29Nov

Understanding the impact of increased cost of living on gambling behaviour: Gambling Commission’s interim findings

29th November 2023 Chris Biggs 195

Last month, the Gambling Commission published its interim findings on the impact of increased cost of living on gambling behaviour. The Gambling Commission’s research aims to improve its understanding of the impact of increased cost of living by examining the behaviours and motivations of gamblers during the period of high cost of living in Great Britain (“COL Research”).

The Gambling Commission commenced the COL Research in December 2022 in partnership with Yonder Consulting, and undertook a “mixed-methodology research approach” with a longitudinal survey taking place over three waves between December 2022 and June 2023. This was followed by qualitative depth interviews to further understand the impact of the rise in cost of living on lifestyle and gambling behaviours.

In this blog, we summarise the COL Research, set out the Gambling Commission’s interim findings and identify key points for licensees in Great Britain to note.

What is the COL Research?

The Gambling Commission sets out its definition of ‘cost of living’, as:

“the amount of money that is needed to cover basic expenses such as housing, food, taxes, healthcare, and a certain standard of living.”

The COL Research specifically aims to test three core hypotheses:

The rise in cost of living is likely to impact consumers’ gambling behaviour in different ways, depending on their personal circumstances and the way in which gambling fits into their lives.
Some gamblers will report that the rise in cost of living has had a mediating effect on their gambling behaviour.
The rise in cost of living may negatively impact vulnerabilities for some consumers, putting them at an increased risk of gambling-related harm.

The project commenced with three waves of quantitative research, which sought to: (1) initially establish a baseline of key gambling behaviours; (2) explore the impact of external triggers for gambling; and (3) subsequently track any changes to the core gambling behaviours.

Wave 1

Between 21 and 22 December 2022 the Gambling Commission commenced the nationally representative survey of 2,065 adults aged 18 or over. 973 participants (47%) had engaged in gambling activity in the last four weeks.

Wave 2

Between 27 February and 3 March 2023, 1,694 of the same sample group were recontacted to capture changes in the core gambling behaviours surveyed. 820 participants (48%) had engaged in gambling activity in the last four weeks.

Wave 3

Between 26 May and 2 June 2023, 1,391 of the same sample group (who all took part in Wave 2) were recontacted to capture further changes in the core gambling behaviours. 666 participants (48%) had engaged in gambling activity in the last four weeks.

Qualitative wave

The qualitative phase took place in August 2023, with the aim to build a “more rounded impression and picture of each individual”. This phase engaged with 16 individuals who each completed a three-day “digital diary pre-task” to reflect on spending habits. 16 one-hour online interviews were then conducted with gamblers who engage in a variety of different gambling types and with different gambling behaviours (whilst it is not clear, we assume these were the same 16 individuals who participated in the digital diary pre-task).

The Gambling Commission’s interim report does not discuss findings from the qualitative phase; these will accompany further quantitative and longitudinal analyses in the final report expected in “early 2024”.

Key findings

The quantitative phase of the COL Research (i.e. the three waves) surveyed the participants across three broad topics. We set out the Gambling Commission’s key findings for each topic below.

Topic 1: Financial comfort and concerns, and wellbeing

Just under half of the respondents indicated they were “just about managing but felt confident that they would be okay” with the cost of living, whereas between 40% and 43% of individuals indicated they were “financially comfortable”.

The subgroups most likely to have broader concerns about their personal finances are those who gamble online and those who score 8 or more on the Problem Gambling Severity Index (“PGSI”), however most individuals signalled the need to take steps to make their income go further during the tracked period.

In terms of wellbeing, between 45% and 49% of respondents reported “not being able to enjoy the things that they used to due to the rising cost of living” throughout the tracked period.

Topic 2: Changes in gambling behaviours

Despite the rise in cost of living, a clear majority of gamblers reported that their gambling behaviours (amount of time and money spent, number of gambling occasions and typical stake placed) had remained stable, the majority ranging from 62% to 75% depending on the type of gambling behaviour.

If a change in gambling behaviour was reported, it was much more likely to be a decrease in gambling. For example, between 22% and 26% of individuals reported a decrease in the amount of time spent gambling, compared to 6% to 7% that reported an increase in time spent gambling.

69% of individuals who did report changes indicated that these changes were “at least partially a direct consequence” of increases in the cost of living.

Individuals who scored 8 or more on the PGSI were more likely to report an increase in the gambling behaviours surveyed, despite the rise in cost of living.

Topic 3: Motivations for gambling

Respondents who previously indicated they had changed their gambling behaviours were asked questions about four specific motivations in Waves 1 and 3, displayed in the Gambling Commission’s Table 4.1:

Between 10% and 20% of online gamblers indicated that bolstering their finances was their motivation for gambling, and this motivation applied to “significantly more” individuals who scored 8 or more on the PGSI.

Interim conclusions

The concluding remarks in the Gambling Commission’s report considered the interim findings in the context of the following two hypotheses:

Has the rise in cost of living had a mediating effect on gambling behaviour?

Initial quantitative evidence does not suggest that the rise in cost of living has had a mediating effect on gambling behaviours. However, the “small proportion” of those who did make changes to their gambling during this period were more likely to have deceased their gambling; the exception being individuals who scored 8 or higher on the PGSI, who were more likely to have increased their gambling compared to other groups of participants.

Has the rise in cost of living negatively impacted vulnerabilities for some consumers?

A small minority of gamblers who said that they have changed at least one of the surveyed gambling behaviours reported using gambling to support their finances in some way, with a greater proportion of those doing so being online gamblers and/or those who scored 8 or more on the PGSI. The individuals who did change their gambling behaviours indicated that the rise of cost of living has at least partially contributed to their change in behaviour.

Takeaway points

It can be inferred from the interim findings that online gamblers and individuals scoring 8 or higher on the PGSI may be more vulnerable to gambling-related harms when faced with a rise in cost of living.

Given that the interim findings come at a time when the spotlight is on affordability and customer interaction, it will be interesting to see whether the COL Research findings feature prominently in the Gambling Commission’s response to its summer consultation that closed on 18 October 2023 and included consideration of new obligations on licensees to conduct financial vulnerability checks and financial risk assessments.

For the meantime, online operators in particular, should bear these interim findings in mind while they are updating their safer gambling policies and procedures to reflect the Gambling Commission’s revised customer interaction guidance for remote gambling licensees; and evaluate whether they ought to take increased cost of living into account in their assessment of financial risk – pending formal direction from the Gambling Commission.

The Gambling Commission’s final report in “early 2024” will combine its interim findings with further quantitative analysis of the longitudinal impact of the increased cost of living across different demographic groups, and key findings from its qualitative phase of the COL Research.

Please get in contact with us if you have any questions about the Gambling Commission’s interim findings and/or your business’ approach to customer interaction and financial vulnerability.

28Nov

Autumn Statement 2023: Upcoming consultation and tax implications for the gambling sector

28th November 2023 Adam Russell 172

On 22 November 2023, it was announced in the Treasury’s Autumn Statement 2023 (the “Statement”) that the Government will “shortly publish a consultation on proposals to bring remote gambling into a single tax rather than taxing it through a three tax structure as at present.”

This would represent a significant shift from the current position, whereby taxation of remote gambling (defined in the Statement as “gambling offered over the internet, telephone, TV and radio”) is through a three-tax structure consisting of remote gaming duty (21% of gross win), general betting duty (15% of gross win) and pool betting duty (15% of gross win).

When these proposals are considered alongside the impact of proposed Gambling Act reforms which include the proposed introduction of a statutory levy, there will likely be financial implications for remote gambling licensees. It is therefore vital that industry and its stakeholders are fully engaged with the Government’s consultation on single tax proposals to ensure that all potential consequences are considered.

Although the proposals do not impact the land-based sector, the Government also announced in the Statement that gross gambling yield bandings for gaming duty (payable by land-based casinos) will be frozen, again, until 31 March 2025. The Betting and Gaming Council has criticised this announcement stating that it will, in effect, mean that land-based casinos will see their tax bills increase because the bands are not being increased in line with inflation.

Next steps

We will blog further on this topic when the Government’s consultation has been published. Please get in touch with us if you have any questions or if we can assist.

24Nov

Gambling Survey of Great Britain: Gambling Commission’s new approach to collecting gambling participation and prevalence data

24th November 2023 Chris Biggs 185

In December 2020, the Gambling Commission launched a consultation on proposals to change the way it collects data about adult gambling participation and problem gambling prevalence. Since then, the Gambling Commission has been developing a “single, gold standard population survey for the whole of Great Britain”, in an effort to improve the quality, robustness and timeliness of its official statistics.

Following two years of pilot surveys, stakeholder engagement, interim findings reports and fieldwork conducted by the National Centre for Social Research (“NatCen”), an independent not-for-profit organisation and registered charity, and the University of Glasgow, on 23 November 2023, the Gambling Commission published the first “experimental” statistics of the Gambling Survey of Great Britain (“GSGB”). Thus begins the roll-out of, as the Gambling Commission’s CEO Andrew Rhodes recently described it in a two-part podcast discussion with The Gambling Files, the “largest survey in the world of its kind, on gambling behaviours, attitudes, participation”.

In this blog, we discuss the background to the GSGB, its current status in light of the recent announcement, and why the GSGB is such an important project for the gambling industry in Great Britain.

What is the GSGB?

Background

Prior to the Gambling Commission’s December 2020 consultation, the GSGB was foreshadowed in the Gambling Commission’s Business plan 2020-2021, where the Gambling Commission stated, in connection with its key strategic priority to prevent gambling harm to consumers and the public, it would “review approach to measuring participation and prevalence and publish conclusions”.

As noted above, the December 2020 consultation on gambling participation and problem gambling prevalence research was subsequently launched, which included proposals to change the Gambling Commission’s research methodology to, amongst other things, consolidate the different surveys the Gambling Commission previously relied upon to understand adult gambling participation and prevalence into one population survey, and improve the frequency and turnaround time of the survey data. The response to the consultation, when it was published, confirmed that respondents largely supported these proposals, with an average of two-thirds of respondents agreeing with the proposals to change the research methodology and only one-fifth of respondents disagreeing.

In the meantime, the Gambling Commission had been conducting quarterly telephone surveys on participation and prevalence of problem gambling (the most recent results of which were published on 11 May 2023). However, it was noted by the Government in the White Paper that the telephone survey was “less robust” than the national health surveys of Great Britain in its tracking of gambling trends, and that there are gaps in the evidence and the Government’s understanding of gambling participation and prevalence of harm. This criticism reflected conclusions we had also reached in our joint blog with Regulus Partners on the topic of in-play betting.

It was thus clear, from an industry, regulatory and Governmental perspective, that there was a need for the Gambling Commission to revamp its methodology for the collection of gambling data. In light of the release of the experimental figures, the Gambling Commission’s continued roll-out of the GSGB will be closely followed by the industry.

How is the GSGB carried out?

NatCen describes the GSGB as a survey that asks individuals for their “views on and experiences of playing different games, lotteries and betting, and the effects that these activities may or may not have on people’s lives.” It explains that the GSGB will provide the Gambling Commission with high-quality information about the gaming, betting and playing habits, attitudes and harms experienced across the adult population in Great Britain.

In terms of the specific methodology, the GSGB will be an annual “push to web” survey of up to two adults per household in Great Britain. The Gambling Commission hopes that the GSGB will collect responses from 20,000 individuals each year.

Procedure

NatCen explains that survey invitation letters have been sent to addresses selected at random from the Postcode Address File. In these invitations, NatCen asks that up to two adults in each household take part in the survey online by either:

scanning one of the QR codes provided in the survey invitation letter; or
visiting the webpage (survey.natcen.ac.uk/GSGB2) and entering one of the unique access codes provided in the survey invitation letter.

Participants will be asked a series of questions that should take approximately 20 minutes to complete. As a reward for taking part, those who complete the GSGB will receive a £10 shopping e-voucher.

Further information about the GSGB and the procedure can be found on NatCen’s website.

Timeline

The Gambling Commission has published a timeline tracking the progress of the GSGB since its December 2020 consultation. This displays the various stages of the Gambling Commission and NatCen’s progress, such as the consultation, stakeholder engagement, pilot testing and interim reporting on the GSGB project.

Release of experimental statistics

What are the findings?

The findings are (in the Gambling Commission’s words) “not yet fully developed and are still under evaluation”. In the Gambling Commission’s blog announcing the update, Helen Bryce, Head of Statistics at the Gambling Commission, explained that the findings are from the “final step in the experimental stage of the project”, and have been published so users (i.e. industry stakeholders) can familiarise themselves with the GSGB’s methods and findings before they become the Gambling Commission’s official statistics.

On our initial review, we note the experimental data was based on a sample group of approximately 4,000 (up to 3,774) respondents and presents some interesting key findings:

50% of respondents (of which 53% were male and 47% female) had gambled in the past 4 weeks, whereas 61% of respondents had gambled in the last 12 months.
The three most popular gambling activities in the past 4 weeks were the National Lottery (32%), charity lotteries (15%) and National lottery scratchcards (13%).
Most gambling respondents indicated they had gambled for the chance of winning big money (84%) and because it is fun (72%).
2.5% of respondents were considered to be problem gamblers, having scored 8 or higher on the Problem Gambling Severity Index (“PGSI”) screen, and a further 3.5% of respondents were considered moderate-risk gamblers (scoring between 3-7 on the PGSI screen).

Ms Bryce explained in the Gambling Commission’s blog, due to the significant changes in its methodology for collecting this data, these results should not be compared to previous figures sourced from its quarterly telephone surveys or NHS health surveys. Generally speaking this is a reasonable point of clarification to make, but it is made in a clear effort to dampen industry outcry to the alarming increase in the problem gambling rates: as at March 2023, the overall headline problem gambling rate (measured by the PGSI screen) was “statistically stable” at 0.3%.

The Gambling Commission has also set out its views on the strengths and limitations of the GSGB methodology. Notably, it has reiterated that although the experimental sample size was approximately 4,000 respondents, the Gambling Commission still expects to gather data from 20,000 respondents annually when it moves to the official statistics phase.

The findings, which are set out in an easily navigated spreadsheet, can be downloaded here. The Gambling Commission is also seeking industry feedback on the GSGB, which can be submitted through its online form.

Current status of the GSGB

The Gambling Commission has recruited Professor Patrick Sturgis, Professor of Quantitative Social Science at the London School of Economics, to undertake an independent review of the GSGB methodology. Professor Sturgis’ findings and recommendations will be published by the Gambling Commission “early next year”, with a view to the GSGB methodology becoming the Gambling Commission’s official statistics “later in 2024”.

The Gambling Commission’s previous update on the GSGB came in a blog from July this year. Having hosted panel workshops with three stakeholder engagement groups (academics, representatives from the gambling industry and individuals with lived experience), the Gambling Commission stated that it intended to publish the first set of quarterly official statistics in Spring 2024, alongside a timeline for future quarterly release dates. With the Gambling Commission seeking an independent review of the GSGB’s methodology, it now appears that the Gambling Commission will not adopt the results of the GSGB as its official statistics until later next year.

Why is the GSGB important?

The Gambling Commission has a duty to advise the Secretary of State on: (a) the incidence of gambling; (b) the manner in which gambling is carried on; (c) the effects of gambling; and (d) the regulation of gambling (see section 26(1) of the Gambling Act 2005).

NatCen explains that the information collected by the GSGB will help the Gambling Commission to fulfil this duty by being “written up in reports for policy makers to use in their decision-making process” so it may be used to “inform policy changes in the gaming, betting and playing industry”.

Furthermore, in its Evidence gaps and priorities 2023 to 2026, published on 23 May 2023, the Gambling Commission confirmed it would be using the GSGB to:

improve its understanding of gambling participation at a national level and in sub-groups of interest;
produce robust statistics on who is experiencing gambling-relating harms, and how; and
develop its understanding of how people commit crime or are a victim of crime as a dimension of gambling-related harm.

The quarterly statistics from the GSGB will thus underpin the Gambling Commission’s future decisions about how it can better protect consumers and carry out its regulatory duties.

Of note for online B2Cs, problem gambling prevalence statistics are also referenced in the Gambling Commission’s new remote customer interaction guidance (about which we have written previously). This guidance addresses, among other things, how remote licensees can comply with the requirement under social responsibility code provision 3.4.3(14) of the Licence Conditions and Codes of Practice to “take account of problem gambling rates for the relevant gambling activity as published by the Commission, in order to check whether the number of customer interactions is, at a minimum, in line with this level”, which came into effect from 12 September 2022.

Licensees should familiarise themselves with the experimental findings, as the Gambling Commission intends. It is, in effect, a warning: Licensees should understand how to interpret the findings of the GSGB and carefully consider these results for when they become the Gambling Commission’s official statistics. Licensees should use this data to inform the minimum levels of customer interactions they are making with customers – or risk enforcement action by the Gambling Commission for not complying with a condition of their operating licence.

Summary

Following criticism of its prior methods for collecting industry statistics, the Gambling Commission appears to be building a robust research methodology to ensure the GSGB will produce its gold standard population survey for the whole of Great Britain. The latest problem gambling rates collected by the GSGB (albeit ‘experimental’) have indeed attracted further scrutiny from the industry – some may argue that the Gambling Commission anticipated such scrutiny and pre-emptively commissioned Professor Sturgis’ independent review of the GSGB. Either way, we fully expect the Gambling Commission, in its future regulatory decisions, to place significant weight on the evidence drawn from the GSGB when it becomes the Gambling Commission’s official statistics.

With new customer interaction requirements for remote operators in Great Britain in effect, we recommend all licensees (and especially online B2Cs) review the experimental findings, stay apprised of the GSGB’s further progress and closely analyse the problem gambling data that is released in light of the number of interactions they are carrying out with customers, in preparation for the GSGB becoming the Gambling Commission’s official statistics next year. After all, we know the Gambling Commission will be doing the same in future compliance assessments.

Please get in touch with us if you have any questions about the GSGB and how its results should be used to inform your remote customer interaction policies and procedures.

In “push to web” surveys, respondents are recruited offline (such as via another survey, or through the post), and then encouraged to go online and complete a web questionnaire.

09Nov

Unlicensed gambling – Part 1: Growing threat or exaggerated myth?

9th November 2023 Gemma Boore 215

Earlier this month, Andrew Rhodes, the Chief Executive Officer and Commissioner of the Gambling Commission, took part in a two-part podcast discussion with The Gambling Files to reflect on and discuss topical issues affecting the gambling industry. Amongst the subject matter covered, Rhodes touched in Part 2: HE REVEALS MORE! on black market activity and the steps the Gambling Commission is taking to disrupt illegal gambling in Great Britain – which Rhodes claims to have resulted in significant drops in traffic to illegal operators.

This reflected themes in Rhodes’ keynote speech at the International Association of Gambling Regulators (“IAGR”) conference in Botswana on 16 October 2023, in which he noted whilst illegal online gambling market exists in Great Britain, as it does elsewhere:

“it is not a significant concern and this position hasn’t fundamentally changed. However, that does not mean there is no illegal market or no risk”.

In other news, Lucy Frazer, the Secretary of State for Culture, Media and Sport recently digested the contents of a letter from eight UK horseracing industry leaders. In the letter, the signatories reportedly warned that affordability checks, which the Government recommended be introduced in the Gambling White Paper, will cost racing £250 million in funding over the next five years and that this would be a disaster for British horseracing as punters either walk away from the sport or turn to the black market to gamble.

Potentially to back up this claim, the Racing Post then published the results of its “The Right to Bet” survey, which found that (1) one in four of the respondents would be prepared to switch to the black market if faced with stringent affordability checks; and (2) nearly one in ten have already used black market betting sites.

A petition was then posted on the UK Government and Parliament website, calling for the Government to abandon the planned implementation of affordability checks because “more intrusive checks triggered at a higher threshold risks bettors moving to the black market where there are no consumer protection or safer gambling tools”. This petition has – as at the time of writing – accumulated 76,204 signatures, three quarters of the number needed to trigger a debate in Parliament.

So, is the black market really a growing threat, or an exaggerated distraction? What are the Gambling Commission and the Government doing to curb illegal gambling? And what can businesses do if their proprietary content (intellectual property (“IP”)) turns up on unlicensed sites?

Read on for our discussion along with a helpful checklist for licensees that receive communications from the Gambling Commission regarding black market activity.

What is black market gambling?

The term ‘black market’ gained popularity during World War II (when common household products were rationed to avoid hoarding) and generally refers to an illegitimate market in which commodities are being traded, exchanged or performed in an illegal manner.

With regard to modern gambling in Britain, section 33 of the Gambling Act 2005 (as amended) (the “2005 Act”) makes it clear that it is an offence to provide facilities for gambling to customers in Great Britain from anywhere in the world, without holding a licence from the Gambling Commission unless a relevant exemption applies. Accordingly, it is common within the industry to refer to unlicensed online operators that illegally provide facilities for gambling to customers in Great Britain, without the appropriate licence or falling under a relevant exemption, as the “black market”.

Why is unlicensed gambling bad?

As Rhodes notes in his keynote speech at the IAGR conference, every gambling jurisdiction in the world has illegal online gambling:

“Whether online gambling is prohibited or not, if you can access the internet, then you will be able to find a way to gamble. We all know this. It’s also worth pointing out at this point that what is an illegal, unlicenced operator for me in Great Britain may be a legitimate, licensed business for you and vice versa.”

From a consumer perspective, one of the fundamental problems is that black market websites are not always distinguishable from those that are locally licensed – at least to the untrained eye. This means a consumer may be gambling on an illegal gambling site without even knowing it and, in this “Wild West” of the remote sector, unlicensed operators are not constrained by regulation. It is common to see consumer reports of problems, such as the inability to withdraw funds and difficulties contacting support in the event of a complaint. Indeed, Rhodes acknowledged in The Gambling Files podcast, that recent research has shown that illegal websites actively seek to advertise to people that have self-excluded from gambling on GAMSTOP and others allow unlawful activity in itself by, for example, allowing children to gamble.

So, what is the Gambling Commission doing?

One of the Gambling Commission’s key functions is to investigate and prosecute illegal gambling and other offences committed under the 2005 Act. As Rhodes noted in his IAGR keynote speech, the Gambling Commission typically deploys an “intelligence-led approach” to combat black market operators.

This means that ordinarily, they will initially issue a cease-and-desist letter to require the unlicensed operator to suspend their operations. Failing this, the Gambling Commission will implement “disruption techniques, using its partnerships or relationships with other companies”, which can include:

asking web hosting companies to suspend or ‘block’ British consumers from accessing the websites;
contacting payment providers to remove payment services;
liaising with internet search and service providers to prevent websites appearing on search engines;
working with social media firms to take down posts which promote illegal gambling; and
engaging with international regulators, including by sharing information and raising the prominence of the issue – and Rhodes used the keynote as an opportunity to call for collaboration in this regard.

In addition, Rhodes described in his speech more novel steps that the Gambling Commission is taking to disrupt unlicensed, illegal online operators through collaboration with others:

“…this means we’ve been going further upstream, further away from where our formal powers begin and have been looking to work with others to get between those illegal operators and British consumers and generally frustrate their business and force them out of our market.”

And this has included:

working with software licensees to prevent access to popular products when their games appear to be available on illegal sites; and

engaging with licensees if we discover their affiliates have placed adverts on illegal sites – ensuring licensees remove advertising and encouraging an assessment of business relationships with these affiliates.

By taking these steps, Rhodes claimed that the Gambling Commission has “increased… enforcement actions by over 500 percent between 2021-22 and 2022-23” and “more than doubled the number of successful positive disruption outcomes” leading to a “a 46 percent reduction in traffic to the largest illegal sites coming into market”.

Notwithstanding the bountiful fruit of its recent efforts, the Gambling Commission has always acknowledged that stronger measures are required. In its Advice to Government relating to its review of the 2005 Act, the Gambling Commission explains that:

“Under our current framework, we cannot compel third party providers to take action such as to block British access to the website, remove payment services or prevent websites from appearing in search engines. Moving to criminal prosecution has had limited effect, largely because websites can immediately disappear and reappear with a different identity (a phenomenon known as ‘phoenixing’), and their ultimate owners and lines of responsibility are very difficult to fully trace. This also makes it very difficult to accurately scope the size of the black market”.

How does this play into the White Paper?

Before it was even published, the black market was the backbone of many highly politicised debates concerning the White Paper and the proposals to be made therein. Affordability (and more specifically, mandatory deposit and/or loss limits) in particular, led to outcry from the sector and various interested parties commissioned research to try to truly gauge the extent of illegal, unlicensed gambling in Great Britain.

In particular, a 2021 PwC report entitled “Review of unlicensed online gambling in the UK” commissioned by the Betting and Gaming Council, claimed that the proportion of UK online gamblers using unlicensed operators in November 2020 had increased to 4.5 per cent – or around 460,000 people – from 2.2 per cent over the previous one to two years. In addition, the study found that stakes with unlicensed operators had doubled to £2.8 billion.

Neil McArthur, the then Chief Executive of the Gambling Commission, poured cold water on the PwC report in a letter to cross-party MPs investigating the harmful effects of gambling, reportedly stating it was “not consistent with the intelligence picture” and that the impact of the black market “may be being exaggerated“.

When the White Paper was finally published in April 2023 – some 30 months after the call for evidence – it was broadly accepted to be balanced and evidence-led. Chapter 3, which considered the potential for reform in the Gambling Commission’s powers and resources, outlined the Government’s views on black market gambling and whether it presented a tangible risk. Specifically, the Government acknowledged that although estimating the size of the black market is difficult, it was clear that “excessive commercial caution risks driving customers to the black market where they can be exposed to a variety of risks”. The Government further noted that there has been a rise of illegal operators in other jurisdictions with:

“either extremely permissive regulatory regimes or no regulatory oversight, and/or are being run by individuals with suspected links to serious and organised crime.”

It then went on to acknowledge the Gambling Commission’s disruptive approach was working well to an extent (a statement with which we agree), but recommended that the Gambling Commission’s powers to action be strengthened to create a safety net, giving the Gambling Commission the versatility to “apply to court as a last resort” if required:

“When Parliamentary time allows, we will introduce legislation that will give the Gambling Commission the power to apply to the court for an order that requires ISPs , payment providers and other providers of “ancillary services” to implement measures aimed at disrupting the business of an illegal gambling operator”.

While a laudable aim, changes to legislation take time and given other legislative pressures and the impending General Election, it is not clear when these changes will take effect – there certainly was no mention of such a bill in The King’s Speech on 7 November 2023. This contrasts with affordability checks (which the White Paper recommends become mandatory for operators to carry out when consumers reach specific loss thresholds), which have already been subject to a public consultation by the Gambling Commission and may take effect much sooner.

Lessons for licensed operators

For the meantime, Rhodes emphasised in his keynote that the Gambling Commission will continue to use its existing powers (and authority) to tackle illegally, unlicensed gambling. As noted earlier, this may include the Gambling Commission contacting its own licensees to try to persuade them to take steps to disrupt illegal gambling.

If you hold a British licence and are contacted by the Gambling Commission about a black market website, we recommend that you take professional advice. You may also want to consider taking one or more of the following steps:

verify that your content is being used / your adverts are being placed on an illegal website. Involve your tech teams as they should be able to confirm whether the content is legitimate or an infringing copy of your IP;

check that games / links are accessible in Great Britain and if they are, whether you receive any British traffic from the site in question;

identify the operator of the website and/or the affiliate that is placing advertisements on the illegal site;

consider whether you have a contractual relationship with the operator / affiliate or any member of its group. If you do not have a direct contract with the operator/ affiliate or one of its group companies, consider whether there may be an indirect relationship (for example, via a content distributor or affiliate program);

if a contractual relationship exists, investigate how this arose and review all due diligence you conducted on the third party/ies during the contractual relationship;

send a cease-and-desist letter (takedown notice) to all entities that you can identify as being involved; cite restrictions in your contract (if relevant);

if the third party does not cease the activity or justify their actions:

terminate any contracts with them promptly. Note that inclusion of such a termination right is a requirement under Social Responsibility Code Provision 1.1.2 of the Licence Conditions and Codes of Practice;

consider contacting third parties such as hosting providers, domain registrars and third-party search engine such as Google who may otherwise be able to stop the website being accessible by customers in Great Britain;

engage professionals to review:

your systems and processes for identifying use of your content / placement of your ads on illegal websites; and

your standard contracts,

to mitigate the risk that your IP rights are exploited illegally in the future; and

update the Gambling Commission within the deadline they have set on the outcome of your investigation and the steps you have taken to:

address the present infringement of your IP rights; and

mitigate the risk of a similar situation occurring again.

Please get in touch with us if you would like assistance responding to a Gambling Commission request, or if would like to discuss the themes in this blog more generally.

07Nov

Personal management licensee: What do you need to know?

7th November 2023 Chris Biggs 210

Individuals who hold a personal management licence (“PML”) issued by the Gambling Commission undoubtedly play the most important role in ensuring business decisions are underpinned by the licensing objectives, building a strong foundation of compliance and raising standards. Ultimately, they are personally accountable and responsible for compliance failings. As personal licensees, PMLs can face enforcement action by the Gambling Commission. We expect to see more enforcement action taken against PMLs on the basis that people make decisions, not businesses.

The White Paper included a proposal to extend the requirement to hold a PML, set out in licence condition 1.2.1 of the Licence conditions and codes of practice (“LCCP”), with the goal to drive “personal accountability and responsibility”, allowing the Gambling Commission to “take necessary action against individual (personal) licensees when failures are found”. In our previous blog, we discussed who (currently) needs to hold a PML, how PMLs drive corporate culture, the Gambling Commission’s proposed changes to PML requirements following the White Paper and the reasons for those potential changes.

With the spotlight on PMLs, in this blog we provide an overview of PML requirements and our top pointers for staying compliant.

PML requirements

One of the key challenges for PMLs is that, unlike many other regulated professions, there are no standards of: (a) conduct, performance and ethics; or (b) competence, which set out the minimum requirements. Instead, the PML regime is based on broad principles as detailed below. It is worth noting that if the Gambling Commission commences a licence review against a PML, it will be based on the PML’s failure to comply with the following licence conditions and/or expectations:

Licence conditions

There are three licence conditions attached to PMLs, set out in Part 3 of the LCCP, summarised as follows:

Licence condition 1: PMLs “must take all reasonable steps” when carrying out their responsibilities in relation to licensed activities to ensure they do not place their employer’s operating or premises licence in breach of their licence conditions. This is evidently broadly drafted and widely interpreted by the Gambling Commission.
Licence condition 2: PMLs must keep themselves informed of “developments in gambling legislation, codes of practice and any Commission guidance … relevant to their role”.
Licence condition 3: PMLs must report key events (see below) within 10 working days of becoming aware of the event’s occurrence.

“Expectations”

Additionally, section 4.3 of the Gambling Commission’s Statement of principles for licensing and regulation sets out the expectations of individuals occupying senior positions, whether or not they hold PMLs, to (amongst other things):

uphold the licensing objectives and ensure compliance of operations with the LCCP;
organise and control their affairs responsibly and effectively;
have adequate systems and controls to keep gambling fair and safe;
conduct their business with integrity;
act with due care, skill and diligence;
manage conflicts of interest fairly;
work with the Gambling Commission in an open and cooperative way;
disclose to the Gambling Commission anything which it would reasonably expect to know; and
comply with both the letter and spirit of their licence, the licence of their operator and associated Gambling Commission regulations.

PML key events

As set out in licence condition 3, PMLs are required to notify the Gambling Commission of the occurrence of certain key events, “within 10 working days after the licensee becomes aware of the event’s occurrence”. These are:

a change in name (for example, following marriage);
a change in address;
any current or pending investigation by a professional, statutory, regulatory or government body in Great Britain or abroad, and the imposition of any sanction or penalty against them following such an investigation (this would include another gambling regulator);
being subject to (a) any criminal investigation, or (b) conviction of any offence, listed under Schedule 7 – Relevant Offences of the Gambling Act 2005;
the imposition of a disciplinary sanction against them, including dismissal, for gross misconduct;
resignation from a position for which a PML is required following commencement of disciplinary proceedings in respect of gross misconduct;
disqualification from acting as a company director; and
the presentation of a petition for their bankruptcy or sequestration or their entering into an individual voluntary agreement.

Further guidance to PMLs about personal key events can be found here.

Online service and contact details

PMLs must ensure their registered contact details are accurate. In addition to this being a licence condition, it will ensure critical correspondence is not missed, including relating to any revocation (generally, for failure to undergo PML maintenance) or licence review.

When granted, we strongly encourage PMLs to register for the Gambling Commission’s Manage your personal licence online service for PMLs. This service allows PMLs to update contact details, submit key events and submit maintenance checks (see below).

PMLs:

must – personally – keep their registered email address up to date; and
should ensure the Gambling Commission’s email domain is trusted, to avoid emails going to junk or spam folders.

PML maintenance

PMLs are indefinite in duration, meaning that the licence does not renew or lapse.

PMLs are subject to a mandatory maintenance check every five years. This is an automatic process (not an application, as the Gambling Commission incorrectly describes it), the purpose of which is solely the provision of updated information about the PML, such as current address and position, and payment of the fee. It is for the Gambling Commission simply to check and record the information. As we have written previously, the Gambling Commission is not legally empowered to delay or put on hold PML maintenance on the misconceived ground that enforcement action is ongoing or imminent.

The Gambling Commission will contact PMLs by email to advise of the upcoming PML maintenance. We recommend that PMLs and any supporting compliance/licensing teams separately diarise the five-year anniversary. A failure to submit the PML maintenance check will result in the PML being revoked.

To complete the check, PMLs need to sign into the online service. PMLs cannot submit the maintenance check before the PML anniversary date, and have only 30 days from the anniversary date to submit the check. Upon submission, a fee of £370 needs to be paid.

At the time of writing, if a check is not submitted within 30 days, the Gambling Commission will send a notice of revocation by email, providing a further 28 days from this notice to complete the maintenance check, otherwise the PML will be revoked.

Tips for PMLs

Keep contact details up to date;
Ensure the “gamblingcommission.gov.uk” email domain is whitelisted;
Register for the online service;
Understand the meaning of a key event, including changes of name or address and criminal investigations (without charges);
Understand the PML licence conditions and expectations;
Document structured and unstructured training; and
Diarise the five-year maintenance check.

Tips for employers

Remind PMLs to provide personal contact details (i.e. not a work email address) to the Gambling Commission upon or shortly before departure from the business;
Provide or arrange for annual refresher training to be provided for PMLs on PML licence conditions and expectations (we can help with this!);
Keep a record of internal and external training provided to PMLs;
Diarise each PML’s five-year maintenance check for both the business and the PML;
If a PML leaves or changes roles within the business and they held a specified management office, the business needs to notify the Gambling Commission as soon as reasonably practicable, and in any event within five working days of the PML’s departure under the operating licence condition 15.2.1(4); and
Remind the PML to notify the Gambling Commission of their departure if they leave the business and update their contact details, if required.

Please get in touch if you have any questions or would like to discuss your training needs.

01Nov

Gambling Commission appoints new Commissioners

1st November 2023 Adam Russell 193

On 31 October 2023, the Department for Digital, Culture, Media and Sport (“DCMS”) announced the Secretary of State had appointed seven new independent Commissioners to the Gambling Commission, taking effect from 11 September 2023. Charles Counsell, Helen Dodds, Sheree Howard and Claudia Mortimore have been appointed for terms of five years. Lloydette Bai-Marrow, Helen Phillips and David Rossington have been appointed for terms of four years. Together with the existing Commissioners and Chair, Marcus Boyle, they form the Gambling Commission’s Board of Commissioners (the “Board”).

Appointment process

Earlier this year, DCMS advertised to fill six Commissioner vacancies, to include three appointees with expert experience in one of: consumer protection and insight; data science and digital innovation; and law enforcement. In the end, seven Commissioners were appointed rather than the advertised six.

The Gambling Commission’s job advert made clear that the Commissioners will have responsibility for:

Ensuring that the Gambling Commission fulfils its statutory objectives and duties;
Ensuring that any statutory or administrative requirements for the use of public funds are complied with;
Setting the overarching strategy for the organisation and making strategically significant decisions;
Setting organisational risk appetite and ensuring a framework for effective identification and mitigation of top risks;
Ensuring that the Board receives and reviews regular information and data concerning the management of the Gambling Commission;
Setting the overarching stakeholder engagement strategy;
Demonstrating high standards of corporate governance at all times.

Meanwhile, the job advert outlined the following essential criteria:

An understanding of the policy and/or legislative environment within which a regulator such as the Gambling Commission operates;
Evidence of working as part of a team towards a shared goal, including ability to make a strong personal contribution;
The ability to analyse complex material and take well-reasoned decisions;
A commitment to improving opportunities for people throughout the UK and access to people from a diverse range of backgrounds.

Various desirable criteria were also set out, including corporate experience in a regulated sector, regulatory experience and experience supporting organisational change (amongst others).

Seven new Commissioners

Both DCMS and the Gambling Commission have published biographies for the new Commissioners and we welcome the strong focus on equality, diversity and inclusion in addition to other relevant experience. We also welcome the appointments, particularly the diverse backgrounds including in commerce and other regulated industries (including law!), and hope that the Commissioners will support and build on the Gambling Commission’s recent efforts to improve relations with industry, acknowledging that better relationships lead to better and quicker regulatory outcomes.

Whilst not intended to be an exhaustive summary, an overview of each Commissioner’s biography is detailed below:

Lloydette Bai-Marrow is an anti-corruption expert and economic crime lawyer. She is the Founding Partner of Parametric Global Consulting, the Chair of the Board of Spotlight on Corruption and sits on the Legal Panel for Whistleblowers UK. She is also a trustee for the Unite Foundation, and a Member of the Conduct Committee of the Institute of Chartered Accountants in England and Wales. Lloydette is also a Co-Founder and Director of the Black Women in Leadership Network.
Charles Counsell OBE was the Chief Executive Officer of The Pensions Regulator from April 2019 to March 2023. Before this, he was the Chief Executive Officer of the Money Advice Service and Executive Director of Automatic Enrolment at The Pensions Regulator.
Helen Dodds OStJ is an international lawyer, consultant and board member. She is currently a board member of the Human Tissue Authority, a director and trustee of the St John’s Eye Hospital Group, a director of LegalUK, and an Honorary Senior Fellow of the British Institute of International and Comparative Law. Previously, she was a board member of the London Court of International Arbitration.
Sheree Howard has over 25 years’ experience of the UK financial services industry with knowledge of the process of regulation and a focus on risk management, audit and controls. She is currently the Executive Director of Risk and Compliance at the Financial Conduct Authority, and is a Fellow of the Institute and Faculty of Actuaries. She has also held senior positions in banking in areas of risk and compliance including at the Royal Bank of Scotland and Direct Line Group.
Claudia Mortimore has over 25 years’ experience of criminal law and regulation. After accumulating 10 years of experience as a barrister, she prosecuted drugs, tax and money-laundering offences for the Revenue and Customs Prosecutions Office and fraudulent trading offences for the Department of Business. She has also held senior positions in the Enforcement Division of the Financial Reporting Council.
Helen Phillips is an experienced executive and non-executive, with a career underpinning the public, private and not-for-profit sectors. Helen is currently appointed in a non-executive capacity as the Chair of NHS Professionals Ltd and Chair of the Chartered Insurance Institute. She is also concluding a nine-year term as Chair of Chesterfield Royal Hospital NHS Foundation Trust. Helen has also held various other positions within social work, education and environmental organisations.
David Rossington CB is a former senior civil expert. He has worked for the Department for Culture, Media and Sport as Finance Director and acting Director General. He has also worked for other Government departments including what is now the Department for Levelling Up, Housing and Communities.

Remuneration and Governance Code

The DCMS’ website confirms that Commissioners are remunerated at £14,160 per year (£295 per day) plus expenses, and that the seven appointments were duly made in accordance with the Cabinet Office’s Governance Code on Public Appointments (“the Governance Code”). The Governance Code requires the declaration of any significant political activity undertaken by an appointee in the last five years (e.g. holding office, public speaking, making a recordable donation or candidature for election); none of the appointees declared any significant political activity.

31Oct

Revised remote customer interaction guidance comes into effect

31st October 2023 David Whyte 219

The Gambling Commission’s revised remote customer interaction guidance (“CI Guidance”) has today (31 October 2023) come into effect, along with the requirement set out in Social Responsibility Code Provision (“SRCP”) 3.4.3 that remote licensees must take the CI Guidance into account.

As readers of our blog will no doubt be aware, we have provided several updates (for example, in December 2022 and January 2023) on, and been critical of, the evolution of the CI Guidance, since the first announcement by the Gambling Commission on 14 April 2022 of the new SRCP 3.4.3 and the associated CI Guidance.

The Gambling Commission has now set out its requirements. Irrespective of their views about the CI Guidance, it is vitally important that those remote licensees to which the CI Guidance applies are compliant with SRCP 3.4.3 and can demonstrate that they have taken the CI Guidance into account. We do not propose to further analyse the CI Guidance in detail in this blog. Rather, we set out below some key considerations for those licensees who must comply with these requirements.

Key considerations

Consideration 1: Be wary of the language used in the CI Guidance

We have previously raised concerns about the Gambling Commission introducing formal requirements through guidance, and about the risk that the language used in the CI Guidance might: (a) inaccurately reflect the requirements set out in SRCP 3.4.3; (b) cause confusion; and/or (c) expose licensees to the risk of broad interpretation by the Gambling Commission.

We note that the Gambling Commission has retained its use of “must” and “should” in the CI Guidance, having confirmed in its response to its consultation on the CI Guidance, published on 24 August 2023 (the “CI Consultation Response”) that it has “ensured that consistently appl ‘must’ language when quoting or referring to the requirements, and use ‘should’ language when referring to guidance which must be taken into account”. Licensees should take note of this distinction, but at the same time be aware that the requirement imposed by SRCP 3.4.3 to “take into account” the CI Guidance might effectively make such distinction irrelevant.

Consideration 2: Document your decision-making processes

As the Gambling Commission explains in the CI Guidance, SRCP 3.4.3 “sets out the requirements relevant licensees must comply with in relation to remote customer interaction. For compliance and enforcement purposes, will expect licensees to demonstrate how their policies, procedures and practices meet the required outcomes. This can be through implementing relevant parts of the guidance or demonstrating how and why implementing alternative solutions equally meet the outcomes”.

Licensees will likely be aware that the Gambling Commission has taken a very literal approach to the interpretation of its guidance in the past (e.g. its guidance for remote and non-remote casinos on the prevention of money laundering and combating the financing of terrorism). It is therefore likely that the Gambling Commission will take the same literal approach in relation to the CI Guidance. Licensees should ensure that they carefully document their decision-making process in relation to the CI Guidance, in particular in cases where their approach is inconsistent with, or diverges from, the CI Guidance. This documented decision-making process will enable licensees to demonstrate to the Gambling Commission that they have met their regulatory obligations in the event of future oversights and/or regulatory scrutiny.

Consideration 3: Licensees are not expected to screen all customers for every indicator of vulnerability

The Gambling Commission makes it clear in the CI Guidance that its “aim” for SRCP 3.4.3(3), which requires licensees to “consider the factors that might make a customer more vulnerable to experiencing gambling harms”, is to ensure that “where licensees know that customers are in a vulnerable situation, these customers are supported”. Licensees should note that the Gambling Commission also confirms that it does not expect licensees to screen all customers for each of the factors of vulnerability set out in the CI Guidance.. Rather, it expects that licensees “consider and act on information that they have available to them” (our emphasis added).

Consideration 4: Not all information included in the CI Guidance is required to be taken into account

The Gambling Commission clarified in the CI Consultation Response that certain information included in the CI Guidance is not required to be taken into account by licensees. Rather, that information has helpfully been included in an attempt to provide licensees with clarification or additional explanation to assist their understanding. Licensees should ensure that they are aware of this distinction, particularly when they are revising their policies and procedures and/or documenting their decision-making process.

A helpful example of this is the additional information – which is not required to be taken into account – set out below paragraph 5.3 of the CI Guidance. This lists further sub-categories of potential indicators of harm which, whilst not required indicators, may be of particular use to licensees when considering the formal indicators that they are required to incorporate into their approach to customer interaction by SRCP 3.4.3(5).

Consideration 5: No change to affordability requirements (yet!)

At present, the Gambling Commission’s position on customer affordability has not changed. Whilst the Government set out its proposed financial risk check model in the White Paper, upon which the Gambling Commission is consulting, the CI Guidance does not address those issues. Rather, it restates the current position at paragraph 4.6, reminding licensees that: (a) open source data that can assist them in assessing affordability exists; (b) thresholds should be realistic and based on average available income; and (c) they should be aware of the distinction between ‘disposable income’ and ‘discretionary income’.

Consideration 6: Manual reviews of automated decisions are only required if customers contest that decision

SRCP 3.4.3(11) requires that “icensees must ensure that strong indicators of harm, as defined within the licensee’s processes, are acted on in a timely manner by implementing automated processes”. It also requires that, where such automated processes are applied, “the licensee must manually review their operation in each individual customer’s case and allow the customer the opportunity to contest any automated decision which affects them”.

The Gambling Commission clarified its position in relation to this manual review in the CI Consultation Response and does so again in the CI Guidance, stating that its expectation is that “where a decision is made solely by automated means and which has legal effects or similarly significantly affects a customer the licensee contacts the relevant customer to inform them of the decision and their right to contest it”. It is only where the customer exercises their right to contest the decision that a substantive manual review must be undertaken.

Licensees should take steps to review their data protection processes and procedures to ensure that they are consistent with both data protection legislation and the Gambling Commission’s expectations as set out in the CI Guidance.

Consideration 7: Do not overlook evaluation

Licensees are likely to have gone to significant lengths to ensure their adherence to the burdensome requirements set out in the CI Guidance, with particular focus on indicators of vulnerability and harm. In doing so, there is a risk that they may have overlooked the importance of evaluation as required by SRCP 3.4.3 (12)-(14). Licensees should therefore ensure that their approach to customer interaction incorporates the mandatory evaluation processes both at the individual customer level and of the whole system, and that those evaluation processes are documented and audited.

Next steps

Please get in touch with us if you would like to discuss the CI Guidance, or if you would like assistance with drafting and/or updating your policies and procedures in light of the CI Guidance.

27Oct

Regulatory returns update: Gambling Commission conducting user research sessions

27th October 2023 Chris Biggs 187

In its fortnightly E-bulletin released earlier this week, the Gambling Commission called for licensees to sign up to its User research programme for the purpose of participating in upcoming regulatory returns user research sessions.

As we previously discussed, the Gambling Commission has recently signalled its intention to “sharpen” the dataset currently received from licensees in regulatory returns, increase the frequency of the reporting requirements and aligning licensees’ reporting dates (see its Making better use of operator data blog), which are proposals we very much welcome. The Gambling Commission also indicated that there would be a consultation on the frequency of regulatory returns in November.

User research programme

The user research programme, which is an initiative we welcome, has been introduced to help the Gambling Commission “test new services, websites and features with people who use them” and sessions can take place face-to-face, over the phone or remotely.

Getting involved may include:

responding to questionnaires: 5-10 minutes;
telephone or video call session: 60 minutes;
face-to-face session: 60 minutes; or
workshop: half a day.

You can register as a participant of the Gambling Commission’s user research programme here.

Registration takes approximately two minutes, whereby you will be required to provide your full name and answer general questions pertaining to your involvement in the gambling industry and use of the Gambling Commission’s services. This information will be used to select suitable participants for the regulatory returns sessions, as well as other research sessions.

Regulatory returns user research sessions

The regulatory returns user research sessions will, as the Gambling Commission states, help it “improve the data, while reducing the burden for operators”. The Gambling Commission has asked that a diverse range of licensees from all sectors sign up to the programme, as it will be hosting a series of workshops on the topic with the aim of producing “a more focused dataset”.

The Gambling Commission has not given further details about the regulatory returns user research sessions, nor an indication of when these sessions will be held. We expect that these sessions will take place very soon to inform the Gambling Commission’s consultation on regulatory returns, which we expect in November 2023.

Why participate?

As we discussed previously, in looking to update the regulatory returns system, the Gambling Commission has the opportunity to refocus its dataset and provide clarity and further guidance on the system. Doing so will ensure the evidence it collects from licensees is accurate and therefore useful. It is equally important to ensure the system is fit for purpose and there is consistency in the responses provided.

We encourage licensees and other relevant industry stakeholders to sign up and participate in the regulatory returns user research sessions, and to provide feedback to the Gambling Commission.

Please get in contact with us if you have any questions about the regulatory returns process.

26Oct

Andrew Rhodes’ speech at the International Association of Gambling Regulators Conference: A call for collaboration

26th October 2023 Adam Russell 209

The current Chief Executive Officer (“CEO”) of the Gambling Commission, Andrew Rhodes, delivered a keynote speech at the International Association of Gambling Regulators (“IAGR”) Conference in Botswana on 16 October 2023. In this blog, we sum up the key messages from Rhodes’ speech, which was delivered to gambling regulators from across the world. Part One outlines Rhodes’s commentary on implementation of the UK Government’s Gambling White Paper, and Part Two summarises what was said regarding the Gambling Commission’s increasingly innovative approach to tackling black market gambling.

Part One: The White Paper

Background

Rhodes introduced the White Paper by stating that the Gambling Commission is “pleased to see so many of recommendations adopted”. He proceeded to describe “the publication of the White Paper an important moment”, citing the need to update the gambling regulatory framework with “evidence-based changes” to keep pace with digitisation in society.

Priorities

Rhodes acknowledged that “the White Paper is a key priority for the Commission”. However, he managed expectations by stating that “this will not be the work of a few months” given that the “Gambling Commission is either leading or supporting on the implementation of Government policy” in relation to “over 60 areas of work”. Rhodes then distinguished between priorities for the Government versus priorities for the Gambling Commission, the latter of which included to:

“ensure bonus offers and incentives do not lead to excessive or harmful gambling,
set further product controls for safer online games,
require operators to identify and take action for financially vulnerable consumers and to tackle significant unaffordable gambling through frictionless checks that are not disruptive for consumers.”

Rhodes noted that some of these themes would be common to all regulators at the conference and that while “attitudes, politics, regulatory frameworks and so on may be quite different”, human behaviour is similar cross-jurisdictionally, which may lead to “some commonality in the way approach these areas”.

Prior and upcoming consultations

Rhodes confirmed that the Gambling Commission has received “over 2,300” responses to its first round of White Paper consultations and that those responses “can and will help us improve the changes we make to our rules and to how gambling is regulated in Great Britain”. He considered, however that there have “been some misunderstandings” in relation to financial risk checks, some of which he put down to the complexity of the issue the Gambling Commission is facing. However, according to Rhodes, in other cases, misunderstandings have arisen as a result of “deliberate misinformation designed to muddy the waters of debate and to torpedo the implementation of Government policy.” This is potentially (we think) a not-so-subtle reference to the open letter to Racing Post readers published in September 2023, in which the Gambling Commission complained that the Racing Post has been writing imbalanced stories about the financial risk consultation.

Rhodes went on to confirm that progress is underway on launching “the next tranche of consultations”, which will initially include:

socially responsible incentives (such as bonuses and free bets), and
gambling management tools (including online deposit limits and opt-outs),

with further consultations to follow in 2024.

Gambling data and the evidence base

Rhodes noted that besides consultations, the Gambling Commission is “leading on” improvements to “gambling data” and “the evidence base”. He mentioned that the Gambling Survey of Great Britain will launch early next year. It is set to be the “largest survey of its type” worldwide and attract around 20,000 respondents annually.

He proceeded to outline the “inherent conflict” in relation to the use of problem gambling data, particularly in the context of polarised debate. Rhodes noted that some may seek to cite a low problem gambling rate of between 0.3 percent and 0.5 percent of the population, at the same time as arguing that the same “sometimes limited” sample sizes create “insufficient evidence to support intervention in areas of higher risk”. Although this is contradictory, Rhodes acknowledged that the evidence base requires improvement and promised that the Gambling Survey of Great Britain would help to achieve this – with updated questions for the digital age and “predictable, regular data” for study.

With regard to the broader evidence base, Rhodes reiterated the six priority objectives which were set out in the Gambling Commission’s three-year evidence gaps paper, namely:

early gambling experiences and gateway products;
the range and variability of gambling experiences;
gambling-related harms and vulnerability;
the impact of operator practices;
product characteristics and risk; and
illegal gambling and crime.

Part Two: The black market

Background

In the second half of the speech, Rhodes explained that the Gambling Commission has been taking an increasingly robust approach towards the black market. As above, the tackling of illegal gambling is a priority area of the Commission’s three-year evidence gaps paper, published in May 2023. Rhodes emphasised that while the black market is an issue, it “is not a significant concern” due to the high rate of channelisation. Channelisation refers to the proportion of consumers who gamble in the licensed market in comparison to the illegal market.

Actions

Rhodes outlined some of the actions that the Gambling Commission has been taking to “disrupt unlicenced , illegal online operators through collaboration with others”, which has broadly involved “going upstream, further away from where formal powers begin”. This means working with others to intervene between illegal operators and British customers to “generally frustrate their business and force them out of the market”.

Rhodes gave examples of what this work entails:

increasing engagement with payment providers and financial institutions,
collaborating with internet search and service providers to delist illegal operators from search results and geo-block their websites,
working with social media companies to remove posts which promote illegal gambling,
cooperating with Gambling Commission software licensees to prevent access to products which appear to be available on illegal sites, and
engaging with Gambling Commission licensees where affiliates have placed adverts on illegal websites.

Results

Rhodes revealed that the Gambling Commission’s combative approach has:

“more than doubled the number of successful positive distribution outcomes”
“close down hundreds of illegal lotteries”
“stop influencers promoting unlicensed gambling.

Further, between May and July, Rhodes explained that geo-blocking had restricted access to four of the top 10 illegal domains, and there was a 46 percent reduction in traffic to the largest illegal sites.

The Gambling Commission also “block 17 sites from Google search results through collaboration with Google, and “remov payment facilities from illegal sites” through their work with Mastercard.

Next steps

Rhodes pledged to “continue to study the impact of interventions and respond accordingly”, and to “deepen collaboration with partners in industry, tech and finance” to further strengthen their disruptive capabilities.

Moreover, Rhodes revealed that the Gambling Commission would be holding a Conference in March 2024 to explore “how can work with partners to further decay, frustrate and drive out illegal gambling”.

Rhodes reflected that “strong collaboration with others”, including with other regulators, has been crucial to the results the Gambling Commission’s disruptive enforcement work has yielded so far. However, he wants to see further collaboration take place and urged other regulators to join him in forging and strengthening relationships.

Reflection

This is Rhodes’ second time speaking at the IAGR conference. His last speech, delivered in Melbourne in October 2022 at a time when the White Paper was still pending, appealed for gambling regulators to work better together; share data and evidence; adopt common approaches; and coordinate actions where possible.

This year, Rhodes recognised the role that collaboration has had in successful outcomes during the last year, including in relation to tackling illegal online operators, and reiterated his call for overseas regulators to “share notes” with the Gambling Commission on gambling operators that trade globally.

Rhodes also emphasised that the Gambling Commission is “more than ready to work with ” – referring to a recent roundtable with nine US and Canadian jurisdictions as an example of the Gambling Commission “establish clear working relationships that will support all of us to be more effective”.

At the conclusion of the conference, IAGR members elected Ben Haden of the Gambling Commission as their new president. Mr Haden takes over the presidency from Jason Lane, the Chief Executive of the Jersey Gambling Commission.

Next steps

Please get in touch if you would like to discuss any aspect of this speech or if we can otherwise assist you. You can find out more about the services Harris Hagan provides here.

This blog has been written on the basis of the published version of Rhodes’ keynote speech available here, which may differ slightly from the delivered version.

19Oct

Gambling Commission reminder to licensees about timely payment of annual fees

19th October 2023 Chris Biggs 194

In its fortnightly E-bulletin of 25 September 2023, the Gambling Commission included two reminders to operating licence holders (“Licensees”). Firstly, about the requirement that they pay their annual fee before the anniversary date of their operating licence and secondly, that it is a condition of the licence that the gross gambling yield (“GGY”) does not exceed the fee category threshold of that licence.

Payment of annual fees

Requirement

Following the Gambling Commission’s grant of an operating licence, Licensees must pay their first annual fee within 30 days of the Gambling Commission issuing their licence. Licensees are then required to pay their subsequent annual fees each year before the anniversary date of their operating licence being issued (section 100(1) of the Gambling Act 2005 (“2005 Act”)).

Failure to make payment on time

The Gambling Commission is required by the 2005 Act to revoke an operating licence in the event of a Licensee’s failure to pay its annual fee before the licence anniversary (section 119(3) of the 2005 Act). However, the 2005 Act permits the Gambling Commission to disapply this requirement, if is satisfied that the Licensee’s failure to pay its annual fee is due to an administrative error. It is of note that there is no requirement that the Gambling Commission commence a licence review before revoking an operating licence for non-payment of the annual fee.

How to make payment

The Gambling Commission will issue an invoice to Licensees six weeks before the annual fee is payable. The invoice can also be found on each Licensee’s Gambling Commission eServices account, through which payment of the invoice can be made.

Annual fees are not refundable by the Gambling Commission, unless an overpayment has been made. For example, no refund would be given if a licence is surrendered the day after the licence anniversary date.

We recommend that Licensees diarise their own reminders, well in advance of the licence anniversary, to ensure the timely payment of annual fees.

Fee categories

It is condition of an operating licence that the gross gambling yield (“GGY”) (or annual gross sales for gambling software licences) does not exceed the upper threshold of the fee category for each licensable activity.

Licensees must therefore monitor their projected GGY or annual gross sales in line with their fee categories, which are displayed on their operating licence. It is of note that fee category thresholds follow the licence anniversary year and not the reporting year (which is stipulated by regulatory returns).

Licensees must apply to vary their operating licence to increase the fee category of a licensed activity before exceeding the upper threshold to avoid breaching the licence condition. Failure to do so may lead to regulatory action. The application to vary can be submitted through eServices, carries an application fee of £40, and must be granted by the Gambling Commission before the licence anniversary date. Licensees who have already exceeded the GGY threshold must regularise the position by submitting an application to vary immediately.

Next Steps

We encourage Licensees to set reminders to pay annual fees, and to ensure the accuracy of their licence fee categories. Further information can be found in the Gambling Commission’s annual fees guidance.

Please get in contact with us if you have any questions about your annual fees and/or fee categories.