On 16 May 2023, Bahar Alaeddini appeared as a panellist on a VIXIO GamblingCompliance webinar titled “The End of the Beginning” together with Dan Waugh from Regulus Partners, in which they discussed some of the key proposals of the White Paper, where we go from here and the impact:
The long-awaited High Stakes: Gambling Reform for the Digital Age (the “White Paper”) has been published today, nearly 30 months after the review of the Gambling Act 2005 terms of reference and call for evidence (the “Gambling Review”) was published on 8 December 2020.
The Gambling Review had the following objectives:
Six Gambling Ministers, three Prime Ministers, two Monarchs, 16,000 responses, several leaks, a World Cup and a global pandemic later, we welcome the publication of the White Paper which brings at least the beginnings of some certainty and direction to the industry about Government plans to ensure our gambling laws are “fit for the digital age” and on important issues such as affordability, where speculation (often of the worst-case variety) and uncertainty has been casting a long shadow over the future of the industry. It also brings substantial and meaningful reforms intended to make gambling safer, “to protect vulnerable users in smartphone era”. These include the proposed introduction of a mandatory levy on gambling companies (for spending on research, education and treatment of problem gambling), but will undoubtedly not go far enough to meet the expectations of gambling reform campaigners.
In today’s announcement, Culture Secretary Lucy Frazer outlined a comprehensive package of new measures to achieve the Government’s objectives following the Gambling Review, and captured the balance between consumer freedoms and protection of harm in her Ministerial Foreword to the White Paper as follows:
“Millions of us enjoy gambling every year and most suffer no ill effects, so state intervention must be targeted to prevent addictive and harmful gambling. Adults who choose to spend their money on gambling are free to do so, and we should not inhibit the development of a sustainable and properly regulated industry which pays taxes and provides employment to service that demand. What we will not permit is for operators to place commercial objectives ahead of customer wellbeing so that vulnerable people are exploited.”
The White Paper is 268 pages long and has six chapters.
The key proposed reforms are:
The White Paper is a Government policy document which sets out proposals for future gambling legislation and regulation. The White Paper does not include a draft Bill, because the proposed reforms (with just a few exceptions) do not require primary legislation. This is consistent with our long-held view that the Government and the Gambling Commission already have wide-ranging and extensive powers under the Gambling Act 2005, that most reforms can therefore be achieved through secondary legislation and regulation, and that the Government has far more important legislative priorities in the present socio-economic climate.
As the previous Gambling Minister, Paul Scully MP, said in his speech to the Betting and Gaming Council on 26 January 2023:
“The White Paper is not the final word on gambling reform. It will be followed by consultations led by both DCMS and the Gambling Commission. I want the industry to stay engaged as policies are refined, finalised, and implemented.”
We urge the industry to heed that imperative. Our initial review suggests that the White Paper is arguably as balanced as the industry could reasonably have expected, with important and overdue liberalisations for the land-based industry, and that it should engage with Government and the Gambling Commission to ensure that the proposed reforms are delivered in a timely, sensible and, critically, workable way. Vigorous engagement will certainly be required in relation to the “affordability” proposals given their importance and complexity. The Government has set out an ambitious timeline for itself and the Gambling Commission in the White Paper and gambling reform campaigners have already made clear their intention to “hold the Government’s feet to the fire to ensure these measures are implemented swiftly”. So perhaps at least one area of consensus will emerge as secondary legislation and regulation is refined, finalised, and implemented, but do not expect many more as the debate about gambling reform intensifies.
We will continue to review the White Paper in more detail and will be publishing our insights “imminently” and reporting on material developments over the coming weeks and months.
Meantime, watch today’s announcement in the House of Commons made by the Culture Secretary, the Rt Hon Lucy Frazer KC MP:
The Department for Digital, Culture, Media & Sport Committee (“DCMS”) Committee is examining the Government’s approach to gambling regulation, including investigating the progress made by the Government in addressing the issues raised by Parliament, how to ensure that regulation keeps pace with innovations in online gambling and the links between gambling and broadcasting and sport.
As part of its inquiry, the DCMS Committee is inviting written evidence on the following questions by 5pm on Friday 10 February:
DCMS Committee member, Julie Elliott MP, has stated:
“Gambling acts as an enjoyable pastime for large numbers of players, but regulation is struggling to keep pace with the rapidly changing way in which it happens today. This puts people at risk of the devastating harm it can sometimes cause to lives. The DCMS Committee’s inquiry will look at the scale of gambling-related harm in the UK, what the Government should do about it and how a regulatory regime can best adapt to new forms of online gambling, based both in and outside the UK.”
Figures from the Ernst & Young report (the “EY Report”) commissioned by the Betting and Gaming Council (“BGC”) and published last November, in The economic contribution of the betting and gaming sector: 2021-2022, also reflect gambling as a popular pastime through which the gambling sector contributed £7.1bn to the UK economy between 2021 and 2022. The EY report’s statistics also serve to highlight the wider context of gambling regulation reform, on which BGC CEO, Michael Dugher, commented last month:
“Our members pump billions into the economy, support the treasury with more billions and support over a hundred thousand jobs. But this contribution is never guaranteed. This industry needs to thrive if it is to maintain its status as a global leader.
“We urge the government to find an evidence-led, balanced white paper that protects the vulnerable, allows the vast majority who bet safely to continue to do so and, crucially, allows businesses to thrive.”
Certainly, the Government’s approach to regulation needs to be balanced and proportionate, however, as delays to the publication of the White Paper continue, a factor that remains to be addressed, is the timeliness of action. Question 2 of the Call for Evidence suggests the possibility of further delay of the White Paper, which was promised “in the coming weeks” for much of last year. The latest word on the street is that the White Paper will be published in February. However, we have learned to be somewhat sceptical about any gossip on this topic; certainly, the questions being asked by the DCMS Committee, and especially question 2, might suggest a longer timeline.
The Department for Digital, Culture, Media and Sport (“DCMS”) has launched a consultation which proposes significant increases to Gambling Commission fees, which will affect existing licensees and new applicants. The fee hikes are based on recommendations made by the Gambling Commission to Government, and are intended to fund its costs and increase its resources to respond to emerging risks and technologies. It follows considerable concerns about the funding of the Gambling Commission raised in February 2020, by the National Audit Office, in June 2020, by the House of Commons Public Accounts Committee, and in July 2020, by the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry.
It is worth noting that the Government Call for Evidence, published on 8 December 2020, includes review of the Gambling Commission’s power and resources. To heed off any criticism that the proposed fee increase is premature, the consultation states “the proposals are aimed at ensuring the Gambling Commission is able to meet ongoing challenges while the Review progresses.” It, therefore, does not close the door on further increases!
“Key challenges”
The Gambling Commission identified the following “key challenges” in regulation which are expected to grow in significance in coming years and are used as justification for the proposed increased fees:
Challenge 1: Increased technological developments, including product and payment innovation, requiring:
Challenge 2: Changes in the size and shape of the market, particularly consolidation by mergers and acquisitions, and globalisation, requiring:
Challenge 3: Increasing risks associated with unlicensed operators to protect consumers and the industry from “black market” encroachment, requiring:
The inclusion of Challenge 3 is perhaps most surprising given that the Gambling Commission has, for some time, maintained the view that the impact of the black market has been “exaggerated”.
The Gambling Commission acknowledges its proposed responses to these key challenges “are not fixed and will need to evolve over time”.
Annex One of the consultation includes the Gambling Commission’s detailed assessment of these key challenges.
Current funding
The Gambling Commission’s funding comes from its fee income (from application and annual fees), and in recent years, it has been drawing on its reserves which are now running low and will not be able to sustain its operations in the future.
In 2020-2021 the Gambling Commission’s budgeted income was £20.4 million and the latest figures suggest that its actual income will be approximately £700k less due to the impact of Covid-19. Its operating budget is £21.39 million, broken down as follows:
| 43% | Operational |
| 24% | Policy |
| 12% | Partnerships |
| 11% | Licensing |
| 10% | Gathering Information |
Without increased fees, the Gambling Commission expects to see a difference between its income and expenditure of approximately £3 million per year by 2023-24. This is without any additional investment in new work to deal with the challenges set out above which it estimates will cost between £2m and £3m per annum.
Proposed changes
Proposed changes from October 2021:
Non-remote annual fees will also be increased, but not until April 2022, as the Gambling Commission and Government appreciate the overwhelming impact Covid-19 has had on the land-based gambling industry, requiring non-remote operators to have been closed for almost all of the last year. When the annual fee increase comes into effect for non-remote licensees, it will be an increase of just 15%, as the Gambling Commission has identified that it is remote B2C operators, gambling software licensees and host licensees which are driving the increased regulatory burden and are responsible for the bulk of the Gambling Commission’s workload and costs.
Application to vary and change of corporate control fees remain unchanged; however, as these fees are usually calculated based on a percentage of a standard licence fee (with the exception of flat-rate fees in specific circumstances), the knock-on effect of the above-mentioned proposed changes will mean that these fees will also significantly increase.
Annex Two of the consultation sets out the proposed new fees for each licence type and fee category.
Consultation questions
There are only five questions that DCMS request feedback on:
1: Do you agree that annual fees should be increased in line with the proposals set out here, in order to enable the Commission to meet the challenges it has identified?
2: Do you agree with the proposals to increase the additional flat fees for licences that combine remote casino, bingo and/or virtual event betting (RNG licences), and the flat fees for those that combine host licences?
3: Do you agree with the proposals to remove the 5% annual fee (and first annual fee) discounts for other types of combined licence, and the 5% annual fee discount where both non-remote and remote licences are held?
4: Do you agree with the proposals to introduce additional fee categories for society lotteries and ELMs that generate (or manage) greater than £10m proceeds per annum?
5: Do you agree with the proposal to increase application fees to better reflect the costs involved in processing applications?
Next steps
We strongly recommend:
The fees consultation closes on 26 March 2021 and we urge you to respond, as one thing is certain: soon you will be paying a lot more for your licence.
You can respond to the consultation by emailing [email protected] copied to [email protected]