knowledge 6 December 2022 |

The Gambling Regulation Bill 2022 Is Unveiled

Background

The Gambling Regulation Bill (the “Bill”) was published on 02 December 2022 by James Browne, Minister of State at the Department of Justice and Equality.  The Bill follows on from the publication of the General Scheme of Gambling Regulation Bill (the “Scheme”) which was published in October 2022.  The Bill comprises 9 Parts and 218 sections and is the most significant reform of gambling legislation in Ireland since the formation of the State.

We summarise in this article some of the key headlines from the Bill.

Establishment of the Gambling Regulatory Authority of Ireland

Part 2 of the Bill provides for the establishment of the Gambling Regulatory Authority of Ireland (the “GRAI”). Section 14 of the Bill sets out the general functions of the GRAI which shall include:

1. The licensing, supervision and control of gambling activities in Ireland;

2. The establishment and maintenance of a register of gambling licensees;

3. The establishment and maintenance of the National Gambling Exclusion Register (“the Register”);

4. The establishment and maintenance of the Social Impact Fund (“the Fund”);

5. The establishment and certification of standards for certain gambling products and related gambling services;

6. The imposition of obligations on licensees and other persons in relation to advertising, branded clothing and merchandise;

7. The imposition of obligations on licensees in relation to the protection of children, sponsorship, training of staff, notification of suspicious gambling patterns and the maintenance of accounts and records;

8. The monitoring and enforcement of compliance;

9. The enhancement of public awareness in respect of the licensing and regulation of gambling products; and

10. The conducting of research in relation to gambling activities and its potential harm.

The GRAI will comprise of 7 board members to be appointed by the Minister for Justice.  One board member will be appointed as chairperson.  When selecting board members the Minister will seek to ensure that the members of the GRAI possess knowledge of, experience, qualifications, training or expertise in matters connected with:

1. legal or compliance functions in a regulated profession or industry;

2. gambling activities;

3. consumer affairs;

4. the pathology and treatment of addiction, with particular reference to gambling addiction;

5. information and communications technology; and

6. financial services, including audit and forensic accounting practice.

A Chief Executive Officer (“CEO”) will be appointed by the GRAI whose role it will be to carry on, manage and control generally, the administration of the GRAI and to perform such other functions as may be determined by the GRAI. Minister James Browne confirmed the appointment of Anne Marie Caulfield as CEO Designate of the GRAI on 8 September 2022.

The intention is that the GRAI will be self-financing after a period of three years with the operating costs of the GRAI being funded from charges payable by licensees.  The Bill does not prescribe the level of fees that will be paid by licensees but rather provides that the level of fees will, with the consent of the Minister, be set having regard to the estimated operating costs that are likely to be incurred by the GRAI in a financial period (referred to as the “relevant financial period”).  Once the estimated operating costs have been determined for the relevant financial period, the GRAI will, with the consent of the Minister, determine the charges payable by the different licensees in respect of different gambling licenses.  The level of fee that will be paid by each licensee will be determined by the GRAI having regard to factors such as:

1. the number and type of relevant gambling activities or relevant gambling products or relevant gambling related services authorised by the licence;

2. the duration of a gambling licence;

3. where a licensee is already providing relevant gambling activities or relevant gambling products under current laws, the turnover from the provision of such activities, products or services;

4. where a licensee has not previously held a gambling licence in Ireland, the estimated turnover from the provision of relevant gambling activities or relevant gambling products; and

5. the administrative costs, actual or estimated, incurred by a licensee in providing relevant gambling activities or relevant gambling products or relevant gambling related services.

Licensing Regime

The Bill provides for 3 broad types of licences:

1. Business to Consumer Licences (“B2C Licence”) which can be obtained to cover the supply of the following gambling products through the following means:
   • (i) Betting Licence (in-person betting, remote betting, in-person and remote betting or remote betting intermediary);
   • (ii) Gaming Licence (in-person gaming, remote gaming or in-person and remote gaming);
   • (iii) Lottery Licence (in-person lottery, remote lottery or in-person and remote lottery);

2. Business to Business Licence (“B2B Licence”) ; or

3. Charitable/Philanthropic Licence.

Whilst the Bill introduces definitions for the terms “bet”, “game” and ”lottery” it does not clearly define when something is a bet versus a game versus a lottery.  As drafted, there is still the potential for products to fall within multiple definitions.  Given the different regulatory environment that can apply to different products (e.g. staking and winnings limits that apply to certain gaming and lottery products) under the Bill this is certainly an area that will need further attention as the Bill passes through parliament.

A B2B Licence will be required where a person is supplying a gambling product or gambling related service.  Section 69 of the Bill provide that a person established in Ireland shall not sell or supply a gambling product or gambling related service unless they have obtained a B2B Licence. Section 70 of the Bill provides that a licensee shall only purchase a gambling product or gambling related service from a B2B Licence holder with the result that overseas suppliers to Irish license holders will also have to obtain a B2B Licence.   In addition, section 70 of the Bill makes it an offence for any person in Ireland to purchase a gambling product or gambling related services where they are not a licensee.  A “gambling product” is defined to mean “..any machine (including a gaming machine), equipment or software used, constructed or adapted for or in connection with gambling.”  A “gambling related service” is defined to mean “…any service provided, directly or indirectly, in the course of business which relates to a gambling activity or a gambling product, or is ancillary to a gambling activity or a gambling product and includes providing, for the operation of a gambling activity—

1. odds to licensees,

2. online hosting services,

3. support and maintenance which is indispensable to its operation,

4. risk management services,

5. fraud management services,

6. services to implement measures to protect and safeguard players,

7. facilities for the holding and managing of customer funds,

8. the installation, maintenance or upgrading of software, and

9. any other service the Authority prescribes”

A Charitable/Philanthropic License will be available to organisations who are providing relevant gambling activity for a charitable or philanthropic purpose.   Section 87(4) of the Bill provides details of the types of activities that will be regarded as having a charitable or philanthropic purpose.  It should be noted that certain small charitable or philanthropic lotteries will continue to be exempt from the requirement to obtain a licence where the holder of the lottery derives no personal profit from the lottery and certain conditions are met including (i) the total value of winnings does not exceed €2,000, (ii) the payment to participate does not exceed €5 and (iii) the maximum number of participants does not exceed 1,500.  In addition, certain lotteries held in conjunction with the selling or marketing products where no payment is required to participate in the lottery will be outside of the scope of the legislation provided that the value of the prize is less than €5,000.

The application process for a licence under the Bill is much more detailed than the current process. There is a significant increase in the level of information that applicants will have to provide in order to obtain a licence with additional information being required where in person gambling is to be provided.

A B2C Licence and a Charitable/Philanthropic Licence will on issue be subject to such conditions as may be prescribed by the GRAI and the conditions set out in the Bill.  Of particular note is the fact that Schedule 3 of the Bill prescribes the maximum stake and payout that is permitted for gaming and lottery products.  As drafted it does not appear that staking or payout limits will apply to betting but this is something that could be imposed by the GRAI under the powers that have been delegated to the GRAI.

Section 104 of the Bill provides that generally a B2C licence will remain in force for a period of one year.  However, the GRAI is given the authority to prescribe that a B2C licence shall remain in force for a longer period.  A B2B licence will remain in force for such period as is prescribed by the GRAI.

The Bill does not prescribe what fees will be payable on the making of an application for a gambling licence or renewal of same but merely notes that this is to be determined by the GRAI (with the consent of the Minister). 

The Bill does not specify what transitional arrangements will apply for licences that are currently in issue.  Given that online betting licences granted under the existing regulatory regime will need to be renewed by 30 June 2023 we would envisage that operators will require clarity on this issue early in 2023.

National Gambling Exclusion Register

The GRAI will establish and maintain the Register of individuals who apply to be excluded.  The exclusion period will be the period prescribed by the relevant account holder when making the application to be excluded.  An account holder can apply to be removed from the Register where the exclusion period has expired.  Where the exclusion period set was indefinite in length then a minimum period of twelve months must expire before an account holder can be taken off the Register. Where an account holder is added to the Register, any money sitting in their account must be refunded by the licence holder. The Register does not apply to in-person gambling.

The GRAI will regularly update and maintain the Register and licensees who provide onlines gambling products must have systems in place to enable it to check the Register in real time. Where a licensee fails to exclude an individual who is named on the Register, there can be fines imposed and a period of imprisonment of up to 5 years for those responsible.

Social Impact Fund

The GRAI will establish and maintain the Fund. The Fund will be funded by way of an annual contribution payable by each licensee. Licensees who hold a Charitable/Philanthropic licence will not be subject to the annual contribution. The annual contribution will be based on a percentage of the licensees’ turnover. In this regard it should be noted that the definition of turnover contained in the Bill is the “..licensee’s total income from gambling less the total amount paid out by the licensee in winnings.”  Therefore, as defined, it would appear that the Fund will be levied on gross gaming revenue rather than stakes.  The Minister is expected to publish regulations in relation to the calculation of the annual contribution before the Fund is established.

Codes of Practice

Section 30 of the Bill provides the GRAI with the power to prepare and adopt codes of practice for the purposes of:

1. setting standards for the provision of relevant gambling activities; and

2. providing practical guidance to licensees in relation to the application and operation of the Bill or any regulations made under it.

The GRAI will publish adopted codes of practice on its website and will specify the date from which the code is effective which shall not be earlier than 7 days from such the date of publication of the code.  Licensees will be expected to comply with codes of practice once effective as failure to comply with a code shall be admissible in proceedings under the Bill in respect of alleged contraventions by licensees of conditions attaching to licensee or of obligations under the Bill.

Before issuing a code the GRAI is required to consult with the Minister.  However, surprisingly it should be noted that there is no obligation on the GRAI to consult with license holders. The codes are expected to be published after the Bill is enacted and are anticipated to cover areas such advertising, sponsorship, and the promotion of gambling.

Consumer & Player Protection Measures  

A central theme of the Bill is the protection of consumers and the vulnerable. The Bill includes extensive safeguarding measures which seek to protect players’ interests.  In addition, the GRAI will be given significant delegated authority to implement further measures to address areas which it believes are of concern.  Player protection measures introduced in the Bill include (but are not limited to):

1. Restrictions on the type of games and lotteries that may be offered by licensees;

2. Staking and pay-out limits on gaming and lottery products;

3. Prohibitions on the acceptance of payments for gambling activity by credit card and extension of credit facilities by players to fund gambling activities;

4. A ban on  ATM’s being located in a premises held by an in-person gambling licence holder;

5. Prohibitions on the offering of inducements to a person to participate in a gambling activity;

6. Prohibitions on advertising gambling products on social media platforms (to include advertising on video sharing platforms, social media websites as well as by telephone, text or e-mail) unless the person receiving the advertising has explicitly opted into to receiving gambling related content;

7. Watershed to apply to the advertising of gambling products on television, radio or on demand social medial platforms between the hours of 5:30 am and 9 p.m.;

8. Prohibitions on advertising that may mislead, deceive or confuse the public about the potential social or financial impact of gambling products;

9. Prohibitions on advertising that may be attractive to children, encourage children to gamble, exploit the credulity, loyalty or vulnerability of children;

10. Prohibitions on advertising that may cause, condone or encourage excessive or compulsive gambling;

11. Requirements that all advertising specifically include a statement that gambling by children is prohibited and a warning on the risks of excessive or compulsive gambling;

12. Prohibitions on the manufacture, import or sale or supply free of charge of branded clothing or merchandise intended to be worn or used by a child;

13. Prohibitions on the sponsorship by a licence holder of (i) any event or part of an event where the majority of those attending or competing are children, (ii) any event aimed at children, (iii) an organisation, club or team in which children are members (iv) a premises that is used by an organisation, club or team in which children are members or (v) a public activity that appeals to children, and

14. Requirements that licensees provide approved training to staff to enable them to identify problem gambling characteristics and to have detailed knowledge of the supports that are available to the public.

Sanctions and Enforcement

The overall aim of the Bill is to encourage compliance rather than enforce sanctions for non-compliance. However, the Bill gives significant capabilities to the GRAI to deal with instances where non-compliance is found. Some of these measures include the power to:

1. Enter licence holders premises to search and inspect any material, equipment or gambling products in use there. The GRAI’s officers may also be accompanied by the police if circumstances are deemed appropriate;

2. Secure any material/equipment which the GRAI deems necessary for inspection and hold for an undefined period of time while the GRAI conduct their investigation. This material/equipment may include computers which hold any information relating to gambling activity;

3. Obtain court orders to cease a licence holders operations on either a temporary or permanent basis including the closing down of any premises held by that licence holder;

4. Suspend or revoke a licence for non-compliance;

5. Apply to the Court to have a licensee’s bank accounts frozen and stop the licensee from receiving any payments;

6. Apply to the Court to have internet service providers block the activity of a remote gambling licence holder.

The Bill provides that it can apply for Court approval to impose administrative financial sanctions which may be up to:

1. €20,000,000 for an individual; or

2. in the case of a provider that is not an individual, whichever is the greater of €20,000,000 or 10% of relevant turnover of the provider.

There is provision for a period of imprisonment of up to 8 years for senior management members of licence holders who are found guilty of offences in contravention of the Bill.

The Bill also provides that the GRAI will be the competent authority for Irish anti-money laundering legislation as it relates to gambling activites.

Conclusion

After many false dawns the publication of the Bill marks a significant moment in the reform of Ireland’s long out dated gambling laws.  The Bill is scheduled for Second Stage in the Irish parliament on 6 December 2022.  It is anticipated that the Bill will be enacted in 2023 with the new regulatory regime coming into effect in 2023. 

We will be monitoring the progress of the Bill through parliament in the coming months and will continue to provide updates on any material changes that are made.

If you have any questions on the Bill please do not hesitate to contact Alan Heuston or any other member of the Betting, Gaming & Lotteries Group.

Also contributed by Niall Manning