Some Clarity on Gambling Commission Fine Levels – Finally
The Gambling Commission’s method of calculating financial penalties has always felt like a dark art, with the lack of clear guidelines and starting figures making it nearly impossible to predict or negotiate the level of a fine levied at an operator. The introduction of a seven step process, with promised transparency, will therefore be a welcomed improvement for most operators.
The levels of fines in recent years has only increased, and it shows no signs of slowing down. The latest fines include £170,000 levied at Taichi Tech Limited, for terms and conditions which ‘may’ lead to unfair outcomes for consumers, along with the typical comments on customer interaction and money laundering policies. Spreadex received a £2,000,000 fine for AML failings and SR failings; another £375,000 to Football Pools Limited, which runs 4 online sites; and £686,070 to Corbett Bookmakers, a family owned betting operator based in Wales. All within the last 5 months.
As a quick reminder – don’t forget to use these decisions to help tailor future policies. Whilst not all of them contain a great deal information as to the actual breaches, there are some helpful and practical comments – for example within the public statement for Football Pools Limited.
Moving forwards, the following will be in force:
• providing a clear and distinct seven step process the Commission will follow when assessing and imposing a financial penalty
• providing transparency on how the Commission will determine the level of seriousness of the breach, and the introduction of five levels of seriousness
• determining the starting point for the penal element of the penalty by reference to the seriousness of the breach and a percentage of Gross Gambling Yield (GGY) or equivalent income generated during the period of the breach
• making adjustments to the penalty for aggravating and mitigating factors, deterrence and early resolution.
This is welcomed clarity, particularly against a landscape of ever increasing fines. However there is some skepticism in the industry so far as to whether ‘clarity and transparency’ will yield, we will have to wait and see.
Lottery Limits remain limited, but Prize Competitions will face increased regulation
A recent statement made by Baroness Twycross, the Minister for Gambling and Heritage, contained two crucial announcements for the world of prize led fundraising.
Firstly, despite vocal opposition from a number of major lottery operators, the decision has been made to retain the current annual lottery limit of £50,000,000. The reason for this decision appears to be predominantly to protect the National Lottery, with concerns that allowing society lotteries the ability to increase their fundraising potential for good causes would negatively affect the National Lottery.
This seems somewhat counterintuitive when the Report, commissioned by the government, opens with-
The knock-on impact on good causes funding is estimated to decrease National Lottery contributions by between £5 million and £30 million, whereas it would increase contributions from PPL by between £17 million and £157 million. Overall, this would lead to a net increase in returns to good causes of between £16 million and £132 million – up by between 0.8% and 6.5% on current returns to good causes.
In 2023/2024 the National Lottery donated 20% of its income, a total of £1,572million, to its good causes. Society Lotteries raised £462million, 44% of its income, for its good causes within the same time period.
A key difference between the two is of course the tax paid by each; the National Lottery paid £937million in Lottery Duty in 2023/2024, whereas Society Lotteries do not pay Lottery Duty.
The full report can be found here – https://www.gov.uk/government/publications/research-report-assessing-the-impacts-of-changes-to-the-society-lotteries-sales-limit
A new Voluntary Code will be introduced for Prize Draws, often referred to as ‘free draws’ or ‘prize competitions’. These draws are not currently regulated under the Gambling Commission, despite the prize draw market currently being worth £1.3billion annually.
The Voluntary Code is due to be released later this year and is aiming to increase player protection, transparency of play and the accountability of the operators. This will be a very decisive time for the prize draw industry, it is clear from the statement that this is being seen as a first step towards regulation, with the potential for further regulation to come if the code does not have the desired effect.
The full report on prize draws and competitions can be found here – https://www.gov.uk/government/publications/research-report-online-prize-draws-and-competitions-market-study-assessment-of-harm-and-review-of-potential-interventions
For more information on the above please contact Amanda Usher on amanda@woodswhur.co.uk, or your usual Woods Whur contact.