UKGC Issues Warning To Operators Using Gag Orders

By Alex Smith, Last updated Jan 28, 2021

The United Kingdom’s Gambling Commission (UKGC) has issued a stern statement warning that operators who breach regulations must not enter into non-disclosure agreements with consumers, if it’s used to dissuade customers from making complaints.
The statement – released just a few days ago – states that the UKGC is concerned over recent reports that betting companies and online gambling operators are forcing claimants to enter into non-disclosure agreements (or gagging orders) in order to prevent them from making official complaints.
The statement was put out recently (potentially) as a result of a recent media report that accused Ladbrokes had made a claimant sign an NDA to prevent him from making a regulatory complaint with the commission.

Gambling Activity and Red Flags

The UKGC have said numerous times in the past that operators must have sufficient operating procedures in place to detect potentially problematic gambling behaviors – and previous reports from the commission have stated that they expect operators to stop players gambling completely when these red flags are noticed. Failing to stop them from gambling, could see their license terms being breached.
This is exactly the kind of activity which the UKGC is worried is being hidden from them, through the use of gag orders, and a recent investigation carried out by the Guardian newspaper in the UK, found that these gag orders are prevented to stop theft victims and problem gamblers from making a complaint with the UKGC.
In the Ladbrokes case we talked of earlier, the Guardian reported that Ladbrokes had repaid almost £1m to five victims of a gambler, who stole in order to fund his habit. The paper reported, however, that the money was only refunded to them under the agreement that they ‘pledged not to bring any complaint or make any report to any regulator in relation to the claim.’
The UKGC has states that it is currently investigating this specific case, and if it turns out to be as the Guardian have reported it, it’s very likely that we will see Ladbrokes issued with heavy fines, and – potentially – even license ramifications.
This all comes at a time when Ladbrokes – and other major online gambling operators – have been accused by responsible gambling campaigners and media critics of ‘sweetening problem gamblers’, by offering them luxury treatment, and VIP packages. In many scenarios, these luxuries are provided to the gamblers without any staff members ever making sure that the consumer is gambling in a way that they can afford, and with funds that are theirs.

UKGC Issues Official Warning

In the UKGC’s official statement, they said:
“We consider that non-disclosure clauses would be improperly used if their effect was to:

• prevent, impede or deter, a person from: reporting misconduct, or a breach of our regulatory requirements to us, or making an equivalent report to any other body responsible for supervising or regulating the matters in question.
• making a protected disclosure under the Public Interest Disclosure Act 1998
• reporting an offense to a law enforcement agency
• co-operating with a criminal investigation or prosecution
• seeking treatment for problem gambling and discussing their gambling history with treatment providers
• influence the substance of such a report, disclosure or co-operation Non-disclosure clauses or other settlement terms must not stipulate, and the person expected to agree the settlement agreement must not be given the impression, that reporting or disclosure as set out above is prohibited. It may be appropriate for the settlement agreement itself to be clear about what disclosures are not prohibited by the non-disclosure clause.”

The statement goes on to say that while the UKGC recognises that there are times when non-disclosure agreements and gag orders are useful for operators, it’s rare that this would be in a customer-focused environment, and it exists more for suppliers of technology and other B2B businesses to take advantage of.
The commission also stated:

“We have become aware that some licensees have been including non-disclosure clauses within settlement agreements with consumers and we are continuing our investigation into these. Some of these agreements may have had the effect of preventing those consumers from reporting regulatory concerns to us, by either excluding disclosure to any third party or, in some cases, explicitly preventing customers from contacting the Gambling Commission.
We recognize that in certain commercial contexts, use of NDAs is commonplace and such agreements, when used properly, can benefit both parties. Examples of appropriate use might include resolving supplier or intellectual property disputes. This statement should not be taken to prohibit the use of NDAs in appropriate circumstances.”

It’s not yet clear how many reports the UKGC have received – or whether they are investigating other reports aside from the Ladbrokes one – but the commission has, themselves warned that they will not be afraid to take regulatory action against operators who are found to be breaking their license terms – and this is likely to be done in the form of big wins, and possibly license penalties.
The commission has been incredibly vocal with its approach to responsible gambling over the last couple of years, and UK players, especially, will have seen – first hand – some of the implications of this new approach. One of these implications is the SOW (Source of Wealth) requests that many online casinos are now requiring players to carry out. These checks are designed to make sure that players are gambling with money that they can afford to lose – and it’s also designed to check that players are only using funds which they have earned themselves, legally.
In some cases, players have been required to submit bank statements, and even inheritance legal documents to prove where their money came from – and this is an approach which has caused great controversy within the online gambling industry, with many players (and operators) calling it an incredible invasion of privacy, and a further example of how the UK is heading towards a nanny-state.

---