The Gambling Commission’s Annual Report 2021-2022 (the “Annual Report”), published and presented to Parliament pursuant to Schedule 4 of the Gambling Act 2005 on 6 September 2022, has arguably never occupied a more topical status. With the effectiveness of gambling regulation throughout the industry under the spotlight, the Annual Report presents the Gambling Commission’s summary of its own performance and accountability for the past year. The UK’s independent public spending watchdog, the National Audit Office (the “NAO”) stated in its report (28 February 2020) (the “2020 NAO Report”) on the Gambling Commission,

“Good performance measurement includes setting clear benchmarks to measure performance against, monitoring good-quality data to assess performance, evaluating regulatory impact on key issues and reporting performance transparently to a range of stakeholders.”

Clear benchmarks to measure performance

The Gambling Commission’s key deliverables include the three licensing objectives, optimising returns to good causes from The National Lottery, and improving gambling regulation. Of the 40 key deliverables the Gambling Commission planned to deliver for the financial year 2021-22, 62.5% were fully completed, with the majority of work remaining in the area of gambling regulation improvement.

Despite this completion rate, the effectiveness of the improvements themselves, as well as their specific nature, remains unclear and sustains the criticism levelled against the Gambling Commission by the Public Accounts Committee (the “PAC”) that it ‘does not have meaningful indicators to measure whether it is being effective, and therefore, to be held to account.’ The Department for Digital, Culture, Media & Sport (the “DCMS”) has also previously called for the Gambling Commission to have ‘a broader set of performance measures, rather than focusing on headline numbers’, although the Government did state in its Response to the House of Lords Gambling Industry Committee Report: Social and Economic Impact of the Gambling Industry (dated 8 December 2020) that it was working with the Gambling Commission to review the regulator’s key performance indicators.

However, reviewing the Annual Report alongside the Gambling Commission’s Corporate Strategy 2021-2024 (1 April 2021) and Interim Business Plan and Budget 2022-2023 (the “Interim Business Plan”), there appears to be a persistence of high-level outcomes but without the accompanying “detailed, measurable success criteria against which to judge progress”. It is unclear whether the Gambling Commission’s remaining improvements will address the development of its impact evaluation processes.

The Annual Report also indicates that work remains on the delivery of optimising returns to good causes from The National Lottery, with none of the deliverables being “fully complete” for the financial year 2020-2021. A highlight of the Gambling Commission does, however, include the announcement of Allwyn Entertainment Limited as the preferred applicant following the conclusion of the 4^th National Lottery Licence.

Monitoring good-quality data to assess performance

In addition to data sets regarding the Gambling Commission’s own performance, the Annual Report also covers industry statistics generally, including sector breakdowns, gambling participation, and problem and at-risk gambling. In relation to the latter, the Gambling Commission itself, concedes that “[u]nfortunately, there was not a comprehensive picture available in 2018 for the whole of Great Britain”, which is problematic, as previous indications, the latest of which are from 2016, suggest that rates of problem gambling are higher in Scotland and Wales than they are in England. However, this appears to be a wider issue, as no gambling statistics were included in the 2019 Health Survey for England Report, and the Public Health England’s evidence review on the gambling-related harms (updated 30 September 2021) was similarly based on 2018 figures.

The 2020 audits conducted by the NAO and the PAC also highlighted gaps in the Gambling Commission’s intelligence and data used to identify consumer problems with gambling, including a failure to consider at the time of the audits, “the 33,000 contacts a year it receives from consumers” . The Annual Report does reassure though that the 5,720 consumer complaints recorded in the past year have helped the Gambling Commission to “inform [its] regulatory approach”, although it is unclear specifically in what ways.

The Gambling Commission has also since issued and received responses to a consultation on participation and prevalence research (23 June 2021) and addresses in the Interim Business Plan the allocation of its own resources and investment in these areas, with £250,000 being allocated to source specialist advice to “help shape [the Gambling Commission’s] data strategy and support scoping activities in the first half of the year”. (Priority 4 – Increasing the effective use of data by the Commission and the gambling industry)

However, whilst improvements to data quality are in progress, the absence of any marked changes reiterates another criticism from the 2020 audits – that intelligence gathered needs to not only be good quality but also be timely and produce timely results if they are to protect consumers. Understandably, change and in particular institutional change, requires time, so the Gambling Commission’s effective delivery on good quality data remains to be seen.

Evaluating regulatory impact on key issues

Non-compliance with licence conditions and codes of practice. The Foreword highlights that the Gambling Commission has issued £26.1 million in fines or regulatory settlements, including some of its highest operator fines to date, ranging from £9 million to £17 million at the higher end. The reiteration of this statistic in relation to “Keeping crime out of gambling” instead of “Improving gambling regulation” is also perhaps a telling reflection of how the Gambling Commission views some of its licensees! There remains therefore, a focus on the use of enforcement as a deterrent albeit with no update on the Gambling Commission’s awareness on how effective this approach is.

The Annual Report also cites the Gambling Commission’s progress towards implementation of the NAO and the PAC’s recommendations generally. These recommendations included exploring the use of incentivisation through financial and/or reputational incentives adopted by other sectors, such as league tables. Whilst there is no specific reference to it in the Annual Report, the Gambling Commission has stated previously that such league tables would have to be introduced carefully to ensure that they have the desired impact for consumers.  

Responding to social and technological change. The Gambling Commission’s ability to respond dynamically to change is undoubtedly affected by the funding it receives, which is in part through application and licence fees. The Gambling Commission’s reported income for the year from fees and other sources, increased from £18.868 million in 2020-2021, to £20.176 million, which is attributable in part to the licence fee increases that came into effect from 1 October 2021.

Owing to the increased complexity of its work, particularly as a result of online and mobile gambling, key skill gaps previously identified by the Gambling Commission include crypto-currency and addictive technologies. The NAO recognised in its 2020 Report that the Gambling Commission’s ability to address these gaps were constrained by its reliance on licence fees set by the DCMS and the Interim Business Plan suggests that these constraints are ongoing. Of the £1.1 million of funding allocated by the Gambling Commission to resources and investment for 2022-2023, it is only stated that the allocation of remaining funds “may include additional specialist staff”.

However, despite such constraints, the NAO also stated in its 2020 Report that the Gambling Commission had not at the time “…produced a robust assessment of future needs or fully explored what more it could do with existing resources”. As part of its recommendations, the NAO included consideration of the ways licence fees could be used to create financial incentives on operators to raise standards. Based on the Annual Report, this remains outstanding.  

Protecting children and vulnerable people form being harmed by gambling. The Gambling Commission’s highlights include  an update on its findings from the interim evaluation on the ban on credit cards for gambling which came into force on 14 April 2020. In relation to the protection of young people, notably absent is any specific reference to research/investigation on the impact of fixed odds betting under lottery legislation, which is accessible by 16 to 17 year olds. The Gambling Commission was recommended by the Public Accounts Committee in its report Gambling regulation: problem gambling and protecting vulnerable people (28 June 2020), to “urgently investigate” this, but as yet, updates are outstanding.

There has been progress, however, regarding the launch of the Gambling Policy and Research Unit within the Gambling Commission’s Behavioural Insights Team, who have conducted work with banks and the financial services sector “to help them understand, identify and support [the] most at-risk customers” in the similar way to how they had been accessing transaction data to support its work in anti-money laundering and against unlicensed gambling operators.  

“A fairer market and more informed consumers”. The Foreword states that “First and foremost, we want to address the impacts of the Covid-19 pandemic…our strengthened guidance and tighter measures for operators have continued to have a positive effect and gambling behaviour has stabilised.” Notably, the PAC commented in its 2019-21 Report that the Commission had not collected data on whether the 10 commitments made by the gambling industry regarding customer interaction during lockdown were met in practice. There does not seem to be any update on this.

Another issue that remains unaddressed is the facilitation of consumers’ right of redress on social responsibility failings. This is perhaps because it falls within the scope of the Gambling Review, as the DCMS have previously underlined that there is no statutory consumer representative organisation or ombudsman which exists in other sectors that provide consumers with greater protections/access to redress social responsibility issues. The Gambling Commission itself has also stated that it has “no role to seek or produce redress for individual consumers, but it does word to enforce the social responsibility codes of practice…[so that] redress] is not needed.”

In terms of progress, new arrangements between GamCare and the Gambling Commission’s Consumer Contact team now facilitates direct transfer or signposting for those who are vulnerable.

Reporting performance transparently to a range of stakeholders

In relation to the Gambling Commission’s delivery of its corporate business plan, the presiding tone in the Annual Report is one of optimism with a marked emphasis on the amount of activity engaged in by the Gambling Commission. Therefore, there is undoubted transparency about the extent of the Gambling Commission’s work but perhaps less so about the effectiveness of such work and the work that still remains.

What’s next?

In its report Social and Economic Impact of the Gambling Industry Gambling Harm—Time for Action (2 July 2020), the House of Lords Select Committee stated,

“The Commission prepares an annual report which it submits to Parliament. This could be debated in either House, but usually is not. It could be considered by the Commons DCMS Committee, which could take evidence from the Commission and others, and report on its performance over the previous year; but it has not done so, certainly in the recent past… The promised Government review of gambling, if and when it takes place, is not intended to concentrate on the Commission. We believe there is a need for a mechanism for a regular assessment of the past performance of the Commission from which lessons can be learned which will improve its work in the future.”

As the last Annual Report before the White Paper is published, a large number of the Gambling Commission’s weaknesses identified by the NAO and the PAC’s independent audits continue to persist – namely that its outcomes are not comprehensive, its impact evaluation lacking and assessment of outcomes, limited. It is with great anticipation therefore, that we await to see how and the extent to which the Gambling Review will address the legal and financial structural limitations of gambling regulation in Great Britain, of which the Gambling Commission plays only one part.