Insights Gambling Commission Consultation on Financial Penalties– Is it “fine”?

On Friday the Gambling Commission released its latest consultation proposals – – the consultation which will grab the headlines relates to financial penalties and is billed as having the goal of seeking “to bring greater clarity and transparency to the way penalties following enforcement action are calculated.”

The consultation includes a proposal for determining the starting point for the penal element of the penalty (i.e. post calculation of any disgorgement) by reference to the seriousness of the breach with a five tiered sliding scale ranging from 0.1%-1% to 10-15% of Gross Gambling Yield (GGY) in Great Britain during the period of the breach. It also provides more colour around a six-step approach to the calculation which seems to codify much of the Commission’s existing machinations as to quantum.

The Commission has, in the eyes of many, been the gambling regulator most willing to dish out substantial financial penalties. There has, however, always been a frustrating degree of opaqueness in how the regulator has run its numbers. Whilst the existence of a tariff may bring more certainty, some will wince at the use of a revenue rather than a profit-based calculation. In reality, the Commission was already undertaking its calculations based on GGY and other UK regulators (including the ICO) are issuing fines based on global revenue so this could have been worse.

Whilst its appears that the upper end of the tariff is likely to be reserved for very serious longstanding high impact breaches with some degree of ineptitude (or worse) from the licensee’s management, it nevertheless appears plausible that, with this level of jeopardy in play, there will be more challenges to the Commission’s decision making.

The Commission has previously been accused of installing regulatory change through enforcement and doing so in such a way as to further its own aspirational agenda rather than by reference to the state of current regulation. With the implementation of all White Paper proposals by no means guaranteed to provide a clear set of requirements, the scope for subjective judgment calls will remain with argument and challenge likely to follow.

With a whole raft of consultations for the industry to respond to, there is a danger that this one doesn’t make the cut on the “to do list”. However, the realisation of the severity of potential fines often only strikes you after something else hits the fan so it is worth taking time to digest the Commission’s direction of travel and submit your thoughts.

We will share our more detailed analysis on the Commission’s proposals in due course.