The Chief Executive of the Gambling Commission, Sarah Harrison, announced in a speech at the GC’s Raising Standards Conference on 8 November last year that the regulator was planning to consult on a new Enforcement Strategy. That Consultation took place between 26 January and 21 April this year, receiving some 21 submissions, mostly from operators. The GC released its Response to the Consultation and submissions last month and on Wednesday (5 July), it published a revised suite of enforcement policies as the outcome of this process.
Those policy documents, which can all be found on the GC’s website, are:
- Statement of Principles for Licensing and Regulation;
- Licensing, Compliance and Enforcement Statement;
- Statement of Principles for determining Financial Penalties; and
- Indicative Sanctions Guidance.
The key changes include:
- Amendments to the Principles for determining, and Guidance on, sanctions, including introducing higher financial penalties for licence breaches, particularly in cases of systemic and/or repeated failings;
- Revising the Principles, Statement and Sanctions Guidance to put all of the GC’s regulatory tools, including licence reviews (of both operating and Personal Management Licences), on an equal footing, thereby removing the previous bias in favour of reaching settlements; and
- Introducing time-limited penalty discounts to create better incentives for early settlement.
The new Enforcement Strategy is consistent with the GC’s current ambition to ensure that operators raise standards and put customers first. The GC says it is building on its experience to date, whilst preserving the legal and procedural safeguards which are already a feature of the gambling regulatory framework, namely:
- The right for operators to be informed that the GC is commencing a licence review;
- Following the correct due process and disclosure procedures and the use of the balance of probabilities test when the GC addresses regulatory investigations;
- Giving opportunities to operators to respond to the evidence and attend an oral hearing before decisions are made;
- A commitment to proportionate decision-making;
- The use of appropriate regulatory tools to deal with non-compliance; and
- The right of appeal to the First Tier Tribunal.
The responses to the Consultation challenged the GC on various fronts. Some respondents suggested that, by championing consumers, the GC is exceeding its powers: the licensing objectives should be paramount and this initiative amounts to “regulatory creep”. Some alleged that the GC is failing to acknowledge its obligations to the gambling industry and that its policies, Guidance and statements on enforcement lack clarity. Some also claimed that there is no need to put all regulatory tools on an equal footing, that a licence review should be retained as the last resort, and that the GC has not got the balance right on timely disclosure by operators.
In its June 2017 Response to the Consultation process, the GC has defended its position, stressing its obligation to protect the consumer as part of promoting the licensing objectives, including protecting children and the vulnerable and ensuring that gambling is conducted in a fair and open way. The GC acknowledges that it must balance the interests of consumers and operators, which it does not see as being in conflict. It denies unfairly prioritising consumers and has sought to reassure operators that its decision – making processes will always be lawful, rational and reasonable.
The GC has also defended its decision to place all regulatory tools on an equal footing, in order to supply the regulator with a full range of powers so that it can use the most appropriate one, given the circumstances and severity of any breach. It has stressed that it is not moving towards a position whereby it actually favours a licence review over a settlement. The GC says that it will continue to use settlements, where they are an effective and efficient way of achieving a satisfactory outcome and appropriate sanction.
The GC has, further, made it clear that it believes its approach to timely disclosure to be appropriate. The earlier that disclosure of all relevant facts and appropriate admissions are made, the more credit that will be given to the operator, whether a formal licence review has been instigated or not. That said, the GC has put its foot down to the extent that it says that it will not extend its approach to any form of plea bargaining – it is open to argument, but will not negotiate on enforcement or sanctions.
So, what can we expect to see as a result of all of this?
First, I believe, more frequent and higher financial penalties for breaches, the quantum of which will be based on a calculation of the detriment to consumers or gain to the operator arising as a result, and an assessment of the seriousness of the breach. This will, however, take into account (amongst other things) the state of knowledge and nature of the licensee, whether it should have known of the breach and sought to conceal it, and the impact of the breach on the licensing objectives and the general public.
Secondly, discounts to be applied to the penal element of any financial penalty (but not to the gain and/or detriment element) for timely and voluntary admissions and/or disclosures made by a licensee, where concerns have arisen. The GC’s Licence Conditions and Codes of Practice have always emphasised the need for operators to work with the GC in an open and collaborative way, and this has been underlined by this new Enforcement Strategy. Unfortunately there is no guarantee that any disclosures will not be included in a Public Statement following the outcome of the investigation, as this will depend on the individual circumstances of the particular case and the public interest.
Lastly, operators should be alive to the fact that the GC has dispensed with its bias towards settlements – we may well see an increase in the number of licence reviews, as a result. We have seen an increasing trend towards reviews of PMLs in recent times, and we can expect to see this continue.
Should you have any queries on the GC’s new Enforcement Strategy, or on any other GC licensing, compliance or enforcement issues, please do not hesitate to contact me at firstname.lastname@example.org or on 07767782997.