Insightx: Sport’s Gambling Sponsorships

This April, the UK Government finally launched its long-awaited review of the Gambling Act 2005. Originally commissioned in December 2020, the review aimed to ensure that gambling legislation was fit for the digital age and to discover any legislative changes which might need to be implemented.

Therefore, Sport Industry Group Official Partner InsightX has taken a deeper look at the changes by putting together a detailed, free guide which is available to download: Gambling sponsorship after the 2023 review of the Gambling Act.

In this article, InsightX has pulled together the report’s key points and advice…

In short, the government’s latest gambling sponsorship review will introduce measures that force gambling companies to step up their checks to protect vulnerable customers but measures to ban gambling advertising have been disregarded – a move that would have greatly impacted sports teams, especially football clubs.

If gambling sponsorship hasn’t been banned, why does this matter for sport industry professionals? In light of the context behind the review, it’s important for the sport industry to understand the ethical landscape the gambling industry presents and how things like fan sentiment, reputational issues and social responsibility can impact partnerships.

GAMBLING ACT 2005 RECAP

Commissioned in 2002 and effective as of 2007, The Gambling Act 2005 sets out three core licensing objectives:

1. Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime
2. Ensuring that gambling is conducted in a fair and open way
3. Protecting children and other vulnerable people from being harmed or exploited by gambling

Furthermore, the Act originally allowed for online gambling providers to operate in the UK, but be regulated in the jurisdiction they are licensed in. As a result, many operators moved to jurisdictions with low business rates, such as Gibraltar.

The Gambling Commission holds Gambling operators accountable.

THE GAMBLING LANDSCAPE

It’s important to understand the impact of gambling on society and how gambling manifests itself in its branding and partnerships.

In the guide we go into greater detail about the following:

Gambling-related harms

Since 2005 the relationship between sport and gambling has deepened. Punters no longer have to physically engage with a bookmaker to make a bet, instead conducting their gambling entirely in the digital world, on smartphones.

As a result, gambling has become more private, meaning physical checks and balances which ordinarily would pose an additional hurdle are avoided. There are a litany of sobering statistics which illustrate the harms of gambling, including:

• It reported that there were an estimated 409 gambling-related suicides annually
• It (under)estimated that the economic burden of gambling in its entirety was approximately GBP 1.27 billion which included treating depression, alcohol dependence and illicit drug use, as well as the wider societal costs of suicide
• The Coalition Against Gambling Ads (CAGA) research suggests that around 55,000 children in the UK are addicted to gambling.

White label licences

As gambling sponsors have become more common in the last decade, a number of Premier League clubs have welcomed sponsors facing the Asian market where gambling is banned or heavily restricted. To circumvent local rules on gambling advertisement, these companies use the global appeal of the Premier League to reach their target audience without breaking local laws.

A number of these companies, which are clearly operating in the Asian market, are registered in tax havens. Rather than fulfilling the “onerous” obligations required to be licensed by the Gambling Commission, companies merely have to obtain the “white label” licence, where the company works with a third party in gambling-friendly jurisdictions to obtain a licence which grants it legal access to the UK market.

It is apparent that the funding and governance of these companies remains obscure and some investigations have found potential links to money laundering and organised crime. Although considered by ministers, a blanket ban on white label licences did not materialise in the review.

Fan sentiment

As community institutions, sports organisations must keep in mind that fans are a crucial part of their existence. The allures of sport and gambling often overlap and what can start as innocuous fun can evolve into destructive behaviours for fans. Communication with and consideration of these groups is therefore vital.

THE GOVERNMENT REVIEW

After its release on April 27 2023, the review proposes:

1. A levy on gambling companies
2. Maximum stakes of between £2 and £5 for online casinos
3. Ban on VIP packages for those who incur heavy losses
4. Affordability checks for “problem” gamblers
5. Increased resources for The Gambling Commission and a gambling ombudsman

Premier League clubs agreed to a voluntary ban on front-of-shirt gambling sponsors which is due to be implemented ahead of the 2026/27 season.

Ministers hope to introduce the majority of the reforms using secondary regulation, meaning that it will not need to be voted through parliament. However, some measures, including affordability checks, will be put out to consultation.

Notably, despite speculation that the Government could make changes to the widely-criticised white label system, no such changes materialised.

ADVICE FOR PROCURING GAMBLING SPONSORS

The cost of living crisis is likely to mean that gambling becomes increasingly alluring to vulnerable people, while victims of the cryptocurrency crash could use it to recoup their losses.

The vacuum left by cryptocurrency companies should see a drive in partnerships from the gambling sector as one of the only other industries that can provide similarly lucrative sponsorship packages.

It is therefore imperative that intelligence and due diligence checks are undertaken into prospective gambling partnerships. Media organisations have shown a willingness to investigate these relationships, and will continue to do so. What can begin as fan unrest can quickly lead to national embarrassment.

This list is no means extensive but InsightX recommend monitoring the following:

• Ethical track record of company and principals

• Ownership, governance and financials

• Litigation and regulatory history of company and principals

These criteria along with other due diligence checks should provide a detailed picture of potential partners which will enable informed decision making.

Download the guide for a full comprehensive overview of the gambling landscape in the UK post-government review and what it means for rights holders working in sport.

Sport Industry Group Official Partner InsightX provides specialist intelligence, due diligence and analysis supported by a comprehensive understanding of gambling sponsorship.