Consultation response

2023 Consultation on proposed changes related to financial penalties: Consultation Response

This response sets out our position in relation to the consultation on the proposed changes to the Statement of Principles for Determining Financial Penalties.

Published
10 July 2025

Last updated
10 July 2025 - Changes

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2023 Consultation on proposed changes related to financial penalties: Consultation Response

Proposal 11: Step 2 (b) - Determining the starting point of the penal element of the fine

Under Step 2(b) we proposed using the level of seriousness of the breach determined at Step 2(a) to inform the starting point of the penal element of the fine. In summary, we proposed that:

in most cases, the starting point of the penal element of the fine will be determined by reference to an appropriate percentage of the Gross Gambling Yield (GGY) derived during the period of breach (calculated to the nearest month), based on the level of seriousness of the breach assessed under Step 2(a)
in terms of the calculation of the percentage of GGY for the relevant period, we proposed that this be calculated by reference to the seriousness of the breach on an escalating 5-point scale, with percentage bands for each of the 5-point scale, up to a maximum (in normal circumstances) of 15 percent of GGY derived during the breach period for the most serious breaches
where the breach period is less than 3 months or is a ‘one off’ event, we proposed using the GGY derived during the quarter preceding the breach
where there are multiple breaches or where the breach period is sustained such that a GGY based penalty would be disproportionate, we proposed that the period(s) of the breach(es) will dictate the number of months GGY that is inputted into the calculation for the starting point of the penal sum
in cases where the GGY methodology of calculation is not appropriate, such as instances where licensees who do not generate GGY or where income is from other sources such as ‘white label’ arrangements, we proposed to set out or rationale for not using GGY to the licensee and to include rationale on how the Gambling Commission will assess the starting point of the penal element, which would be based on the Commission's experience, knowledge and judgement of previous cases.

We sought views on:

the proposal to use GGY generated during the period of the breach (rounded to the nearest month) as a basis for the starting point for determining the level of financial penalty
in the case of one-off or events lasting short time periods, the proposal that GGY derived during the quarter preceding the end of the breach be considered as the starting point for determining the level of the financial penalty
in the case of multiple breaches of varying duration, the proposal to use the aggregated breach period, taking account of different levels of seriousness within that breach period, or if this is not appropriate, for the Commission to use its judgment to reach a fair and proportionate period
the proposal that the starting point for the financial penalty be calculated by adopting a percentage of GGY derived during the period of the breach, where this percentage is set by reference to the level of seriousness of the breach
the proposed percentage ranges for informing the starting point of the penal element to be associated with the level of seriousness of the breach
the proposal for the Commission to reserve the right to impost a percentage of GGY in excess of 15 percent in exceptional circumstances for the most serious breaches
any circumstances in which it would not be appropriate to use GGY as a basis for the starting point.

We also invited general comments on this section.

Consultation questions

Questions 33 to 40, as detailed in Annex 2, related to this document.

Respondents' views

Overall, approximately half of respondents answered questions 33 to 40 and most of those who answered indicated varying levels of disagreement with the proposals but provided helpful feedback which is summarised as follows.

Using GGY as the starting point for determining the level of the financial penalty, including feedback on the proposed time periods for shorter or one-off breaches and longer or multiple breaches.

Some respondents disagreed with the proposed method of calculation for instances where the breach period was a ‘one off’ or lasted less than 3 months and suggested that the GGY calculation should be based on the actual period of breach, where known, rather than on the preceding quarter as proposed. Several respondents also disagreed with the proposal for using GGY generated during the period of the breach (rounded to the nearest month) and suggested that using GGY for the actual period of the breach would be more appropriate.

Some respondents disagreed with the proposed wording regarding the approach to instances where the breach period is sustained and suggested that the amended Statement of Principles for Determining Financial Penalties (SoPfDFP) should set out the approach to be taken in these cases more clearly.

Using the ‘level of seriousness’ of the breach assessed under Step 2(a) to inform the percentage of GGY used to calculate the starting point of the financial penalty.

Most respondents agreed with the proposed approach to determine the appropriate percentage range by reference to the level of seriousness of the breach.

The proposed percentage ranges and the Commission’s proposal to reserve the right to impose a percentage of GGY in excess of 15 percent for the most serious breaches.

Most of the feedback received in relation to the proposed percentage ranges suggested that there was concern amongst some of the respondents regarding the exceptional circumstances in which the Commission might use the higher limit of 15 percent. Several respondents suggested that the approach to be followed in these situations should be made clearer.

The proposed examples of the circumstances in which it will not be appropriate for the starting point to be based on a percentage of GGY.

Several respondents indicated that using GGY as the starting point for determining the level of the financial penalty for society lotteries was not appropriate and proposed that this category of licence holder be added to the examples of instances where it would not be appropriate to use GGY as the starting point for determining the penal element of the financial penalty.

Some respondents also suggested that breaches in relation to marketing should also be added to the list of examples of instances where it would not be appropriate for the starting point to be based on a percentage of GGY.

Our position

We have considered the feedback raised by stakeholders in the consultation responses and have made the following changes to the wording of paragraphs 2.15 to 2.21 of the amended SoPfDFP:

At paragraph 2.15 of the amended SoPfDFP we have removed the last sentence entirely such that the approach that the Commission will adopt in determining the starting point figure, in most cases, is by reference to a percentage of GGY derived during the period of the breach.

We have conflated paragraphs 2.17 and 2.18 in the amended SoPfDFP and made the following amendments:

we have removed the casework examples of circumstances where multiple breaches are identified
we have made revisions to the wording to provide further clarity as to the Commission’s approach
we have removed the sentence regarding the setting out of the Commission’s preliminary findings regarding the breach period and have moved this to its own paragraph, the new paragraph 2.18.

At paragraph 2.19 of the amended SoPfDFP we have slightly amended the wording to make it clearer the Commission will apply the appropriate percentage of GGY according to the level of seriousness (as determined at stage 2a).

In the table at paragraph 2.19 we have also slightly amended the wording in parentheses for the level 5 parameter to make it clearer that, in exceptional circumstances, the Commission retains the discretion to increase the upper limit higher than 15 percent and, where this is done, will provide rationale for doing so.

At paragraph 2.20 we have added “cases relating to society lotteries or external lotteries” as a fifth example of circumstances where it may not be appropriate for the starting point to be based on a percentage of GGY. The list at this paragraph is not exhaustive and there will be other examples which will fall into this category which the Commission will consider. For this reason, we have not added breaches in relation to marketing.

Final wording

This requirement will come into force on 10 October 2025.

Paragraphs 2.15 to 2.21 of the amended SoPfDFP

Step 2(b) Determining the starting point of the penal element of the fine

2.15. The ‘level of seriousness’ assessed under Step 2(a) is used to determine the appropriate starting point for the penal element. In most cases, the Commission will determine the starting point figure by reference to a percentage of the licensee’s Gross Gambling Yield (GGY)¹ derived during the period of the breach.

2.16. The GGY will be ascertained from the licensee’s regulatory returns for its licensed activities in the UK. It will not include GGY accrued from activities which do not fall to be licensed by the Commission or from activities which fall outside the licence that has been breached.

2.17. The period of the breach will dictate the number of months of GGY that is inputted into the calculation for the starting point of the penal sum. Where there is a distinct period of breach, the Commission will determine the level of seriousness by taking a singular or holistic review of the breach(es) present during the distinct period. Where there are multiple breach periods over varying dates, the Commission will consider each distinct breach period in isolation and determine the level of seriousness of the breach(es) for each specific breach period by taking a singular or holistic review of the breach(es) present during the distinct period. The level of seriousness for each identified period would then be added together and aggregated to calculate the overall level of seriousness covering the whole period.

2.18. The Commission will, where possible, set out within its preliminary findings what it considers to be the breach period or breach periods.

2.19. Having determined the GGY for the relevant period, the Commission will then decide on the percentage of that GGY which will form the starting point of the penal element of the fine. The appropriate percentage range will be determined by the ‘level of seriousness’ assigned at Step 2(a). The Commission will use its judgement on a case-by-case basis to decide upon the appropriate percentage within that range.

Percentage of GGY over relevant period for levels of seriousness
Level of seriousness	Percentage of GGY over relevant period
Level 1	0% to 0.99%
Level 2	1% to 2.99%
Level 3	3% to 4.99%
Level 4	5% to 9.99%
Level 5	10% to 15% (in exceptional circumstances the Commission retains the discretion to increase the upper limit higher and should it do so will provide rationale for this)

2.20. The Commission recognises that in some circumstances it will not be appropriate for the starting point to be based on a percentage of GGY. Examples may include, but are not limited to:

2.20.1. the licensee’s business model is not reliant on GGY (such as white label operators)

2.20.2. in cases relating to Personal Functional and Management Licence (PFL/PML) holders.

2.20.3. in cases where there may be a specific single issue relating to a part of a licensee’s business (such as failings at a single premises within an estate of licensed premises)

2.20.4. where there is no potential of GGY being generated from the breach such as failing to report key events or

2.20.5. in cases relating to society lotteries or external lottery managers.

References

¹Gross Gambling Yield (GGY) is the total amounts paid to the licensee by way of stakes, plus the total of any amounts that will otherwise accrue to the licensee, minus the total amounts deducted in respect of the provision of prizes or winnings. Further details of how GGY is calculated are available on the Commission’s website

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Proposal 10: Step 2 (a) - The seriousness of the breach to determine the starting point of the penal element Next section
Proposal 12: Step 3 - Mitigating and aggravating factors

Last updated: 10 July 2025

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