Worldwide: 4 Million Viewers But No Gambling Licence!? Why One of the UK's Favourite Game Shows Has Come Under the Glare of Gambling Regulators (and Why its Australian Counterpart Has Not)

Introduction

Recent media reports indicate that the UK Gambling Commission (UK Commission) is investigating the British version of Deal or No Deal (the British Version) as well as Simon Cowell's Red or Black, to determine if these shows require a gambling licence. These investigations are perhaps a curtain raiser for a written guidance on television game shows which the UK Commission is reportedly due to publish later this month.¹

Key Issues

Little background to these investigations has been released. However, two issues appear to be at their centre, namely:

• to what extent do TV game shows constitute games of chance and fall under the definition of gambling, therefore requiring a gambling licence; and
• do these shows glamourise gambling and, if so, what controls should be placed on them?

Deal or No Deal

Prior to considering these issues, as well as any possible differences between Australian and UK gambling law, it is useful to set out the basic structure of Deal or No Deal.

The Australian version of Deal or No Deal (the Australian Version) follows the following basic format²:

• There are 26 participants, including the Finalist who stands with the host. Each participant is allocated a briefcase. Each briefcase represents a cash value between $5 to $200,000, with the exception of one briefcase which represents a car. None of the participants are aware of the contents of any of the briefcases.
• The Finalist is eligible to win either:

• The Finalist decides which briefcase he/she would like opened. Each time a briefcase is opened, one more possibility of the cash value represented in his/her briefcase is eliminated.
• At various points throughout the game, the Finalist will be presented with offers from the Bank to purchase the Finalist's briefcase. If the Finalist accepts the deal, the Finalist ceases playing and takes the money offered by the Bank. If the Finalist does not accept the deal, the Finalist continues to choose briefcases which are opened (and then decides whether or not to accept subsequent offers from the Bank).

It is our understanding that the British Version follows a similar format, with slight differences³.We do not consider that these differences are material to this discussion.

Game shows in Australia

Whilst both the Key Issues are relevant to any game show broadcast on Australian television channels, Australian game shows are generally classified as trade promotions.

Trade promotions involving games of chance (including the disposal of property by lot) are exempt from the gambling licensing framework. For gambling to occur in Australian law, three requirements generally have to be fulfilled:

• the game has to involve chance;
• the player has to provide consideration; and
• the game has to be played for something of value.

Many trade promotions fulfil these criteria. However, the law makes provision for trade promotions to be regulated as a separate category of gambling activity. In many cases, the trade promotions regime also covers disposals by lot.

Certainly, on the basis that many trade promotions do not involve entrants paying an entry fee or purchasing a good or service, they would not normally constitute gambling in any event.

To the extent that a trade promotion – including a game show – involves an element of chance, it will fall under the ambit of trade promotion regulations. In some state and territories, a permit must be obtained.

Trade promotions involving games of skill fall outside the ambit of laws regulating trade promotions involving games of chance, such as the Lotteries and Art Unions Act 1901 (NSW). In that situation, no permit is required.

It is worth noting that the Australian Version, which is filmed in Victoria and is televised every weekday afternoon, is considered to be a game of skill by the Victorian regulator. Accordingly, no permit is required.

Game shows in the UK

On the other hand, gambling is construed differently in the UK. The Gambling Act 2005 (UK) (the UK Act) regulates lotteries, gaming and betting. This means that, to the extent that a game show fits within any of these categories, the game show would require a licence.

Gaming is of most relevance. It is defined in section 6 of the UK Act, as "playing a game of chance for a prize". Also, it is provided that a person plays a game of chance for a prize where s/he plays a game of chance and acquires a chance of winning a prize whether or not anything is risked being lost in the game. In other words, there is no requirement for a player to provide consideration.

Therefore to the extent that the British version is a game of chance and constitutes gaming, it is not likely to be sufficient for the producers of the British Version to point to the fact that contestants do not provide consideration.

Chance or skill?

Whilst the view of the UK Commission is unknown, it is worth noting that there is no shortage of game theory related commentary available (including by academics and viewers), that the Deal or No Deal format, which was created by Dutch production house Endemol and is broadcast in over 30 countries, to support the view that it constitutes a game of skill.

These views exist despite contrary views that an element of chance is involved, thereby making it a game of mixed skill and chance.

Gambling at 5pm

There are consequences which apply if the British Version – or any other game show – is found to constitute a "game of mixed skill and chance". Certainly, if a gambling licence were required or conditions needed to be met (on the basis that it constitutes gambling), the profitability of the show may be at risk. In addition to the cost of the annual licence fee itself, the producers are likely to have to move the show into a much later timeslot (in the UK after 9pm).

Any move is likely to have implications on the composition of the audience and its size (and in turn advertising and sponsorship revenue). Also, the changed timeslot may involve increased spending on advertising. Considering that the British Version regularly attracts an audience of over 4 million viewers in its 5pm timeslot, any requirement to broadcast the show after 9pm may have far reaching commercial ramifications.

Further, any form of gambling licence would involve ongoing compliance requirements, which would impose costs on the broadcaster of the game show. These requirements include, for example, probity and fitness of character requirements to be met by the key personnel involved in the production of the game show, as well as ongoing reporting and audit requirements.

Stop fussing and change it to a game of skill!

It is possible that the format of any game show likely to be deemed a game of chance, including the British Version, can be altered so that it becomes a game of skill. However, these changes are likely to be made to the inherent features of the game. How much change a game show can sustain before it becomes a different show altogether?

In any case, such changes may be costly and are likely to raise a myriad of other issues. For example:

• If the licence to the game show requires a specific format to be used, can the necessary changes be made?
• As discussed above, gambling legislation commonly categorise games of mixed skill and chance as gambling. To what extent can outcomes in the game show be dependent on chance before the regulators become concerned? This question is of particular relevance to producers who are considering amending a pre-existing game show format likely to be deemed a game of chance to a game show which is likely to be deemed a game of skill.
• Will the audience like the new changes? It is difficult to imagine some of the most popular game shows without their elements of chance (for example, the spin of a wheel).

Normalising and glamorising gambling

The concern that game shows glamourise gambling is one which can be raised independently of whether or not these shows fall within the ambit of gambling legislation, but rather on the basis that game shows involve elements of chance in the determination of the winner.

As discussed above, most mainstream game shows involve chance and the game is played for something of value – arguably meeting two of the three requirements of the definition of gambling generally used in Australian law. But the third element, that is, the staking of consideration by a participant, is rarely found to occur. ⁴ As a result, the issue is not so much whether gambling is occurring.

As community concerns about the promotion of gambling in the mainstream media increase, it is quite possible that critics of gambling may argue that game shows involving these two requirements normalise and glamorise gambling to mainstream audiences (which are likely to include children).

We note that similar concerns have recently been made in the context of commentators mentioning sports odds during live sports broadcasts and virtual gaming applications being readily available through social media, for example, Double Down Casino, which is available through Facebook. But these concerns are more focused on whether the activity is promoting or normalising gambling itself.

The concern here is more that risk (that is, the chance element/s) and the prospect of winning monies glamourises activities which involve characteristics also inherent in gambling. But will this lead to criticism? In our view, there are numerous other activities with similar characteristics. These include skins, golf and other similar sports events. Where would the line be drawn?

Obviously, if any concerns raised were taken into account, there is likely to be a considerable impact on the ability of television broadcasters to broadcast game shows. Currently, many are broadcast in the afternoon timeslot and this is likely to be affected if the view is taken that they glamorise gambling. Accordingly, there remains a risk, albeit remote, that Australian regulators may take issue with game shows, despite their popularity and accepted status as mainstream television shows, if there is sufficient community concern that these shows promote gambling.

Accordingly, there remains a risk, albeit remote, that Australian regulators may take issue with game shows, despite their popularity and accepted status as mainstream television shows, if there is sufficient community concern that these shows promote gambling.

Whether this approach is taken in the UK is not yet known and we look forward to their views. However, it will necessarily be of relevance in Australia.

¹ Brendan Carlin and Chris Hastings, "Hit Game Shows Hit game shows like Deal or No Deal and Play Your Cards Right could be forced off air after gambling watchdog claims that they break the law", The Daily Mail, 10 March 2012. See:
http://www.dailymail.co.uk/news/article-2113217/Deal-NoDeal-faces-Gambling-Commission-probe-TV-gameshows-facecrackdown.html
²See: http://au.tv.yahoo.com/deal-or-no-deal/features/
³ See: http://www.dealornodeal.co.uk/ For example, the finalist must answer correctly a skilled based question before being entitled to participate.
⁴A technical argument may arise in the course of a game that the player has a stake, for example, when s/he knows that their suitcase has a value.

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