The Competition and Markets Authority (“CMA”) has announced that it is taking enforcement action against certain online gambling businesses suspected of breaching consumer law. The breaches have been found in respect of promotions offered to new players, in particular bonus and free bet offers.

The enforcement decisions – announced on 23 June - form part of the CMA’s joint investigation with the Gambling Commission into the practices and consumer terms of the remote gambling sector. As reported here, the investigation was launched back in October 2016 following in the wake of concerns raised by the Commission surrounding the fairness of licensees’ consumer-facing terms. After issuing Information Notices to operators requiring them to provide evidence of their compliance with consumer law, the CMA scrutinised operators’ responses, raising a raft of questions and, in some cases, requiring live demonstrations of promotion functionality and user experience.

Having assessed the sector, the CMA has expressed particular concern that consumers may be prejudiced due to:

  • inadequate or unclear information being provided by operators about the restrictions and conditions that apply to the promotion before sign-up;
  • restrictions on their right to withdraw winnings made from gameplay with their deposit (as well as the remaining deposit itself) unless they meet extensive wagering requirements; and
  • potentially unfair rules that restrict certain play strategies, on which firms rely to deny customers a pay-out when they come to claim their winnings.

The investigation widens

As part of this announcement, the CMA also broadened the scope of their on-going investigation to include restrictions placed on customers’ rights to withdraw funds from their online accounts. In particular, the CMA has raised concerns regarding operators:

  • having terms that state a customer cannot withdraw any funds they have deposited in their account unless they have first wagered their value through in full (in some cases several times);
  • requiring customers to undertake certain activities that the operator can then use for promotional purposes before the customer can withdraw their winnings (such as posing for photos with a ‘winner’s cheque’);
  • having unreasonably high minimum withdrawal limits (for example where the minimum amount a customer can withdraw is higher than the amount a customer needs to deposit before they can play);
  • having daily, weekly or monthly withdrawal limits that appear unreasonably low (for example, compared to the amount that a consumer can deposit and bet over the same period); and
  • having terms that impose arbitrary deadlines on the time customers have to provide information to verify their identity as a condition of withdrawal. (As further explained here, the Commission are also questioning the request of identity documents from an anti-money laundering and social responsibility perspective).

Nisha Arora, CMA Senior Director for Consumer Enforcement, commented on the enforcement action and broadened investigation:

We know online gambling is always going to be risky, but firms must also play fair. People should get the deal they’re expecting if they sign up to a promotion, and be able to walk away with their money when they want to. 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. And players can find a whole host of hurdles in their way when they want to withdraw their money. That’s why we are today launching enforcement action where we think the law has been broken. We are also asking people who have had difficulties withdrawing their money when they’ve gambled online to tell us about it, and help probe this issue even further.”

What to expect next

Even operators that have not faced enforcement action at this stage cannot quite yet breathe a sigh of relief. With the newly broadened investigation, their withdrawal practices may yet still be scrutinised. In addition to this, it is not just the CMA that should be on operators’ radars. Gambling Commission chief executive Sarah Harrison commented that “whilst the CMA takes enforcement action on how consumer legislation is followed, the gambling industry should be under no illusion that if they don’t comply with consumer law, [the Commission] will see this as a breach of their operating licence, and take decisive action”.

Going forwards, the Gambling Commission is likely to impose new requirements on all licensees based on the CMA’s findings. This was certainly suggested in the CMA’s statement, which claimed that they will “will work with the Gambling Commission to deliver sector-wide change in the areas of concern identified and will also work together to drive improved compliance with consumer protection law more broadly.”

What this means in practice is yet to be seen, but change is certainly imminent in this area and operators would be wise to pay close attention to the CMA’s next moves.

Updates from the CMA and the Commission on the progress of the investigation can be found on the CMA’s case page.