A new dawn for Irish gambling law reform & regulation

Overview

2023 will be a pivotal year for the reform of Irish gambling legislation, following the publication of the Gambling Regulation Bill (the Bill) on 2 December 2022, which has already started its journey through the Irish parliament (known as the ‘Oireachtas’).

On 6 December 2022, the Bill passed the second stage of this legislative process, with the general principles underpinning the legislation being debated. It will now go onto the third stage or ‘Committee Stage’ where it will be examined section by section and some amendments are likely to be made.

In parallel with the legislative process, the establishment of a new regulatory agency – the Gambling Regulatory Authority of Ireland (the GRAI) – is already in train. As tangible evidence of the Government’s commitment to legal reform of the sector, Ms Anne Marie Caulfield was appointed CEO-designate of the GRAI on 8 September 2022. Ms Caulfield is said to be working closely with the Minister of State for Law Reform at the Department of Justice, James Browne TD and his department in actively recruiting staff for the GRAI and in developing procedures for how the authority will function once it is operational. The Minister has commented that: “Ms Caulfield’s ongoing preparatory work, in parallel with the passage of the [Bill], will ensure the authority will be ready to hit the ground running once it is formally established”.

With significant momentum behind these reforms, regulatory change is now reasonably imminent – with the potential for the legislation to be enacted and the GRAI to become operational this year. In this briefing, we examine what’s coming down the tracks for operators established in, or providing services to, the Irish market including licensing, advertising, promotions and player safety, as well as the establishment of a robust new regulator in the form of the GRAI.

Legislative objectives underpinning the Bill

The primary objective of this long-awaited piece of legislation is to put in place the framework for a strong regulatory and licensing regime to govern the gambling sector in Ireland. Unsurprisingly, public safety considerations and the protection of the vulnerable and underage have been to the fore as key considerations in the public discourse to date.

The Bill aims to strike a balance between the implementation of safeguards to protect people from falling prey to addiction, while at the same time, recognising the freedom to gamble and the fact that that it has been a leisure activity enjoyed by many people in Ireland over many decades (and one which also generates significant revenue for the Irish economy).

At the heart of the Bill is the establishment of the Gambling Regulatory Authority of Ireland which, in addition to being responsible for licensing gambling in Ireland, will have a range of powers to monitor compliance with licensing requirements and to tackle non-compliant operators, including through the application of administrative financial sanctions.

Approach to licensing of gambling activities

The Bill will introduce a comprehensive licensing regime for all forms of in-person and remote gambling activity in Ireland – including gaming, betting and lotteries. This is a welcome but long overdue development.

The Bill will replace the current fragmented regime with three broad licence types that will be available to both retail and online operators: FINAL International Masters of Gambling Law Magazine A New Dawn for Irish Gambling Law Reform & Regulation

B2C gambling licenses for all forms of in-person and online gambling, including gaming, betting (including pool betting) and commercial lotteries (including bingo). Similar to the existing position for remote betting operators since 2015, all online gambling operators based abroad will have to apply for a relevant Irish gambling licence in order to legally offer online gambling services to customers in Ireland.

B2B licenses for persons selling or supplying gambling products or related services to Irish licensees or persons outside of Ireland. The new requirements, which are broadly framed, may result in many third party service providers needing to be licensed once the Bill is enacted into law. In addition to capturing hardware and software used for gambling services, providers which offer fraud prevention, fund management, customer checks or location services, including cloud computing services, to a licence holder, are also likely to require a B2B licence under the Bill, as currently drafted.

A separate type of gambling licence for charitable or philanthropic organisations (including sports clubs, community organisations and charities).

Notably while the heads of the Bill (known as the ‘General Scheme’) published in October 2021, had signalled the potential introduction of a limitation on the jurisdictions in which licence applicants must be based, this does not seem to have been carried over into the Bill itself, or at least not in the initial published draft.

The Bill does not deal with the National Lottery (which will continue to be regulated by the National Lottery Act 2013) or lotteries organised by political parties (which are to be regulated separately by the recently enacted Electoral Reform Act, 2022, once the relevant provisions are commenced).

Consistent with existing exemptions introduced in 2019, the Bill provides that a gambling licence won’t be required for games or lotteries which are promoted in conjunction with the “promotion selling or marketing of a particular product or service”. However the maximum prize fund amount in respect of such activities is set to be doubled to €5,000 (from the current limit of €2,500), so this will materially widen the scope of its application.

GRAI role as regards licensing

Once the Act is commenced, the GRAI is likely to be the sole authority for the licensing of gambling services with powers to develop, grant, renew, revoke or revise any licence or category of licence. This will see a move from the current process of applying to the National Excise Licence Office of the Revenue Commissioners for retail and remote betting licences, to an application process that will be monitored and tightly managed by a bespoke regulator.

With respect to the licensing application process and the conditions which will apply to licences, the Bill is largely principles based, with a lot of the detail left to be determined by way of regulatory codes and guidance to be issued by the GRAI. Depending on how specific and detailed these are, this should bring some welcome clarity to a sector that has long occupied a twilight zone where regulations have been absent. There is a strong sense that the GRAI will be delegated a significant amount of power to allow it to get on with the business of regulating and responding to an industry that is constantly evolving and innovating.

Licence application procedure

The Bill maintains a “relevant officer” requirement similar to the current betting licensing regime. The definition of “relevant officer” has been expanded to include persons who are directors, managers, secretaries, or other officers of the prospective licensee, or a person purporting to act in that capacity. “Relevant officers” will apply for the licences on behalf of the corporate entity and the Authority will specify the minimum number of relevant officers that may be required.

The Bill envisages that the level of information which licence applicants will have to provide will significantly increase compared to the information which must be provided under the current licensing regime for remote betting. In particular, applicants will have to provide details as to the:

• Beneficial owner of the applicant business;
• Business plan;
• Information on past infringements / convictions;
• Financial circumstances and related documents and information;
• Servers and providers used to promote remote gambling (including location);
• All of their software and systems;
• The premises from which the licensed activities will be operated.

To enable it to satisfy itself before granting a licence, the GRAI is to be given a wide sweep of powers. These include the conduct of interviews with licence applicants; carrying out checks, analysis or scrutiny as deemed reasonable; visiting the prospective licensed premises and seeking additional information from the applicant.

In deciding whether to issue a licence, the GRAI will have regard to a number of factors including the GRAI’s principles and licensing objectives, and the applicant’s fitness and suitability to carry out the licenced activity. It may also consult with the Irish police force in that regard, and the suitability of any equipment involved in the provision of the service, may also be considered.

The GRAI will have the power to either vary the licence i.e. tailor it to a specific licence holder, or specify terms and conditions to be binding on the licence holder.

Under the current licensing regime, the relevant authority must make a decision on an application for a Certificate of Personal Fitness to hold a betting license within 56 days of receipt of the application. While it is not yet clear what timeframes will apply to applications under the new licensing regime, it seems likely that the licensing process will be more involved and will take longer, than at present.

Licensing fees

Currently, an applicant for a remote bookmaker’s licence must pay either a first-time excise fee or a fee for renewal, which is based on turnover. Under the Bill, the GRAI will have responsibility for setting licensing fees for each of the new proposed licence categories. In setting fees, the GRAI may have regard to the size of the licence holder’s operations, the forms of gambling on offer, turnover level and any other matter that the authority may wish to specify. These licence fees will be separate and distinct from administrative charges associated with the making of the application for a licence. While there is not yet any visibility on the level of fees proposed, it is worth noting that the GRAI is ultimately intended to be self-financing (after an initial three-year period).

As well as any potential uplift in licensing fees, operators will also have to factor in the making of a contribution to a ‘Social Impact Fund’. Again, the Authority will be given powers to calculate the contribution to the Social Impact Fund with regard to the size of a licence holder’s operations, its turnover, the services to be offered by the licence holder, and any other matter which the Authority may specify.

Transitional arrangements

While the General Scheme had indicated that any remote betting licence or gaming licences/permits, issued under existing Irish gambling legislation, which were in place at the time of the commencement of the Act, would remain valid until such licences expire, the Bill isn’t clear on what transitional arrangements will apply to licensees – although it is expected that further clarity will be provided on this in due course. This will be particularly relevant for betting operators (including retail bookmakers, remote bookmakers and remote betting intermediaries) who are already licensed, as the renewal period for the licences is relatively imminent (with the current two-year licensing cycle being due to expire on 30 June 2023).

Player safety

Unsurprisingly this is a key focus of the legislation. The Bill seeks to enhance player safety through the proposed introduction of a number of restrictions, prohibitions and licensing conditions (although a large part of the detail of these will be determined by the GRAI in decisions to come). Planned measures include for example:

Maximum stake and prize limits for relevant games and lotteries (but not commercial betting products) – initially set at a maximum of €10 in respect of payments for relevant games and lotteries, with limits on payouts of €3,000 for relevant games, €5,000 per week for periodical lotteries and €360,000 for one off lotteries. The list of “relevant games” will be set out by the GRAI

• Licence holders will be required to ensure that customers can set monetary and time limits on their gambling
• There will be a ban on using credit cards or extending credit facilities for gambling activities
• The GRAI will have powers to limit the amount of customer lodgements
• The GRAI will be able to prescribe days or times when gambling cannot be provided by remote means
• The GRAI will be able to restrict betting on certain matters and some of these may be prohibited on grounds of public interest and safety. These prohibitions will be detailed in further regulations to be brought forward by the Minister

National gambling exclusion register

In a further effort to protect players, the Bill proposes the establishment of a national exclusionary register. This was notably a hot topic during the second stage debate in Parliament in December 2022. The proposed Register will allow persons to register with the GRAI to exclude themselves from gambling online with a specific licensee (or licensees) with whom they hold an account(s). Once someone has self-excluded themselves from participating in gambling related activities with a particular licensee(s), the GRAI must inform that licensee(s) in writing that the account-holder has applied to be added to the register. The onus will be on the licensee(s) to ensure that they don’t provide any gambling products or services to that account holder nor accept payments from them. They will also be required to refund to the account holder all monies currently lodged in the relevant account specified, within 7 days.

Restrictions on advertising, sponsorship and promotions

The regulation of gambling advertising is also central to the proposed legislative measures with some of the key restrictions including:

On-demand audio-visual media and electronic communication advertising: the introduction of significant restrictions on advertising are proposed across a broad range of media, including on ‘on-demand audio-visual media services’ (ODAVMS), video sharing platforms, social media websites, telephone, text messages and email. Recipients of gambling advertising in these forms of media need to have subscribed to such services and have given their ‘explicit consent’ to receive gambling advertising. The manner in which ‘explicit consent’ is obtained, is not set out in the Bill. While not an outright prohibition, it appears to be a prohibition on such advertising ‘by default’. To complement this provision, it is proposed that providers will put in place a ‘blocking facility’ whereby a recipient of a gambling advert can elect not to receive the same, or similar adverts, in the future.

Statutory watershed: While there won’t be a specific ban on advertising on TV, radio or on on-demand audio-visual media services, there will be a statutory watershed prohibiting gambling advertising between the hours of 5:30am and 9:00pm. The GRAI will also have broad powers to prescribe the times, place and events, where gambling advertising can be broadcast, displayed or published (including as regards frequency and volume).

Gambling adverts must be clearly identifiable: There will be specific information required to be included in gambling adverts to ensure that they are clearly identifiable. For example, adverts will need to include the name and contact details of the licensee; a statement that children are prohibited from participating in gambling; a warning about the risk of excessive or compulsive gambling; details of where support services are available; and an explicit statement that gambling activity may result in a person making a payment without obtaining anything in return. There is also an interesting provision to the effect that sample games must not be included in gambling advertisements.

Advertisements directed at children and vulnerable persons: There are proposals for specific prohibitions on advertising material portraying gambling as attractive to children, as well as advertising, which encourages or seeks to exploit a child to encourage them to gamble. In addition, any advertising that promotes excessive or compulsive gambling, or seeks to misrepresent any perceived social or financial benefits of gambling will be prohibited.

Sponsorship: There are similar provisions relating to the prohibition of sponsorship of events aimed at children, where the majority attending the events are children, organisation/teams/clubs where children are members, or a public activity that appeals to children. There are some potential parallels here with recent developments in the UK, where the Committee of Advertising Practice introduced new rules restricting gambling companies from using celebrities or anyone with a “strong appeal” for young people, in targeting under-18s in their advertisements and sponsorship initiatives.

Inducements/promotions: As initially drafted, the Bill provides for a broad prohibition on offering “inducements” to a person to (i) participate in gambling or (ii) to continue to participate in gambling. The term “inducement” is not currently defined. While it certainly seems intended to prohibit ‘free bets’, we expect that its meaning will be subject to intense debate and analysis in the months ahead. For promotions more generally, the GRAI will be able to make regulations which limit or prohibit certain types of promotional activity that directly or indirectly encourage people to gamble. The term “promotional activity” is broadly defined as “an activity which is intended to or is likely to promote relevant gambling activities”.

The GRAI: a robust new regulator to be equipped with comprehensive powers

Alongside the oversight of licensing gambling services and related activities in Ireland, and issuing relevant regulatory codes and guidance, the GRAI will have a comprehensive mandate and robust powers to ensure that the legislation (and any new regulations and codes of practice established under it) are adhered to. The range of tools at its disposal will include powers to:

• suspend or revoke relevant licences
• compel internet service providers to block access to an online provider
• obtain court orders to close down providers’ operations on a temporary or permanent basis (including the closure of physical premises)
• freeze bank accounts or other assets
• stop payments to licensees

It will also have powers to impose administrative financial sanctions of up to €20m or 10 percent of turnover (subject to Court approval). That said, as set out in the explanatory memorandum to the Bill, the overall intention of the policy is to encourage compliance rather than to enforce penalties for non-compliance.

Notably also, the GRAI will be the competent authority under Irish anti-money laundering legislation. It will also have powers to establish requirements for processing personal data and to hear individual complaints.

Conclusion

From the foregoing, it is apparent that the Irish government is intent on putting in place a comprehensive (yet flexible) regulatory regime and a regulator which will strive to ensure a well controlled gambling industry. Ireland has long enjoyed a tradition of sports betting and more recently, has embraced gaming in the online sector and in private members clubs offering casino gaming.

This legislation and the creation of a new regulator dedicated to supervising, managing and effectively licensing gambling activity, will be welcomed by all compliance-focused businesses. The challenge will lie in ensuring a reasonable and reasoned approach by the GRAI to the exercise of a very considerable array of powers.

It is very easy to envisage the burgeoning development of this sector in Ireland, hand in hand with the development of the thriving technology sector. The stewardship of the GRAI and the confidence which a competent and confident regulator can engender, has the potential to make a massive contribution to an industry that has endured years of neglect on Ireland’s law reform agenda.