harry Kane on Friday, August 30, 2019

If there’s one trend that unites iGaming markets around the world, it’s the pressing need for regulatory compliance. This is particularly prominent in regions such as the UK, where the UK Gambling Commission (UKGC) has made regulatory compliance and the safeguarding of vulnerable gamblers core strategic focuses through 2021.

The same priorities are also evident in Sweden, which has recently opened up its own iGaming industry to private sector operators from throughout Europe. As of January 1st, 2019, the Swedish market was flooded with private license applications, and regulators responded to this by implementing stringent rules for participants to follow.

Over the course of the last eight months and beyond, we’ve seen both the UKGC and the Swedish Gambling Authority emerge as the biggest and most proactive regulatory hitters in the world. But how are they blazing a trail for others to follow, and in what fields are they leading the way as market regulators:

Ushering in the Age of Social Responsibility

Both the UKGC and the Swedish Gaming Authority have focused heavily on the issue of social responsibility of late, as they look to challenge behaviours in the iGaming market and force operators to be more proactive when safeguarding their customers.

But what exactly does social responsibility mean? In simple terms, it refers to the impact of gambling on both individuals and society as a whole, and grasping this enables companies to identify key issues and present viable solutions that are accessible to all.

One such solution exists in the form of self-exclusion, which should be made available by all iGaming operators to players in the UK. This is essentially a policy that allows individuals to ban themselves from operator’s websites indefinitely, creating a scenario where they’re unable to log into their account or receive online marketing material.

Any UK player who wants to join a self-exclusion list should be able to do so in the modern age, and by registering they’ll be unable to gamble online for a period of at least six months. This can be extended, but it’s expected that a player will seek for their issues during this period of enforced activity.

Of course, there have been some issues with implementing self-exclusion programs in the UK market, thanks in part to the lack of a single register that’s managed by a central authority.

In particular, the GamStop scheme has endured some high-profile failures since its inception, with one report from the BBC finding that participants were still able to gamble online after they’d registered for self-exclusion.

In fact, by changing minor details in the name or email address many people were able to circumvent GamStop’s security checks, whilst continuing to receive promotional emails from different operators.

In this respect, Sweden’s own self-exclusion measures have proved far more successful than those imposed by their more illustrious counterparts. This is because the Spelpaus.se self-exclusion register is a comprehensive resource that provides a one-stop shop for problem gamblers, with more than 30,000 names listed by the end of the first quarter of this year alone.

As we’ve already said, recently regulatory changes in Sweden and the UK have placed a greater emphasis on operators to assume responsibility for the wellbeing of their players. This includes taking steps to identify problem gamblers provide individual players with even greater autonomy over their activity.

Many believe that this type of approach is necessary given the potential pitfalls with self-exclusion, whilst it’s also fair to say that operators are at the front line of all efforts to negate the issue of problem gambling.

This thinking has certainly inspired brands like Mr. Green, with this Swedish-based operator a direct product of social responsibility and a desire to protect problem gamblers.

This forward-thinking operator even launched its own responsible gambling tool in 2017, with this innovative solution designed to help gamblers monitor their activity in real-time and gain insights into potential areas of concern.

Known as the Green Gaming Tool, this feature has already been rolled out throughout the UK market, enabling players to identify early signs of problem gambling before they become all-consuming.

But how exactly does this tool work? In simple terms, it requires all new players to complete a detailed survey and provide some insight into what they consider healthy and unhealthy gambling behaviours.

These answers will then be compared to each player’s actual gambling habits, whilst the tool will then intuitively alert individuals if they engage in any activity that fits their own description of problem behaviour.

There’s another benefit to this tool too; as it gives the operator a clear insight into how to market themselves to each individual player based on their own, unique risk profile.

What About Transparency and Fair Dealing?

Transparency is another key watchword for operators in the modern age, with both the UK and the Swedish regulators taking steps to ensure that customers are treated fairly and with the utmost of respect.

The UK has been particularly influential in this respect, as operators are now compelled to ensure that their promotions adhere to clearly-defined terms and conditions. These terms should be available for the duration of the promotion too, removing any potential ambiguity on behalf of players.

Last year saw both the UKGC and the Competition and Markets Authority (CMA) conduct an investigation into the ease with which players were able to withdraw cash from their online accounts.

This stemmed from concerns surrounding so-called wagering requirements, which are typically applied to welcome offers and dictate the amount of money that players are required to play through before they can withdraw their winnings.

The most seminal issue was the practice of tying in initial deposits to individual wagering requirements, which essentially prevented players from withdrawing their own cash until they’d stake up to 50-times the total bonus value.

This was criticised heavily by the CMA, who said that requiring players to “commit to an extended period of gambling before winnings can be withdrawn”.

As a result, the investigation recommended the segregation of deposit and bonus funds under the terms of any wagering requirements that are imposed, whilst also calling for tougher sanctions to be imposed on operators who breach this aspect of consumer law.

New rules were also introduced to ensure that the UKGC could sanction offending companies quicker than ever before, forcing operators to act immediately when updating their bonus terms and ensuring that players have access to their deposited funds.

Empowering Operators to Impose Anti-Money Laundering Measures

Back in February 2018, the market leading brand William Hill was hit with a hefty £6.2 million fine by the UKGC, primarily due to a failure to safeguard its online consumers.

However, this sanction was also the result of a clear failure to prevent money laundering through its website, and this has been a growing trend in an iGaming market that has enjoyed exponential growth during the last decade.

Make no mistake; money laundering is an incredibly serious crime, and one that proactive regulators in the UK and Sweden have been quick to clampdown on as they aim to enhance the reputation of the iGaming marketplace.

Once again, both authorities have attempted to achieve this aim by empowering operators to assume responsibility for the prevention of money laundering, whilst imposing heavy sanctions on those that fail to do so.

Whilst the mechanics used by each national regulatory body may vary, they’re all based around the same strategic principles.

More specifically, casino operators are duty-bound to conduct a Know your Customer (KYC) check when players register for a brand-new account, enabling them to verify each customer’s identity and highlight those who reside in high-risk or politically exposed jurisdictions.

These checks will also enable operators to identify suspicious player behaviour, creating a scenario where some customers are monitored over an extended period of time.

In more recent times, the UKGC has also imposed new rules aimed to expediting verification times, in order to restrict money laundering activity further whilst also safeguarding vulnerable or underage gamblers.

Historically, online gambling firms were allowed up to 72 hours to carry out all age and ID verification checks on new players, during which time they can deposit funds into their account, place wagers and bank winnings.

In fact, they were only prohibited from withdrawing winnings prior to having their information verified, but this was clearly at odds with the new regulatory stances of the UK regulator.

Under the new rules unveiled at the beginning of the year, operators are now required to verify a customer’s age and ID before they can credit their accounts or place any wager with the licensee.

This is forcing operators to complete the verification process far quicker than the current 72-hour deadline, or run the risk of losing revenue and seeing their profit margins diminish over time.

This is another important step towards regulatory excellence, whilst it’s certainly helping to create a safer and more secure iGaming experience to gamblers of all ages.

Exploring the World of Advertising

Advertising is another key focus for regulators in the UK and Sweden, particularly after a study found that football fans were exposed to almost 90 minutes of betting adverts during the 2018 World Cup in Russia.

ITV aired extensive messaging during just eight-and-a-half hours of ads prior to England’s semi-final clash with Croatia, whist many of these pro-gambling commercials were broadcast prior to the 9pm watershed in the UK.

This prompted the UKGC to consider a range of proposals to crack down on TV advertising amongst iGaming brands, although they were ultimately beaten to the punch as the Industry Group for Responsible Gambling (IGRG) confirmed that several market leading operators had agreed to a ‘whistle-to-whistle’ ban during live sports broadcasts aired prior to the watershed.

This ban extends from five minutes before a live sporting event to five minutes after the broadcast has ended, whilst it actively prevents operators from promoting lucrative in-play markets as the action unfolds.

This is being rolled out as 2019 progresses, and whilst it may have welcomed by some responsible gambling lobbyists, it does little to tackle the significant issues surrounding digital marketing and the messages published online.

It may even be argued that operators have looked to self-regulate their television advertising activities in order to avoid having their online messaging scrutinised.

After all, nearly half of the £1.56 billion spent on marketing by gambling firms in the UK during 2017 was invested online, with digital channels largely accounting for a 56% expenditure increase in just three years since 2014.

Conversely, television advertising accounted for just 15% of the total marketing spend in the iGaming space, and this undoubtedly casts the voluntary ban in an entirely different light.

This will be an interesting space to watch in the near-term, particularly with the UKGC keen on regulating online advertising and sanctioning operators that either deliberately or inadvertently target children with their messaging.

At the same time, UK-based operators are required to conform the codes of conduct issued by the Committees of Advertising Practice (CAP). These are specifically designed to address misleading messages and the publication of overly promotional material, whilst also preventing those aged under the age 18 from accessing the content.

Whilst the Swedish regulator continues to lag behind the UKGC in this respect, it’s in the midst of establishing its own regulatory framework that’s based heavily on the UK template.

This will create a far stricter set of guidelines, whilst it’s fair to note that the Swedish Gaming Authority has achieved a great deal given the youthful nature of the marketplace.

The Last Word

When you consider prominent regulatory bodies such as the Malta Gaming Authority and the Gibraltar Regulatory Authority, there are a clearly number of established and reputable entities currently safeguarding online gamblers across the globe.

However, there can be no doubt that the UK and the Swedish Gaming Authority are currently leading the way when it comes to imposing progressive regulatory measures on operators, whilst these agents are also willing to hit non-compliant firms with hefty financial sanctions if required.

This trend is unlikely to change any time soon, especially with the UKGC likely to become a key player in regulating the burgeoning iGaming market in the States.