ADVERTISING AND MARKETING OF GAMING SERVICES:
LEGAL IMPLICATIONS AND UNDERSTANDING OF LEGAL SITUATION IN
THIS NEW ENVIRONMENT

Giles Crown
Senior Communications Lawyer
Lewis Silkin

July 8 2002

1. The laws applicable to the promotion of gambling services are in a mess.Ê They have been built up over decades (mostly since the 1960s), with regular piecemeal amendments, leaving a confusing and complicated situation for advertisers and agencies.Ê Much of the law is openly flouted, with illogical anomalies abounding.Ê For example:

• Television advertising for UK based credit betting companies is legally permitted, but not for UK licensed betting offices;



• Despite being legally permitted, UK based credit betting companies are forbidden from advertising on television by the ITC, but are allowed to sponsor programmes;



• UK licensed betting offices can take bets over the internet and by telephone, but cannot use those media for advertising;



• The sale in the UK of tickets for EU based lotteries is permitted, but such lotteries cannot be promoted in this country.

It is very much to be hoped that this situation is remedied as soon as possible, by the implementation of the recommendations contained in the Government's White Paper, "A Safe Bet for Success", based on the Gambling Review Body's proposals.

2. This paper sets out the law as it is today, and probably will be until at least 2004/5, considering where appropriate the impact of the present law on the promotion of internet and mobile gambling. It then looks at the Government's recommendations, and highlights those areas which will be particularly effected by the proposed de-regulation of the laws surrounding the marketing of gaming services. It also briefly considers the regulatory framework surrounding this type of advertising (i.e. the British Code of Advertising and Sales Promotion, the Independent Television Code and the Radio Authority Code), although these will also be dealt with by other speakers.Ê

B.Ê THE LAW

Betting

Advertisements for betting officesÊ

3. Under the Betting, Gaming and Lotteries Act 1963, if an advertisement in any form whatsoever is published indicating that any particular premises are a licensed betting office, or indicating where any such office may be found or drawing attention to the availability of or to the facilities afforded to persons resorting to such offices, then the licensee of the office and any person who published the advertisement or caused or permitted it to be published, is guilty of an offence [1].

4. It is to be noted that this prohibition is only concerned with advertising which promotes the availability of licensed betting offices.Ê It does not otherwise restrict the advertising of the services provided by betting companies.Ê Nor does it apply to advertising of credit betting, as opposed to cash betting at licensed betting offices.Ê The advertising of telephone, internet or interactive-based credit betting services is therefore legally permissible, provided they are established in the UK [2] (and subject to regulatory restrictions [3]).

5. There is no definition of the word "advertisement" under the Act, but in other contents it has been held that there may be advertising if a business by some means draws attention to its own existence.Ê A voucher printed in a racing newspaper which could be exchanged in part payment of a £1 bet, and had a list of betting shops printed next to the offer under the heading "Where to bet", constituted an advertisement under the Act as it drew attention to the availability of the defendant's offices [4].ÊÊ In another case it was held that an advertisement under the Act did not have to state that the premises to which it was affixed was a licensed betting office, provided only that it drew attention to the availability of, or to the facilities afforded at, licensed betting offices [5].

6. It is a defence for any person charged with this offence to prove that:

(a) he did not know and had no reasonable cause to suspect that the advertisement was, and that he had taken all reasonable steps to ascertain that it was not a prohibited advertisement; or

(b) that if charged only as a licensee, the advertisement was published without his consent or connivance and that he exercised all due diligence to prevent the publishing of any such advertisement in connection with his office or offices.Ê

7. It is not an offence to publish such an advertisement if it is published:

(a) Inside but not outside a licensed betting office.Ê The content of such advertisements are subject to no restrictions.Ê They must, however, only be visible to those inside the betting office.Ê Or

(b) Outside a licensed betting office: (i) from a place inside such an office [6] (e.g. displayed in the front window); or (ii) in premises giving access to such an office (e.g. in the foyer of a multi-occupancy building), and in either case in the form of text, moving displays or images, including only the following [7]:ÊÊ

(i) text (including words and/or figures) up to 3 words in length indicating that the premises are, or give access to, a licensed betting officeÊ (e.g. "licensed betting office", "bookmaker", "turf accountant" or name of licensee);

(ii) in the case of premises giving access to a licensed betting office, text indicating where any such office may be found;

(iii) text indicating the hours during which a licensed betting office is open;

(iv) text indicating the facilities afforded to persons resorting to the licensed betting office concerned;

(v) text indicating the range of bets available in the licensed betting office concerned; and

(vi) text providing information relating to any event in connection with which betting transactions may be or have been effected in the licensed betting office concerned, including information as to the odds available on any particular event.Ê

8. Most importantly, it is also now not an offence to publish an advertisement promoting a licensed betting office's services provided that the advertisement is in a "material form" [8] (e.g. in a newspaper, journal, circular, letter or poster printed on paper). There are therefore no legal restrictions on these types of advertising by licensed betting offices.Ê They still cannot advertise, however, in media such as film, television, radio, e-mail, the internet or on mobile phones, despite the fact that they are legally permitted to take bets over the telephone or internet.Ê A licensed betting office can therefore set up a website which takes bets, but cannot advertise its services on that site!ÊÊ

Overseas bets [9]

9. Any person who knowingly issues, circulates or distributes in the United Kingdom, or has in his possession for that purpose, any advertisement or other document inviting or otherwise relating to the making of the following types of bets is guilty of an offence:

(a) all bets made by way of pool betting or coupon betting unless the totalisator or promoter of the betting is in the United Kingdom;

(b) all bets made with a bookmaker outside the United Kingdom.

10. This prohibition does not apply to: (a) bets where the promoter or bookmaker is in the Isle of Man; (b) bets made by means of a totalisator situated outside the United Kingdom on a horse race taking place in that country; or (c) bets made by a UK bookmaker on an event outside the UK if bets have been made inside the UK with the bookmaker by others.Ê A person who gets or tries to get any advertisement or other document given or sent to him is not guilty of procuring, inciting, aiding or abetting another to commit the offence.ÊÊ

11. Teletext pages appearing on a screen and teletext broadcasts inviting punters to use Victor Chandler's offshore credit betting service constituted the transmission of "documents" as prohibited by this section, this falling "squarely within the mischief that section 9(1)(b) was trying to prevent", and was therefore illegal [10]. The Court of Appeal interpreted the prohibition to include "information circulated and distributed by being electronically reproduced".Ê

12. It is unclear whether a hypertext link from an internet website to an offshore betting site would constitute an "advertisement or other document" and thus fall foul of this prohibition.Ê But on the basis of the Victor Chandler decision, there is little doubt that the section includes information accessed by the internet and over mobile phones.Ê Therefore, any advertisement for offshore betting, whether online or offline, and possibly even a non-descriptive hypertext link to an offshore betting site, could amount to a criminal offence.Ê However, HM Customs & Excise do not appear at present to be taking action against such activities.

Promoting betting to young persons

13. Under the Betting, Gaming and Lotteries Act 1963 it is an offence for any person, for the purpose of earning commission, reward or any other profit, to send or cause to be sent to a person whom he knows to be under the age of 18 any advertisement, circular or other document which invites or may be reasonably inferred to invite the person receiving it to:

(a) make any bet, or

(b) enter into or take any share or interest in a betting transaction, or

(c) apply to any person or at any place with a view to obtaining information or advice for the purpose of any bet, or for information as to a race, fight, game, sport or other contingency upon which betting is generally carried on [11].

14. Any person named or referred to in such document as a person to whom any payment may be made, or from whom information may be obtained, shall be deemed to have sent that document or caused it to be sent, unless he proves that he had not consented to be so named and that he was not in any way a party to, and was wholly ignorant of, the sending of the document.Ê

15. If any such document is sent to any person at any university, college, school or other place of education and that person is under the age of 18, the person sending the document or causing it to be sent shall be deemed to have known that person to be under that age unless he proves that he had reasonable grounds for believing him to have attained that age. Where the address used is one which may or may not be within the university (e.g. the address of licensed lodgings) there is no presumptive evidence that the person charged knew the addressee to be under 18, unless there is proof that he knew the address to be within the university. [12]

16. In respect of advertisements relating to football pool betting, the age limits set out above have been reduced from 18 to 16.ÊÊ

Spread betting advertisingÊ

17. Spread betting is regulated by the Financial Services Authority.Ê Under Part VIII of the Financial Services and Markets Act 2000,Ê it is an offence to engage in behaviour which is "likely to give a regular user of the market a false or misleading impression as to the supply of, or demand for, or as to the price or value of investments". Under s.21 of the Act, a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity, unless that person is an authorised person or the content of the communication has been approved by such a person.

Gaming

General prohibition

18. Under the Gaming Act 1968, 'gaming' is defined as the playing of a game of chance for winning in money or money's worth.Ê Gaming has been held to require some active participation by the players, either by way of skill or some physical act or exercising some choice.Ê In addition, it has traditionally been held to require some physical presence by the players (but this is likely to be of diminishing importance with the advent of new media) and some communication or competition between the players.Ê Gaming includes games against a machine [13].

19. One of the main purposes of the Act was to prevent the artificial stimulation of demand for gaming, and therefore advertising was a prime target for prohibition.Ê It is an offence under section 42 of the Act to issue or caused to be issued any advertisement:

(a) informing the public that any premises in Great Britain are premises on which gaming takes place or is to take place; or

(b) inviting the public to take part as players in any gaming which takes place, or is to take place, on any such premises, or to apply for information about facilities for taking part as players in any gaming which takes place, or is to take place, in Great Britain; or

(c) inviting the public to subscribe any money or money's worth to be used in gaming whether in Great Britain or elsewhere, or to apply for information about facilities for subscribing any money or money's worth to be so used.

20. Given these rules, and the fact that gaming activities can only be conducted on licensed premises with the players present on those premises, any advertising by whatever means of gaming facilities based in Great Britain is unlawful (save for the exceptions set out below).Ê The situation in respect of gaming facilities based outside Great Britain is less clear.Ê The only part of the section 42 prohibition applying to such facilities is set out in sub-paragraph (c) above, which applies to ads "inviting the public to subscribe any money or money's worth" to be used in gaming.Ê The Gaming Board takes the view that this permits a significant amount of off-shore gaming advertising, provided there is no express exhortation to purchase.Ê In any event, prosecution and enforcement against foreign based operations is likely to be very difficult.Ê

21. It may be that some forms of gaming on the internet (e.g. roulette or craps) could be constructed in such a way that they did not fall within the definition of gaming, amounting instead to fixed odds betting or even a lottery.Ê Games such as internet poker, blackjack or on-line gaming machines are more likely to qualify as gaming.ÊÊÊ

22. 'Advertisement' includes every form of advertising, whether in a publication, by the display of notices, by means of circulars or other documents, by way of sound broadcasting or television or by inclusion in a programme service.Ê Advertising on the internet and by mobile phones is probably also covered, on a purposive construction of the statutory definition [14]. There is, however, a distinction between 'advertising' and 'editorial'.Ê Articles in the Evening Standard describing facilities offered at certain London casinos were not covered, the proper definition of 'advertisement' under the Act being "matter published by or on behalf of the owner of a gaming business which on its true construction is solely or primarily intended to solicit custom" [15].

23. It is a defence for an accused to prove that he is a person whose business it is to publish or arrange for the publication of advertisements and that he received the advertisement in question for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to an offence [16].Ê Sending circulars to existing members of a gaming club would probably not fall within the prohibition, as existing members arguably do not fall within the definition of the "public" [17].

General exceptions

24. The above prohibition does not apply to any advertisement insofar as it relates to gaming which is, or is to be:

(a) gaming as an incident of a bazaar, sale of work, fete, diner, dance, sporting or athletic event and other non-commercial entertainments of a similar character that do not take place on licensed gaming premises;

(b) gaming at entertainments not held for private gain;

(c) gaming on any premises used or to be used wholly or mainly for the provision of amusements by slot machines (e.g. arcades, but not pubs), so long as the premise has a permit for being used for such purposes;

(d) gaming on any premises used or to be used for the purposes of a pleasure fair consisting wholly or mainly of amusements, so long as the premise has a permit for being used for such purposes;

(e) gaming at any travelling showmen's pleasure fair.

25. The prohibition also does not apply (inter alia) to:

(a) the display, on any licensed premises, of a sign or notice indicating that gaming takes place, or is to take place, on those premises, whether the sign or notice is displayed inside or outside the premises; or

(b) the publication of an advertisement in a newspaper which circulates wholly or mainly outside Great Britain.

Bingo

26. In addition, gaming in the form of playing bingo is excluded from the prohibition on gaming advertising [18]. The exception, which applies to any form of advertising, only covers bingo. It does not permit bingo clubs to advertise their amusement without prizes or jackpot machines.

Casinos

27. In respect of casinos [19], since 1999 the prohibition has also not applied to the publication of an advertisement relating to licensed premises, other than bingo club premises, if:

(a) the advertisement is contained in a publication which is not published wholly or mainly for the purpose of promoting premises on which gaming takes place or is to take place; and

(b) the advertisement contains no more than:

(i) the name, logo, address, telephone and facsimile numbers of the premises; and

(ii) factual written information about the facilities provided on the premises, the ownership of the premises, the persons who may be admitted to the premises and the method by which such persons may become eligible to take part in gaming on the premises.Ê

28. The Gaming Board and British Casino Association have produced additional advertising guidelines for the Association's members.

Lotteries

General prohibition

29. There is no statutory definition of a 'lottery', but the courts have defined it as a scheme for distributing prizes wholly by lot or chance (merit or skill playing no part in determining the distribution) where the persons taking part, or a substantial number of them, make a payment or consideration in return for obtaining their chance of a prize [20]. An on-line chance competition for which no charge is made directly to the user to participate may well not fall within the definition of a lottery.ÊÊÊÊ

30. All lotteries, which do not constitute gaming, are unlawful, except as provided by the Lotteries and Amusements Act 1976 or the National Lottery etc Act 1993.Ê Under the 1976 Act, every person who in connection with any lottery promoted or proposed to be promoted either in Great Britain or elsewhere [21] is guilty of an offence [22] if he:

(a) advertises for sale or distribution any tickets for the lottery;

(b) prints, publishes or distributes, or has in his possession for the purpose of publication or distribution (i) any advertisement of the lottery or (ii) any such matter descriptive of the drawing or intended drawing of the lottery, or otherwise relating to the lottery, as is calculated to act as an inducement to persons to participate in that lottery or in other lotteries;

(c) brings, or invites any person to send into Great Britain from a place outside the British Islands and the EU member states for the purpose of sale or distribution any ticket in, or advertisement of, the lottery.

In this context, a favourable criticism of a lottery may amount to an advertisement [23].Ê

31. There is a clear anomaly in these rules, in that it is permissible to sell tickets (over the internet or otherwise) for participation in a EU based lottery, but such lotteries may not be marketed or promoted in Great Britain.Ê This does not take account of the power of theÊ Internet as a marketing, as well as a transactional, tool [24].ÊÊÊ

Defences

32. It is a defence to prove that at the date of the alleged offence the person charged believed, and had reasonable ground for believing: (a) that the lottery to which the proceedings relate was not being, and would not be, promoted or conducted wholly or partly in Great Britain; and (b) that the advertisements or other documents were not being, and would not be, used in Great Britain in or in connection with that or any other lottery.Ê Proceedings can only be instituted by or by direction of the Director of Public Prosecutions.Ê

33. It is also a defence to prove (inter alia) that the lottery to which the proceedings relate was:

(a) a lottery that was lawful by reason of it being: (i) incidental to a bazaar, fete, dinner, dance, sporting or athletic event or other similar non-commercial entertainment without money prizes; (ii) a private lottery (i.e. for members of one society or persons working/residing on the same premises); or (iii) a lottery conducted by voluntary associations;

(b) a properly conducted society lottery (i.e. a lottery promoted on behalf of a charitable/sporting/cultural /non-commercial society) or local lottery (i.e. a lottery promoted by a local authority) [25];

(c) not promoted wholly or partly outside Great Britain and constituted gaming as well as a lottery;

(d) a lottery forming part of the National Lottery [26].

34. The advertising of lotteries under (a)(i) above must be limited to the confines of the event [27].Ê Private lotteries under (a)(ii) may not be advertised outside the premises of the club/work premises for whom the lottery is promoted or on the lottery tickets [28].Ê Society and local authorities' lotteries must be promoted in Great Britain, but are otherwise not subject to advertising restrictions [29].Ê

The National Lottery

35. Not only is the advertising of the National Lottery exempted from the general prohibition against lottery advertising, but it is also protected from unauthorised associations being made with it by competitors.Ê If a person advertising, or offering the opportunity to participate in, a lottery, competition or game of another description give, by whatever means, a false indication that it is a lottery forming part of, or is otherwise connected with, the National Lottery, he shall be guilty of an offence [30].Ê

36. The National Lottery is regulation by the Director General of the National Lottery and his department, the Office of the National Lottery ('OFLOT').Ê The National Lottery Advertising Code of Practice lays down rules for the advertising and promotion of the National Lottery and all lotteries run under the National Lottery etc. Act 1993.Ê All persons authorised to run the National Lottery or promote constituent lotteries must adhere to the Code ('Licensees').Ê The Code is applied in conjunction with appropriate laws and regulations (e.g. BCASP, ITC, RA, DMA Codes).Ê The ultimate sanction is withdrawal of the offending Licencee's licence [31].Ê

37. The Code applies to all forms of advertising and promotion, including printed and broadcast. It includes general provisions (e.g. no exaggeration of chance of wining, no encouragement of excessive or reckless playing, not presented as alternative to work), as well as specific rules prohibiting advertising aimed at or likely to appeal to under 16s (e.g. no characters likely to appeal to under 16s, no advertising within 200m of schools, not in publications of which 25% or more of the total readership is under 16, not in breaks around children's programmes).

C.Ê THE REGULATORY REGIME

Introduction

38. In the UK advertising is regulated by a number of statutory and self-regulatory bodies.Ê Non-broadcast advertising (e.g. press, poster) must conform with the British Codes of Advertising and Sales Promotion, produced by the Committee of Advertising Practice ('CAP') and policed by the Advertising Standards Authority ('ASA').Ê Advertising on the Internet in paid for space (but not on advertiser's own websites) must also comply with this Code.Ê

39. Television advertising and sponsorship is regulated by the Independent Television Commission ('ITC').Ê The equivalent body for radio is the Radio Authority ('RA').Ê Both produce advertising and sponsorship codes.Ê The ITC alsoÊ has a Code specifically for text services (e.g. Teletext) [32].ÊÊÊ

40. All the Codes contain general rules requiring advertising to be legal, decent, honest and truthful.Ê They reflect to a large extent the legal restrictions on gaming advertising, but add further restrictions on otherwise lawful gaming advertisements relevant to the particular media in which the advertising appears.ÊÊ

41. The ITC and RA enforce their statutory codes by making orders against, and occasionally fining, their licensees.Ê All national TV and radio advertising must be pre-vetted by the Broadcast/Radio Advertising Clearance Centres. The CAP enforces its self-regulatory Code through the co-operation of advertisers, agencies and media owners.Ê In extreme circumstances, it can refer complaints to the Office of Fair Trading, with a view to obtaining an injunction to restrain misleading advertising.Ê

Non-broadcast advertising

42. Clause 56 of the British Codes of Advertising and Sales Promotion contain specific rules applicable to betting and gaming, which are set out at Annex A.ÊÊÊ

43. The ASA has apparently received no complaints about gambling advertising since the restrictions on such advertising were lifted.Ê

Television advertising and sponsorship

Advertising Code

44. The ITC Advertising Code rule 18 prohibits TV advertisements for products or services coming within the recognised character of, or specifically concerned with (a) betting tips [33], or (b) betting and gaming (except football pools, bingo and lotteries permitted under the National Lottery etc, Act 1993 and the Lotteries and Amusements Act 1976 as amended) [34].Ê The rule goes on to make clear that broadcast advertising of bingo is not permitted in Northern Ireland.Ê

45. The Code reflects the legal position, but in addition prevents all 'betting tips' and 'betting' advertising.Ê It therefore prohibits advertising for services (e.g. telephone, internet and interactive-based credit betting services) which otherwise could lawfully be promoted as falling outside the restrictions imposed on the promotion of betting offices.Ê This apparently reflects Home Office policy from the 1980s that broadcasts should not stimulate demand for gambling, although such advertisements can appear on teletext services (see below).ÊÊ The ITC believes that its current prohibition on advertising legally permissible betting services is likely to be challenged [35].ÊÊ In its current review of its Code, the ITC states that it "has agreed with DCMS to open debate on the potential for relaxing the ITC's current prohibition on the advertising of gambling services up to and not exceeding the statutory position".Ê

46. Rule 19 of the Code contains specific rules relevant to permitted advertising for lotteries, pools and bingo, which are set out at Annex B.ÊÊ The ITC has produced an advertising guidance note, as an aid to the correct interpretation of rule 19, which is set out at Annex C.Ê

Scheduling issues

47. Appendix 1, rule 9 of the Advertising Code states that advertisements for lotteries, pools or bingo must not be transmitted during children's programmes or in the advertisement breaks immediately before or after them.Ê The ITC Rules on the Amount and Scheduling of Advertising (rule 4.2.1) similarly provide that bingo may not be advertised in or adjacent to children's programmes or programmes commissioned for, principally directed at or likely to appeal particularly to audiences below the age of 18.Ê The relevant age limit for lotteries and pools advertising is 16.Ê

Text services

48. The ITC Code for Text Services disapplies the above prohibitions on betting tips and betting and gaming advertisements contained in rule 18 and Appendix 1, rule 9 of the Advertising Code, although advertisements for betting systems and the like remain unacceptable.Ê In addition, the Code for Text Services contains the following rules in respect of such advertising (rules 21 & 22):ÊÊ

• Detailed advertisements for betting tips or betting and gaming (including pools and bingo) must appear only on full advertising pages devoted solely to such advertisements but may be "signposted" on other pages (except those of particular interest to children).
• Advertisements for lotteries permitted under the Lotteries and Amusements Act 1976 are not restricted to such pages but may not be included on pages of particular interest to children.
• Advertisement for betting tips, betting and gaming (including pools and bingo), and lotteries must not appear on or adjacent to editorial pages of particular interest to children or adjacent to other advertising of particular interest to them.

49. The ITC has produced a guidance note as an aid to the interpretation of these rules, set out at Annex D.

50. Under clause 5 of the ITC Code of Programme Sponsorship, those who cannot advertise on television (including betting tips and betting and gaming) are also not allowed to sponsor television programmes.Ê However, providers of the following are allowed to sponsor television programmes, but are subject to certain restrictions:Ê

• Bookmakers (including companies whose principal business is bookmaking).Ê They may not, however, sponsor programmes that include coverage of horse or greyhound racing, or the results of such racing;
• Gaming companies (including companies whose principal business is gaming).Ê They may not, however, sponsor television game shows that closely resemble the gaming that takes place in bingo halls and casinos.

51. These provisions sit uneasily with the outright ban on advertising by such entities, particularly as sponsorship credits can now include an explanation of the sponsor's business.Ê As the Gambling Review Body noted, "as well as the sponsorship of programmes, the names of gambling operators are often emblazoned on the screen as sponsors of individual races.Ê We share the ITC's view that allowing sponsorship and prohibiting advertising is a 'distinction without a difference'" [36].

Radio advertising and sponsorship

52. The Radio Authority's Advertising and Sponsorship Code includes provisions similar to the ITC Codes restricting advertising and sponsorship by gaming organisations.Ê Clause 23 contains the general prohibition on radio advertising for betting and gaming, including bookmakers, betting companies, tipsters and gaming machines unless specifically allowed under statute.Ê Lawful lotteries, bingo and amusement arcades may advertise, but all such advertisements must be centrally copy cleared and must not:

• Be directed at those aged under 16 (18 for bingo);
• Feature any personality aged below 16 (18 for bingo) nor any content directed at or likely to be of particular appeal to anyone aged 16 years (18 for bingo);
• Make reference to gaming machines present on bingo premises;
• Be presented as a solution to financial difficulties.Ê

53. As for sponsorship, clause 3.9 states that companies with betting and gaming interests may sponsor programming, subject to similar restrictions as for TV sponsorship.

D.Ê CHALLENGING THE RESTRICTIONS

54. All restrictions on commercial speech, including advertising, must comply with European Union and human rights legislation.Ê

55. The two basic tenets of the Treaty of Rome are the freedom to provide services (Art 36) and the free movement of goods (Art 59).Ê National rules on 'selling arrangements' (including advertising) are permissible provided they are not discriminatory against persons established in other member states [37].Ê Many such rules (e.g. prohibitions on advertising) will be discriminatory, and will therefore need to pursue a legitimate aim (e.g. public health) and be proportionate to that aim in order not to fall foul of these Articles.Ê

56. A couple of years ago, two Liechtenstein based companies licensed by their Government to run lotteries (known as "Millions 2000") on the internet wanted to advertise the lottery in Great Britain but were prevented by the above mentioned rules restricting the advertising of lotteries, even though the tickets could lawfully be sold in this country and despite the massive promotion of the National Lottery. A challenge to this provision under the free movement of services provisions of the Treaty of Rome failed.Ê Although contrary to the single market, the advertising ban was deemed legitimate in order to protect consumers against fraud and to ensure that only appropriate responsible bodies were in charge of the distribution of lottery proceeds [38].

57. In a more recent case concerning a near absolute ban on alcohol advertising in Sweden, the ECJ ruled that such a ban is only permissible if the public health aim cannot be achieved by measures having less effect on intra-Community trade [39].Ê The matter was remitted to the Swedish courts which held that the advertising ban, in the context of the case in question (ads in a food and drink magazine), should be struck down.

58. The Gambling Review Body's proposal (see paragraph 61 below) that only on-line gambling sites licensed in the UK should be permitted to advertise in this country might fall foul of EU rules, particularly if other EU states provide similar or more stringent control of on-line gambling sites established in their territories.Ê

59. The Human Rights Act 1998 incorporated the European Convention on Human Rights into UK law.Ê Article 10 of the Convention protects the right to freedom of expression, which protection extends to commercial communications.ÊÊ All restrictions on this right must be prescribed by law and necessary in a democratic society in pursuit of certain specified legitimate aims (including public safety and the protection of health or morals).Ê A complaint against a ban on political advertising in Switzerland was recently held to be in breach of Article 10 [40].Ê Countries are, however, allowed a certain discretion in deciding what is and is not necessary in their territory, particularly in the commercial arena.Ê Any advertising restrictions not underpinned by law (e.g. TV/radio ban on all betting advertising) or not clearly justified by and proportionate to a legitimate public policy objective may face renewed challenge under the Act.Ê

E.Ê THE GAMBLING REVIEW BODY'S RECOMMENDATIONS AND THE WHITE PAPER'S RESPONSE

The Gambling Review Body

60. The Gambling Review Body ("GRB") recommended that all regulation relating to gambling shouldÊ be incorporated in a single Act of Parliament, and that all gambling activities should be regulated by a single regulator, the Gambling Commission (except spread betting for the time being).ÊÊ

61. In addition, of particular relevance to advertisers, it recommended:-

• Advertising of gambling products and premises should be permitted, subject to an advertising code of practice to be issued by the Gambling Commission.Ê Breach of the code may be subject to enforcement action by the Commission up to and including the revocation of a licence (recommendation 52);
• The Gambling Commission should monitor the impact of relaxing the restrictions on advertising and, if it seems appropriate in the light of that monitoring, it should have the power to require a 'wealth warning' to be displayed on advertisements [41] (recommendation 53);
• The law should continue to prohibit the promotion of overseas lotteries hereÊ (recommendation 122);
• Only on-line gambling sites that are licensed by the Gambling Commission should be permitted to advertise in Great Britain (recommendation 150).

Industry responses to the GRB's recommendations

62. The Advertising Association and the Institute of Practitioners in Advertising both submitted responses to the GRB's recommendations insofar as they applied to advertising.Ê Unsurprisingly, they were both supportive of the deregulation of gambling advertising restrictions.Ê The most important points made by these bodies were as follows:

• Deep concern was expressed as to the proposal that gambling advertising should be controlled by the Gambling Commission, because of the risk of institutional proliferation, regulatory overlap, double jeopardy and consumer confusion (cf. OFCOM, The National Lottery);
• Gambling advertising should fall within the existing regulatory structures, which are presently responsible for permissible gambling advertising (e.g. National Lottery, Football Pools, casinos);
• Existing advertising codes of practice should be developed in conjunction with the Gambling Commission, the Department of Culture, Media and Sport, local authorities, the advertising and gambling industries, existing regulators and other interested stakeholders;
• The Codes must contain adequate provisions to protect the vulnerable, especially children and problem gamblers to ensure gamblers are not exploited or misled (e.g. exaggerating chances of winning), advertisements contain nothing likely to encourage people to adopt or maintain unwise gambling habits; and advertising is not aimed at children (cf. alcohol advertising restrictions);
• The Gambling Commission's role could be as a legal backstop for frequent offenders, with a range of sanctions at its disposal up to an including the revocation of gambling licences (cf. OFT role);
• There was scepticism about the benefits of health/wealth warnings in advertisements for gambling products, which experience shows are of doubtful effect being largely ignored and discriminate particularly against radio advertising. The effects of such warnings are perhaps questionable, given the mixed experiences of similar warnings in financial and tobacco advertisements. Indeed, the IPA is presently urging the Government to abolish similar wealth warnings on financial advertisements, which have, in their view, become "hollow and meaningless" [42].Ê The Financial Services Authority, however, are recommending that "small print" warnings in financial ads should in future be included in the body copy.Ê

The White Paper, "A Safe Bet for Success ö modernising Britain's gambling laws" [43]

63. In respect of advertising, the White Paper essentially supports the recommendations made by the GRB. In particular, it states:

"We will remove the present confusing array of legal restrictions on the advertising and promotion of gambling products, enabling them to become more visible and accessible and creating a fairer and more competitive operating environment.Ê In the process we will work with the gambling and advertising industries and with advertising regulators to establish a code of practice to ensure that advertising is honest and fair and does not exploit children or vulnerable adults".Ê

64. The White Paper agrees with the GRB's recommendations 52 and 53, but with the qualification that it was necessary to consider the precise role of the Gambling Commission in consultation with advertising regulators. It also accepted recommendation 122, subject to compatibility with Northern Ireland law.Ê It accepted recommendation 150 in principle, but stated that there was a need to consider further the extent to which this recommendation might apply to on-line advertising.

New opportunities

65. If all the existing restrictions on the advertising and promotion of gambling services were lifted, the types of advertising that would be allowed for the first time include the following:

• Betting:
  - Advertising promoting UK licensed betting offices on television, radio, the internet and mobile phones;
  - Betting advertising on television and radio;
  - Advertising by betting companies based outside the UK.
• Gaming:
  - All gaming advertising (other than presently permitted bingo and classified casino advertisements).
• Lotteries:
  - All lottery advertising (other than presently permitted advertising for The National Lottery).Ê However, as it appears that the ban on commercial lotteries will remain, there is unlikely to be significant marketing activity in this area.Ê

66. The proposals represent a potential jackpot for the marketing industry, offering for the first time far greater opportunities for the promotion of the £42bn UK gaming and betting industry.Ê There is some doubt, however, as to whether there will be a large increase in television advertising of gambling services, given the regional and small scale nature of much of this activity.Ê

 

Giles Crown
Senior Communications Lawyer
Lewis Silkin

giles.crown@lewissilkin.com

020 7074 8090

 

 

The content of this article does not constitute legal advice and should not be relied on in that way.Ê Specific advice should be sought about your specific circumstances.Ê

ANNEX A

THE BRITISH CODES OF ADVERTISING AND SALES PROMOTION

Betting and Gaming

56.1
	The gaming industry and the advertising business accept responsibility for ensuring that advertisements contain nothing that is likely to lead people to adopt styles of gambling that are unwise.
56.2
	Advertisements and promotions should be socially responsible and should not encourage excessive gambling.
56.3
	Care should be taken not to exploit the young, the immature or those who are mentally or socially vulnerable.
56.4
	Advertisements should not be directed at people under 18 through the selection of media, style of presentation, content or context in which they appear. No medium should be used to advertise betting and gaming if more than 25% of its audience is under 18 years of age.
56.5
	People shown gambling should not be, nor should they look, under 25.
Casinos
56.6
	Licensed casinos can only use classified advertisements to advertise to the public. Such advertisements should be restricted to the name, logo, address, telephone and fax numbers of the premises, factual information about ownership, the facilities provided, those who may be admitted and how to apply for membership
56.7
	Advertising material other than classified may be sent only to the members of such casinos.

ANNEX B

THE ITC ADVERTISING CODE

19

Advertising for lotteries acceptable under rule 18(a)(iv) and football pools and bingo may be accepted subject to the following: (a) No advertisement may be directed at people under the age of 16 (or 18 for bingo) or use treatments likely to be of particular appeal to them. NOTE: Rule 19(a) extends to the scheduling as well as the content of advertisements. Such advertisements must not be broadcast in the breaks in or immediately adjacent to children's programmes or those commissioned for, primarily directed at or likely to be of particular appeal to audiences below the relevant age. (b) No advertisement may feature any personality whose example people under 16 (or 18 for bingo) are likely to follow or who has particular appeal to people under 16 (or 18 for bingo). (c) No advertisement may feature or encourage excessive or reckless playing. (d) Advertisements must not present lotteries, football pools or bingo as an alternative to work or a way out of financial difficulties. (e) Advertisements for bingo must not make reference to the presence of gaming machines on bingo premises.

ANNEX C

ITC Code of Advertising Standards and Practice. Guidance Note No.7 Rule 19: Lotteries, Pools and Bingo
1.	Foreword The television advertising of football pools has been permitted since April 1995, following a consultation by the ITC in the light of the Home Secretary's announcement that government no longer felt it necessary in the public interest to prevent such advertising on television. Guidance on the application of the revised rule was also issued in April 1995 as Guidance Note No. 7. Television advertising of bingo was permitted from the end of April 1997 following a change of legislation. After discussion by the ITC's Advertising Advisory Committee it was decided that further guidance on the application of this rule to betting and gaming should be issued. The purpose of this revised Guidance Note is to consolidate this additional guidance with that issued in 1995.
2.	Rule 19: Lotteries, Pools and Bingo. Advertising for lotteries acceptable under rule 18(a)(iv), football pools and bingo may be accepted subject to the following: Guidance Except with the prior permission of the ITC, the allowance for pools betting shall apply only to football pools. (a) No advertisement may be directed at people under the age of 16 (or 18 for bingo) or use treatments likely to be of particular appeal to them; NOTE: This rule extends to the scheduling as well as the content of advertisements. Such advertisements must not be broadcast in the breaks in or immediately adjacent to children's programmes or those commissioned for, primarily directed at or likely to be of particular appeal to audiences below the relevant age. Guidance. This restriction aims to ensure that advertising for activities falling under this rule is not "directed at" audiences below the relevant age. Thus such advertising must be kept away not just from "children's programmes" but also from those which have special appeal to adolescents. Broadcasters are already required to use a system of "viewer indexing" to identify programmes which have a special appeal to teenagers for the purposes of scheduling alcohol and slimming product advertising, and the same system must now be applied to advertising in this category. (b) No advertisement may feature any personality whose example people under 16 (or 18 for bingo) are likely to follow or who has particular appeal to people under 16 (or 18 for bingo); Guidance. Current football players may appear in pools commercials only in footage of actual play, in which case no individual may receive particular prominence. This restriction does not apply to players who have been retired for at least one full season. (d) Advertisements must not present lotteries, football pools or bingo as an alternative to work or a way out of financial difficulties. Guidance. This does not permit making explicit contrasts between working and not working, or any reference to the role of winnings in relation to debt, but does not prevent references to other material benefits of winning a jackpot. No Guidance has been issued on Rules 19(c) or 19(e).

ANNEX D

ITC Code for Text Services. BETTING TIPSTER ADVERTISING
These guidance notes are intended to assist in the application of the ITC Code for Text Services to advertising for betting tipsters. These services are normally provided via premium rate phone lines and these notes have been written with those primarily in mind but the same principles also apply to other comparable services. Where an advertiser fails to cooperate with the television company in fulfilling its obligation to apply the ITC's codes, the television company may refuse to include particular kinds of claims in the advertising or may, if necessary, refuse to accept the advertiser's business.
UNACCEPTABLE SERVICES
1.	Advertising for betting systems and the like is not acceptable. Advertising is not acceptable on behalf of tipsters who offer money-back guarantees.
2.	Advertising for "update lines" etc is acceptable only where the television company is satisfied that the recorded messages are brief and that the lines are a valid and necessary complement to the "main line" service.
LOCATION OF ADVERTISING
3.	Advertising for betting tipster services must not appear on or next to teletext pages which are of particular interest to children. (This includes both advertising and editorial pages.)
IDENTIFICATION OF ADVERTISER
4.	The true identity of each racing tipster (ie not simply a business name) and his or her full, permanent business address must be disclosed to the television company before the start of any advertising campaign.
5.	Each advertisement must carry the usual trading name and business address of the "Service Provider" of the premium rate phone line (not the "Line Provider"). PO Boxes and accommodation addresses are not acceptable. Advertising "signposts" which refer viewers to other advertising need not carry this information.
6.	Tipsters who run, or are associated with, any other tipster services advertised on the same teletext channel must make clear in their advertising the link between the services. Advertising "signposts" which refer viewers to other advertising need not carry this information.
ICSTIS CODE ETC
7.	The ITC's codes require that all advertising for premium rate phone services comply with the ICSTIS (Independent Committee for Supervision of Telephone Information Services) Code of Practice.
8.	In addition, advertising for premium rate phone services which are likely to involve a call lasting five minutes or more must carry a warning such as "This service may involve a long call".
MISLEADING ADVERTISING The ITC requires that all claims made in television advertising are checked for truth and accuracy by the television companies before they are broadcast. Claims to be, for example, "the best", "better than the rest", "in touch with the top trainers" or "first with the news" must therefore be supported by convincing evidence. Claims which cannot be substantiated in this way are not acceptable and this rules out claims such as "This horse cannot be beaten" or "I can promise you great results". There is no objection, however, to advertising "puffery" which simply, for example, describes an advertiser's general business style or objectives (eg "We always know where the action is") and which viewers would be unlikely to take very seriously.
"Track Record" Claims
9.	Claims concerning a tipster's successes are acceptable only where the advertiser has provided (in advance of the relevant races) appropriate supporting evidence ("proofing") of all tips offered on his or her service on the day or during the period in question.
"Profits" Claims
10.	No claims regarding notional profits from previous tips are acceptable.
"Doubles", "Trebles" etc
11.	Claims to have tipped a successful double or other combination must be supported by "proofing" which confirms that the winners were clearly and specifically tipped as a combination. (In other words, three winners from six tips, for example, or four winners from five tips, must not be described respectively as a successful "treble" or "four-timer").
Quoting Prices/Odds
12.	The only odds which may be quoted in advertising are Starting Prices. No odds may be quoted in advance of the race in question. Copylines such as "50/1 winner on the cards" are, therefore, not acceptable since such odds may not, in practice, be available.
"On Line" Times
13.	Where advertising claims that a recorded telephone message is updated at a particular time, the advertiser must ensure that this does indeed happen.
Changing Circumstances
14.	a) If circumstances change in such a way that advertising would be rendered misleading (eg because of the cancellation of a race meeting), the advertising must be amended or removed without delay. b) Advertising must also be amended without delay if the content of the tipster's recorded phone message is changed in a way which renders the advertising misleading. (For example, if the advertising promises two tips but the tipster decides, in the end, that only one is worth offering.)
Non-runners
15.	If a tipped horse is not a "declared" runner, then any reference to that tip must be removed from advertising without delay. (However, advertising which refers to a tipped horse which is declared overnight but subsequently withdrawn will not normally be considered to be misleading.)
"Maximum Bet" Advertising
16.	No tip may be described in advertising as a "maximum bet" or similar unless it is the only tip offered for a particular race. (This does not preclude a tipster changing the tip if a better prospect emerges.) Claims regarding the success of a "maximum" tip are acceptable only where the advance "proofing" confirms that it was offered as such.

FOOTNOTES

[1] Betting, Gaming and Lotteries Act 1963, s.10(5)

[2] See paragraphs 9 et seq below

[3] See paragraphs 38 et seq below

[4] Simpson v. Joe Coral Ltd [1972] Crim LR 36

[5] Windsors (Sporting Investments) Ltd v. Oldfield[1981] 1WLR 1176

[6] Dunsford v. Pearson [1970] 1 WLR 222; Windsors v. Oldfield [1981] 1 WLR 1176

[7] Licensed Betting Office Regulations 1986, SI 1986/103 (as amended by SI 1995/578 and 1997/1071)

[8] Deregulation (Betting and Bingo Advertising etc) Order 1997, SI 1997/1074

[9] Betting and gaming Duties Act 1981, s.9

[10] Victor Chandler International Ltd v. Customs and Excise Commissioners [2000]1 WLR 1296, CA

[11] Betting, Gaming and Lotteries Act 1963, s.22, as amended by the Family Law Reform Act 1969, s.1(3), Sch1, Pt I and the National Lottery etc Act 1993, s.57(2)

[12] Milton v. Studd [1910] 2KB 118

[13] Gaming Act 1968, s.26

[14] cf. Victor Chandler, fn.10

[15] Pitts v. The Evening Standard Co Ltd (17 July 1972, unreported)

[16] Gaming Act 1968, s.42(5)

[17] Severn View Social Club and Institute Ltd v. Chepstow Licensing Justices [1968] 1 WLR 1512

[18] The Deregulation (Betting and Bingo Advertising etc) Order 1997, SI 1997/1074 (not applicable to Northern Ireland)

[19] The Deregulation (Casinos) Order 1999, SI 1999/2136 (not applicable to Northern Ireland)

[20] Taylor v. Smetten (1883) 112 QBD 207, Hall v. Cox [1899] 1 QB 198; Reader's Digest Association Ltd v. Williams [1976] 1WLR1109

[21] e.g. Irish Free State lottery, Barker v. Wood (1932) 48 TLR 402

[22] Lotteries and Amusements Act 1976, s.2 as amended (not applicable to Northern Ireland)

[23] Bottomley v. DPP (1914) 84 LJKB 354

[24] See "Millions 2000" case, paragraph 55 below

[25] e.g. Premiership Lotter-e, on-line lottery involving Football Society of Great Britain, players must register with the Football Society and maintain an account with at least £12 in credit

[26] National Lottery etc Act 1993, ss.2(2), 46(3), Sch 1, para 2(2)

[27] Lotteries and Amusements Act 1976, s.3(3)

[28] Lotteries and Amusements Act 1976, s.4(3)

[29] Lotteries and Amusements Act 1976, ss.5 & 6

[30] National Lottery etc. Act 1993, s.16

[31] There are no clear sanctions against others involved in the process e.g. agencies, media

[32] Applicable to any analogue or digital additional service (including teletext services) which is broadcast for general reception anywhere in the UK

[33] Rule 18(a)(iii)

[34] Rule 18(a)(iv)

[35] GRB's Report, cl.22.20

[36] GRB's Report, cl.22.21

[37] Keck and Mithouard [1993] ECR I-6097

[38] R v. Secretary of State for the Home Department ex parte (1) International Lottery in Liechtenstein Foundation (2) Electronic Fundraising Co plc sub nom Millions 2000 case (1999), ILR 28 June 1999, LTL 14 June 1999; cf. Commissioners for Customs & Excise v. Schindler C-275/92 (1994) QB 610

[39] Konsumentombudsmannen v. Gourmet International Products, 8 March 2001, C-405/98

[40] VGT Verein Gegen Tierfabriken v. Switzerland, 28 June 2001, No.24699/94

[41] e.g. Holland: "Life is a gamble, but don't gamble with your life"; Australia: "Gambling can be addictive", "Excessive gambling can lead to the loss of your home and other assets".Ê

[42] IPA submission to OFT, October 2001

[43] Command Paper, 27 March 2002, Command No.5397