Report
Annual Report and Accounts 2022 to 2023
The Gambling Commission's 2022 to 2023 Annual Report and Accounts. For the period 1 April 2022 to 31 March 2023.
Performance analysis
Gambling Commission funding
The Gambling Commission is an independent public body. We are funded in two ways:
- by application and licence fees set by the Secretary of State, approved by Parliament and paid by the gambling industry. These fees fund all gambling regulation except that for the National Lottery
- in respect of National Lottery functions, by Grant-In-Aid (GIA) from the National Lottery Distribution Fund (this GIA is not treated as income in accordance with FReM).
Income
Our total income from fees and other sources was £26.09 million for the year (£20.18 million for 2021 to 2022). This figure does not include the £22.56 million (2021 to 2022, £26.97 million) of GIA funding in respect of the National Lottery functions which is transferred directly to reserves.
Our fee income for the year was made up of the following:
- gambling operator application fee income was £2.05 million (2021 to 2022, £1.21 million)
- fees for personal licences £0.76 million (2021 to 2022, £0.67 million)
- gambling operator annual licence fees £22.89 million (2021 to 2022, £18.02 million)
- miscellaneous income of £0.39 million (2021 to 2022, £0.28 million). This was mainly attributable to contributions to compliance and enforcement costs received from gambling operators.
Annual gambling operator fee income by sector 2022 to 2023
Total fee income has been analysed by industry sector in the following table.
| Sector | Annual operator fee income (percentage) |
|---|---|
| Arcades | 4% |
| Machines | 24% |
| Betting | 33% |
| Bingo | 4% |
| Casino | 29% |
| Lotteries | 6% |
Expenditure
During the year, total expenditure on operational costs including depreciation was £40.91 million (2021 to 2022, £45.11 million), a decrease of £4.20 million on the prior financial year (9 percent).
Expenditure on gambling regulation totalled £19.33 million (2021 to 2022, £18.85 million) National Lottery functions accounted for £21.58 million (2021 to 2022, £26.26 million). This included £19.15 million on the National Lottery Fourth licence competition (2021 to 2022, £23.65 million).
Employee costs for the year were £19.02 million (2021 to 2022, £19.17 million), a decrease of £0.150 million. Employee costs for gambling regulation were £13.97 million (2021 to 2022, £13.80 million) and National Lottery regulation £5.05 million (2021 to 2022, £5.36 million). Of this, £3.18 million related to the National Lottery Fourth licence competition (2021 to 2022, £3.23 million).
For comparative purposes, the following table shows year-on-year operational expenditure comparison for gambling and National Lottery regulation expenditure, and the costs of Horserace Betting Levy activity which was funded by the Horserace Betting Levy Board (HBLB) and ceased in 2018/19.
The Commission received £0.16 million in relation to preparatory work undertaken for the proposed transfer of the Horserace Betting Levy from the HBLB to the Commission which did not subsequently take place. This funding came from the HBLB.
Year-on-year operational expenditure for gambling and National Lottery regulation
| Description | 2018 to 2019 (£ million) | 2019 to 2020 (£ million) | 2020 to 2021 (£ million) | 2021 2022 (£ million) | 2022 to 2023 (£ million) |
|---|---|---|---|---|---|
| National Lottery regulation | £2.80 | £2.96 | £2.76 | £2.60 | £2.43 |
| National Lottery competition | £4.08 | £13.29 | £14.84 | £23.66 | £19.15 |
| Gambling regulation | £20.54 | £21.20 | £20.57 | £20.07 | £19.33 |
| Horserace Betting Levy activity | £0.16 | not applicable | not applicable | not applicable | not applicable |
| Total costs of operation | £27.58 | £37.45 | £38.17 | £46.33* | £40.91 |
Net expenditure for the year
During the year, the regulation of gambling under the Gambling Act 2005, as amended and updated by the Gambling (Licensing and Advertising) Act 2014 (opens in a new tab), produced an income and expenditure surplus of £7.05 million (2021 to 2022, £1.24 million). A surplus of £3.46 million (2021 to 2022 deficit of £0.04 million) for the year was budgeted under the Commission’s medium-term financial plan using reserves created from the fee income collected in prior years because of the continuing expansion of the gambling industry, particularly within the remote sector.
The surplus set was with the expectation that the Gambling Act Review White Paper would be released during the financial year, generating investment activity which has been delayed into financial year 2023 to 2024. The Commission has revised its reserve policy in-year to £7 million. The comprehensive net expenditure for the year is £14.45 million, including regulating the National Lottery. This deficit is due to the requirement to transfer Grant-In-Aid (GIA) funding of £22.56 million (2021 to 2022, £25.04 million)* in respect of National Lottery regulation direct to reserves and not being included as income.
Statement of financial position
At 31 March 2023 the book value of non-current assets was £3.40 million (2021 to 2022, £3.98 million). Assets less liabilities at 31 March 2023 amounted to £13.02 million (2021 to 2022, £4.92 million)*.
The Commission holds reserves as a matter of prudent financial management, principally so that it can:
- fund substantial legal action in furtherance of its regulatory objectives
- manage short-term fluctuations in its licensing income
- provide for foreseeable but not yet certain liabilities such as other provisions.
Following an update to our Reserves Policy within 2022 to 2023, the Commission calculates that reserves of £7 million meet this requirement. Reserves were maintained at this level at the close of 2020 to 2021 as a result of a GIA advance from our sponsor department. Our reserves levels have increased during the year, largely as a result of delays to the publication of the White Paper and significant underspends on staffing costs.
The year-end closing cash balance at 31 March 2023 was £30.05 million (2021 to 2022, £27.33 million). The cash balance reaches its peak between August and November each year, after the largest tranche of annual fees fall due, which are paid in advance by gambling operators.
GIA to fund National Lottery regulation is drawn down monthly as required, satisfying the normal conventions applying to parliamentary control over income and payment performance.
The Commission’s policy is to pay all invoices within 30 days of receipt unless a longer payment period has been agreed or the amount billed is in dispute. The Government target is 95 percent of invoices should be paid within 30 days. In the year to 31 March 2023, 100 percent of invoices were paid within 30 days of receipt, totalling value was £24.82 million (2021 to 2022 100 percent, £24.32 million).
References
* 2021 to 2022 numbers restated, further information is included in Note 2 of the accounts.
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