Surrogate advertising in the gaming industry is alarming

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THE is an increase in surrogate advertising in the gambling industry. The recent Asian Cup Men’s International Cricket Tournament testifies to this phenomenon, in which betting or gambling services have been promoted under the covered with sports news. This is a worrying issue as it circumvents the will of the law and promotes addictive activity among citizens.

What are Alternative Ads?

Advertising is an important means of influencing consumer choices and is part of the commercial discourse. Justice HA Blackmun of the Supreme Court of the United States, while upholding the constitutional protection granted to commercial speech in the historic judgment of Virginia State Board of Pharmacy v Virginia Citizens Consumer Council, Inc. (1976), observed that “the individual consumer’s interest in the free flow of commercial information… can be as strong, if not stronger, than their interest in the most pressing political debate of the day” and that “the free flow of commercial information is indispensable”.

Advertisements can create a need and desire to obtain a product or service, which was not there originally. But there are products like alcohol or tobacco, or services like betting, which are harmful to people’s health or finances. Ads related to these products or services may cause people to consume more of these products and become addicted to them. The State therefore has a legitimate interest in prohibiting advertisements linked to these goods or services, the consumption of which is considered immoral.

But it is in the interests of companies to bring their products or services to consumers. To circumvent the ban, they advertise legitimate goods and services with the same brand name and logo as those related to the banned product. In this way, they can market their brand without violating the prohibition imposed by law. It’s substitute advertising.

The affair of TV Today Network Ltd. against the Indian Union (2021) decided by the Delhi High Court is a good example of surrogate advertising. Advertisements for alcoholic products are prohibited under various laws such as the Cigarettes and Other Tobacco Products (Prohibition of Advertising and Regulation of Trade and Commerce, Production, Supply and distribution) and the Cable Television Networks (Regulation) Act 1995.

In this case, the makers of ‘All Seasons Whisky’ were advertising ‘All Seasons club soda’, where the bottle of club soda is of the same design and manufacture as a bottle of whisky. As such, there is no ban on advertising club sodas. But to circumvent the ban on advertising alcoholic products, manufacturers used club soda as a ghost product. The court deemed the ad a substitute ad and ordered the channel to issue an apology.

The State has a legitimate interest in prohibiting advertisements relating to those goods or services the consumption of which is considered immoral. To circumvent the ban, companies advertise legitimate goods and services with the same brand name and logo as those related to the banned product. In this way, they can market their brand without violating the prohibition imposed by law.

Also Read: Will New Guidelines Issued by Union Government Help Combat Misleading Ads?

Are there exceptions to alternative ads?

But there may be cases where the phantom products used in these types of advertisements could be legitimate, commercially significant and viable businesses worth marketing. Going back to the example of the previous case, what if the individually club soda were an important product of the manufacturer, rather than just a phantom product? The State cannot refuse advertising to these products.

The challenge, then, is to determine whether something is a mere copy or phantom product used to circumvent the advertising ban, or whether it is a legitimate and commercially viable business in its own right, worthy of consideration. to be marketed.

To address the above challenge, Rule 7(2)(viii) of the Programming and Advertising Codes prescribed under the Cable Television Network Rules of 1994, provides certain guidelines. It allows the use of the brand name and logo of a prohibited product as long as the storyboard or the visuals of the advertisement are completely different from the prohibited product; when no reference is made to prohibited products; when the layouts, colors, presentations or phrases used are not related to the prohibited product; and when the advertisements do not use situations that are typically used to promote prohibited products (such as a club or bar for alcohol advertisements).

In addition, whenever manufacturers use the logo and brand name of prohibited products in advertising other products, they must obtain certification from a public accountant attesting “the products are distributed in reasonable quantities and are available in a substantial number of outlets where other products of the same category are available and the proposed expenditure for this advertising must not be disproportionate to the actual turnover of the product.” It is also subject to scrutiny by the Union Ministry of Information and Broadcasting, and the manufacturer must obtain certification from the Central Board of Film Certification before television broadcasting.

If these criteria are met, the advertised products may be considered brand extensions of the prohibited products.

The challenge is to determine if something is just a timid or phantom product used to circumvent the advertising ban, or if it is a legitimate and commercially viable business in its own right, worth marketing.

All of these steps are taken to ensure that the advertised product is not just a phantom product used to circumvent the advertising ban.

Read also : Concerns about regulatory loophole for alternative advertising

How is surrogate advertising done in the gaming industry?

With the advent of technology, the online gambling industry is booming. Some online gaming companies sponsor major sporting events. These online games allow people to play games for money, and there is an element of risk.

These games could be broadly categorized into games of skill and chance. Skill games are those games where there is a display of skill, talent, knowledge, memory, etc. On the other hand, games of chance or luck can be likened to betting or betting, since they bet money on the occurrence or not of an unforeseeable event.

Games of skill, although played for money with an element of risk, are legal and are protected by freedom of enterprise under the Constitution. For example, many Indian courts have declared that the game of rummy is a game of skill and cannot be considered gambling. While gambling, including betting or gambling, is illegal and cannot enjoy the protection of the law.

The rule of thumb for advertising is that the law does not allow the promotion of illegal activities. The Advertising Code states that “No advertising is permitted that tends to incite people to commit a crime, cause disorder or violence, or breaks the law or that glorifies violence or obscenity in any way.” Naturally, no gambling company can advertise their betting or gambling business as it is breaking Indian law. But to circumvent this regulation, many companies promote their betting business in the shadow of sports news sites or blogs. This was most recently seen at the Asian Cup tournament, with two betting companies – 1XBet and Fairplay Club – advertising frantically through their phantom sports blog services 1XBET and Fairplay News respectively. In fact, Fairplay News has become the official sponsor of the Sri Lanka cricket team.

Also Read: Are Betting Games Based on Cricket and Fantasy League Games Just a Source of Central Government Revenue?

Are news sites or blogs brand extensions?

Although news websites and blogs are available online, the real purpose of advertisements is to attract people to their betting websites. A first online search for these companies leads Internet users to betting sites, rather than to blogs or news sites. It is also financially unwise to run expensive advertisements at popular sporting events to sell free services such as sports news.

Skill games are those games where there is a display of skill, talent, knowledge, memory, etc. On the other hand, games of chance or luck can be likened to betting or betting, since they bet money on the occurrence or not of an unforeseeable event.

It should be noted that the logo and designs are the same on betting and news sites. What is conspicuously missing from these ads is the marketing of informational websites. Other than the logo, which indicates it’s news or blog, there’s no promotion of the news or blog (like directions to go and check sports updates). The FairPlay advertisement goes one step further and states that “there is no registration fee to practice this sport”. Is it really a reference to sports news?

This indicates that the news is merely a shadow product to circumvent the ban. Additionally, these ads do not meet the brand extension criteria such as in-market presence, visual effects, storyline, etc., mentioned in the ad code, discussed earlier.

These types of advertisements also conflict with Rule 8 of the Central Consumer Protection Authority’s 2020 Guidelines (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements). As the Cable TV Networks (Regulation) Act and Advertising Code are not applicable to over-the-top platforms like Hotstar and SonyLiv, this law can be relied upon to remedy this.

The Advertising Standards Council of India (“ASCI”), which is recognized by the rules of the cable television network, strongly attacks substitution advertisements. ASCI’s self-regulatory code provides even stricter requirements to qualify as a brand extension: the advertised product must be registered with an appropriate government authority. If it is a brand that has been around for more than two years, it should have a turnover of five crore rupees nationwide and one crore rupee statewide. If he has not completed two years, he should have a minimum income of Rs. twenty lakh per month and an investment above Rs. ten crore. It is very doubtful that these news sites meet the above criteria.

These substitute advertisements are potentially dangerous, as they can strongly influence young techies. Technological innovations such as online platforms and UPI payments make betting easier. The state and society should be concerned about these developments and ban these advertisements before it is too late.

Sri Harsha Kandukuri is Assistant Professor of Law at CMR University, Bangalore.

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