White Paper Series: Gambling Commission consults on timing of regulatory returns
On 30 November 2023, the Gambling Commission released its Autumn 2023 consultation on proposed changes to Licence Conditions and Codes of Practice (LCCP) and Remote Gambling and Software Technical Standards (RTS) (the “Autumn Consultation”). In this blog, we focus on the proposed changes to the Gambling Commission’s regulatory returns requirements, which for our regular readers, will not have come as a surprise.
As we have previously reported, regulatory returns have been under the Gambling Commission’s microscope in recent months:
- First, in an E-Bulletin on 29 August 2023, the Gambling Commission reminded licensees to submit regulatory returns on time in accordance with licence condition 15.3.1 of the Licence Conditions and Codes of Practice (“LCCP”). We discussed this reminder in our previous blog: Gambling Commission sets its sights on late regulatory returns and incorrect fee categories.
- Subsequently (and as highlighted in our article: Regulatory returns are under the microscope – but will the key issue be missed?), 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, confirming the regulator’s intention to make changes to its regulatory returns, including to “sharpen” the dataset currently received from licensees. Haden also indicated that there would be a consultation on the frequency of regulatory returns in November 2023.
It therefore comes as no surprise that the Autumn Consultation includes proposals to amend the frequency of submission of regulatory returns. In addition, the Gambling Commission indicates in the Autumn Consultation that it intends to make other changes outside of the consultation process. For example, by removing data fields from regulatory returns which are:
“both burdensome for gambling licensees and [provide] data quality issues for [the Gambling Commission]”.
In this blog, we outline the Gambling Commission’s proposals in relation to regulatory returns and reflect on the likely impact of these changes.
- Proposed changes to frequency – subject to consultation
Currently, the frequency of a licensee’s regulatory return submissions depends on the type of operating licence it holds. The Gambling Commission is consulting on requiring regulatory returns quarterly from all licensees, irrespective of gambling licence type.
It is expected that this proposal will affect the following categories / number of licensees:
|No. of licensees submitting annual regulatory returns
|Adult gaming centre
|External lottery manager
|Family entertainment centre
|Gaming machine technical
|Remote casino, betting and bingo
The Gambling Commission proposes to introduce this change by amending licence condition 15.3.1 as follows:
15.3.1 – General and regulatory returns
Applies to: All operating licences
- On request, licensees must provide the Commission with such information as the Commission may require, in such a form or manner as the Commission may from time-to-time specify, about the use made of facilities provided in accordance with this licence and the manner in which gambling authorised by this licence and the licensee’s business in relation to that gambling are carried on.
- In particular within 28 days of the end of each quarterly period
or, for those only submitting annual returns, within 42 days of the end of each annual period,licensees must submit an accurate Regulatory Return to the Commission containing such information as the Commission may from time to time specify.
- Further changes – not subject to consultation
The Gambling Commission also confirms in the Autumn Consultation that it plans to implement changes in relation to:
“the range of data required, the harmonisation of reporting periods across the industry, and improving the functionality for submitting and quality assuring the data.”
This is not the first time these changes have been mentioned. They actually flow from the Gambling Commission’s Changes to information requirements in the LCCP, regulatory returns, official statistics, and related matters consultation response, published in July 2020 (the “2020 Consultation Response”). According to the Autumn Consultation, the changes proposed in the 2020 Consultation Response were not implemented at the time due to the “reprioritisation” of the Gambling Commission’s work and the COVID-19 pandemic.
Changes to harmonise reporting dates
The first change that the Gambling Commission proposes to make is in terms of the “harmonisation” of regulatory return reporting dates. According to the Autumn Consultation, this change will take effect at the same time as its proposal to move to quarterly submissions – and means that the return due dates for all licensees will become:
|Return due date
|1 April to 30 June
|1 July to 30 September
|1 October to 31 December
|1 January to 31 March
Changes to data fields
In addition, the Autumn Consultation confirms that the Gambling Commission intends to remove a significant number of data fields from the current regulatory returns process, which it states will ensure:
- data completion is less time-consuming for gambling licensees;
- an opportunity to clarify questions and improve data quality;
- obsolete and non-business critical fields/ questions are removed; and
- improved understanding of current and emerging issues.
It is currently unclear which fields will be removed. Again, the Gambling Commission has chosen not to formally consult with the industry in respect of the removal of these data fields. However, it has confirmed that it will engage – outside of the consultation process – with the industry on the final reporting fields, with the intention to reduce the current number.
In line with Proposal 1 (of Part 2) of the 2020 Consultation Response, we expect the following data fields to be impacted as part of this process:
- Non-GB data
The Gambling Commission will only ask for non-GB data at an aggregated activity level, as opposed to requiring data for each sport and game category level. (It is important to note here that the Gambling Commission is concerned with non-GB revenues received in reliance on the GB licence, rather than all non-GB revenues – as this is often misunderstood by licensees.)
- B2C revenue share
Reporting of revenue share Gross Gambling Yield (“GGY”) for B2C licensees will be combined with proprietary GGY across remote casino, betting and bingo sport and game categories. The Gambling Commission stated that this would not affect licensees’ fee categorisation.
- Gaming Machine Technical
The Gambling Commission will no longer ask for the number of units sold, software sales or gross value of software sales and instead simply require the total value of sales. It will also remove a number of questions relating to the purchase, lease or sale of machines, profit shares and reporting of data by venue type.
- Bingo (non-remote)
Turnover reporting will no longer need to be split between participation fees and sales.
The Gambling Commission will no longer ask licensees for their workforce numbers.
For operators interested in participating in the Gambling Commission’s pilot program (or providing feedback), queries can be directed to [email protected].
- The elephants in the room
It is undeniable that aligning reporting dates for licensees will bring a degree of harmony to the regulatory returns process. However, neither the proposals in the Autumn Consultation nor the Gambling Commission’s intended changes to reporting dates / data fields address one of the main issues with regulatory returns, i.e. that fee categories are calculated by reference to a licensee’s licence year, not their financial or calendar year.
Currently, the Gambling Commission is generally amenable to amending a licensee’s reporting dates if requested by a licensee – giving licensees the flexibility to align their regulatory returns reporting dates with other internal financial reporting dates, which typically increases their ability to spot when they are about to exceed a fee category. However, once the new reporting periods are introduced, it seems that licensees will be unable to harmonise Gambling Commission reporting requirements with internal deadlines. The Gambling Commission appears to have paid little heed to this – despite some respondents to the 2020 Consultation highlighting that having the flexibility to determine their own reporting periods better enabled them to manage their resources to comply with their various other financial, regulatory and business reporting obligations.
Instead, it appears that the decision to align reporting dates has been made because it will be beneficial for the Gambling Commission, leading to:
- an improved ability for the Gambling Commission to budget based on more timely reporting of financial information, which will assist forecasting and ensure licensees are in the correct fee category;
- a more timely and accurate picture of the gambling sector, as the Gambling Commission will not need to estimate quarterly comparisons based on annual returns; and
- improved data quality for the Gambling Commission’s official statistics.
As we have indicated in our previous blog, we are certainly hopeful that the Gambling Commission’s collection of ‘better’ evidence will lead to its better regulation. However, it is also critical that these changes do not create a significant additional regulatory burden on licensees.
Finally, we also hope that the Gambling Commission will, as part of its review of the regulatory returns data fields, review and update its regulatory returns guidance. As we have previously highlighted, the Gambling Commission’s guidance on regulatory returns is in many places, unclear and lacking in detail – an issue which continues to lead to confusion for licensees and, in turn, the inadvertent submission of inaccurate information. For now, it is unclear whether the Gambling Commission will update its guidance following the Autumn Consultation; and we strongly encourage licensees and other industry stakeholders to raise this with the Gambling Commission when they respond to the Autumn Consultation.
- Next steps
The Autumn Consultation will close on 21 February 2024. Responses can be submitted through the Gambling Commission’s online survey or sent by post to the Policy Team at the following address: Gambling Commission, 4th Floor, Victoria Square House, Birmingham, B2 4BP.
In the short time before the Autumn Consultation closes, we strongly encourage licensees to consider how the proposals will impact their businesses and if they wish to influence change, respond to the Autumn Consultation and/or apply to be part of the Gambling Commission’s pilot data programme.
Please get in touch with us if you have any questions about your regulatory returns or if you would like assistance with preparing a response to the Autumn Consultation.