Could a UK ban on unlicensed gambling sponsorships jeopardize white label partnerships?

(AsiaGameHub) –   Legal specialists think the white label gambling sponsorship framework shouldn’t face jeopardy if the UK government enforces a ban on unlicensed gambling sponsorships within football.

This measure is under consideration through industry consultations, which the Department for Culture, Media and Sport stated is a response to the increasing threat of the black market in the UK. The aim would be to prevent non-UK-licensed companies from using Premier League clubs to target British consumers.

In a statement dated 23 February, the government cautioned that the black market is connected to organized crime and that unlicensed operators “expose customers to fraud and identity theft risks”.

A number of Premier League clubs currently have partnerships with unregulated operators. That said, there’s another model allowing non-UK operators to collaborate with licensed counterparts to provide a white label version of their product in the UK as part of a gambling sponsorship agreement. At this stage of the DCMS process, it remains unclear how this model might be affected.

White label model not a threat if govt prioritizes consumer protection

A lawyer who collaborates closely with clubs on operator sponsorship agreements notes that white label sponsorships shouldn’t be endangered if the government’s focus is on eliminating money laundering and payment practices that put British consumers at risk.

“The white label model isn’t impacted by that because there’s a party that legitimately processes payments from British consumers in a compliant manner,” she points out.

Melanie Ellis, a partner at Northridge Law, thinks the future for white label partners is somewhat unclear. She proposes that the government might aim to block sponsorships from gambling brands that use a white label setup to advertise in Great Britain while also running their own sites licensed in other jurisdictions.

UK Gambling Minister Baroness Twycross stated in December last year that white label football sponsorships were under scrutiny. This came after reports that Curaçao-licensed BC Game was operating illegally in several markets and had been declared bankrupt by a local court for failing to pay out player winnings. Back then, BC Game quickly lost its UK white label license, and its sponsorship agreement with Leicester City was called into doubt.

“I believe the government will most likely seek to ban gambling operators from sponsoring clubs if they are not ‘subject to’ a Gambling Commission license—this would let sponsorships under the white label model continue,” Ellis explains.

“Crafting such a ban that operators can’t get around, yet doesn’t accidentally restrict other setups where a licensee runs gambling sites under various brands, will be difficult.”

She thinks this step would mirror the government’s worries about unlicensed brands luring British players. “When a white label partnership is in place, British consumers should be directed to the licensed site when looking for the advertised brand.”

How long might it take to put the unlicensed sponsorship ban into effect?

Regarding when the possible ban might take effect, amending or updating legislation in the UK is usually a time-consuming process. “I expect they’d want to table something before summer,” the legal source comments.

“The timeline reflects a phase of discussions between the Gambling Commission and DCMS about whether legislative changes or other steps are needed,” Ellis states.

“I expect the [two parties] will want to roll out this [ban] within a fairly short period, but I think at least 18 months will be required to finish the consultation process and get the necessary legislation approved and enacted.”

Licensed operators commend the consultation

Over recent years, UK football has seen numerous questionable deals that have stalled after brands exited the UK market. Last year, Stake kept its multi-year front-of-shirt agreement with Everton even though a Gambling Commission investigation revoked its UK license.

However, the government has not provided clear guidance in such cases. Clubs have been advised to conduct due diligence on operators. Entain CEO Stella David recently alleged that the Premier League is lobbying the government to “keep unregulated gambling brands on shirt sleeves and stadium signs.”

In a February letter to the League, she further stated that its “ongoing support for illegal gambling sponsorships [has] been extremely worrying.”

David is one of several licensed operators who have lauded the DCMS consultation, which the department said would launch “this spring.”