Memorandum from the Advertising Association
(DGB 52)
INTRODUCTION
The Advertising Association (AA) is a federation
of 25 trade associations and professional bodies representing
the advertising and promotional marketing industries, including
advertisers, agencies, the media and support services in the UK.
It is the only body that speaks for all sides of an industry that
was worth over £16.7 billion in 2002. Further information
about the AA, its membership and remit, can be found at the following
location: http://www.adassoc.org.uk/
The AA welcomes the opportunity to comment on
the published and unpublished (but anticipated) Sections and Schedules
of the draft Gambling Bill. These comments and the Sections and
Schedules to which they relate are set out below.
The AA is aware that some of the draft clauses,
including on advertising, may not be published by the time the
Committee finishes taking evidence. The lack of scrutiny that
may consequently be accorded to these clauses would clearly be
a cause of concern for the AA. The AA would therefore welcome
the opportunity to give oral evidence.
SECTION 30—ADVERTISING
(UNPUBLISHED)
The AA supports the decision to lift current
restrictions on the advertising of gambling products and premises,
on the basis that it is to be treated as a normal leisure activity,
albeit a regulated one. It is important that, in so doing, the
advertising is regulated in accordance with a Code of Practice
to provide proper consumer protection. Advertising is only successful
if consumers trust it, and effective regulation plays a key role
in that.
However, we have some concerns as to how the
Government is proposing to achieve this. The advertising provisions
of the Bill are not yet published, and so our comments relate
in particular to the relevant sections (paragraphs 6.6-6.8) of
the Policy Document.
Role of the Gambling Commission in the Regulation
of Gambling Advertising
Paragraph 6.7 of the Policy Document proposes
that the Gambling Commission (GC) should draw up a Code of Practice
and deal with breaches of that Code, including enforcement action.
This might include revocation of the licence. It is also proposed
that the general advertising restrictions (eg for misleading advertising)
imposed by the Office of Communications (Ofcom) and the Advertising
Standards Authority (ASA) [6]
should apply.
We are aware that this concept is based on the
model of the Financial Services Authority, which has code-making
and complaints-handling powers as regards financial services advertising.
We know that the Government considers that similar regulatory
expertise is necessary for the more technical elements of gambling
advertising to ensure responsible regulation and adequate consumer
protection and that this best lies with the GC.
However, we believe that this is not an ideal
approach in the longer-term. The advertising industry has not
found that it works particularly well in the financial services
industry, and believes a similar system for gambling will lead
to double regulatory jeopardy, with the GC being responsible for
the technical gambling rules, and the ASA/Ofcom for general provisions
such as misleading advertising. We appreciate the Government's
concern that there should be the highest level of consumer protection,
but we believe that, in the long-term, this is an inherently unsatisfactory
situation in which both licensees and advertisers would have to
look to and comply with the Codes of different regulators.
The ASA system has worked well for over 40 years,
and is widely regarded as a model for effective self-regulation.
Both the ASA and the broadcast advertising regulators already
have within their Codes sections dealing with gambling advertising,
within the current legislative framework, and we do not envisage
there would be any problem with extending these rules in light
of changes in the law.
Secondly, the existence of such a dual system
of regulation is contrary to the evolution of Government policy
in other areas. For example, in communications, five regulators
have been merged into one (Ofcom) to address media convergence.
The same momentum is happening in the advertising industry where,
in accordance with its powers under the Communications Act 2003,
Ofcom is currently consulting on a proposal to "contract
out" broadcast advertising regulation to the ASA self-regulatory
system, so that a "one-stop shop" is created for the
regulation of advertising across all media. The aim again is to
be better able to address the challenges of convergence by creating
a single regulatory letterbox for complaints about all advertising
in all media, thus enabling more effective and accessible regulation
of advertising for both the public and the industry.
The advertising industry therefore believes
the best solution would be for the GC to delegate responsibility
in this area to the advertising regulator/s. In such a scenario,
the ASA would become the "established means" for the
regulation of gambling advertising, in the same way as it acts
as the established means for the implementation of the Control
of Misleading Advertising Regulations (CMARS). An alternative
option might be the contracting-out principle used in the Communications
Act 2003 as a means by which Ofcom can delegate functions (this
is what is under consideration for broadcast advertising). This
uses the mechanism of the Deregulation and Contracting Out Act
1994.
In both cases, this would mean the GC would
retain its licensing powers, but would become the backstop regulator,
able to impose sanctions on its licensees upon referral by the
ASA.
We are aware that the Government believes that
the GC should be the body that draws up and retains overall responsibility
for the technical aspects of the advertising Code, whereas in
the existing ASA system, it is the industry through the Committee
of Advertising Practice (CAP) [7]
that has this role. However, this need not preclude external input.
For example, in the case of tobacco advertising, the industry
and the Department of Health drew up rules on advertising which
were subsequently incorporated into the CAP Code. In the case
of broadcast advertising, it is also proposed that the existing
broadcast advertising Codes would transfer.
Thus the AA could envisage the GC drawing up
the Code initially. The GC could then invite the CAP to incorporate
its provisions within the CAP code, with the independent ASA invited
to administer it. This would make for a single complaints-handling
system—the ASA—which could in the case of persistent
offenders refer transgressing licensees to the GC.
We have every confidence that the advertising
regulators would be capable of handling the more technical aspects
of gambling advertising regulation as well as the general aspects
(such as misleading advertising). Both consumers and the advertising
industry would benefit from a single point of contact and existing
code-making and complaints-handling expertise, which works effectively
and transparently in the public interest.
There are a number of advantages in this approach:
— A single complaints letterbox simplifying
the regulation of gambling advertising as far as punters are concerned.
— A streamlined regulatory approach
to gambling advertising in all media, including online services
(this would address concerns about spam and hotlinks raised in
the Regulatory Impact Assessment, page 69).
— No duplication of regulatory effort,
and no double jeopardy for licensees.
— The costs to the GC of advertising
regulation would be reduced, enabling them to divert funding to
other areas.
— The existing bodies would be able
to draw upon their long-standing experience rather than the GC
having to expend time, money and effort on creating its own internal
advertising regulation department, which would have to be capable
of monitoring advertisements across the full range of media.
Monitoring of advertising and possibility of introducing
"health/wealth" warnings
In Paragraph 6.7 of the Policy Document, which
accompanies the Bill, the Government states that: "The [Gambling]
Review Body also recommended that the impact of relaxing advertising
restrictions be monitored and, in particular, that the possibility
of requiring the attachment of a warning about the risks of gambling
to all relevant adverts is held open. The Government believes
that this will be an important task for the Commission..."
The AA therefore anticipates that Section 30
will provide the GC with the facility to monitor the impact the
relaxation of advertising restrictions may have with a view to,
should it prove necessary, requiring a warning of some kind to
be displayed on advertisements.
The advertising industry is aware of the need
to act in a socially responsible manner (and already does so across
a number of licensed and/or sensitive sectors). The regulatory
framework for advertising already has and will continue to have
extensive monitoring systems in place. It would be very straightforward
for them to provide information to the GC as necessary. Equally,
there is no reason to single out advertising and attribute to
it alone any increase in the prevalence of problem gambling that
may or may not occur amongst all the liberalisation measures being
proposed by the Government. The Government should undertake holistic
research into the causes of problem gambling well in advance of
reform. Experience in other sectors indicates that "health/wealth"
warnings on advertisements is unlikely to be of much benefit,
given the tendency of consumers to ignore them because they regard
them as industry simply "covering their backs". (This
is also the view of the Office of Fair Trading.) The best place
for such warnings is at the point of purchase. The introduction
of such warnings would also create an uneven playing field in
terms of price competitiveness for different media.
Advertising of overseas gambling services in the
UK
Lotteries: The AA understands the reciprocity
argument behind the position of the Government for continuing
the prohibition on overseas lotteries from promoting the sale
of their tickets in the UK. The AA would, however, argue that
this particular area be readily open to review in case circumstances
and international understandings change.
Betting operators: The AA understands why the
Treasury and HM Customs & Excise would be resistant to change
in this area and wish to continue the prohibition on betting operators
based overseas from advertising in the UK, via the Betting &
Gaming Duties Act 1981 and the Finance Act 2002. The AA believes,
however, that the Government's position on this issue and rationale
for it should also be kept closely under review post-reform.
Online gambling sites: It is the AA's understanding
that the Government is still considering its position, not least
in relation to the impact of E-Commerce Directive and Regulations.
The AA believes there should be a pragmatic approach with positive
measures rather than restrictions. For example the GC could establish
a portal on its website listing licensed on-line gambling providers
it regulates, with their sites displaying a click-through kitemark
icon providing authentication of that fact. Licensed operators
could then make use of that click-through kitemark in any online
advertising they might choose to conduct allowing UK (and indeed
foreign) consumers to arrive at a considered opinion as to whether
or not to use a site.
SECTION 34—INVITATION
TO GAMBLE
(PUBLISHED)
The AA agrees that in the context of the protection
of children and young persons, gambling operators should not intentionally
send a child or young person any document that advertises gambling.
The AA also notes that defences will exist where children or young
persons are unintentionally sent such documentation. The AA would,
however, argue that children (as defined in relation to gambling)
and young persons (ie those aged 16 or 17) should be treated differently
when it comes to whether they may be advertised to, with regards
to those products the latter group are legally permitted to purchase.
SECTION 206—LOTTERY
(PUBLISHED)
The AA welcomes the attempt to provide a workable
statutory definition of a lottery for the first time, having long
called for such a tightening of definitions.
A number of legitimate companies do run games
of chance, which are currently lawful because no purchase is necessary.
For example, scratch card promotional competitions, may run at
a profit or loss and the AA has sought confirmation from Government
that such services would continue to be allowed within any new
legislative framework. Although Paragraph 8.29 of the RIA suggests
that the scratchcard industry may be affected to a greater degree,
these concerns might equally be addressed by Section 206(6). This
sub-section provides the Secretary of State with a power to make
regulations to require that particular types of scheme are, or
are not, to be treated as a lottery for the purposes of this Act,
irrespective of whether they meet the basic criteria for a lottery.
SCHEDULE 7—LOTTERIES:
DEFINITION OF
PAYMENT TO
ENTER (PUBLISHED)
The AA welcomes the attempt to provide greater
clarity in the form of a statutory definition of what constitutes
"payment to enter". The AA has long supported the legalisation
of promotional lotteries provided that customers have to pay no
more for the product than they would without the offer. In relation
to this, the AA believes that the high degree of collaboration
that exists between the Department for Culture, Media & Sport
and the Department of Trade & Industry on the EU Sales Promotion
Regulation needs to be maintained. The co-ordination of such efforts
needs to continue right up until the process of gambling reform
has been completed.
PARAGRAPHS 12 AND
20, SCHEDULE 8—EXEMPT
LOTTERIES (PUBLISHED)
The AA understands the Government's caution
about lifting the restrictions on the advertising of private lotteries,
especially given that by definition entries are only permitted
from those who are members of the society or people living and
working on the same premises as where the lottery will be held.
It would not therefore appear logical for the promoters to advertise
a private lottery outside the club or work premises in which it
would take place, not least given the additional cost implications.
Nevertheless, the AA believes that advertising restrictions on
private lotteries should be lifted, subject to any relevant advertising
codes that may be put in place. The rules on advertising for gambling
products should be as straightforward as possible, with as few
exceptions as practicable.
SCHEDULE OF
REPEALS (UNPUBLISHED
AND UNNUMBERED)
The AA understands that given the adoption for
the first time of a statutory definition of a lottery, Section
14 of the Lotteries & Amusements Act 1976 will be repealed.
The definition of a prize competition will consequently be defined
as something that is not a lottery in that it involves a degree
of skill and/or a genuine free entry route for participants. Equally,
the AA understands that this will be achieved in relation to any
new Gambling Act via the inclusion of Section 14 of the 1976 Act
in an, as yet unpublished, Schedule of Repeals. In relation to
the repeal of Section 14 of that Act, the AA notes that Government
intends to allow newspapers and other publications to run forecasting
competitions by moving them into the betting regime, currently
covered by sub-section 1(a) of that clause of the 1976 Act. The
AA strongly welcomes this decision and surmises that the definition
of betting used in the draft Bill will be sufficiently wide to
accommodate this change.
SECTION ON
"CREDIT & INDUCEMENTS"
(UNPUBLISHED AND
UNNUMBERED)
The AA notes that the Government intends to
bring forward draft clauses in early 2004 relating to certain
forms of promotional activity, including loyalty schemes. The
AA regards many such activities as genuine and harmless sales
promotion, which often act to the very real benefit of consumers.
The AA would therefore support the ability of businesses to conduct
them. The AA notes, however, that the clause, when published,
is likely to leave open the option to the GC of introducing a
general condition on operating licences providing for the prohibition
of all such inducements to gamble were the case to be made that
customers were being unfairly exploited. Such an inflexible approach
appears somewhat out of kilter with the overall flexible approach
that the GC proposes to adopt. The AA would suggest that any such
clause is so worded that it allows for action to be taken in a
far more targeted manner, rather than via the introduction of
general conditions on operating licences. Were the GC to consider
drawing up guidance to address the issue of inducements, it should
be in consultation with relevant stakeholders such as the Institute
of Sales Promotion and the British Casino Association.
ADDITIONAL COMMENTS
ON PRIZE
COMPETITIONS AND
ENFORCEMENT
The AA is pleased to note that the Government
does not consider prize competitions to be a form of gambling,
or even quasi-gambling any longer (see Paragraph 8.5 of RIA).
The AA understands therefore that the Government no longer regards
the GC as the appropriate regulator for this sector and sees responsibility
remaining with the existing and well-established regulatory framework
(including the Advertising Standards Authority), which ordinarily
functions very effectively. The AA welcomes this decision. Similarly,
the AA considers that the guidance the GC intends to issue to
the organisers of prize competitions and promotional draws (see
Paragraph 8.34 of the RIA), on what they should do to ensure their
offerings are legal competitions and not unlawful lotteries will
serve a useful purpose. The AA believes that the production of
such guidance should draw upon the expertise of representatives
of the business sectors affected. Such guidance should also facilitate
the scope for maximising action against the tiny minority of rogue
traders who intentionally break the law by those agencies currently
responsible for enforcement to do so with greater persistence
and consistency. At present some of these agencies can sometimes
appear reluctant to prosecute.
December 2003
6 Independent of both the advertising industry and
the Government, the ASA handles complaints for advertising in
all media (except broadcast media), including print, posters,
sales promotions, direct mail, SMS and internet advertising. The
ASA is funded by a small levy on display advertising and direct
mail expenditure. Back
7
The Committee of Advertising Practice is the industry committee
responsible for writing, revising and enforcing The British Code
of Advertising, Sales Promotion and Direct Marketing. Back
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