What to do with the free-to-play sector?

Off the back of four recent Advertising Standards Authority (ASA) rulings against companies providing free-to-play (F2P) games (with no real prizes available, despite what the adverts in question suggested), I've got to thinking about the F2P sector and how it fits into the wider gambling ecosystem.

There are various types of games which make it possible to play for free. Firstly, you have the casino/slots-style games which offer no real prizes. Secondly, there are ‘skill'-based games which do provide prizes for answering a question or making a prediction (think TV or radio show quiz questions or Sky Super 6). Thirdly, we have the lottery-style games through which you can win huge prizes via a simple prize draw process (such as Omaze or Raffle House).

Each of these options offers users an experience which is akin to real-money gambling in some way or another, yet they don't currently fall under regulation and are not required to hold a gambling licence.

In terms of skill-based and lottery-style offerings, the regulatory position is somewhat confused and riddled with loopholes, which providers are more than happy to take advantage of. Basically, to offer games which often have huge prizes on offer without holding a gambling licence, there either needs to be an element of ‘skill’ (eg, What's the capital of France?) or a F2P route to entry (long-winded postal process) alongside the paid-for options.

For me, the biggest concern comes with lottery-style games, of which there's been a huge explosion in recent years. Mostly people pay to participate but the providers get round the need for a licence by also offering the chance to enter via postal application. Tickets are often expensive (£25+) and the prizes on offer are so huge and enticing it's easy to get caught up in the dream of winning them. I never play the lottery, but I have been known to buy multiple tickets in the hopes of winning a £3m+ property.

You only need to have a cursory Google to see how many people are confused by why these companies don't need a gambling licence and whether they're legal and legitimate. In 2023, there was even a freedom of information (FOI) request published by the Gambling Commission, with a member of the public challenging the legality of this type of game, with the regulator noting they don't fall under its remit and listing the reasons why.

Like many other important areas, the F2P sector seems to be something which has fallen by wayside as part of the white paper into the Gambling Act 2005 review. While it was referenced in the white paper and a DCMS consultation was promised, nothing has materialised. Furthermore, considering all the other urgent, gambling-related changes still sat in the DCMS backlog, it seems unlikely action will be taken on this any time soon.

Of course, some of these games are used by charities to generate much needed funding and, to be fair, the product type is arguably less likely to encourage problem gambling behaviours than other types of gambling. But does that mean it doesn't need to be brought under regulation? I don't think so.

Time for control

While prize draws may be lower-risk than a slot, I still feel the most obvious issue is around a lack of safer gambling controls, which are simply not required without a licence and are therefore not in place. Coupled with this, as far as I'm aware, there has been no research into the extent this type of product could be propagating gambling-related harm.

Although these are clearly not high volatility products, the cost of entry (for those players who don't have time to mess about with individual postal entries) is usually high, certainly much higher than for a standard, regulated lottery ticket. What's more, there are even options to set up monthly subscriptions, effectively hooking you in deeper.

Another glaring issue for me is that advertising of such products is not captured under gambling specific ASA or CAP/BCAP Code guidance, or of course LCCP advertising requirements; yet companies are actively ‘selling the dream’ often on prime-time mainstream television.

Being mindful of the Gambling Commission's newly minted focus on the fair and open objective, how comfortable are we that these ads are not misleading consumers into thinking they are being offered a regulated and controlled product by a licensed entity?

Aside from issues relating to consumer protection, the explosion of such unlicensed products in recent years just doesn't feel fair to me. In an industry severely struggling with the cost of maintaining regulatory compliance, how can it be justified that F2P businesses are shouldering no regulatory or gambling specific tax burden (and don't get me started on the levy)? Why don't we all just offer a F2P route to spin a slot or place a bet and have done with it? Of course, that's a flippant comment and not something which could work in practice for a multitude of other regulatory and operational reasons, but it serves to illustrate a point.

I'm not saying there is no place for these products in the market, far from it. I personally really like taking part in some of the competitions, doing my bit for charity and living that dream for a few weeks until the prize draw happens and I inevitably drop back into reality with a bump.

What I am saying is: let's bring these competitions into the regulatory fold, allow society to reap the financial benefits, ensure players are being properly protected and level the playing field for the wider sector.

Written by Kirsty Caldwell, CEO and Founder, Betsmart Consulting

Published by: Joe Levy, News Editor at EGR Global - You can view the original source article on EGR Global here.