UK LEGAL COMMENT
We need to talk about the Gambling Commission
Northridge Law partner Melanie Ellis looks at the reality around the UK’s Gambling Commission
I
n February, the National Audit Offi ce (NAO) published a report on the effectiveness of gambling regulation in Great Britain and it was followed by Carolyn Harris MP, chair of the All Party Parliamentary Group on Gambling Related Harm (APPG), tweeting that “the Gambling Commission is not fi t for purpose”. Ms Harris went on to suggest that the Commission’s CEO Neil McArthur should resign, suggesting that the Commission is “gambling with people’s lives”. This appears to be Ms Harris’s personal view, rather than the conclusion of the APPG which has yet to publish its fi nal report. However, the APPG’s own statement includes that “individuals at the Gambling Commission should be held accountable for this failing”. The APPG’s low regard for the Commission became apparent in November 2019, when it published an interim version of its report before having even heard from representatives of the Commission. Neil McArthur fi nally gave evidence to the group on 12th February 2020. The criticisms levelled at the Commission in the NAO’s report
are less damning than the APPG’s response implies, although it does conclude that “the Commission is unlikely to be fully effective in addressing risks and harms to consumers within the current arrangements.” The NAO’s criticisms fall into three general categories: its response to emerging issues, its ability to raise standards in the industry and its articulation of its own aims, including what standards need to be met. The key difference however is that whilst the APPG and its chair level the blame for inadequacies in these areas on senior individuals within the Commission, the NAO focusses on the lack of resources available to the regulator. The Commission’s income is almost entirely made up of
licence fees paid by licensed gambling operators and applicants for licences. It received approximately £18m in licence fees in the last fi nancial year, plus just under £1m of additional income, which includes investigation and licence review costs paid by operators. Licence fees are based on the Commission’s assessment of the cost of regulating the different types of licensee and are signifi cantly higher for operators with larger revenues, but the last time the fee levels were adjusted was in 2017. The fees can only be amended by secondary legislation so it is not within the Commission’s independent power to increase them.
34 MARCH 2020
Additional fi nancial pressure comes as consolidations and
mergers in the gambling industry tend to lead to a reduction in annual fees, a fact refl ected in an almost £1m decrease in the Commission’s income compared to the previous fi nancial year. It is also fair to say that, since 2017, the expectations and demands on the Commission’s resources have increased signifi cantly. There may be good reason why the number of employees at the Commission, now operating with total staff of 355, keeps growing. So it is not hard to see why the Commission is becoming increasingly stretched fi nancially and it operated on a £1.6m defi cit in the last fi nancial year. This was covered by its fi nancial reserves, but these will not last forever. It is diffi cult to argue against licence fees increasing if it is costing the Commission more to regulate gambling than it receives. However, if the Commission is now being given a wider mandate to reduce problem gambling, should all of its work be covered by licence fees? This is perhaps a controversial opinion these days, but problem gambling is not an issue created entirely by licensed gambling operators. The reality is that it is a mental health issue that, sadly, will probably always affect a minority of people. If gambling were banned in the UK, affected individuals would most likely continue to gamble with illegal operators, or privately with friends and “acquaintances”. Whether it is the Commission, the NHS, or a combination of the two who are expected to deal with problem gambling issues, it would not be unreasonable to expect some public money to be used, particularly given that licensed gambling operators pay £3bn in gaming duties each year. If we want to make a signifi cant reduction to the number of people suffering from, or at risk from, problem gambling, we urgently need detailed evidence of its causes. One of the key fi ndings of the NAO’s report was that “evidence on the causes and impacts of gambling problems is limited compared with other addictions”. Whether research should be commissioned by the Commission, the government or the NHS is up for debate, but we don’t currently understand whether the root cause is availability of certain gambling products, lack of intervention by gambling operators at certain key trigger points, mental trauma, fi nancial distress, a combination of these, or something else entirely. Answers to this question would enable the Commission to focus its resources in the way most likely to make gambling safe for everyone. Given the information and resources it does have, is the Commission focussing its spending in the right way? I could highlight two projects it is currently working on: a complete redesign of its website and a lengthy consultation on alterations to the timing and detail of information which must be reported
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