A Fine Mess: Gambling Commission Unveils Potential Five-Tier System of Financial Penalties

Gambling Commission LogoAt the end of a record-breaking year for the Gambling Commission’s fines department, the betting sector regulator has confirmed its plans to make its system of financial sanctions more transparent and easy to understand.

They have launched a consultation period, starting in mid-December and running through until March, will record the views of operators and other industry stakeholders as to how best to proceed.

There is a real determination on the part of the Gambling Commission to be more transparent in how they calculate the fines, with the organisation facing criticism from some operators for what they consider to be the ‘random’ numbers that the fines committee comes up with.

It comes in a year in which the Commission has generated more than £40 million in financial revenues in what has been an astonishing year of enforcement action.

Clear as Mud

When a gambling operator breaches their licensing conditions in the UK, they know what they’ve done wrong – they just don’t know the size of the penalty they face.

For more clarity, the Commission will look at ways to improve the transparency of their financial sanctions – however, that could allow betting firms, according to some cynics, to effectively budget for the fines that they are happy to be hit with as a ‘cost of business’.

In a rather clunky press release, the regulator hopes that the consultation will bring clarity in ‘determining the starting point for the penal element of the penalty by reference to the seriousness of the breach and a percentage of Gross Gambling Yield (GGY), or equivalent income generated during the period of the breach.’

“These consultations are part of our continued drive to ensure Britain has the world’s most effectively regulated gambling sector,” so says the Commission’s executive director of operations, Kay Roberts. “We would urge all our stakeholders to take the time out to have their say on these consultations as all views on proposed changes will be considered.”

Views can be aired via the official consultation page, which can be found here.

Taking an Interest

As well as welcoming views on the structure and governance of their financial penalties, the Commission is also looking at new ways to manage the administration of changes of owners and licensees.

Normally, a licensee must inform the regulator when somebody new takes a 3% or greater share in the business (or a holding company) – in some overseas jurisdictions, this can be as high as 5%, as well as when a loan is taken out with an agency that is not regulated by the Financial Conduct Authority.

However, there’s a fear that the ownership structure at some gambling firms – particularly those that can be categorised as pan-global – is so complex that some individuals are being spirited into senior positions without the necessary due diligence being undertaken.

The risk is that nefarious individuals may be taking on major shareholding or positions of seniority without the regulator’s assent, while other complicated management structures can also create confusion as to how a gambling firm is financed.

For greater consistency, the Commission is planning to introduce new reporting procedures that will ensure that all senior figures within UK licensed betting firms are known and vetted, while their financial positions – and the source of their money – will also need to be documented in clearer fashion.

The £40 Million Pound Question

In amongst the desire for change, the UK Commission can be chuffed with its punitive work – in a year in which the government’s Gambling White Paper has put their position under the microscope.

By my admittedly mediocre math, the regulator has clawed in a sum in the region of £42 million in 2023 from the misbehaving operators under its jurisdiction.

Shouldering the main burden of that back in March was William Hill, who were fined a whopping £19.2 million for a catalogue of failings.

Those were described as ‘widespread and alarming’ by the regulator, whose Andrew Rhodes admitted that he had considered suspending their licence altogether but for the immediate improvement work that the firm had put in.

Also under the spotlight was 32Red and sister company Platinum Gaming, who ate a £7.1 million fine barely a week prior to William Hill’s sanction being metered out. The Kindred Group businesses were found not to have done enough to combat problem gambling behaviours showcased by some of their customers.

Others to face significant fines from the Commission were InTouch Games (£6.1 million, January), Videoslots Ltd (£2 million, June) and the experienced Done brothers at Betfred (£3.25 million, July). Will penalties of these size be a thing of the past under the Commission’s future plans, or a mere drop in the ocean?