11Oct

Regulatory returns are under the microscope – but will the key issue be missed?

11th October 2023 Chris Biggs 42

The Gambling Commission’s Director of Research and Statistics, Ben Haden, posted a blog on 6 October 2023, entitled Making better use of operator data.

In the blog, Haden explains that, following industry discussions at the Setting the Evidence Agenda Conference on 9 March 2023, and as hinted at in the Gambling Commission’s Evidence gaps and priorities 2023 to 2026 publication in May this year, the Gambling Commission is introducing two new measures over the next six months that are intended to enable it to gather more detailed operator data.

Measure 1: “Sharpening” the data currently received from licensees in regulatory returns by “removing a significant number of items which are out of date or not useful”; increasing the frequency of reporting requirements for many licensees, from annual to quarterly; and aligning reporting dates.

Measure 2: Commencing a pilot to receive a more detailed “daily aggregated consumer data” from operators (meaning aggregated transaction data over the course of a day – not on a per transaction basis).

According to Haden, Measure 1 will be subject to public consultation in November.

In this article, we discuss Measure 1 and consider its effectiveness in the absence of improvements being made to the current regulatory returns system.

Background

In our recent blog on regulatory returns, we highlighted that the Gambling Commission is taking a tougher approach to regulatory returns and, in particular, will escalate to its Enforcement team any operator which fails to submit its regulatory returns on time. As a reminder, it is a licence condition for all licensees to submit regulatory returns on time (15.3.1 of the Licence Conditions and Codes of Practice). Separately, we understand that the Gambling Commission has established a working group which is seeking feedback on the questions raised in the regulatory return form.

Regulatory returns are clearly therefore under the microscope internally at the Gambling Commission – but what is going to change?

Proposed changes to regulatory returns

As mentioned above, Measure 1 will be subject to public consultation in November 2023. For now, therefore, we have only a generic outline of the proposed changes.

Proposal 1: Certain (out of date and/or not useful) questions to be removed.

We agree that less is more, but will the Gambling Commission also take the opportunity to review the remaining questions and related guidance, to ensure it elicits the correct responses from licensees?

Proposal 2: Frequency of reporting to increase for many licensees.

This change would only apply to licensees that are currently required to submit annual returns, which include (but are not limited to) the following licences:

Adult gaming centre
Betting (limited) (non-remote)
Betting (standard) (non-remote and if less than 50 premises)
Betting intermediary (non-remote)
Bingo (non-remote)
Gambling software (ancillary, non-remote, remote and linked)
Pool betting (non-remote and remote)

The full list of licences and the current frequency of reporting can be found here.

Proposal 3: Regulatory returns reporting dates to be aligned.

We expect the Gambling Commission will require all licensees to submit regulatory returns at the same time, rather than in line with (for example) their own financial reporting periods.

These proposals follow the Gambling Commission’s previous efforts, in 2014, to align regulatory returns (for all licensees) to a periodic reporting frequency from 1 October, the original date the point of consumption licensing regime was due to be implemented. The rationale of these proposals was explained in the Gambling Commission’s Review of remote casino, betting and bingo (‘RCBB’) regulatory return and gambling software regulatory return consultation response, in August 2014. The proposals were abandoned following the judicial review that delayed the implementation of the new regime.

Technology is only as good as the data put into it. Doesn’t the same apply to the Gambling Commission?

Haden opens the blog by stating:

“Operator data is a rich resource in terms of ensuring how we understand how the market is developing, appreciate how interventions we make are (or aren’t) having an impact and at a fundamental level ensure we charge the right fees and can forecast and manage income and finances.”

and concludes it by asserting that:

“better evidence driven by better data, will lead to better regulation.”

Whatever the Gambling Commission’s aims, its intention to collect better industry data is laudable; we cannot argue that better evidence and data should lead to better regulation. However, as we have discussed previously, the current regulatory returns system is imperfect and lacks detail. This lack of clarity has, in our experience, sometimes resulted in incorrect data being provided with the regulatory returns, or being provided under the wrong licensable activity.

This is of course a serious concern from the licensee’s perspective, as it is an offence under section 342 of the Gambling Act 2005 for a licensee to misrepresent or provide false information to the Gambling Commission without reasonable excuse. However, it also raises concerns regarding the quality of data being collected by the Gambling Commission – and thus the reliability of the conclusions drawn therefrom.

The Gambling Commission is right to acknowledge that operator data is a potentially rich resource, but the quality (or otherwise) of the data collected will be key to ensuring that it can be relied upon by the Gambling Commission. Whether data is to be used to calculate correct fees, to manage income and finances, or to identify and evaluate market change does not matter. If the data provided to the Gambling Commission by licensees is incomplete or inaccurate, it will cast doubt on decisions taken by the regulator and may lead to the wrong regulatory outcomes.

When it consults on Measure 1, we hope the Gambling Commission will at the same time propose (and consult on) changes to:

the remaining questions that are posed in regulatory returns; and
the associated guidance,

to ensure there is little to no ambiguity between licensees as to what data should, and should not, be provided.

By taking the time to get the regulatory returns process right now, the Gambling Commission could make significant gains in the future, by ensuring that the datasets it collects going forward are as accurate, and therefore useful, as possible.

Next steps

Licensees should look out for the Gambling Commission’s consultation on Measure 1, which is due to be published in November 2023. Once the consultation is open, we recommend licensees to respond and use the consultation as a platform to raise other concerns about the regulatory returns system, even if they are not specifically raised by the Gambling Commission. In the meantime, licensees can also contact the Gambling Commission about the regulatory returns process by completing its online contact form.

Please get in touch if you have any questions regarding the regulatory returns process or if you would like our assistance preparing a regulatory return.

With credit and sincere thanks to Gemma Boore for her invaluable co-authorship.

17Aug

Consultation Response on Changes to Information Requirements

17th August 2020 David Whyte 218

In our blog of 7 April 2020 we summarised the Gambling Commission’s consultation, launched on 26 February 2020, in two parts, on planned changes to regulatory information and data reporting requirements. On 30 July 2020, the Gambling Commission published its consultation response document (the “Consultation Response”). The Gambling Commission received 70 written responses to its consultation, including 50 from licensees.

We recommend that all licensees read the Consultation Response and new/amended LCCP provisions. We highlight some of the Gambling Commission’s significant changes:

Additional obligations

Licence condition 15.1.3 (reporting of systematic or organised money lending)

This new licence condition requires licensees to provide the Gambling Commission with any information relating to cases where they encounter systematic, organised or substantial money lending between customers.

We discuss this new licence condition in a separate blog.

Licence condition 15.2.2 (other reportable events)

A new requirement that licensees notify the Gambling Commission of any actual or potential breaches by the licensee of the requirements imposed by or under Parts 7 or 8 of the Proceeds of Crime Act 2002, or Part III of the Terrorism Act 2000, or any superseding legislation has been added.

We discuss this new licence condition in a separate blog.

Licence condition 15.2.3 (other reportable events – money laundering, terrorist financing, etc)

This new licence condition requires licensees to notify the Gambling Commission:

as soon as reasonably practicable, of any actual or potential breaches by the licensee of the provisions of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the “Regulations”);
within 14 days of appointment, the identity of the officer responsible for the licensee’s compliance with the Regulations
within 14 days of appointment, the identity of the nominated officer; and
within 14 days of the departure of removal of the above-mentioned positions.

We discuss this new licence condition in a separate blog.

Removed obligations

Licence conditions 13.1.1 and 13.1.2 (pool betting)

The requirement for licensees to notify the Gambling Commission about persons they have authorised to offer pool betting on a track in connection with a horserace or dog race in reliance on an occasional use notice, or to offer football pool betting have been removed.

It is of note that this change does not affect the substance of (existing) licence conditions 13.1.1(2) and 13.1.2(2). Licensees will therefore still be required to produce and retain a record relevant to each pool that they offer and make this information available to the Gambling Commission on request.

Licence condition 15.2.1 (reporting key events)

Various key event notification requirements have been removed. Pertinent removals include:

investments in the licensee other than by way of subscription by shares;
entering into arrangements with third parties for services other than for full value;
changes to the structure or organisation of the business that affect a key position or the responsibility of its holder;
court judgements against the licensee remaining unpaid for 14 days;
issues relating to auditing or the submission of audited accounts;
changes to arrangements concerning the protection of customer funds (this requirement has been moved to licence condition 15.2.2 and is therefore no longer a key event);
customer fund reconciliation deficits;
the receipt from any professional, statutory or other regulatory or government body of the outcome of a compliance assessment;
any change in the identity of the ADR entity or entities for the handling of customer disputes (this requirement has been moved to licence condition 15.2.2 and is therefore no longer a key event); and
the reference of a dispute to an ADR entity, other than one in respect of which contact details were given in accordance with the social responsibility code provision on complaints and disputes.

Licence condition 15.2.2 (other reportable events)

Requirements to notify the Gambling Commission about the conclusion of a dispute referred to an ADR entity and of any outcome adverse to the licensee of proceedings taken against the licensee by a customer in relation to a gambling transaction have been removed.

Other proposed amendments

Licence conditions 15.1.1 and 15.1.2 (reporting suspicion of offences)

These licence conditions have been amended to introduce additional text which will enable the Gambling Commission to specify the form and manner of the reporting of suspicion of offences etc. and to provide clarification on the reporting of suspected breaches of betting rules to the appropriate sport governing body.

The changes also reinforce the principle that responsibility for meeting this licence condition rests with licensees, not third parties. The Gambling Commission notes that while it is acceptable for one licensee to provide information on behalf of another within a group, that ultimate responsibility for the timing and content of the submission rests with the licence holder.

Licence condition 15.2.1 (reporting key events)

Other key event notification requirements have been amended. Amendments of note include:

key events relating to the presentation of a winding up order or petition, entering into administration or receivership, bankruptcy, sequestration, or an individual voluntary arrangement have now been merged into a single key event. This has been expanded to include any person holding a key position for a licensee, group companies and shareholders or members holding 3% or more of the issued share capital of the licensee or its holding company;
the definition of a ‘key person’ in relation to anti-money laundering has been expanded and now covers a position, the holder of which, has overall responsibility for the licensee’s anti-money laundering and/or terrorist financing compliance and/or for the reporting of known or suspected money laundering or terrorist financing activity;
notification requirements about investigations by professional, statutory, regulatory or government bodies into the licensees’ activities have been narrowed to apply to persons in ‘key positions’, rather than to ‘personal licence holders or persons occupying a qualifying position employed by them’;
notification requirements about criminal investigations have been amended and must be reported if it concerns the licensee or a person in a key position and if the Gambling Commission may have cause to question whether the licensee’s measures to keep crime out of gambling had failed;
notification requirements in the event of a breach in the licensee’s information security have been amended. Licensees are now required to notify the Gambling Commission in the event of any security breach to the licensee’s environment that adversely affects the confidentiality of customer data; or prevents the licensee’s customers, staff, or legitimate users from accessing their accounts for longer than 12 hours;
in the case of remote gambling, notification of the commencement or cessation of trading on website domains has been expanded to include domains covered by ‘white label’ arrangements.

Submission of key events

The Gambling Commission has amended the wording in licence conditions 15.2.1 (reporting key events) and 15.2.2 (other reportable events)to include wording that they “are to be reported” via eServices. Key events will therefore no longer be able to be submitted by email unless they have technical issues with eServices (as is often the case!):

If licensees do experience technical issues preventing them reporting key events to us via eServices within 5 days, they should capture evidence of the problems experienced and contact their Licensing Account Manager for assistance.

Ordinary code provision 8.1.1

The Gambling Commission decided not to proceed with its proposals to elevate elements into licence condition 15.2.2 at this stage. The code provision therefore remains in its current form.

Licence condition 15.3.1

The Gambling Commission has harmonised the reporting periods for the submission of regulatory returns, with unified reporting periods across the industry. It has retained the 42-day period for the submission of annual returns for the time being. The regulatory reporting periods are therefore as follows:

Type of return	Reporting period	Submission window
Annual	1 April to 31 March	1 April to 13 May
Quarterly	1 April to 30 June 1 July to 30 September 1 October to 31 December 1 January to 31 March	1 to 28 July 1 to 28 October 1 to 28 January 1 to 28 April

The Gambling Commission received a response about the “stability of the eServices system and a suggestion…to develop an API”, which it is exploring to enable data submission via an API.

Technical scoping work for the harmonisation of reporting periods will start in the Autumn 2020.

Social responsibility code provisions 3.2.1, 3.2.3, 3.2.5 and 3.2.7 (access to gambling by children and young persons)

These code provisions have been amended to allow the Gambling Commission to specify the form or manner of reporting test purchasing results. The Gambling Commission is yet to specify a standardised format for the submission of these results.

Social responsibility code provision 6.1.1 (complaints and disputes)

This code provision has been amended to remove the requirement for routine reporting of the outcomes of complaints and disputes referred to ADR and court proceedings that are adverse to the licensee.

Changes to personal licence conditions

The time within which personal licence holders must report key events to the Gambling Commission has been extended from up to 5 working days to up to 10 working days. Wording has been included that requires all key events to be reported via Personal eServices. Key events will therefore no longer be able to be submitted by email.

The changes come into force on 31 October 2020.

If you would like to discuss any of the issues raised, please do get in touch with us.

07Apr

Consultation on LCCP Information Requirements, Regulatory Returns and Industry Statistics

7th April 2020 Jessica Wilson 209

Gambling Commission licensees are required to report certain information to the Gambling Commission in accordance with the Licence Conditions and Codes of Practice (“LCCP”).

On 26 February 2020 the Gambling Commission issued a consultation, in two parts on its changes to regulatory data reporting requirements. Its proposals seek to:

improve data quality and the efficiency of regulation;
reflect continued focus on consumers and social responsibility;
ensure requirements are reconciled against…current and future data needs; and
streamline…existing requirements and, where possible, reduce regulatory burden.

Part 1: Proposed changes to information reporting requirements within the LCCP

We recommend that all licensees read the consultation and respond. We highlight some of the Gambling Commission’s significant proposals:

Additional obligations

Licence condition 15.1.3 – Reporting of systematic or organised money lending

This new licence condition will require licensees to report any suspected organised money lending between customers, elevating existing ordinary code provisions 3.8.1 and 3.8.2.

Licence condition 15.2.1(19b) – Reporting key events

This key event will be amended to include the need to report any criminal investigation involving a person holding a key position.

Licence 15.2.2 – Other reportable events

Elements of ordinary code provision 8.1.1 will be elevated to licence condition 15.2.2, to ensure the reporting of any material change to a licensee’s structure, operation of its business, managerial responsibilities or governance arrangements.

Additionally, the Gambling Commission proposes to add a new requirement for reporting actual or potential breaches under Parts 7 or 8 Proceeds of Crime Act 2002, Part III Terrorism Act 2000 or any superseding legislation.

LCCP 15.2.3 – Other reportable events

The Gambling Commission proposes to include a new licence condition, for non-remote and remote casino operating licensees, requiring them to report:

any actual or potential breaches by the licensee of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on Player) Regulations 2017 (the “2017 Regulations”);
within 14 days of appointment, the identity of the officer responsible for the licensee’s compliance with the 2017 Regulations;
within 14 days of appointment, the identity of the nominated officer; and
within 14 days of the departure or removal of the above-mentioned persons.

Removed obligations

Licence conditions 13.1.1 and 13.1.2 – Pool-betting

The requirements for licensees to proactively notify the Gambling Commission of any person authorised to offer pool-betting on a track or in relation to football pool-betting have been removed.

Licence condition 15.2.1 – Reporting key events

Good news! Various key events, including the investments other than by subscription of shares and referral of a dispute to an ADR entity, have been removed.

Ordinary code provision 8.1.1 – Information requirements

This provision will be removed in its entirety as the Gambling Commission proposed to incorporate elements within licence conditions 15.2.2 and 15.3.1.

Other proposed amendments

Submission of key events

The Gambling Commission proposes to rearrange key events in licence condition 15.2.1 and reportable events in licence condition 15.2.2 and include wording that requires all key events to be submitted via eServices. This will mean key events can no longer be submitted by email.

Licence condition 15.3.1 – General and regulatory returns

Currently, the Gambling Commission allows licensees to choose their reporting periods for regulatory returns. It planned to harmonise reporting periods after point of consumption licensing in 2014, but these plans were disbanded due to the GBGA judicial review. This variation in reporting period dates complicates the Gambling Commission’s internal processes and impacts on the quality of its official statistics. It proposes to align and harmonise, with unified reporting periods across the industry, as follows:

Type of return	Reporting period	Submission window
Annual	1 April to 31 March	1 to 28 April
Quarterly	1 April to 30 June 1 July to 30 September 1 October to 31 December 1 January to 31 March	1 to 28 July 1 to 28 October 1 to 28 January 1 to 28 April

Further, it proposes to reduce the period of 42 days for a licensee to submit an annual regulatory return to 28 days, to mirror the 28-day period to submit quarterly regulatory returns.

Part III – Personal key events

Personal licensees will be provided with 30 working days to report key events (presently five working days). These will have to be reported via Personal eServices only, meaning they cannot be submitted by email.

Part 2: Proposed changes to regulatory returns

The Gambling Commission’s proposals include significant reduction to the amount of data requested in regulatory returns. However, it “also intend to introduce new datapoints that place a greater focus on commitment towards consumers and the prevention of gambling-related harms, and to implement several changes focused on improving data quality…”. The wording of questions will be amended to ensure consistent use of terminology.

Reduced data requirements

Non-GB data will only be required at an aggregated activity level.
Reporting of GGY will be simplified to combine B2C revenue share GGY with proprietary GGY.
Gaming machine technical licensees will no longer need to provide the number of units sold, software sales, gross value of software sales, instead just requiring total value of sales. This will include removal of the requirement for reporting numbers of machines leased, sold, profit share, by venue type, the number of machines purchased or scrapped, by second-hand and new.
The total number of inactive, acquired or disposed premises will no longer be required.
Non-remote casino data on a venue-by-venue basis, and monthly casino drop/win data, will no longer be required. However, the Gambling Commission may require aggregate level data to be split by ‘High End London’ casino and ‘Other’ casino.
Software game titles will no longer be required as this has been superseded by the Games Register.
Turnover figures for non-remote bingo, split between participation fees and sales, will no longer be required.
The RET questions will be simplified to two questions requesting the name of the recipient of the contribution and the value.
Workforce numbers will no longer be required due to inherent data quality issues.

New requirements

The Gambling Commission proposes to add new questions focusing on safer gambling, including customer complaints, customer accounts, customer interactions and safer gambling tools such as deposit limits and exclusion schemes.

Length of return periods

Whether a licensee submits quarterly or annual returns is currently dependent on the sector the licence relates to. The Gambling Commission intends to change this to be based on aggregated GGY. This would result in larger operators, such as bingo operators, changing from annual to quarterly returns and smaller remote operators changing from quarterly to annual returns. The thresholds are yet to be determined.

New digital service

“ proposes to improve the usability, accessibility and availability of eServices system for the submission of regulatory returns; possibly building a new digital service.” At this stage, we understand this will allow regulatory returns questions to be dynamic and tailored to a licensee’s activities with, for example, use of an API.

Industry statistics

The Gambling Commission intends to make “improvements” to its industry statistics. These are contingent on implementation of the regulatory returns’ improvements detailed above. At this stage, we understand this will include:

reducing the current lag (seven to eight months) from the end of the reporting period to publication of the industry statistics, to three months;
half-year updates; and
presenting the information in a more accessible format and embedded within the Gambling Commission’s website.

Respond to the consultation

The consultation closes on 20 May 2020 and can be accessed here.

Any changes to the LCCP will be implemented in October 2020.