A focus on fines

Comments by David Clifton are featured in an EGR Intel article entitled Fine with that: Are the UKGC’s punishments befitting of operators’ shortcomings?’.

The subheading to the article reads as follows: “Three major firms were fined a total of £13.7m by the UKGC in the space of 22 days in March, and with more potentially on the way, EGR Intel examines whether hefty financial penalties are a deterrent or the ‘cost of doing business in the UK”.
It is referring to the following three fines:

The above-mentioned EGR Intel article is subject to a paywall with the consequence that it can only be viewed in full by EGR subscribers. However, David summarises below his views on this highly topical question and some consequential issues arising from that.

The Gambling Commission’s fines emanating from each successive operating licence review and regulatory enforcement case have to be assessed on their own individual respective circumstances. Factors that will be taken into account by the regulator include whether the operator in question has repeated previous failings, for example in relation to vulnerable customers, as was identified in the recent 888 Public Statement.

As a general rule, the Commission’s Statement of Principles for Determining Financial Penalties aims to ensure that its financial penalties will not only eliminate any financial gain or benefit on the part of an operator arising from its non-compliance but will also be proportionate to the nature of the breach and the harm caused.

However, its fines are also intended to have a deterrent effect, which explains why the sums involved keep increasing in amount the more that the Gambling Commission thinks that operators have not sufficiently learned from others’ mistakes.

Quite conceivable following the Commission’s recent consultation on changes to its Licensing, Compliance & Enforcement Policy is that, when assessing what level of fine to impose in future cases, the regulator will increasingly take into account the resources of not only other group and parent companies but also the resources of an operator’s ‘ultimate beneficial owner’. 

This was evidenced by comments within a speech by Andrew Rhodes, the Commission’s Chief Executive, at the Annual GambleAware conference last December when he said:

“This year so far is already on course to be our busiest year ever in terms of enforcement activity, and that’s something that should concern us. We’re also seeing the proportion of regulatory settlements versus fines change, with fines increasing, and that is because we are seeing recidivist behaviour. We are seeing the same companies committing the same offences for the second and third time, and my concern is that those operators are starting to see fines as a compliance tax, and that’s something that I’m not prepared to tolerate. It must also be incredibly frustrating for those in the industry who are working hard to comply and to raise standards. It must be unacceptable for them too”.

Despite those concerns, there have been very substantial improvements in regulatory compliance standards in recent years. Many of the most negative national media headlines still hark back to historic failings by UK licensed operators. However, despite the very best of intentions, it is inevitable that some mistakes will still be made.

Where little further patience on the part of the Gambling Commission can be expected is where failings resulting from such mistakes are of a systemic, prolonged or repetitive nature or where they provide yet further examples of financially vulnerable customers sustaining ‘clearly unaffordable’ losses. That is particularly so now the regulator expects all operators to be using technology available to them to mitigate against the risk of such mistakes occurring in the first place.

That said, some considerable room has long existed for the Commission to provide much greater clarity, not only to its licence-holders but also to its own enforcement officers, in relation to its precise affordability-related expectations. As matters stand, despite the very best efforts of many operators and their advisors, a great deal of confusion currently exists that could so easily be removed if the regulator made its own position very significantly clearer.

It is to be hoped that much improved clarity will arise from a combination of (a) the new customer interaction guidance coming into effect for UK licensed remote gambling operators on 12 September 2022 and (b) the Commission’s forthcoming (and long-promised) consultation intended to tackle what is calls ‘the three key and significant risks’ associated with unaffordable binge gambling, significant unaffordable losses over time and identifying customers who are in a particularly financially vulnerable situation.