Legal View: EveryMatrix and how licensed operators may soon have to surrender their white labels

The Gambling Commission’s increased interest in white-label gambling operators continues to gather pace and has now led to its first casualty.

You will recall that on 5 September 2019 the Commission announced that it had instigated a review of the B2C operating licence of EveryMatrix Software Limited, due to concerns about its customer interaction framework. The Maltese-based operator’s B2C licence was suspended, pending the outcome of the review.  Its software licence was not reviewed and remains in force.

Shortly after the review was announced, on 9 September 2019, the Commission issued a warning to white-label operators, reminding them they were solely responsible for regulatory compliance, that they must carry out due diligence on their white-label partners and that partners operating in their own right would require their own licence.

Attempting to lift its licence suspension and resolve the identified customer interaction concerns, EveryMatrix quickly announced that it had partnered with compliance start-up beBettor to improve its operational compliance.  The beBettor software helps operators decide how much their customers can safely afford to gamble, utilising network data and open data sources to produce customer affordability estimates.

Announcing the partnership, Harry Cott, beBettor CEO, stated: “Given the average online gambler in the UK now has four accounts, isolated operator action will not sufficiently reduce gambling-related harm long-term. That’s why we’re building a networked approach to understanding customers affordability, which will help beBettor operators power the next generation of their social responsibility policies and procedures for customer interaction.”

Let it go

The partnership certainly sounded impressive and the expectation in the industry was that the suspension would be short-lived, and the problems quickly ironed out.  However, it appears that the issues identified were not so easily to resolve. On 23 September 2019, EveryMatrix announced that it had decided to “let go” of its B2C remote betting and casino operating licence.  Ebbe Groes, CEO of EveryMatrix, stated that “the business has by now become unsalvageable” and that it acknowledged the Gambling Commission’s “wish for a substantially changed way of operating white-label businesses in the future”. The “letting go” of the B2C operating licence presumably means that it has already been surrendered.  However, it is not certain that surrendering the licence will be the end of the matter, as the Gambling Commission has previously indicated that it may still conclude reviews, so that the facts (and the failings) can be reported.

It will take some time to work out exactly what went wrong and why the beBettor partnership could not resolve the identified issues.  We wait to see what the Commission intends to do to “substantially change” how white-label businesses operate.  These arrangements are, in principle, permitted by s.33 Gambling Act 2005, so it might take a change to primary legislation if existing white-label setups are to be dismantled altogether.

According to press reports, EveryMatrix’s white-label partners were only told about the suspension hours before it took effect, meaning that they were left high and dry and unable to operate.  This highlighted the precarious position those operating under white-label arrangements can find themselves in.  The surrender of the B2C licence means that the EveryMatrix white-label partners are now stranded and must quickly migrate to another licence holder, or else obtain their own licence.  All of this is, of course, terrible for business continuity.

It remains to be seen whether EveryMatrix is an isolated example or the start of something bigger.