2023 Consultation on proposed changes related to financial penalties and financial key event reporting

Overview

The Gambling Commission regulates most forms of commercial gambling in Great Britain. We are consulting on two sets of ‘business as usual’ proposed changes relating to clarity and transparency to the way financial penalties are calculated, and financial key event reporting by licensees to make sure we have the right information for risk-based regulation. This consultation makes proposed changes to our requirements on gambling businesses for reporting through the Licence Conditions and Codes of Practice (LCCP) and one of the proposed changes relating to reporting would also be reflected in our Licensing, Compliance and Enforcement Policy Statement. This consultation also makes proposals for a revised Statement of Principles for Determining Financial Penalties (SoPfDFP) which would also be reflected in our Indicative Sanctions Guidance. All stakeholders, including consumers, gambling licensees and members of the public are invited to share their views on these proposals.

Separate from this consultation on ‘business as usual’ matters, the Commission is also consulting on proposed changes to the regulatory framework required to implement the Gambling Commission’s commitments as part of the Gambling Act Review. Our consultation on the first set of proposed changes was published in July this year and closed in October. We are currently analysing the consultation responses we have received and will set out one or more responses to this consultation in 2024. Our consultation on the second set of proposed changes was published in November this year and will close in February 2024. You can have your say on this separate current consultation on our website.

Why your views matter

This consultation covers two ‘business as usual’ areas:

Principles for determining financial penalties

Through effective licensing and regulatory enforcement, we aim to protect consumers and the wider public, and to raise standards in the gambling industry.

We may require a gambling licensee to pay a financial penalty if as a result of an investigation we find that a condition of the licence has been breached. We may impose a financial penalty following a licence review under the Gambling Act 2005 (the Act), and we also have the power to impose a financial penalty without carrying out a licence review.

Our Statement of Principles for Determining Financial Penalties (SoPfDFP) is produced in accordance with the Act and requires the Commission to, among other things, prepare a statement setting out the principles we will apply in exercising our powers to impose a financial penalty and to have regard to the statement when exercising that power. The Act requires us to review this statement from time to time and revise it when we consider it necessary.

In order to ensure transparency, clarity and consistency on how penalties are calculated, we are proposing to make changes to the criteria for imposing a financial penalty and the methodology for determining the amount of a penalty. These proposed changes are set out in a revised SoPfDFP for consultation. These proposed changes, if implemented, would also be reflected in our Indicative Sanctions Guidance, also set out here for consultation.

Financial key event reporting: Reporting changes in ownership and interests

Currently, gambling licensees are required to make a report to the Commission when persons become 3% or more shareholders in the licensee (or its holding company) and also if the licensee enters into a loan with an entity that is not regulated by the Financial Conduct Authority.   

The proposed changes are driven by gambling licensees being linked to complex, modern day, global business structures meaning that the ownership and interests are not always clear. Similarly, their financing arrangements are not always straightforward. 

The current requirements risk potential gaps in our understanding of licensees’ financial positions and associations with others.

Furthermore, many gambling licensees are now linked to jurisdictions where the governance arrangements mean that some licensees cannot meet the 3% shareholder reporting requirement because they cannot access information about shareholdings below this level. This has led to some licensees having additional conditions added to their licence to allow a 5% threshold reporting requirement to apply to them. 

The current reporting requirements are therefore difficult to apply consistently across all licensees.

We are therefore consulting on changes to the LCCP (Licence Condition 15.2.1 Reporting key events) and the addition of some new key reporting requirements to ensure that we are notified of changes to finances, ownership and interests within gambling licensees at the appropriate levels. The proposed changes to the LCCP would also be reflected in our Licensing, Compliance and Enforcement Policy Statement.