MARKET REPORT: UK ONLINE MISHCON DE REYA
THE GAMBLING COMMISSION’S CONSULTATION ON CHANGES TO LICENSING, COMPLIANCE AND ENFORCEMENT POLICY
In November 2021, the Gambling Commission (GC) launched a consultation on its Licensing, Compliance and Enforcement Policy (Policy). Te consultation closed on February 9, 2022. Te Policy is a critical document for applicants and licensees, and we consider several of the proposed changes to be controversial. We highlight some of the key proposals below:
l 'Dual regulation products' - until legislative
clarity about how such products should be regulated (which the GC considers is necessary), and to avoid potential risk to the licensing objectives, the GC proposes to enshrine in its Policy that licence applications for products that (a) the GC considers contain an element that should be regulated by the Financial Conduct Authority (FCA) and/or (b) in their name, branding or game rules contain language associated with financial products (such as stock, share, index or investment) are likely to be refused. In our view, this is misguided. Te GC appears to be seeking to define a category of products that may not be 'specified investments' for the purposes of the Financial Services and Markets Act (and therefore subject to regulation by the FCA), but which the GC thinks should be. Consumer notices can adequately address the risks to which the GC refers, and in those circumstances, our view is that the GC is under a duty to regulate those products that constitute gambling.
l Incomplete licence applications - the
consultation proposes clarification that incomplete licence applications may be rejected (and the application fee forfeited), with the intention that this will enhance the quality of applications and speed up the overall process. In our view, however, enhancements to the online application portal and associated guidance would be a more effective, and less potentially unfair, way to address the issue.
l Financing arrangements - the GC proposes
not to grant a licence until it is "fully satisfied" that the applicant business will not be financed by the proceeds of crime, and that its profits will not be used to finance crime. Whilst this seeks to promote the first licensing objective, the proposed standard of proof (i.e. "fully satisfied") is completely subjective, uncertain, and potentially unattainable.
Te proposal also raises the troubling prospect of applicants having to prove a negative, and having to evidence future action/intention. In our experience, the GC does not adopt (as it should) a risk-based approach to the investigation of source of funds, and for this reason we are particularly concerned that this proposal will lead to significant delays in new applications, and considerable uncertainty.
l Special measures – the proposals anticipate
the formalisation of the "special measures" process, which had been "piloted" over the
P140 WIRE / PULSE / INSIGHT / REPORTS “The Gambling Commission
proposes not to grant a licence until it is "fully satisfied" that the applicant business will not be financed by the proceeds of crime, and that its profits will not be used to finance crime. Whilst this seeks to promote the first licensing objective, the proposed standard of proof (i.e. "fully satisfied") is completely subjective, uncertain, and potentially unattainable.”
Nick Nocton Partner
Mishcon de Reya
Niki Stephens Partner
Mishcon de Reya
Mishcon de Reya is a law firm with offices in London and Singapore, which employs more than 1,000 people of which 600 are lawyers. The firm covers all sectors within the finance and business world including gambling and offers its services to settle disputes, protect assets or grow businesses. Mishcon's Betting and Gaming team are a highly regarded sector-focused team, with extensive experience advising the industry. This article is produced by Nick Nocton and Niki Stephens about the Gambling Commission’s consultation on changes to its Licensing, Compliance and Enforcement Policy.
www.mishcon.com
Nick.Nocton@
mishcon.com
Niki.Stephens@
mishcon.com
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