Gambling Commission responses for the regulatory data consultation

The Gambling Commission has now published both parts of its response for the regulatory data consultation (upon which we have previously reported), in which it set out its proposals to change some parts of the regulatory data that it requires licensed operators to provide to it. Both parts of the response can be downloaded below. Of particular note is the Commission’s response in relation to Question 30 of the consultation which asked: “What are your views on our preferred option for the provision of group jurisdictional revenue information to the Commission, and why?”

The Commission now states its position (due to come into effect in April 2018) as follows (in Part 2):

  • 4.91 Regulatory returns are collected on a product-by-product basis and focus upon data which is relevant for that particular operator / licence. As several of the responses have pointed out, gambling businesses are often large, multi-jurisdictional organisations with a large number of companies within the group. These entities within a larger group often share funding arrangements, expertise and in some cases gaming liquidity.
  • 4.92 Our duty in this area is around the licensing objective to keep crime out of gambling, which drives our concern around the legality of funding or liquidity to our licensees from other group companies trading in other jurisdictions.
  • 4.93 Although the licensee itself may not directly trade in other markets – it may benefit from sister companies doing so and for this reason we have to have regard to the point raised by respondents – namely that some groups are complex and interconnected.
  • 4.94 Revenues generated in ‘grey’ markets could be used to gain a commercial advantage in Great Britain, for example by funding marketing spend in GB. For this reason we need operators to submit data on revenues for the group as a whole. Indeed the group concept is not a new one when it comes to the current reporting requirement, given that an amendment was made to licence condition 15.2.2 which came into effect in May 2015 and focussed specifically on ‘groups’ (and not individual licensees).
  • 4.95 We are concerned that some operators seem to be indicating in their response that they are either unwilling or unable to provide group data which is currently an LCCP requirement (under section 15.2.2). So for clarity our proposal is to amend 15.2.2 slightly to widen it from the current requirement to report group advertising to a new requirement to report where there has been sustained/meaningful generation of the 3% / 10% threshold being passed for the wider group. The reporting of this could be done by any group company holding a Commission licence.
  • 4.96 The requirement will be to notify us at such time as the group becomes aware of the change, and would focus upon a significant or sustained change in the group’s revenue profile by jurisdiction. We would expect such changes to be reported against a usual reporting period for the group and related to an appropriate time-period (for example annually or quarterly), dependent on factors such as the size or organisational structure of the group.
  • 4.97 This change, which would amend licence condition 15.2.2 will take effect for regulatory returns due to be submitted in April 2018 and we will make the relevant changes to e-Services and guidance in support of this change before that date.

We believe that this change will close what was previously regarded by some as “a loophole” and will create a dilemma for those operators who have to date relied on the limited extent of information required by the Commission about sister companies’ operations in other jurisdictions. We expect that what does or does not constitute a “group company” will be coming under the microscope, as too will the legal justifications for doing business in grey markets.