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Richard Williams | Gambling and football sponsorship – the end of an era? 

Richard Williams, a gambling and regulatory partner at Keystone Law, discusses the possible future relationship between gambling advertising and sports sponsorship.

In December 2020, the UK Government began a review of the Gambling Act 2005. The consultation sought evidence to investigate whether the current regulatory framework for gambling in Great Britain is effective, and whether further protections are required to prevent the exploitation of vulnerable people.  The Government’s review noted that, while gambling is a popular leisure pursuit in Britain, 0.5 per cent of the adult population are problem gamblers, with approximately 55,000 children having a gambling problem.

The review focussed on several key areas, including “the positive and negative impacts of the advertising and marketing of gambling products and brands”, paying particular attention to children and young adults.  The review noted that the implementation of the Gambling Act 2005 had removed longstanding advertising restrictions, allowing gambling companies to advertise gambling in any media (subject to mandatory and voluntary restrictions, such as the 9pm watershed on TV advertising). It also noted the strong link between gambling advertising and sport, including sponsorship of sports teams and shirt sponsorships and growing public concern about the relationship between sport and gambling.

As recently as September 2018, following press reports that football clubs were selling replica kits featuring gambling advertising to children, the Gambling Commission and Advertising Standards Authority issued a reminder to operators about gambling advertising and sponsorship rules.  Gambling operators and football clubs were reminded that their adverts should not appear on junior sections of club websites and that children’s replica shirts should not include logos for gambling operators.

Respondents to the Government’s review were asked to comment on the benefits and harms of gambling advertising, including “what is the positive or negative impact of gambling sponsorship arrangements across sports, esports and other areas?”

The consultation period closed in January 2021 and a white paper is now awaited from the Department for Culture, Media and Sport, which will set out its response and include proposals for revised legislation.

Interested parties will then have the opportunity to respond to the proposals before any legislative changes are implemented. If new primary legislation is required, this is unlikely to be before 2023, although some changes could be made earlier via secondary legislation or revisions to the LCCP (Licence Conditions and Codes of Practice).

As things stand, gambling sponsorship of football clubs remains big business. While the larger Premier League teams appear to be migrating away from gambling sponsorship (perhaps pre-empting any legislation) this season, nine out of twenty Premiership clubs retain gambling operators as their main shirt sponsors. Some of these gambling companies do not operate in the UK and are not licensed by the Gambling Commission. Football shirt sponsorship remains a good way to reach customers in international markets, where Premier League football is extremely popular, but where remote betting is often illegal.

Given the focus on gambling advertisement in the consultation document, it is reasonable to assume that some new restrictions on gambling advertising will be implemented.  Whether that leads to an outright ban on sports sponsorship by gambling firms remains to be seen. However, any new restrictions on gambling advertising would not happen overnight. When Italy implemented a ban on all forms of gambling advertising in January 2019, it is reported that Serie A clubs lost a collective €20m per season in sponsorship revenues. Deals in place prior to the ban were allowed to run their course, but despite recent pleas by the Italian FA to relax the restrictions, to allow clubs to recover from Covid -19, the ban remains in place. Is the UK soon to follow suit and, if so, what will replace the gambling industry?

Early signs are that, if like tobacco and alcohol before it, gambling’s relationship with sport is heading towards the exit.

Financial trading platforms, currency exchanges and cryptocurrencies appear to be ready to move in to fill the void. For instance, Watford Football Club has recently announced a shirt sleeve sponsorship deal with cryptocurrency Dogecoin, replacing an earlier sponsorship agreement with Bitcoin.

However, concerns have already been raised about football clubs encouraging their fans to migrate from betting to financial trading and investing.  Last season, Queens Park Rangers and Nottingham Forest had to terminate their shirt sponsorships with Football Index overnight, after the Gambling Commission regulated platform had its licence revoked and crashed into administration. Despite being licensed as a gambling product, Football Index was more like a financial trading platform. Many football fans were left nursing heavy financial losses after it collapsed and £58m of customer funds were wiped out.  An independent enquiry by the Government into the Football Index collapse and the role of the regulator is still ongoing.

Opposition has also been growing to the Socios scheme, where club supporters buy virtual tokens in return for club engagement. Press reports indicate that Europe’s biggest clubs have made £150m in the last year from converting fiat currency to Socios’ Chiliz cryptocurrency and then selling engagement tokens to fans.

Some fans appear to be pressurising clubs to renege on such deals, fearing that these sponsorships are a gateway into speculative cryptocurrency trading.  In July 2021, the FCA issued a warning to consumers that they have very little protection if they invest in crypto assets, that investing holds very high risks and that consumers must be prepared to lose all of their money.

Whilst we await the outcome of the Government’s review, new sponsors are already moving into football to replace gambling sponsorship.  If the Government does ban gambling advertising in sport, it’s possible that alternative sponsors could also present a high risk to the vulnerable.  It will be interesting to hear the fans’ reaction towards their clubs if they end up investing with these sponsors and lose more than a matchday bet.

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