European Regulators Grapple with Advertising Rules and Channelisation Challenges

Across Europe, a crucial debate is unfolding within the iGaming sector regarding the delicate balance between increasingly stringent gambling advertising regulations and the imperative to maintain high rates of channelisation to licensed operators. Industry leaders are weighing in on how authorities can safeguard players without inadvertently pushing them towards unregulated markets.

Grainne Hurst, CEO of the Betting and Gaming Council (BGC), emphasizes the necessity of proportionate and evidence-based advertising rules. She points out that the regulated betting and gaming industry in Britain already adheres to strict guidelines, with safer gambling messages prominently displayed. BGC members, for instance, dedicate 20 percent of their TV, radio, and digital ad spend to safer gambling initiatives. Hurst warns that excessive restrictions could drive consumers away from the regulated system, which offers stronger oversight and consumer protection, towards illicit platforms. She highlights WARC research indicating that unregulated operators could soon dominate UK gambling advertising spend.

David Yatom Hay, general counsel at Soft2Bet, stresses that Europe cannot be viewed as a monolithic market due to varying regulatory landscapes. He argues that advertising curbs should primarily target the protection of minors, prevention of misleading claims, and broader consumer safeguarding. For Yatom Hay, player protection and harm prevention are paramount, with channelisation serving as a key method to keep players within a system offering appropriate safeguards. He cautions that simply restricting marketing may not fully address responsible gambling concerns or deter vulnerable players, potentially leading to migration to unlicensed offerings.

Andy Danson, head of media, entertainment & sport at Bird & Bird, notes that newly regulated markets often see intense advertising from licensed operators vying for market share. While compliant, this can trigger public and political backlash, pressuring regulators. Danson asserts that regulated operators must be permitted to advertise, with appropriate safeguards, to achieve regulatory goals and compete against the growing threat of the unregulated market, especially given the challenges of enforcing against illicit activities aided by VPNs and cryptocurrency. The ability to advertise is often one of the few visible distinctions for consumers between licensed and unlicensed entities.

Filip Knežević, president of the Association of Gambling Operators of Montenegro, identifies a prevalent issue in Europe, including the Balkans, as an imbalance between player protection and the sustainability of legal operators. He illustrates that overly restrictive advertising rules, if not properly monitored, allow illegal operators to flourish, making it difficult for players to differentiate between legitimate and illicit platforms. Citing the Netherlands and Sweden, Knežević points to instances where severe advertising restrictions reportedly led to reduced channelisation and increased grey market activity. Montenegro has experienced similar effects with an almost complete advertising ban and new taxes on winnings, contributing to a decline in revenues for legal operators and state budgets, alongside a surge in illegal promotion via social media and influencers. He advocates for gradual, monitored restrictive measures, combined with strategic action against illegal markets, payment blocking, and closer cooperation with financial institutions and digital platforms.

Michel Groothuizen, chairman of the Executive Board of the Netherlands Gambling Authority (Ksa), shares a cautionary perspective, acknowledging that stricter advertising regulations can indeed decrease channelisation. The Ksa is concerned that tougher rules will impede new players' ability to locate licensed offerings, while illegal operators continue to advertise unchecked, particularly on social media. Groothuizen underscores that since the Ksa supervises rather than enacts legislation, it is incumbent upon European regulators to diligently monitor the impact of advertising bans on channelisation and intensify efforts against illegal operators and their advertising on social media platforms.