Andrew Rhodes speech at Bacta Annual Convention 2023

22 November 2023Speech by Andrew Rhodes

This speech was delivered by chief executive Andrew Rhodes at the British Amusement Catering Trade Association (BACTA) Annual Convention on 14 November 2023.

Please note: This is the speech as drafted and may slightly differ from the delivered version.

Thank you John and thank you everyone for being here today. It is always a warm reception for a regulator to follow a panel of trade bodies! This is my first Bacta Annual Convention - despite previous attempts to get here - so it really is great to be here and have a chance to talk to you all, hear your thoughts on where your sector is and engage in your theme of ‘shaping the future’. You may think ‘here comes the regulator, brace yourselves’, and my office like to remind me I do play the ‘sour grape’ well – but in preparing for today my list of positives does outweigh anything else.

I’ll be open, the relationship between the Commission and those we regulate is by its very definition one that can and will be challenging at times. We do not always agree, but the story of the last twelve months from my point of view is overall a positive one. And that is just as true for your sector – adult gaming centres and arcades – as it is for the gambling sector as a whole.

It would be amiss for me not to say thank you to Greg Wood who has always been open and constructive in our discussions as your President and welcome Jon Bollom your new President – which gives me great pride (but no bias) to have south Wales represented on the national stage.

May I also respect that Bacta turns 50 next year – I am not sure I have (or will get) an invite for the party. I will generally leave the jokes to others – but I am awaiting John to tell me there are Cat D machines across the country older than Bacta.

So today I want to talk a bit about:

• how we see the current state of gambling in Great Britain today, as well as your sector itself
• the progress that we have seen over the last year and what that means for both our relationship and how we can work together going forwards as a result
• of course, we have seen the Gambling Act Review White Paper published this year as well so I will give you an update on how we are progressing with its implementation.

But first, as today is my first Bacta Annual Convention, I wanted to tell you a little about the approach and the principles I have set for the Commission. It is an approach I call the Commission Story.

Why the Commission Story? Well, the reason behind this is simple. The topic of gambling in Britain today is not one that falls along party political lines. We have some exceptionally polarised lobby groups on either side of the debate, as well as arguably the most varied and diverse group of licensed operators in the world alongside some of the most varied consumers too which might vary – from savvy professionals through to social gamblers who many of you will know from your businesses, come in to play a few machines over a coffee and sadly those who can and do suffer extreme harms as well. So the work that the Commission does, to permit gambling as long as it is in line with the licencing objectives, is always likely to attract criticism. Either described by someone as being likely to drive everyone to the illegal market and destroy the industry, or as being woefully inadequate to prevent harm by someone else. On this front, the last few years have been difficult for everyone involved in gambling to have a sensible debate on practical matters – and it is still very difficult – tensions run high and opinions are strong.

Sitting in the middle of this is the regulator – delivering necessary reforms and safeguards while trying very hard not to interfere with those who really do not need our intervention. We are an organisation of about 350 people and it is important our people do not lose sight of why their work is important and also that they see the value from it.

So, what I remind everyone who works at the Commission is that everyone has a part in that story. Whatever they do, they are all part of that Commission Story – they all feature in it because none of what we do works without the effort we all make.

I set out the three principles that I want to run through the work of the Commission in everything we do about this time last year, so I thought it would be helpful to discuss this approach with you today. Those principles are:

• putting people first
• doing the right thing
• regulation that works for all.

What do these mean? Well, I’ll start as you might expect, with putting people first.

The Commission is a people-focused regulator. We are a people business. That does not mean we are not evidence-led – we always will be – but what it means is that everything we do must always start with consumers.

An example of this is customer interaction. Now this is an area that our recent consultation on Financial Risk Checks has of course attracted a fair bit of attention to. I do not intend to dwell on that today given that the consultation and its results will not have any bearing on land-based gambling, whether you are running an adult gaming centre on the High Street, or an on-course bookmaker. But for those of you with online businesses, I would say we are making strong progress in working through the around 2400 completed consultation responses and we hope to be ready to report back early next year.

Customer Interaction is, in general I think, one of those areas in which I often see a good approach at some of the arcades and family entertainment centres as part of knowing your customers. I get to see that on the visits I do as part of my job. Things are not easy, especially in a land-based setting, so I do not expect perfection, and we must all always strive to keep getting better… but the commitment that many of you and your businesses show to knowing your customers, looking for signs of risk in your premises and training your staff to be up to date on these issues is noted and appreciated by the Commission.

This brings me on to doing the right thing. This of course means doing what is right even when it is difficult. And that also means engaging with you so you understand why these things need to happen and we understand from you what practical barriers and risks they bring.

Gambling is an inherently difficult sector as it is at the most basic level adversarial in nature. Both the consumer and the operator they are gambling with, want to win the other’s money. So I do not pretend any of these conversations are easy – but we are committed to them.

Alongside that we are guided by insight and make evidence-led decisions that are in the best interest of the gambling public. Our interventions and policy work is driven by a growing level of consumer and industry insight – our consumer voice has been utilising both survey data and focus groups to give us a greater depth of understanding. And we are always striving to get the balance right between protecting those who need it and not infringing those who do not. It is not always easy, but that does not mean it is not the right thing to do.

Now your theme is about ‘shaping the future’ so let me reflect briefly on the last year or so, as a bit of context. For me, that saw the Commission conclude the largest enforcement cases in our history. In terms of scale, we broke our own record for the largest ever settlement twice last financial year where we found unacceptable failings at different leading operators. None of that is easy and it all comes with a heavy dose of scrutiny, as you would hope.

In the last financial year the Commission concluded 24 enforcement cases with operators paying over £60 million because of regulatory failures. This compares with just three operators paying out £1.7 million because of failures in the 2016/17 financial year. You can read more about why it is not all doom and gloom though in my recent CEO Briefing speech.

But your sector should take heart in the fact that whilst we will continue to take enforcement action wherever we find failings that require it, we are not routinely finding failings in your part of the gambling industry that requires us to take dramatic enforcement action. You have had difficult years, not least recovering since covid and with the ongoing cost of living and inflation challenges. As is only right, our compliance activity paused for land-based sectors to allow a window of recovery post-COVID but we have recommenced checks across all land-based sectors now – and the feedback from the team has been broadly positive – so thank you.

Of course I understand that this progress is against the backdrop of an economy recovering from the pandemic, dealing with other blows too and a gambling industry that remains as ferociously competitive as it has ever been. When we look at our most recent statistics the stable picture it shows, confirms that your businesses have to be competitive:

• land-based gambling participation rate for the last year remained statistically stable at 27 percent and online has also remained statistically stable at 26 percent
• and when we look specifically at gaming centres and arcades, in the year to March 2023 participation stood at 1.6 percent, down from 1.8 percent in the year to March 2022.

So progress despite the challenging situation we are working through. But this means, as I said recently, this is the right platform for a more collaborative and grown-up relationship. It allows us to start looking at the more complex issues, the starting point for which comes from eliminating the most unacceptable failings.

Over the last year or so, I have set out how I want the relationship between the Commission and who we regulate to work. Clearly, there is an unavoidable and inescapable tension between the regulator and the regulated. We are not always going to agree, I am rarely going to be the popular slot on your agenda. At times, especially when we find failings in your businesses, it will be uncomfortable for you. However, that does not mean it needs to be adversarial as a point of principle.

At the Commission, a key expectation for us is Compliance at the earliest opportunity. So I want to see issues proactively resolved and for the Commission to engage quickly and early to secure that compliance. And if that means spotting and resolving issues before we need to use our formal powers, so much the better. And the progress made over the last twelve months has meant we can start to use this approach more and more with you. You can read about some of the themes Mandy reflected on in her recent speech.

Of course, compliance isn’t the only (or first) lens we engage with you through. Compliance at the earliest opportunity means from day one of your licence and includes requirements like annual fees and regulatory returns. So let me shed some positive light:

• we processed 2,000 licence applications in the first half of this year

• I know as soon as you submit, you want an imminent response – so I can rally off:
• variation of operating licenses average is 12 working days
• Personal Management Licence (PMLs) are 34 days
• Personal Functional Licence (PFLs) are 14 days
• PML variations are 12 days
• PFL variations are 10 days

• I am sure there are people wanting to focus on individual examples but I am proud our team has really accelerated that activity. I am not pretending it is perfect, and I am not pretending I’ll ever get a thanks for this, but it is a lot better and we should be open about that.

And there is a further side to this – from the licence application to things like regulatory returns, we need to maintain a rich source of data for a range of reasons, which is why you are required to submit them. One reason is so we get the annual fees cycle right first time, which is something I imagine all of us (you and I) should have better things to focus on. It is your requirement to pay your annual fee on time, but like an annual tax bill I would rather we help you factor that in in a timely way rather than rely on just chasing late payers. The vast majority (let us put a number on it, 78 percent of licences) have an annual fee less than £5,000, and the starting rate is £230 – it should not need to be something either of us expend much time/energy on, but life is not that easy so where needs must, we have had to focus and push on late payments this year. I mention this for two reasons, one because we want to be constructive as far as possible – so you should get a timely reminder a week before your deadline and a chaser on the deadline day – there is then no excuse if you don’t pay. The second reason for mentioning it, is whilst I know some have fallen foul in this sector, I also know which sectors perform better than others, you are not last by any means, so I do welcome that.

In a more constructive light, during the last year we have held a regular cycle of roundtables with different operators, representing different sectors and sizes – including specifically with Bacta and Bacta members. And we will continue to hold more of these going forwards. We have also already ramped up our engagement too, with the last financial year seeing around 220 meetings, visits and events with our stakeholders, of which nearly half were with gambling operators. This financial year we have already clocked up about 150. I think this activity has been genuinely helpful and it is my hope that those who have attended them think so too. They’ve allowed us to air issues in a transparent way and on occasion to improve outcomes too. We are committed to this approach and we expect it to help us with the tricky things we will have to work through in 2024.

We will also be inviting some of you and John and the Bacta team to our next Spring Conference next year too. This last year we held a really successful event – despite snow and train cancellations – looking at the evidence and data we need for gambling and next year’s event will be similar but with some important sessions on illegal gambling amongst other topics as well.

So the Commission is committed - wherever possible - to a more supportive, transparent and grown-up relationship with any operator that is committed to their compliance and open to working with us. And we think that is crucial. Especially when we think about just how much work there is to do in the years ahead – as you say ‘to shape the future’.

It would not be a speech from me or anyone else at the Commission these days without a few words on the Gambling Act Review. And so I want to give you an update on how we’re getting on with the implementation of the Government’s White Paper.

In April this year, the Government of course published its White Paper with a detailed set of commitments that laid out what Government, we as the regulator and others – including you as the gambling industry – would do to make gambling safer, fairer and crime free. As the Statutory advisor to the Government on gambling policy we published our advice at the same time and were pleased to see so many of our recommendations adopted by the Government.

Government wanted quick implementation and whilst in total we expect full implementation of the White Paper to take the next few years to complete, we have been determined to make quick progress and deliver at pace. So we have already completed our first round of consultations connected to the Gambling Act Review and look forward to updating you all with our response to those in the New Year. Probably the most pertinent for Bacta members of those was of course the consultation on age verification in premises, which looks at moving all land-based gambling to checking those who enter premises on the basis of looking under 25 as opposed to 21. It also included proposals to remove the current exemption from carrying out age verification test purchasing for the smallest gambling premises. We know that age verification is something the vast majority of you here today take very seriously already and we thank those of you who responded to that consultation with your thoughts.

We have course also delivered on a number of other areas not reliant on consultations and continue to make strides on improving the data we collect that will in turn improve gambling regulation and the implementation of the Review as well.

But whilst the last set of consultations only closed last month, we are already on the verge of publishing our next round of consultations aimed at implementing the Government’s Review. We’ll also be addressing other aspects of our regulation to make us fit for the future. These will cover:

• socially responsible incentives – we will consult on proposals relating to incentives such as free bets and bonuses, to make sure they do not encourage harmful or excessive gambling
• customer-led tools – we will consult on proposals to empower consumers and make it easier for them to manage their gambling in ways that work for them, such as deposit limits
• transparency of protection of customer funds – we will consult on proposals to increase transparency to consumers if their funds are held by licensees that offer no protection in the event of insolvency
• requirement to make annual financial contributions to Research, Prevention and Treatment - we will consult on removing the existing requirement to contribute to a set list of research, prevention and treatment bodies in the context of Government proposals to introduce a statutory levy in the future
• regulatory data – as explained in Ben Haden's making better use of operator data blog, we will be consulting on increasing the frequency of reporting for many licensees from annual to quarterly
• financial penalties – our enforcement activity has ramped up in recent years and we are proposing changes to the way in which we calculate financial penalties imposed following a breach. Our proposals will seek to bring greater clarity and transparency to the way we calculate such penalties. This will include measures to ensure that penalties are set at a level where the costs of non-compliance outweigh the costs of compliance
• financial key event reporting – we propose to amend our rules so that licensees provide us with relevant information about their finances and interests, enabling us to strengthen our risk-based approach to regulation. This is particularly important given the changes seen in the sector over recent times, particularly the increase in complexity of mergers and acquisitions and the globalisation of gambling.

Clearly some of these will be of more or less interest depending on how your business operates but when they are published in the coming days and weeks, we would encourage you all to have a read and have your say. The submissions we receive can and do help us make changes to the policies we consult on and as I’m sure you agree, it is important that we get these things right.

As we go through 2024 there will be further consultations and more work where we will look to you to get involved as we implement other areas of the Review as well. We are committed to delivering on this at pace and so continuing to be able to build that constructive and collaborative relationship with you, based on compliance at the earliest opportunity is critical to that.

So there you go. The last twelve months has been one of taking some positive steps forward. It has created the conditions where we can have more constructive discussions about some of the more thorny issues. And that is key if we are to continue to make progress in implementing the Government’s White Paper in the year ahead. Because whilst I know I and others have said it before, we are here to make gambling safer, fairer and crime free. Working together we are going in the right direction and I hope we can continue to do so together in the year ahead.

Thank you.

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Last updated: 22 November 2023

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