The Competition and Markets Authority (CMA) has recently announced that it will be taking legal actions against any companies who are found guilty of breaching the consumer law. This action might prove to be challenging for online gambling sites who have been resorting to “unfair” sign-up deals.
There has been an investigation being conducted by the CMA along with the Gambling Commission to scrutinise how the online gambling site attracts consumers through various offers and promotions and prompt them to sign-up and later restrict them to make withdrawals or quit.
The minimum withdrawal limits are set to a very high amount as compared to the deposits, hence, players would have to gamble more in order to win more money and make withdrawals.
As described by Nisha Arora, the senior director of CMA for consumer enforcement, the players were feeling that the dice were rolled against them during play and they would constantly face obstacles when they would try to make a withdrawal.
The Gambling Commission’s chief executive, Sarah Harrison mentioned that gambling companies should not be under any illusion and that it will take necessary action against any company who is found guilty of practicing unethical sign-up practices and fails to comply with the consumer law. She also stated that gambling companies should follow the fair treatment of customers, however, some companies have been practicing unfair methods like sign-ups with hidden terms and conditions.
The online gambling sector is valued at £4.5 billion and draws 6.5 million users or more in the UK.
CMA will start by issuing warnings to online gambling companies following who seem to be following unfair practices and request appropriate changes from them. If the companies fail to make changes in the given time, strict legal action will be taken against them.
Investigations are being conducted by the CMA on various online gambling companies for laying restrictions on withdrawals. The companies need to adhere to their social responsibilities and take care of anti-money laundering needs.
Ms. Harrison also stated,”Those checks cannot be used as an excuse to unduly restrict legitimate customers from withdrawing their funds.”
A Memorandum of Understanding has been signed between the CMA and Gambling Commission in February to stop unfair practices in online gambling through co-operation.
As said by Andy Danson, a lawyer at Bird & Bird LLP, the news came as a surprise to the online gambling industry. He suggests that the online gambling companies should provide undertakings to the CMA and make revisions in their terms to avoid further enforcement. He also stated, “If the industry does not accept the regulators’ interpretation of the law in all areas, the courts may be invited to do just that.”
After the announcement made by CMA, shares in online-focused bookies 888 and GVC fell 0.85pc and 1.1pc respectively.
According to the senior market analyst at ETX, Neil Wilson, the step was taken by CMA, marks the beginning of a much wider change in the online gambling industry after liberalisation. However, the regulatory measures are not working in the industry’s favour currently.
The gambling industry is facing increased scrutiny of fixed odds betting terminals (FOBT) and has been termed as “crack cocaine” of the industry.
Pledges have been made in general elections by Labour and the Liberal Democrats reduce the maximum limit of bets allowed on these gambling machines from £100 to just £2.
John White, the chief executive of Bacta which is the trade association for the UK’s amusement and gaming machine industry, had earlier warned the gambling companies with that they “should learn to live without” the “dangerously high £100 stake limit”. He also raised concerns that reducing the limit too low would prove to be harmful to the industry.