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2016 and Changing Times for the Gambling Industry

In December 2015 Paddy, Anna and myself sat down as we usually do to review the year and to look forward to and plan the next year. It was clear to us that the Gambling Industry was going through significant changes in terms of compliance and regulation following some high profile review cases brought by the Gambling Commission, and the public statements and penalties which followed those review cases. We decided at that stage to hold a seminar and Simon Thomas at the Hippodrome kindly agreed to give us use of the theatre for the event.

On the 6 June 2016 over 100 people attended the Hippodrome and heard presentations from all of us at Woods Whur, as well as from Kerry Simpkin (Westminster Council), Sheila Roberts (Newham Council) and Rob Burkitt (Gambling Commission) and we received some excellent feedback on what was a very enjoyable day. My opening presentation was entitled “Changing Times” and I reflected on how there had been very little regulation between 2007 to 2011 but that, since 2011 and in particular during 2015, we had seen a new approach to enforcement from the Gambling Commission, with a huge focus on anti-money laundering and social responsibility controls. There had been major public statements on the 7 September 2015, 15 December 2015 and thereafter in February and April 2016, and all public statements related to major operators in what is a heavily regulated industry. It was clear that the Gambling Commission felt that the gambling sector as a whole was not reaching the standards required in 2016, and that more detailed inspections at provincial casinos and betting offices would be taking place.

We are still waiting for the latest decision in the Greene King Bingo Operating Licence application case and we are currently left with the comments of Judge Levenson who noted as follows: “The Commission has an integral role as the national body with oversight over gambling policy and regulation… it acts as a gatekeeper by issuing operating and personal licences, it provides guidance to local authorities and advice to Government and its first duty is to have regard to the licensing objectives…. the Commission has the function of setting policy at a national level and where innovative applications are made it cannot be unlawful for the national regulator to express a view as to the wider issues of principle”.

When I first read Judge Levenson’s comments I wondered if the Judge had gone too far in expressing his opinion as to the role of the Gambling Commission, but having considered the matter further, I welcome the Judge’s comments that the Gambling Commission can (and should) be expressing a view. I would go further than that, and ask the Gambling Commission to be very clear in their views and approaches, to ensure that the industry as a whole is aware of the Gambling Commission’s approach and opinion and to regularly update the industry on the Gambling Commission position.

What has frustrated me in recent years with regard to the Gambling Commission is what I perceive as a lack of transparency and openness with the industry. The industry and the Gambling Commission should work together to achieve “best practice” and that can only be achieved by the sharing of information and a proportionate approach to regulation throughout the industry.

  • If decisions are being made with regard to particular cases or particular innovations, then let us know who is ultimately responsible at the Gambling Commission for this and let us meet with them to discuss their approach. Don’t hide behind a Gambling Commission officer who ultimately cannot make any decisions or discuss cases openly.
  • Don’t hide behind the usual mantra of “we don’t give advice”, “we don’t approve policies and procedures”. Be more proactive in working with the industry. I still receive correspondence from the Gambling Commission which says they do not approve policies and procedures and yet in the same post can receive correspondence from the Gambling Commission indicating that an application is going to be refused because the policies and procedures are either missing or inadequate.
  • Cut down on significant delays in responding to correspondence in major cases. I have had examples in the last year of waiting sixty days for a response on a particular case which is wholly unacceptable.The ambling industry should be under no illusion that the regulatory approach to compliance of 2015 and 2016 will continue, into 2017 and beyond. Most of the major London casinos have already been inspected, some provincial casinos have now been inspected, and the next phase of regulatory control will surely relate to provincial betting offices, bingo premises and adult gaming centres. The Money Laundering Regulations 2007 must be complied with and individual companies and individual premises will have to ensure that the following main regulations are covered, not only by policies and procedures, but by staff fully understanding the implications of these regulations:
  • The above frustrations do relate to individual cases and it is only fair to comment that I have also had experience of receiving a first class and tremendous service from the Gambling Commission on other cases. Individual officers have turned around applications extremely quickly when circumstances dictate that a swift response is required and others have been incredibly helpful and forthcoming in assisting applications and cases in general, during the last six months. Just as I am not going to name and go into detail about the individual public statements I am not going to name individual officers who have been extremely helpful, but should like to thank those officers at the Gambling Commission for their help during 2016.
  • Regulations 5 & 7: Customer Due-Diligence
  • Regulation 8: Ongoing Monitoring of a Business Relationship
  • Regulation 14: Enhanced Due-Diligence
  • Regulation 19: Keeping Records
  • Regulation 20: Adopting Risk Sensitive Policies I welcome the approach of the Gambling Commission in organising the Raising Standards Conference on the 8 November 2016, which by its very nature starts to deal with my earlier frustrations with regard to transparency and proportionality, and I think it is worth concluding my final article of 2016 by reminding everyone of the three main topics covered by Sarah Harrison, Chief Executive Officer for the Gambling Commission:
  • The challenge to the industry is to ensure that regional area managers and regional shop managers fully understand these policies and ensure that all staff are working towards a common goal of putting into effect all policies and procedures.
  • The Gambling Commission vision for raising standards and accelerating the pace of change.
  • The specific areas of focus for the Gambling Commission.
  • The Gambling Commission review of their enforcement policy and proposals for the future. The specific areas of focus for raising standards will be social responsibility, treating customers fairly and money laundering, and everybody in the industry should be aware of the five bullet points that Sarah put forward in the social responsibility part of her speech:
  • The Gambling Commission’s point of view is that more can be done to put customers at the heart of what the operators do and that was a major point of Sarah’s speech. “Don’t wait for a crisis to happen”.
  1. Is the work operators are doing on social responsibility aimed at preventing harm – or just dealing with it where it was already occurring?
  2. How will the industry assess the impact of measures and share findings?
  3. Are operators doing the minimum or taking their responsibilities further?
  4. Are businesses considering every aspect of the customer journey?
  5. Will operators take stake holders with them and be open about the inputs to their work as well as the conclusions and actions?

The most important part of the speech in terms of regulation and the one most significant message that operators need to take forward into 2017 is that the Gambling Commission will remove any bias in favour of settlement and put all aspects of regulatory enforcement including a licence review on an equal footing. As Sarah said, “Yes we should use them (“the powers”) proportionately but adopting a blanket approach of seeking a regulatory settlement as a matter of course is not the right way to achieve that proportionality”.

In 2015 and 2016, many clients and many operators ensured that their policies and procedures evolved to meet new standards. The Gambling Commission call is to “take this to the next level” and the industry should seek to be at the forefront of working with the Gambling Commission to ensure that this happens.

I am sure that 2017 will continue to be an interesting time for the gambling sector, and we would like to wish everybody a happy Christmas and a merry New Year.