Memorandum from the Mobile Broadband Group
(MBG) (DGB 66)
THE MEMBERS OF THE MOBILE BROADBAND GROUP
("MBG") ARE 3, O2, ORANGE, T-MOBILE AND VODAFONE
1. SUMMARY
— The MBG welcomes the draft Gambling
Bill and the proposed policy framework for all forms of gambling
activity in Great Britain.
— We believe the draft Bill should
aim to create an environment for gambling in Great Britain that
is both sustainable and conducive to attracting providers that
now operate overseas. It must not create barriers to new ways
of accessing gambling, such as via mobile phone or other mobile
device.
— The Bill and its accompanying regulatory
regime needs to adopt a risk based approach, whereby regulatory
burden is proportionate to customer risk.
— Creating regulatory barriers and
applying disproportionate regulation to "remote gambling"
will stifle this new market and continue to encourage use of "offshore"
gambling sites.
— UK mobile operators will ensure robust
measures are in place to meet age verification requirements. However,
we believe more money laundering proposals are not necessary and
will create a regulatory barrier to new "remote" services.
— The development and review of codes
of practice needs to be executed in a way that follows best practice
for regulatory transparency and accountability.
2. INTRODUCTION
2.1 The MBG welcomes the opportunity to
make a submission to the Joint Committee on the Draft Gambling
Bill. In view of the short time scale and the fact that not all
relevant material is available, the submission gives only an outline
of the issues in the Bill that impact on the mobile industry.
2.2 The MBG would very much like the opportunity
to give oral evidence to the Joint Committee in due course. In
addition, we would like to extend an invitation to all or any
member of the Committee to receive a demonstration of the wide
variety of prize competition/gambling type services that can now
be accessed through a mobile device.
2.3 The MBG, the background to the Bill
is that, increasingly, mobile devices are available with enhanced
features, including colour screens, picture messaging, video cameras
and Internet browsers and can be used to access a growing variety
of content.
2.4 The MBG has a significant interest in
the deliberations of Parliament on the Bill. Some mobile operators
already offer a number of gambling services through third parties,
including betting services, mobile society lotteries, based on
virtual scratchcards, bingo and slot machines, where some of the
proceeds are donated to charity. We are all also active in the
provision of prize competitions directly to our customers. With
the advent of increased data speeds we anticipate that customers
will increasingly use their mobile devices to engage in a variety
of remote gambling services including fruit machine applications
and virtual casino games.
2.5 The MBG endorses a de-regulatory approach
to gambling and the key objective to make the UK a sustainable
environment in which to operate gambling services. However, it
is not sufficient just to make it sustainable. The regulatory
regime must be conducive to attracting and retaining gambling
providers that now operate overseas. The Bill cannot be considered
in isolation to the regimes in other countries.
2.6 We also endorse the establishment of
a single regulator, the desire to keep crime out of gambling,
the removal of unnecessary restrictions on businesses' ability
to meet customer wishes and the aim of strengthening safeguards
protecting children and the vulnerable.
2.7 The MBG looks forward to reading the
remainder of the Bill, when it is published. We remain concerned
that some of the concepts, such as a "conduit", are
still not fully clear and we await sections of the Bill on prize
competitions.
3. REMOTE GAMBLING
3.1 The MBG welcomes the principle of licensing
remote gambling in the UK for the first time and the Government's
firm belief that this sector "can establish itself as a world
leader." Ensuring regulatory intervention is appropriate
to the risks posed is crucial to achieving this.
3.2 There seems, however, to be a mismatch
between how services are treated in the physical world and how
they are treated in the virtual world. Underlying this, there
is an unfounded concern that gambling problems will intensify
where customers are not present at physical premises. Creating
artificial barriers to the delivery of games by remote means will
stifle the ability of UK licensed gambling operators to serve
the emerging "softer" gambling market, ie the occasional
gambler, who may prefer to play remotely.
3.3 The gambling industry is competitive
and will become more so with the growth of on-line gambling. Customers
will have plenty of choice as to the sorts of experience they
want to enjoy and it should be open to them to seek out the service
that suits them best. Problem gambling is not caused by the availability
of gambling any more than problem drinking is caused by the availability
of alcohol. There are other factors at work. There is therefore
no justification for placing regulatory barriers that discriminate
against remote gambling conducted from either a mobile device
or a fixed PC. They should not need to contain clocks, on screen
"reality checks" or controls on the rapidity of play.
These types of checks do not exist in the physical world such
as in casinos.
4. RISK BASED
APPROACH
4.1 Regulatory intervention should be appropriate
to the risks posed. Both remote and non-remote operators providing
modest prizes based on low value stakes should not be subject
to the full licensing procedure.
4.2 A risk based approach is already adopted
for gaming machines. For example children of any age will be allowed
to use Category D gaming machines with a total prize of £5.
Furthermore, in pubs and clubs, Bingo and other equal chance games
are not regulated when the size of the prize is under £1,000
per week.
4.3 Where there are no age limits in the
physical world, the same should apply in the remote world. We
advocate a stepped approach whereby there is a correlation between
the level of regulation, including the rules on advertising, and
the size of the stakes and pay outs.
5. AGE VERIFICATION
AND IDENTITY
CHECKS FOR
ANTI-MONEY
LAUNDERING
5.1 The main gambling activities are restricted
to those aged 18 and over. The Gambling Bill does not stipulate
how confirmation of age should be obtained other than to take
reasonable steps to determine the individual's age. The MBG supports
this approach. The mobile operators are putting in place measures
to verify the ages of customers. These age verification processes
will be robust for gambling applications. The regulatory regime
should allow for these procedures to be relied upon by those of
our commercial partners that are licensed gambling operators.
5.2 We are concerned, though, about the
anti-money laundering proposals for remote gambling. The Bill
suggests additional measures to curb such activity: thorough checks
of applicants, licence conditions requiring comprehensive registration
systems, precise audit trails and tight payment method controls,
all to be defined in detailed codes of practice.
5.3 Money laundering regulations must continue
to focus on payment flows and not extend across into the gambling
activity itself, beyond the existing measures covering casinos.
On-line gambling is not really suitable for money laundering as
the payment flows leave an electronic audit trail. Encumbering
licensed operators with overbearing regulation in respect of the
gambling activity will be extending the law unnecessarily and
disproportionate to the risks presented.
5.4 We are concerned that the terms identity
checks and age checks are used interchangeably—with both
having very different implications for the mobile operators in
terms of cost and administrative process. The need to verify identity
is driven by money laundering policy, the need for age verification
driven by the legal age for gambling. Reasonable proof of the
latter is very much less onerous to obtain. For example, people
who use credit cards can be assumed to be over the age of 18 (the
legal age for owning one). Where suppliers accept credit card
payments over the Internet or telephone—for any service,
they cannot possibly verify the identity of the purchaser on each
transaction. The same principles must apply to remote gambling.
5.5 We are also concerned over the proposal
that players' deposits should be "ring fenced" regardless
of value. For services which are low risk we anticipate customers
wanting to use their existing mobile prepay accounts to pay for
these services. However it is impossible for mobile operators
systems to identify separately the proportion of a customers prepay
account that will be allocated to a specific service, such as
gambling, as the prepayment can be used to pay for any one of
a range of services such as voice calls, video clips or ring tones.
6. PRIZE COMPETITIONS
6.1 Mobile phones are becoming increasingly
popular as a platform for customers to participate in prize competitions
and so the MBG welcomes the changes to the relevant regulatory
regime. Our comments are, of course, subject to the measures on
this section being published by the Government.
6.2 The MBG supports the approach of actively
defining and prohibiting commercial lotteries rather than specifically
defining prize competitions and relaxing the substantial degree
of skill test. However, some competitions may still be restricted
by the definition of "gaming". It is not clear whether
the definition may capture existing prize competitions.
7. CODES OF
PRACTICE
7.1 The MBG supports the principle of flexibility
enshrined in the Bill, whereby the Commission will be able to
respond to changes in circumstances by amending licence conditions
and codes of practice. However, the need to amend the regulatory
regime to keep pace with changes in technology and innovation
must be dovetailed with the requirement to make informed and balanced
decisions.
7.2 At present, clause 16(7) seems to require
the Commission to consult only a prescribed number of people before
issuing or revising a code of practice. Although it will be required
to consult those who appear to the Commission may be affected
by a code or its revision, we are concerned that those with a
legitimate interest in the making or revision of a code of practice
may be excluded from a consultation exercise if it does not occur
to the Commission that they have an interest.
7.3 We would prefer an obligation on the
Commission to conduct public consultation exercises, to lessen
the chance that those with a legitimate interest are excluded.
This change would not represent a burden on the Commission—sectoral
regulators, like Oftel, presently conduct a large number of wide
consultations exercises and they are able to respond promptly
to changes in circumstances in their respective industries. The
procedural model for amending conditions of entitlement set out
in section 48 of the Communications Act 2003 seems to us to be
suitable for the purposes of the making and revising of codes
of practice by the Commission.
December 2003
| 
