DGB 66
Submission to the Joint Committee on
the Draft Gambling Bill from the Mobile Broadband Group
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 i.e. 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 £1000
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.
If any further information is required with regard
to this evidence, please contact Hamish MacLeod on 07770
996177 or at mobilebg@btopenworld.com
| 
