Are all bets off? An update on sports gambling legal developments in the UK

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The UK Government’s pending review (the Review) of the Gambling Act 2005 (the Gambling Act) will follow a series of parliamentary committees’ recommendations to increase regulatory scrutiny and implement widespread restrictions on the sports betting industry. Benja Arnott, solicitor in the dispute resolution and sport sector teams at Linklaters LLP, takes a look at the latest developments and considers the effect of potential mitigating measures, such as a ban on gambling advertising.

The UK: One of the world’s most lucrative and liberal sports gambling markets

Sports gambling has a long history in the UK and was first legalised by the Betting and Gaming Act 1960. The superseding Gambling Act facilitated the creation of one of the world’s most developed sports gambling markets, dominated by bookmakers and licensed websites for betting. The sports gambling industry in the UK is estimated to generate £15 billion in annual revenues and is growing at a rate of up to 8% per year. However, following increased media and parliamentary scrutiny in recent years, with heightened public awareness of issues such as gambling addiction, the industry now faces potentially drastic legislative or regulatory interference.

Does the house always win? A regulatory crackdown

The Conservative Party’s 2019 UK election manifesto promised to “take action to tackle gambling addiction” and made a commitment to review the Gambling Act, which was “increasingly becoming an analogue law in a digital age”, including by “tackling…credit card misuse.” In April 2020, almost all credit card gambling was banned in Great Britain (but not Northern Ireland) by the Gambling Commission, the UK’s commercial gambling licensing regulator. The Review, initially delayed but reportedly due to commence in the Autumn of 2020, will face intense scrutiny by Parliament and various stakeholders from commercial operators to civil society organisations, and follows two critical, recent Parliamentary interventions.

With a view to reducing gambling harm, a House of Lords Select Committee report (the HL Report) urged the Government to enact over 50 recommendations before commencing the upcoming Review. Once the Government’s response, required by the end of September, is received, the House of Lords is expected to debate the HL Report, although the timeframe for such debate has not been fixed. In particular, the following recommendations would dramatically impact the sports gambling industry:
- The gradual prohibition on advertising anywhere on sports teams’ kits or anywhere in or near sports grounds or venues (except those of horse or greyhound racing). The HL Report recommends that this should not take effect for football clubs competing in leagues below the English Premier League (EPL) before 2023, in recognition of smaller clubs’ reliance on sponsorship deals with betting firms and their fragile, current financial situations (and with equivalent flexibility in other sports).
- The prohibition of licensees offering bet-to-view inducements, such as making the viewing of a sport – usually football – conditional on having an account with a gambling operator or placing a bet with it. Notably, the Football Association (FA), having previously announced that it would no longer have a betting partner (resulting in the cancellation of its contract with Ladbrokes worth around £4 million a year), was required to explain in January 2020 that Bet365 had been offering bet-to-view access to FA Cup fixtures. This was apparently the result of a pre-existing media rights deal the FA had agreed with IMG, which was subsequently acquired by Bet365. The proposed prohibition would result in the FA (and any other body with the rights to broadcast sports fixtures) no longer being able to sell those rights to licensed (or unlicensed) gambling operators.
- The creation of a statutory independent Gambling Ombudsman Service, modelled on the Financial Ombudsman Service, to settle disputes between gambling operators and gamblers, with compulsory membership of operators.

A separate cross-party report from June 2020 goes further in its sports betting-related recommendations, proposing: (i) a complete ban on all gambling advertising, marketing and inducements; (ii) a new Gambling Act, increased enforcement powers for the Gambling Commission, a new Gambling Ombudsman, and a “duty of care” imposed on operators; and (iii) restrictions on in-play sports betting with customer affordability-dependent spending limits.

Meanwhile, the Gambling Commission has been increasingly flexing its enforcement powers, issuing its record fine by some distance of £11.6m to Betway for accepting stolen money from high-spending and potentially addicted ‘VIP’ customers. At the same time, the Gambling Commission has received criticism for its failure to revoke Betway’s licence.

A game of high stakes: sponsorship in the spotlight

For many reasons, this is a time of much uncertainty. On the one hand, heightened scrutiny of betting companies’ involvement in sport appears to be forthcoming. On the other, one cannot help but notice that cash-strapped sports clubs are increasingly reliant on their gambling sponsorship revenue streams.

It is anticipated that one of the most likely measures to be introduced by the Review is the gradual prohibition of advertising by betting operators on sports kits and at sports grounds. Some form of legislative and regulatory overhaul is also likely, with potential measures including (i) increased controls and participation; (ii) spending limits; (iii) restrictions on bet-to-view inducement offerings; and (iv) the introduction of an ombudsman.

A comprehensive ban on advertising on sports kits and around grounds would be seen to address a clear flaw of the ‘whistle-to-whistle’ ban on gambling advertising during pre-watershed live sport broadcasts. The prohibition of advertising from five minutes before to five minutes after a fixture has a limited effect on its stated aim of protecting vulnerable viewers (including children). Besides the obvious acknowledgement that such viewers are likely to be watching the broadcast outside of this ‘in-game’ period, 27 of England’s top 44 football clubs display betting brands on their kits or around their grounds during matches. Gambling brands are estimated to appear on screen during 70% of the BBC’s ‘Match of the Day’ programme. During the broadcast of one match between Scottish rivals Rangers F.C. and Celtic F.C., there were 920 occasions on which gambling brands were visible – equivalent to once every 10 seconds. The EPL’s opposition to such a ban (while promising cooperation with the Government review) is understandable, given clubs are expected to have earned a record £349.1 million from shirt sponsorship deals last season. It is likely that English Football League clubs, who are even more reliant on such deals (given they garner lower broadcasting revenues), will also oppose it.

However, EPL clubs Everton F.C. and Aston Villa F.C. have both reportedly seen shirt sales leap by over 50% since terminating sponsorship deals with betting companies. This will be welcome news to clubs like Swansea City A.F.C., which has recently ended its gambling brand shirt sponsorship with a view to enabling its younger fans to wear the same shirts as the club’s players.

Perhaps in anticipation of the Review, and a potential ban, betting companies have already come up with novel ways of reacting to a changing public attitude towards sponsorship. For example, GVC Betdaq has ‘gifted’ its shirt sponsorship rights with Sunderland A.F.C. to the charity Children with Cancer UK, and the Rank Group’s rights with Ipswich Town F.C. have similarly gone to its long-standing charity partner, Carers Trust.

At this crossroads in the relationship between the sports and gambling industries, companies may weigh up their odds by reflecting on the diverse reactions to imaginative approaches to sports sponsorship. Paddy Power’s popular ‘Save Our Shirt’ campaign stood in stark contrast to the sponsorship arrangement between 32Red and Derby County F.C., involving new arrival Wayne Rooney wearing the squad number 32. The latter was widely publicly criticised as a way of circumventing existing advertising rules around betting.

Comment

Betting companies will ultimately have to await the outcome of the Review. However, in the face of heightened media attention on issues surrounding gambling harm, reflected in increased parliamentary scrutiny of the relationship between gambling and sports, the odds are stacked in favour of a legislative and regulatory overhaul. This could well lead to tighter controls in the UK sports betting industry, particularly in relation to sports sponsorship and advertising.

Benja Arnott

Benja Arnott is a solicitor in the dispute resolution and sports sector teams at Linklaters LLP. He advises on a wide range of matters, including sports regulatory advice and complex, high-profile dispute resolution, with a particular focus on commercial, competition and public law litigation, arbitration, public and private international law, and in the fields of business and human rights, ESG and climate change. He has a broad interest in sports law and has recently advised a number of clients in relation to domestic and international financial fair play rules in football.