Back on 7 August, less than a month before the ban on TV gambling advertising was due to be lifted, the gaming industry was forced into an emergency announcement. Under pressure from the new Gordon Brown administration, it published a voluntary code with new restrictions on advertising.
"It was a serious threat," recalls Clive Hawkswood, chief executive of the Remote Gambling Association.
"The Government was looking at all gambling advertising being banned."
New Culture Secretary James Purnell had the power, it seemed, to reinstate the ban without going back to Parliament.
Hawkswood adds: "The news was met with horror on our part, because it was very close to 1 September and lots of companies - between 10 and 20 of them - had bought ads."
The Government was worried about the effect on children and the potentially embarrassing situation of gambling advertisements appearing during family programmes such as The X Factor or Coronation Street.
"That would have been allowed," admits Hawkswood, "although it was a bit late in the day for them to realise that." So, faced with the ban on advertising staying in place, the industry began to negotiate. The 9pm watershed gave the Government what it wanted, while an opt-out for sports betting was damage limitation for the gaming industry.
But what will the impact of the new rules be for media? Gary Digby, managing director of ITV Customer Relations, says that Champions League football and the Rugby World Cup will be the immediate drivers for gambling revenue on the channel.
He believes predictions of a £50m injection of advertising revenue for broadcasters are "not unrealistic", but suspects that figure will be reached not from new money, but by gambling firms cutting back on existing areas like poster ads.
"I'm not sure people are going to spend more money," he says. "I don't know exact figures, but I'd say we'll see a £40m to £50m gap in outdoor as money moves over to broadcast."
Neil Kent, commercial partnership controller at Sky Media, agrees that "football is king". Sky is showing 92 live Premier League matches this season, but for the first time it will be sharing duties with Irish pay-TV broadcaster Setanta, which will show 46 games.
Kent says football best enables gambling firms to target the male demographic they want, with the result that most advertising is concentrated between September and May. Sky is aiming to capitalise on gaming spot advertising at half-times and the break between overs in cricket. He expects more clients to come to market after January, after they have watched the first few months of gambling ads on TV. But unlike Digby, he predicts a rise in total spending on gambling advertising.
Over at IDS, whose portfolio includes Setanta, UKTV and Living, managing director James Wildman echoes his peers' caution: "I don't think gambling will ever be a massive market, perhaps £50m or £60m a year." But he, too, expects total spending to rise. "You could see a fall in outdoor, but on the other hand, there may well be a vicious circle, with bigger and bigger markets created. At the moment, most advertising is online, but I think TV will eclipse that," he predicts.
The picture is somewhat different at mainstream broadcasters without much sports programming. Merlin Inkley, head of airtime sales at Channel 4, says the arrival of gambling will bring limited gains: "It'll get a new category of advertiser onto our main channel. However, we don't carry that many sports programmes, so opportunities before 9pm are quite limited."
And yet advertising executives argue the potential is huge. Tom Morton, head of planning at advertising agency TBWA, contends: "It's going to allow brands to start telling stories. At the moment, they've got their dreadful advertorials in FHM and one-dimensional associations with Vegas, fast cars and dolly birds."
Broadcast advertising will provide legitimacy and allow the bigger gambling firms to separate themselves from the cowboys, Morton explains. At the moment, poker is the gateway activity used to sign people up, but TV programming suits sport and could lead to a renaissance in football betting. "What I hope doesn't happen is that gambling props up bloke TV with loud shouty advertising as ring tones do for music TV now. Broadcasters must avoid the easy money route that will make viewers switch off in the long term," he warns.
The new rules throw up a number of possible scenarios. The attraction of spot advertising around televised sport is likely to hit football team and other sponsorship deals. Already Bet24 has told Blackburn Rovers that the 2007/08 season will be its last as shirt sponsor. And C4 recently lost its racing sponsor when the Tote announced it was moving its marketing budget into broadcast advertising. At least one channel, At the Races, has chosen not to take spot ads so as not to upset relationships with sponsors.
Another uncertainty is whether a fixed odds betting advertisement and one for poker would "conflict" in the same break.
John Hagan, partner at Harris Hagan, a law firm specialising in gambling law, says it will take time for the new rules to be understood, conceding: "It's entirely a grey area at the moment because we don't know how the new regime applies in practice."
He cites the "very subjective" rules from CAP and BCAP (see box, page 24). He believes some will choose to keep their powder dry for other reasons: "The first ads will attract a lot of attention, which will reward clients with improved appeal and new customers, but also attract the attention of people concerned with problem gambling," he warns.
John Shepherd, director of corporate communications at Party Gaming, also expects a slow start. "Whether it turns into the river of advertising that some people predict I don't know. Good advertising campaigns are sustained and television is expensive," he says cautiously.
Of course, late night poker programming will bring firms such as his to the table - "but people aren't going to bet the farm on TV", he adds, insisting the internet will remain the focus.
What really animates him is not spot advertising, but "strong alliances" between leading gaming firms and big media outfits. "The online gaming industry is growing up and media companies are going hell for leather down the online path. They're going to meet in the middle," he wagers.
But a gambling analyst in the City, speaking off the record, thinks Shepherd is being a bit coy. "It's true the bulk of these guys prefer to advertise on the internet where they can reach people who are already online and also measure the click-throughs," he says. "But Party Gaming is likely to advertise aggressively on television as it did in America, where it circumvented the anti-gaming rules with free poker sites to great effect."
Away from poker, he believes the figure of £50m is a tad optimistic. "Ladbrokes and William Hill have said they will invest no more than £5m each and they account for a quarter of the bookies' industry," he says. In short, he claims, broadcast advertising will help the big firms extend their dominance and punish the smaller fry, such as Bet24 and Mansion, who are still scraping around for an identity.
Betfair, another big player, is keeping its cards close to its chest. A list of questions from Media Week was politely returned by its media manager with a standard CIA-style response. "Sorry, this is sensitive information which, if released, would benefit our competitors", illustrating the degree of nervousness out there as operators attempt to second-guess each other.
So are there any surprises in store? Simon Collins, commercial director and founder of Foxy Bingo, believes there could be a rise in TV advertising from affiliate websites.
One such site - a gambling equivalent of moneysupermarket.com - is already moving all its advertising spending from online to TV. The move is not without risk, Collins adds. "If you have a pop-up on AOL, you can check out the stats the next day and swap it around or tailor it. In TV you don't have that luxury. If you spend £500,000 on creative, you are stuck with it," he notes.
Many operators are still fuming about the way the Government forced a voluntary code on the industry.
"It's been disgraceful," says a senior broadcasting executive. "We go to CAP and BCAP, we spend years going through it preparing, and then Mr Brown comes along and says it's not ethical and rides roughshod over the deal. It's a bad start from him and where do they go next - food, alcohol, motors?"
Northern Ireland is another problem - why the province wasn't part of the 2005 Act remains a mystery to most people. Only a few channels have the ability to send separate feed there, meaning that many broadcasters will be in breach of Northern Irish law if they carry gambling advertising.
"It's a major impact for us at C4, although the main channel will be okay. But it will be devastating for the satellite carriers," Inkley predicts. A spokesman for the Department of Culture, Media and Sport responds in unapologetic fashion: "Nothing has changed on Northern Ireland. It should come as no surprise to broadcasters and they should have prepared for this."
At the time of writing, broadcasters are still debating the issue with the regulators. Unless a compromise can be reached, many channels will have to refrain from broadcasting gambling advertisements in England, Scotland and Wales for fear of breaking the law in Northern Ireland - surely not what the Government intended.
"The Government's legislation wasn't aware of the nuances of broadcasting and how we work," concludes one senior industry figure. "It's a cock-up that's going to affect the whole multichannel universe."
All in all, it's been a messy few months. But the Remote Gambling Association's Hawkswood says the gambling industry is playing a long game. "We don't agree with the need for a watershed, but this softly, softly approach can show people there's nothing to worry about. Further down the line, we can look to replace it with a more flexible solution."
But to get that far, the industry cannot afford to put a foot wrong. There is legitimate concern from politicians on left and right, religious groups and professional bodies.
The Royal College of Psychiatrists' submission to the Government from earlier this year claimed: "Since the purpose of advertising is to promote gambling activity, no euphemistic or frankly oxymoronic slogans about 'responsible' behaviour will lead to anything other than more gambling. It is inevitable that there will be a consequent increase in excessive participation."
Doubtless Gordon Brown and James Purnell will be watching closely, not just for breaches in the code, but for how the ads go down with the British public and, of course, the Daily Mail.
THE RULES OF THE GAME:
To advertise in the UK, gambling firms must be licensed in one of the territories on the Government's "white list".
The content of advertising is governed by three things:
- The BCAP and CAP rules that are policed by the Advertising Standards Agency seek to ensure that gambling advertising is socially responsible. For example: "Advertisements must not suggest that gambling can be a solution to financial concerns, an alternative to employment or a way to achieve financial security ... Advertisements must not link gambling to seduction, sexual success or enhanced attractiveness ... Advertisements must not suggest gambling is a rite of passage."
- The gambling industry's voluntary code, which sets out three main points:
- Gambling advertisements must carry the name of the independent website www.gambleaware.co.uk, in the interests of educating the public about responsible and problem gambling. This may not always be practicable in the case of radio advertising, such as when a remote gambling operator is primarily using an ad to promote its own website. In such cases an educational message should be added at the end of advertisements
- New TV gambling advertising - not bingo or the National Lottery - will not be allowed before the 9pm watershed. The exception is betting around major televised sporting events. This does not include sport-themed programmes such as Strictly Come Dancing
- All sponsorship agreements from 1 September 2007 must not be targeted at children. This means replica football shirts in children's sizes sold after this date cannot bear the logo of gambling firms
- Rules relating specifically to marketing inducements. The Licence Conditions and Codes of Practice, regulated by the Gambling Commission, control what incentives may be offered to punters. The most important rule is that inducements cannot be dependent on a punter gambling for a certain period of time or with a certain frequency.