First-Tier Tribunal (Gambling) decision raises questions how the UKGC should conduct its compliance assessments

In March 2020, we reported on the suspension by the Gambling Commission of the Combined Remote Real Event and Virtual Betting Casino operating licence held by Stakers Limited pending the outcome of a review of that licence under section 116 of the Gambling Act 2005, subsection (2)(a) of which enables a review to be conducted if the Commission “has reason to suspect that activities may have been carried on in purported reliance on the licence but not in accordance with a condition of the licence”.

Subsequent events have taken an interesting turn, as reported by, amongst others SBC News in its 13 May 2021 news article entitled “Stakers application to appeal licence suspension refused”.

Each of the industry media articles on this topic cite comments made in the following press release by Richard Williams of Joelson Solicitors, who represented Stakers:

Stakers took an early decision that it would prefer to cease operating in Great Britain rather than pay a financial penalty.

On 13th April 2021, First-Tier Tribunal Judge Aleksander issued his written decision dismissing Stakers appeal against the suspension of its operating licence. As a result, Stakers has now surrendered its operating licence.

Unfortunately, the Tribunal refused Stakers initial application to stay the suspension of its licence, which meant that by the time the appeal was heard, Stakers remote casino business in Great Britain was effectively extinguished.

Stakers’ appeal covered a significant number of regulatory issues and alleged compliance failings. During investigations by the Commission, Stakers questioned whether the Gambling Act 2005 permitted it to compel operators to participate in compliance assessments via Skype.

In his judgement, the Judge stated that whilst he considered assessments by Skype to be lawful for production of documents and records, the Gambling Act 2005 does not require operators to display their live operational environments to the Commission via Skype. Nor does the Act require operators to provide test accounts to the Commission.

In relation to cautioning of participants prior to compliance assessments, the Judge ruled that he did not consider that the Commission’s officers were required to caution individuals under PACE prior to recorded compliance assessments undertaken via Skype, even though evidence of compliance failings could be a criminal offence under the Act.

The Tribunal took 6 months from the final hearing to issue its decision and in total, it took 12 months from the initial suspension of the licence, until the Tribunal’s final decision was made. That’s a long time for a licence to be suspended. Operators whose licence has been suspended, even where they do not agree with the Commission about alleged regulatory failings, will understand that appealing a suspension to the First-Tier Tribunal may not be a viable option if they want to keep their business open.

Stakers has now surrendered its GB operating licence and has ceased its GB operations. All GB customers have already had their funds refunded.

Those comments will be of considerable interest to other UK licensed operators and their advisors because they indicate that the First-Tier Tribunal Judge made findings of direct relevance to the manner in which the UKGC is entitled to conduct its compliance assessments. It remains to be seen from the Judge’s written decision whether greater clarity can be obtained in that respect, notwithstanding that – according to the SBC News article – Stakers Limited has sought to distance itself from comments made in the above-mentioned press release.

In this respect, SBC News reports in its above article that:

  • Stakers Legal team:
    • has explained that the position of Stakers Ltd “does not coincide with the views and conclusions made by Joelson and Mr. Williams” and
    • maintains that “Stakers ceased business due to the project’s end”

and

  • a spokesperson for Stakers has said: “the UK licence was one of the licences we had and due to reasons outside of FTT appeal ruling, our operation ceased back in 2020. Stakers was a startup and the timing was against us both in UK and the EU; we started in the middle of increased scrutiny of the regulators, and new licensing regimes were introduced on our key markets.”

UPDATE: A commentary on the above decision by Philip Kolvin QC (who represented the Gambling Commission in the above appeal to the First-Tier Tribunal) has been published on his Chambers’ website. It is accessible here.