Opinion: Lessons learned from Full Tilt saga?

The consultation published by the UK Gambling Commission proposes to extend the UK’s existing Licence Conditions and Codes of Practice to offshore remote gambling operators who take business from British players.

Various sorts of regulation had been anticipated and discussed in the run-up to the consultation and in particular some commentators had expected a light touch regime that might have acknowledged the current practice of operators located in Gibraltar, Alderney or the Isle of Man for example.

Instead, the whole apparatus of UK regulation is to be rolled out and imposed upon operators with no regard to current practice, subject to whatever changes may be made as a result of the Consultation. The white list is truly dead and buried, conceptually as well as legally.

One area where the Commission has however not issued particularly strong requirements is in the area of player deposit protection. This stands out in some contrast with the rest of the consultation.

The Commission, along with the rest of the industry, watched aghast as the Full Tilt saga unfolded under AGCC regulation and it became clear that the operator did not have the ability to cash out its customers.

ARJEL and PokerStars responded to this, just to take an example of ‘best practice’, by putting dot.fr deposits under an independent trustee in a standalone settlement, thereby breaking the controlling link between the operator and the customer account that had proved the Achilles heel of the Full Tilt arrangement. It is rumoured that the Dutch authorities are contemplating similar robust requirements and the Nevada and Danish authorities have imposed some robust measures for their licensees.

Given that the Full Tilt episode remains the defining instance of poor customer care in the recent past, one would have thought that if the UK point-of-consumption regime was really about consumer care it would have concentrated on this area. One might have expected a strong response to the threat of operators suffering operational and fiscal stress of some sort or another and using player funds to paper the cracks.

Instead the Commission has laid down only the most minimal requirement ““ the requirement for player funds and operators’ working capital to be kept in separate accounts. No trust is required, either over the account or as a standalone matter and no formal capital ratios or insurances are imposed either.

The consultation does impose extremely intensive reporting requirements and a need for UK personal management licences and so the consultation looks as if what may be lacking in terms of regulation in this area may partly be offset by the depth of reporting.

That said, of course, reporting is only as good as the probity and good faith of the persons providing the report, as the Commission itself acknowledges. Operators will be free to adopt stronger measures if they wish, for example segregated trust-status Quistclose accounts and fully separate standalone trust arrangements, and if they do then they will get a corresponding ‘medium’ or ‘high’ rating from the Commission which they must display to players.

So the thrust of the Consultation seems to be self-regulation with a ‘ratings’ scheme that players can use to choose who to gamble with. To an extent, players are expected to be responsible for their own protection.

This model of regulation is flexible and business-friendly in that it allows operators to adopt their current practice for UK LCCP purposes, apart from where that is to co-mingle. One wonders however whether the e-literacy of players is such that they will take on board the significance of the PDP ratings in amongst all the other iconography on a site or whether they will simply assume, as the blogs amply reveal was the case for Full Tilt depositors, that the licensee of a reputable jurisdiction should always be able to return their money to them.