When it comes to regulations designed to improve the safety of consumers, gambling companies are used to being the centre of attention. Sometimes though, the industry simply gets caught in the crossfire — a problem that is increasingly the case with broad pieces of legislation designed to reign in search and social media giants.
From affordability rules to advertising bans, there’s no shortage of regulation that specifically constrains what gambling companies are allowed to do in specific markets, all in the name of protecting consumers.
In the face of these many overlapping layers of compliance, it can be easy to lose sight of the broader areas of new legislation that nevertheless also require attention from the European gambling industry.
Not just Facebook
At the EU level, this includes mammoth regulatory initiatives like the Digital Services Act (DSA).
Although it was created to force social media giants to be more responsible for the content posted on their platforms, as providers of online services within the bloc, gambling companies are well within its scope.
The DSA has a particular focus on hosting illegal content and requires service providers online to remove content that has been flagged or face costly enforcement.
On provision requires operators and marketing providers active in Europe are required to offer consumers a way to flag illegal content on their platforms and must have a process on how they respond to these requests.
The EU also expects to receive a so-called transparency report every year, which details what consumer requests were made and how they were dealt with.
Any requests made by law enforcement over potentially illegal content must also be included in that report.
The role of chat services, particularly where they allow your players to speak with one another, is also covered by the DSA.
This can create unique compliance headaches for gambling operators, particularly where a backend service is actually provided and maintained by a B2B provider.
Legal experts say that the EU has no issue with this sort of structure, but expects there to be a clear understanding about who is responsible for dealing with any issues that might arise.
“You need to make sure between the two of you, how you’re going to apportion responsibility for making things like the notice and action form available,” said Heather Catchpole, a senior associate with law firm Bird & Bird.
“If a user does request chat content to be removed, then who’s going to be responsible for actioning that? Who is able to remove that content on the back end? So, there’s some obligation apportionment things to think about here,” she said.
Brexit in name only
The UK has its own version of this kind of law called the Online Safety Act (OSA). It too attempts to enact tighter controls on digital businesses in the name of consumer safety, but in the process creates evern more unique problems for online gambling companies.
It casts a wide net. Even if your company has no physical presence in the UK, or even if it isn’t technically licensed there, operators may still find themselves covered by its provisions.
“If you are based in Gibraltar, if you are based in Cyprus or in Malta, you would still be caught by the online safety net if you have UK users on that service,” explained Bird & Bird partner, Emma Drake.
“Also, even if you thought that you didn’t target the UK and you still have UK users, if [digital regulator] Ofcom thought that you pose a material risk of significant harm, they might still consider you caught.”
For most gambling companies the risks are less about the kinds of enforcement or negative press you might expect to face from failures in gambling regulations, instead operators will need to make sure they have filled out the right paperwork to show officials they are following the rules.
In the UK, this includes an illegal content risk assessment, which requires a company to lay out the likelihood of users encouraging illegal content on their platform and what they are doing to mitigate those risks.
Although the odds of a gambler encountering something illegal in the UK on their platform, the report still needs to be filed and still requires significant time and effort from a compliance team, Drake said.
The challenge of complying with the OSA is made more difficult by its vagueness and even for seasoned professionals it has been a challenge to work out what elements of the act apply to gambling.
“The online safety act is amongst the poorest drafted pieces of legislation I’ve ever had the ‘joy’ to practice on,” Drake added.
These dual digital safety laws are just the tip of a very large and complex iceberg of broad spectrum legislation that has ensnared online gambling companies in the past few years.
Other examples just within the EU include, the AI Act, the Digital Markets Act and the Corporate Sustainability Reporting Directive.
As governments globally grow more aware of the role social media and AI plays in our societies, gambling companies can expect to be more regularly caught up in these kinds of big legislative projects.
