BY AN ANONYMOUS GUEST BLOGGER

3 JUNE 2020

This is a blog of a disordered gambler, attempting to highlight some of the intricacies and complexities of the Gambling Act 2005 and the difficulties in attempts to make complaints to Gambling Operators who have breached their licence conditions, BUT also to the bodies set up to protect the public (The Gambling Commission) whose role and duty is to regulate the industry and thus protect consumers from the risks posed by gambling when THE FUN STOPS.

The complaints process :

PARLIAMENTARY REVIEWS

There have been many and some really committed people both MP lobbyists such as the APPG on gambling related harm and many other groups such as Gamvisory have questioned the industry. The most recent being the Public Accounts Committee (PAC).
The PAC held an inquiry, with a hearing on 27 April 2020. This was with the witnesses Sarah Healey, Permanent Secretary, Department for Digital, Culture, Media and Sport (DCMS) and Neil McArthur, Chief Executive, Gambling Commission (GC). DCMS has overall responsibility for the policy and regulatory framework for gambling.
The Commission regulates all gambling in Great Britain, with the objectives to permit gambling, so long as it is fair and safe, free of crime, and children, young people and vulnerable people are protected from exploitation and harm.
MP asked why ‘consumers cannot typically seek redress from [the Commission] where operators have failed to abide by social responsibility codes of practices’ (NAO, p 34, para 3.17).
CEO of Gambling Commission explained the responsibility for enforcing the social responsibility code sits with the Gambling Commission, but if an individual has not been treated by an operator in accordance with social responsibility codes, the Gambling Commission is not established to provide redress for individual consumers.
However this is NOT FACTUAL !!!!!!! The Gambling Commission can impose enforceable legal sanctions which include :
• Financial Penalties
• Revocation of Operator’s Licence
• Criminal Proceedings in UK Courts

BACKGROUND

Attached below are the 5 Gambling Commissions key documents which control their compliance and enforcement activities against the Gambling Operators within the UK and which explain how the Commission

These documents collectively set out the GC’s regulatory policies and are the framework by which they assure that Gambling Operators comply with their License Conditions and Codes of Practice (LCCP). All these documents can be accessed on the GC’s website.
The 3 objectives of the GC are:

  1. preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime
  2. ensuring that gambling is conducted in a fair and open way
  3. protecting children and other vulnerable people from being harmed or exploited by gambling.

But what does it mean when it states protecting vulnerable people from being harmed or exploited ?
The GC have written the following as part of the answer : The Commission does not seek to define ‘vulnerable persons’ but it does, for regulatory purposes, assume that this group includes people who gamble more than they want to, people who gamble beyond their means and people who may not be able to make informed or balanced decisions about gambling due to, for example, mental health, a learning disability or substance misuse relating to alcohol or drugs.
Protecting vulnerable people is enshrined within the LCCP. Once an operator or individual holds a licence, the Commission seeks to ensure, through its compliance work, that the licensee remains suitable to hold licences and that they conduct themselves in a way which is consistent with the licensing objectives, the requirements of the Gambling Act (2005), and the conditions of their licences and related codes of practice, both in letter and spirit.
The Commission’s role is to uphold the licensing objectives set out in the Act. There are a variety of ways that the Commission can deal with non-compliance by licensees, ranging from enhanced compliance procedures and regulatory settlements to licence reviews and formal enforcement action. The Commission also has powers to launch criminal investigations and bring criminal proceedings against companies and individuals.

Enforcement forms an essential part of the Commission’s work to keep gambling fair and safe for all.
The Commission’s effective and proportionate use of its enforcement powers plays an important role in the pursuit of the licensing objectives. Enforcement activity contributes to the protection of consumers and the wider public and serves to deter future contraventions of the Act and other applicable requirements. It can also be a particularly effective way, through the publication of enforcement outcomes, of raising awareness of regulatory standards.

Section 116 of the Act gives the Commission the power to review the performance of licence holders and the operation of licence conditions. The section provides for two different types of review.
• Under section 116 (1) of the Act the Commission may review matters relating to a class or type of licence. The purpose of such a review will be to review the manner in which a particular class of licensees carry on the licensed activities authorised by their licences, and, in particular, how the licensees in question comply with the conditions attached to the class of operating licence.
• Section 116 (2) of the Act gives the Commission the power to review any matter relating to a licence if the Commission:
 suspects that conditions of a licence have been or are being breached

A review can be carried out even if there is no suspicion as to the licence holder’s activities. This means that a licence could be reviewed solely on the grounds that the Commission considers a review would be appropriate. There will, however, always be a reason for starting a review, whether, for example, it is part of a sampling exercise to enable the Commission to maintain a good understanding of the industry, or whether it is a potentially licence-threatening concern. The Commission will ensure that the letters sent to licensees when a review is being initiated clearly explain the grounds for the review
Once an investigation is completed by the GC, and where concerns have been raised about a licensee the Commission may commence an investigation. Where appropriate, in certain specific cases, the Commission may seek to fulfil its statutory obligations and pursue the licensing objectives through means that stop short of a completed formal licence review under section 116 of the Act.

One means for achieving this will be by way of regulatory settlement, which the Commission will consider where a licensee is amongst other things:
• prepared to volunteer a payment in lieu of the financial penalty the Commission might otherwise impose for breach of a licence condition in accordance with the Statement of Principles for Determining Financial Penalties.
A regulatory settlement is a regulatory decision, taken by the Commission, the terms of which are accepted by the licensee concerned. When agreeing the terms of a settlement, the Commission will carefully consider its statutory duties and other relevant matters such as the importance of sending clear, consistent messages through enforcement action, and will only settle in appropriate cases where the agreed terms of the decision result in acceptable regulatory outcomes.
It may be particularly important in this respect to provide redress to consumers who may have been disadvantaged by a licensee’s misconduct, or to relieve licensees of the profits or gross gambling yield resulting from their failures. In almost all circumstances, regulatory settlements will result in some degree of publicity, unlike commercial out of court settlements, which are often confidential

GAMBLING COMMISSION REGULATORY POWERS

Question : What other regulatory powers does the GC have at its disposal ?
Answer: The Commission has regulatory powers which it can exercise without carrying out a licence review. The Gambling Act 2005 gives the Commission the power to:
• impose a financial penalty, where the Commission thinks that a condition of a licence has been breached
Financial penalties
Section 5.47 of the Licensing, compliance and enforcement under the Gambling Act 2005: policy statement (June 2017) states ‘The Commission has the power to impose a financial penalty, without a review having taken place, where the Commission thinks that a condition of a licence has been breached (which by virtue of section 82 of the Act includes a breach of a social responsibility provision of a code of practice). It must, however, give the licensee an opportunity to make representations as to the financial penalty.

As indicated above, the Commission have a ‘Statement of Principles for Determining Financial Penalties’ which can be found on the Commission’s website, excerpt transcribed below:
Section 2.14 : Payments in lieu of financial penalties
Payments made in lieu of a financial penalty as part of a regulatory settlement DO NOT need to be paid into the Consolidated Fund as financial penalties imposed under section 121 do. As a result there is more flexibility about how such monies may be used. However, The Commission will apply the following principles in approaching such agreed payments:
i. The Commission reserves the power to approve the destination of monies paid as part of a regulatory settlement
ii. Operators must not generate positive publicity from the settlement
iii. Payments need to be demonstrably over and above ‘normal’ RET contributions
iv. Where practicable, the operator should return money to any identified victims

Although the Gambling Act 2005 does not set a limit for a financial penalty, a penalty will be set at a level which the Commission considers to be proportionate to the breach. It will take into account the financial situation of the licensee where this information is provided to the Commission. A financial penalty allows the Commission, amongst other things, to eliminate any financial gain or benefit from non-compliance.
The total amount payable by a licensee will normally be made up of two elements:
i. an amount to reflect any detriment suffered by consumers and/or remove any financial gain made by the licensee as a result of the contravention or failure (where these can reasonably be calculated or estimated) and
ii. an amount that reflects the seriousness of the contravention or failure, the impact on the licensing objectives and the need for deterrence (the ‘penal element’)

Some key parts of the Gambling Act 2005