U.K. Regulator to Online Gambling Operators: Play Fair

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By Eleanor Tyler

The U.K.'s Competition and Markets Authority’s investigation into online gambling companies has matured into an enforcement action, according to a June 23 update from the regulator.

The industry is big and has grown by around 150 percent since 2009, according to CMA. The industry is now worth £4.5 billion ($5.72 billion) annually, entertaining more than 6.5 million regular online gamblers.

The CMA’s notice points to a new phase that indicates investigators believe there are violations, and offending firms will be directed to fix their behavior. Operators can be fined and have their licenses revoked by the U.K.'s Gambling Commission, which is working closely with the CMA. If the companies don’t comply with the regulators’ demands, they CMA can take them to court.

“We know online gambling is always going to be risky, but firms must also play fair,” CMA Senior Director for Consumer Enforcement Nisha Arora said in a statement. “Sadly, we have heard this isn’t always the case. New customers are being enticed by tempting promotions only to find the dice are loaded against them.”

The CMA opened its joint investigation into online gambling operators with the U.K. Gambling Commission in October. After hearing from around 800 angry customers who felt they were duped by promotional offers and then couldn’t withdraw their money when demanded, the CMA said it has “identified a number of operators engaging in practices likely to be breaking consumer law.”

Risk, Not a Con

The CMA and Gambling Commission received hundreds of complaints that sign-up promotions for online gambling operations are misleading.

Casino-like gaming websites offer promotions to attract players, including cash bonuses when people put up their own money. The CMA received complaints, however, that people often don’t get the deal they are expecting because the promotions come with confusing, unclear terms and conditions that may be illegally unfair.

For example, “Customers might have to play hundreds of times before they are allowed to withdraw any money, so they don’t have the choice to quit while they’re ahead and walk away with their winnings when they want to,” CMA said.

Customers told CMA that some operators impose minimum withdrawal amounts far bigger than the original deposit, or place hurdles in the way of consumers withdrawing their money from the site. The CMA has added the issue to its investigation, encouraging consumers on its Twitter account to come forward if they have had trouble with withdrawing winnings or an initial stake.

“Gambling is a risk, but it shouldn’t be a con,” the regulator said.

Two-Pronged Enforcement

The Gambling Commission and the CMA have different enforcement powers, according to guidance from both regulators. Both have pressures to bring to bear on bad actors in the industry when acting together as they are in this action.

During the enforcement action, CMA can demand changes to how the gambling firms operate to insure that they play fair with customers. Because only a court can hold companies in violation of the U.K.'s Consumer Rights Act, CMA would sue to enforce the act if firms refuse to reform their behavior. The court can impose fines and revoke licenses.

The Gambling Commission’s enforcement powers include the right to fine violators and revoke their licenses, but it does not enforce consumer protection law. Gambling Commission Chief Executive Sarah Harrison said that, while consumer protection legislation is CMA’s responsibility, “the gambling industry should be under no illusion that if they don’t comply with consumer law, we will see this as a breach of their operating licence, and take decisive action.”

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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