Affiliates and UKGC face up to licensing uncertainties

David Clifton is quoted in a Vixio Gambling Compliance article by Scott Longley entitled “Affiliates and UK Gambling Commission Face Up To Licensing Uncertainties” that follows up on:

  • last month’s about-turn (from its previous firmly adopted position) by Responsible Affiliates in Gambling (“RAiG”) in announcing its support for a licensing or registration regime for gambling affiliates (as reported by us here) and
  • the recommendation earlier this month by the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry that affiliates should be licensed by the Gambling Commission (as reported by us here).

In terms of further background to David’s comments quoted in the article, his thoughts are as follows:

1. RAiG’s support for a licensing/registration regime for affiliates was a very clear example of a gambling industry body coming to the conclusion that – before any legislative change is forced upon its members – it is better to make its position clear on a subject that is likely to come up for otherwise contentious debate in the forthcoming UK Government review of the Gambling Act 2005. However, it was particularly noteworthy as it represented a complete about-turn from the RAiG’s previously firmly adopted position on this subject.

2. Given the Gambling Related Harm APPG’s call for a ban on gambling advertising and marketing across all channels, I think that RAiG members see affiliate licensing as the lesser of two potential evils and a means of acknowledging the reasoning behind the House of Lords Select Committee’s more considered recommendation that affiliates should be licensed by the Gambling Commission before they can enter into contracts with gambling operators, and that UK-licensed operators should not be permitted to enter into contracts with unlicensed affiliates.

3. Although the Gambling Commission has to date taken the view that the need to licence affiliates is obviated by the fact that it can hold its licensees liable for failings made by their affiliates, it is the Commission that will be the obvious licensing body in the event that, as I now suspect, the forthcoming review of the Gambling Act 2005 concludes that affiliates should be licensed if they are to provide their marketing services to operators licensed by the Commission. In principle, is that really very different from the logic applicable to the licensing regime that applies to gambling software providers? I think not.

4. Whether the requirements of the licensing process can be minimised for smaller affiliates is something of a hypothetical question. At the heart of the Gambling Commission’s licensing process is the test of the applicant’s suitability to hold a licence and to uphold the licensing objectives so that consumers and the wider public are protected and public confidence is maintained in not only the gambling industry but also the Commission as its regulator. I see no reason why lesser standards in this respect should be applied in the case of smaller affiliates, but one might expect a suitably tiered fee structure to apply as indeed it does currently in relation to existing application and annual fees.

5. Whilst there may still be a lot of sceptics over the issue of affiliate licensing, taking into account the way in which the political winds are blowing, I think the sceptics’ arguments will become harder to sustain, apart from this giving rise to yet another basis on which to fear that over-regulation will end up driving larger numbers of UK customers to offshore, black market, illegal operators – even more so in the case of affiliate licensing as driving custom to gambling operators is the very essence of what they do.

6. In terms of gambling regulation, all European interested parties’ eyes are currently on the British and Swedish regulators. Where they go in terms of increasing regulatory requirements – including a move in the direction of affiliate marketing – will most certainly not be ignored by regulators in other European countries.

You can download the Vixio GamblingCompliance article below.

UPDATE: You can read further comment on this same subject by David in an iGB article entitled “Getting serious on affiliate licensing?”