Paddy Power and Betfred may face regulatory action regarding FOBT replacements

We reported on 29 March that, in advance of the £2 maximum stake limit on FOBTs being implemented, the Gambling Commission had written to bookmakers to remind them of their responsibilities in ensuring consumers are protected.

We added an update to that website posting on 1 April, commenting on a Guardian article concerning:

  • new high-staking “games” launched by Paddy Power and Betfred, called “Pick ‘n’ 36” and “Virtual Cycling” respectively, and
  • the suggestion that William Hill was planning to launch a similar product.

We added a further update on 2 April, arising from a BBC report that Paddy Power and Betfred “have pulled new high stakes betting games after a warning from the Gambling Commission”, with the former saying “its game was only a limited trial” and the latter saying “it wanted more talks with the Commission”.

The Gambling Commission has now made an announcement regarding the above developments, indicating that the above operators could “face regulatory action as the Commission continues to investigate”.

The announcement (entitled “Following a warning from the regulator two major high street bookmakers have removed products”) can be downloaded below. It reads as follows:

Products recently launched in high street bookmakers Paddy Power Betfair and BetFred have been pulled following a warning from the Gambling Commission and the operators could still now face regulatory action as the Commission continues to investigate.

A third bookmaker who was poised to launch a new product, which has been reported in the media, has also been warned.

This week saw the introduction of reduced maximum stakes on fixed odds betting terminals (FOBTS) from £100 to £2 and the Commission is concerned that the new products undermine the changes made.

The Commission may also investigate key senior staff at bookmakers who are responsible for bringing those products to market.

Today’s announcement follows a letter from the Commission’s Chief Executive Neil McArthur to bookmakers warning the industry against any attempts to circumvent the FOBT stake cut and remind them of their responsibilities to ensure their consumers are protected.

Richard Watson, Executive Director for Enforcement, said: “We have been absolutely clear with operators about our expectations to act responsibly following the stake cut implementation this week. We have told operators to take down new products which undermine the changes, and we will investigate any other products that are not within the spirit and intention of the new rules.’’

In our view, the products in question will have been designed to avoid classification as gaming machines. Instead they are likely to have been intended to constitute betting on a virtual event. Use by the Gambling Commission in its above announcement of the words “products which undermine the changes” and “are not within the spirit and intention of the new rules” leave open room for argument on the part of the betting operators that they were not acting illegally when making them available in their betting shops, but it is a shame that this latest episode (and the adverse media attention it has attracted) will inevitably make even harder the battle by all sectors of the gambling industry to regain public trust.

UPDATES:

(1) In a further related development, the Daily Mail has reported (on 7 April 2019) that:

  • “gamblers restricted by new FOBT laws can now get instant results on roulette games at Ladbrokes with their ‘turbo’ button and only have to wait half as long on machines” and
  • “Ladbrokes introduced the changes a week ago, and a whistleblower told the BBC’s 5 Live Investigates programme it was ‘a ploy to get people betting more quickly’”.

(2) During Parliamentary Questions in the House of Commons on 11 April 2019, Carolyn Harris (MP for Swansea East and Chair of the Gambling-Related Harm APPG) posed the following question:

“On the very day that the stake reduction on fixed odds betting terminals was introduced, we discovered that the bookmakers had found a way to bypass that reduction. What promises can the Secretary of State make that the industry will not be allowed to do that in pursuit of further exploitation?”

Jeremy Wright MP (Secretary of State for Digital, Culture, Media and Sport) responded as follows:

“I agree with the hon. Lady. The actions of those who tried to find a way around the procedures banning the things that we across this House have decided should be banned were disgraceful. What happened thereafter, as she knows, is that the regulator took immediate action and those particular products were withdrawn. I hope that that lesson will be learned by all those across the industry who are tempted to try it again.”