CPC Armenia against misleading practice in online gambling and lottery sector
The Competition Protection Commission of the Republic of Armenia ('CPC') conducted proceedings against four economic entities operating in the online gambling and lottery sector on the grounds of unfair competition, including misleading the public by sending advertising messages to both users and non-users of gambling platforms.
Some individuals, including those who had never engaged in online gambling and lotteries, received SMS messages to their mobile phones that were of an advertising nature. These messages failed to contain the legally required warning information ('Warning: participation in the game carries a risk of material damage'), and did not provide a proper mechanism opting out. Notably, recipients included both individuals who never gave consent and others who had consented long ago.
The investigation revealed that a lot of marketing messages sent were of an advertising nature and had been sent in violation of both advertising and personal data protection legislation.
According to the findings of the proceedings, CPC established that:
The marketing messages sent to citizens were of an advertising nature.
These messages were distributed without obtaining the explicit consent of the recipients and without providing a mechanism or time frame for such consent to be given.
The messages lacked the required warning information regarding age restrictions and potential losses.
As a result of the proceedings conducted by the CPC, a precedent was established concerning the use of personal data, with relevance extending beyond consumer and competition law. The case also clarified the nature of such promotional messages, concluding that advertising regulations can be fully applicable to them.
As a sanction, large fines were imposed on the companies.
In addition to the fines, the CPC instructed the biggest companies in gambling sector to immediately rectify the violations of the legislation by developing clear rules for sending marketing messages to users related to lotteries and online gambling.
This case is particularly significant on a global scale due to the growing trend of user engagement in the gambling sector in Armenia. Such widespread involvement in a heavily regulated and high-risk sector underscores the urgent need for strict oversight to protect consumers from harm and ensure fair competition practices.