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January 2022: Parliamentary All Party Betting & Gaming Group Investigation into the Competency and Effectiveness of the Gambling Commission 

Executive Summary

  • This report was motivated by the amount of anecdotal evidence the APBGG had received regarding the poor performance of the Gambling Commission

  • We decided to provide an anonymous platform for gambling operators and their advisers to complain about the Commission as there was palpable fear from them that if they complained publicly, the Gambling Commission would punish them.

  • We took submissions through the APBGG website and invited complaints into the categorises which allege that the Commission has acted ultra vires, beyond its powers as a regulator, has allegedly acted in breach of the regulators code, which every regulatory is legally subject to and allege that the Commission had acted incompetently and ineffectively.

  • Even though we had been made aware that certain trade bodies had advised their members not to submit evidence for fear of upsetting the Commission, we received a significant number of submissions that far surpassed our own test on whether to publish a report or not.

  • We have presented the submissions where possibly as verbatim, but where it was necessary we have edited to ensure anonymity. As well as the three categories of complaint we present seven case studies where respondents have provided far more evidence than can be simply put into the categories

  • In summary, the evidence is condemning and leads us to the conclusion that the Commission is in urgent need of change, the APBGG urges the new Chair and soon to be CEO, DDCMS and all stakeholders to do their upmost to do, for we fear if unchallenged will lead to an explosion in the black market and the destruction of one of the world’s best gambling industry’s.

  • We introduced our report by considering what little scrutiny there has been of the Commission in the past. This includes the Hampton implementation review in 2008, the Culture, Media and Sport Select Committee’s 2012 report The Gambling Act 2005: A bet worth taking?, February 2020’s report by the National Audit Office, Gambling regulation: problem gambling and protecting vulnerable people, the June 2020 report of the same name by the House of Commons Public Accounts Committee and the Report of the Independent Review of the Regulation of BetIndex Limited by Malcolm Sheehan Q.C. in September 2021. All of these highlighted shortcomings that considering the evidence we’ve received still exist today.

  • The Group is very concerned that it appears from evidence submitted to both the NAO and PAC reports that the Gambling Commission believes it is its role to reduce the number of problem gamblers as we believe that this was not what government intended when the Commission was set up and we echo the concerns the NAO and PAC that the Commission seems to have no evidence based strategy for how it will go about it or evaluate its methods. We believe that the Commission is acting ultra vires in its strategy of seeking to significantly reduce the number of problem gamblers. We are obviously not against the concept but believe that the Commission has neither the tools or expertise to attempt such a thing, which has never been attempted elsewhere, via regulatory methods alone. We believe that the Commission is on an ideological mission that will undoubtedly lead to an explosion in the black market.

  • Examples of the Commission acting ultra vires provided to us have been the imposition of Affordability and the prospect of Vulnerability, the replacement of clear regulations with Guidance Notes, the illegal imposition of the Covid-19 restrictions and their continuation after lockdown restrictions have been removed, the expectation that every publication of the Gambling Commission should be considered of potential regulatory importance, the misuse of research by the Commission to provide either reasoning for regulations or for newspaper headlines or both, the unquestioning acceptance of advocacy over evidence, the allegedly illegal assessment of operators AML Risk Assessments, allegations of the Commission acting excessively, disproportionately and inconsistently during assessments, breaches of GDPR and their own Statement of Principles and an ignorance of their statutory duty to ‘permit gambling’.

  • Evidence supplied to us suggests that the Commission has been in breach of the following sections of the Regulators Code:

    • 1. Regulators should carry out their activities in a way that supports those they regulate to comply and grow

    • 1.1 Regulators should avoid imposing unnecessary regulatory burdens through their regulatory activities and should assess whether similar social, environmental and economic outcomes could be achieved by less burdensome means. Regulators should choose proportionate approaches to those they regulate, based on relevant factors including, for example, business size and capacity.

    • 1.2. When designing and reviewing policies, operational procedures and practices, regulators should consider how they might support or enable economic growth for compliant businesses and other regulated entities, for example, by considering how they can best:

      • understand and minimise negative economic impacts of their regulatory activities;

      • minimising the costs of compliance for those they regulate;

      • improve confidence in compliance for those they regulate, by providing greater certainty; and

      • encourage and promote compliance.

    • When proposing new regulations and regulatory burdens a consultation process is followed.

    • 1.3 Regulators should ensure that their officers have the necessary knowledge and skills to support those they regulate, including having an understanding of those they regulate that enables them to choose proportionate and effective approaches.

    • 2. Regulators should provide simple and straightforward ways to engage with those they regulate and hear their views

    • 2.1. Regulators should have mechanisms in place to engage those they regulate, citizens and others to offer views and contribute to the development of their policies and service standards. Before changing policies, practices or service standards, regulators should consider the impact on business and engage with business representatives.

    • 2.2 In responding to non-compliance that they identify, regulators should clearly explain what the non-compliant item or activity is, the advice being given, actions required or decisions taken, and the reasons for these. Regulators should provide an opportunity for dialogue in relation to the advice, requirements or decisions, with a view to ensuring that they are acting in a way that is proportionate and consistent.

    • 2.3. Regulators should provide an impartial and clearly explained route to appeal against a regulatory decision or a failure to act in accordance with this Code. Individual officers of the regulator who took the decision or action against which the appeal is being made should not be involved in considering the appeal. This route to appeal should be publicised to those who are regulated.

    • 2.6. Regulators should have a range of mechanisms to enable and regularly invite, receive and take on board customer feedback, including, for example, through customer satisfaction surveys of those they regulate.

    • 3. Regulators should base their regulatory activities on risk

    • 3.1 Regulators should take an evidence based approach to determining the priority risks in their area of responsibility, and should allocate resources where they would be most effective in addressing those priority risks.

    • 3.5 Regulators should review the effectiveness of their chosen regulatory activities in delivering the desired outcomes and make any necessary adjustments accordingly.

    • 4. Regulators should share information about compliance and risk

    • 4.1 Regulators should collectively follow the principle of “collect once, use many times” when requesting information from those they regulate.

    • 5. Regulators should ensure clear information, guidance and advice is available to help those they regulate meet their responsibilities to comply

    • 5.5. In responding to requests for advice, a regulator’s primary concerns should be to provide the advice necessary to support compliance, and to ensure that the advice can be relied on.

    • 6.2. Regulators’ published service standards should include clear information on:

      • a) how they communicate with those they regulate and how they can be contacted;

      • b) their approach to providing information, guidance and advice;

    • 6.3 Information published to meet the provisions of this Code should be easily accessible, including being available at a single point on the regulator’s website that is clearly signposted, and it should be kept up to date.

    • 6.5. Regulators should publish, on a regular basis, details of their performance against their service standards, including feedback received from those they regulate, such as customer satisfaction surveys, and data relating to complaints about them and appeals against their decisions.

  • Evidence of the Commission being less than competent and/or effective include incredibly lengthy timeframes for licence applications being processed and telephone calls or emails responded to, administrative errors that result in applications being threatened with rejection, unacknowledged Key Events, stock answer on licensing or compliance questions to seek legal advice even if it’s a lawyer doing the questioning, licensing staff responding with false, misleading of factually untrue commentary, AML assessments being mistaken with Social Responsibility regulations, website being full of deadlinks, not having required information and search function unworkable, Commission fines appearing to be arbitrary, no evaluation of remedial actions, repeated misnaming of licenses, payment for licence applications unacknowledged even when proof of payment submitted, demands for information sent out mistakenly, turnover of staff that mean case managers often unbriefed, assessments made by GC where accusations were made about an operator which had no basis in fact and misconstrued evidence submitted, no apparent knowledge by GC staff of gambling practices, repeated cases of staff unbriefed, licence application software inadequate, licence application timeframe targets breached significantly over the years, incredibly periods of time for licensing that has left many an applicant in financial hardship often without any explanation about the reason for the delays, licence applications requiring enormous amounts of supporting evidence from the applicant far out of proportion for the licence being applied for, GC ignoring communications from operators, GC misunderstanding gambling terminology, GC having a bullying attitude that has cause mental harm and for people to leave the industry, GC inspectors stating their hate for the industry, GC findings from investigation written in ambiguous terms with scant evidence of why they found their findings, GC not participating in industry engagement, GC not participating in AML forum, persistent negative commentary about the industry from the GC.

  • Our case studies highlighted the experiences and commentary of a number of operators and their advisors. Their complaints about the GC can all be summarised by those complaints made in the above three categories.

  • Our conclusion is that upon reading the submitted evidence means one can only really reach one conclusion and that is that the Gambling Commission has failed in practically every aspect of being a regulator.

  • Our first recommendation is that DDCMS as part of its Review of the Gambling Act 2005 considers what the role of the Commission is in the future. By this we mean answering the question ‘is it the Gambling Commission’s job to actively seek a significant reduction in the number of problem gamblers?’. DDCMS needs to consider that, as mentioned above, this was not the original intention of the Gambling Act and should that not be the case any more than this is a significant change in government policy and should be brought before Parliament for debate and scrutiny.

  • If DDCMS consider the answer to this question to be yes, then what needs to be brought before Parliament is what the Hampton Review recommended over a decade ago and what the NAO and PAC reports of 2020 criticised for its absence, is a strategy of how it will be achieved, what targets there will be, and the evidence (science) behind the approach. There will also need to be an impact assessment of how such measures will affect the financial position of the regulated gambling industry and whether there will  be any growth of the unregulated sector. Each intervention will need analysis of its implementation and results. It should be up to Parliament to weigh up the benefits of decreased problem gambling numbers versus economic dereliction and an increased illegal gambling not an un-elected regulator. Changes in social policy, established over many decades need the transparency of Parliamentary scrutiny.

  • Our second recommendation is that the Better Regulation Executive undertake an audit of the Gambling Commission on the basis of a Hampton Implementation Review as last conducted in 2008. Our evidence shows that the Commission is in flagrant breach of practically all the Regulators Code and we would like to see the government’s own Better Regulation body consider what we have seen and make formal recommendations for improvement.

  • Our third recommendation is that a QC should be commissioned to undertake an independent investigation of the enforcement process of the Commission. This should consider the status of the Regulatory panel and overall appeal process and whether it fits the considerations of natural justice. It should also consider the process of awarding fines and the basis for determining the amount.

  • Our fourth recommendation is that DDCMS should temporarily take over the complaints process from the Gambling Commission. It is obvious that the industry is too scared to use it and that the usual check and balance of a regulars performance has been made inoperable. Hopefully by handing it over to the sponsoring Department, more operators will be willing to highlight any wrongdoings and at the same time DDCMS will be made aware of the Commissions failings.

  • Our fifth recommendation is that the Gambling Law Review consider amending the Gambling Act 2005 to differentiate between high risk and low risk gambling operators so that the level of regulation can be made proportionate. One of the factors contributing to the Commission abysmal performance is the zealotry with which they have decided to enforce the AML and Social Responsibility regulations. Both of these sets of regulations are open to interpretation and should be risk based, with the operator making the risk assessment. The Commission has often, according to the evidence we’ve seen, had a far more severe risk assessment and extreme interpretation of the regulations than the operator, far in excess of the actual risk of harm. If low risk operators could be designated as such and have regulations proportionately written for them this would dissuade the regulator of its desire to penalise.

  • This leads us into our sixth and final recommendation, that DDCMS put the Commission ‘under Special Measures’ to see if it is able to change its culture and strategic direction. Given the results of the investigations we propose being undertaken in the above five recommendations, how they result and how the Commission responds should be key question as to whether the Commission is allowed by DDCMS to continue as it is.

  • We believe that now is the perfect opportunity for the Commission, with a new Chair and soon to have CEO, to change things for the better and become a proper regulator again.

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Copies of the report can be accessed from the All Party Group website www.apbgg.org

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