The Gambling Commission is planning to introduce new and amended licence conditions and codes of practice (LCCP) during 2014, in anticipation of the implementation of the proposed UK point of consumption regime. All operators and software suppliers who obtain a licence to access the UK market will be required to comply with any such new and amended LCCP, so their application is likely to be much wider than the existing version. The amendments which the Commission intends to make are currently open for consultation, with responses requested by 4 December 2013 (see here for the full consultation documents).

1. Key changes proposed

Key amendments or new conditions include:

• Licensed operators must ensure that the suppliers of all gambling software which they use hold software licences from the Commission. 
• Poker network operators must:
  • ensure that each player in Britain plays only with a Commission-licensed operator; and 
  • when pooling British players with players that have entered via a non-Commission licensed operator, have effective measures in place to: (a) ensure that such operators hold the appropriate permissions in the country in which they are based; (b) approve such operators as being suitable, having conducted their own due diligence enquiries; (c) satisfy themselves that such operator has in place measures to identify customers that are broadly equivalent to measures required by the Third Money Laundering Directive; and (d) ensure effective information sharing to enable all parties to comply with their regulatory obligations. 
• Other network operators (e.g. bingo networks) must comply with the requirements in the first bullet point and part (d) of the second bullet point above. 
• Remote licensees must link customer account activity with any group company of theirs, so as to police self-exclusion and financial limits. This strengthens the current obligation to identify separate accounts held by the same customer. 
• A new social responsibility code:
  • requiring licensees to take responsibility for sub-contractors who are responsible for any aspect of the licensee’s provision of gambling facilities; 
  • imposing certain terms in contracts with sub-contractors, including a termination right for acting in a manner inconsistent with the licensing objectives; and 
  • requiring licensees to ensure that third parties who provide user interfaces comply with the Commission’s technical standards, with a right of termination if they do not. 
• Strengthening customer funds protection by introducing:
  • a requirement for operators to hold customer funds in a client account separate from other company accounts. The Commission has also requested feedback on whether a number of alternative options for protecting customer funds would be preferred, including: (a) 'Quistclose' trusts; (b) insurance against insolvency; (c) independent trust accounts; (d) reserves held by the regulator; or (d) more stringent rules for specific gambling products such as remote poker; and 
  • a standard rating system for assessing the level of protection of customer funds by each operator, which must be displayed prominently on the website page used for depositing customer funds. Customers would also be required, at the point of depositing funds for the first time, to confirm that they have read and understood the potential risk to their funds. Any changes in the operator's policy for protection of customer funds would have to be notified to the customer in advance.

2. Other noteworthy proposals

The Gambling Commission has also proposed the following changes:

• A new ordinary code provision requiring licensees to work with the Commission in an open and cooperative way. 
• Individuals occupying the management office of regulatory compliance must not, except with the Commission's express approval, occupy any other specified management office. This will apply to all gambling operators other than small-scale operators. 
• In relation to code provisions on the prevention and detection of money-laundering, a requirement for licensees to comply with the Commission’s guidance – ‘The prevention of money laundering and combating the financing of terrorism’. 
• A requirement for operators not just to publish and implement consumer terms which are fair and open, as currently, but also to comply with such terms. 
• A requirement for licensees to have arrangements in place for customers to refer any dispute not resolved to the customer's satisfaction by use of the operator's complaints procedure to an independent person offering alternative dispute resolution, and to make information about it readily available.
• Consolidating information reporting requirements in the LCCP, and the introduction of a new ordinary code provision to clarify the Commission's expectations about reporting suspicions of match-fixing and cheating. 
• A requirement for remote gambling operators not to relocate remote gambling equipment without the Commission’s permission. 
• A new licence condition requiring gambling operators only to use payment processors so authorised under the Payment Services Regulations 2009.

3. Free bets/bonus offers

The Gambling Commission, as part of the Gambling Advertising Monitoring Unit (together with representatives from the Advertising Standards Authority, Broadcast Committee of Advertising Practice, Ofcom, Phonepay Plus and the Department for Culture Media and Sport), intends to hold a consultation, at a later date, on the marketing of free bets and bonus offers. So watch this space!