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  3. 2023 Consultation on proposed changes related to financial penalties: Consultation Response

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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Contents

Proposal 8: Criteria for determining the quantum of a financial penalty

This section of the Statement of Principles for Determining Financial Penalties (SoPfDFP) included proposals which are distinctly different from the existing SoPfDFP and represent the substantive changes to the way in which the Gambling Commission proposes to determine financial penalties.

These proposals:

  1. include a clear and distinct 6 step process the Commission would follow when determining a financial penalty
  2. provide clarity as to how and when the Commission will calculate a ‘disgorgement’ element of the penalty where clear consumer detriment and/or financial fain by the licensee has resulted directly from the breach
  3. identify which factors would determine the seriousness of the breach and form part of the assessment of the starting point of the penal element, as distinct from constituting aggravating or mitigating factors
  4. provide transparency on how the Commission would determine the level of seriousness of the breach and the introduction of 5 levels of seriousness
  5. include a proposal for determining the starting point for the penal element of the penalty by reference to the seriousness of the breach and a percentage of Gross Gambling Yield (GGY)1 or equivalent income generated during the period of the breach
  6. include a proposal for addressing situations involving multiple breaches during the period
  7. include a proposal for making adjustments to the penalty for aggravating and mitigating factors, deterrence and early resolution, as distinct and separate from the process for determining the seriousness and starting point of the penal element of the penalty.

We sought views on:

  • moving to a clear 6 step process for calculating financial penalties
  • separating the calculation of the disgorgement2 element of the fine from the calculation of the penal element of the fine, with these added together at Step 6
  • the proposed steps and their sequencing.

We also invited any other comments on the proposed process as set out in the consultation document.

Consultation questions

Questions 20 to 24, as detailed in Annex 2, relate to this document.

Respondents’ views

Generally, there was broad agreement with the proposed process from the respondents. A few respondents indicated disagreement with the overall proposal to move to a clearly defined 6 step approach but the accompanying comments were about the content or wording of the steps rather than the structure and sequencing of the process. The feedback received in relation to each of the steps is addressed in this response.

Our position

Broadly, no major changes to the proposed process as set out in the consultation document have been made except that an additional step, Step 7, has been added. Step 7 has been added to the process to provide for the consideration of whether an adjustment should be made to ensure the sum of the financial penalty as calculated at Step 6, is proportionate.

The reason for this addition is explained under the section entitled “Step 2(b) Determining the starting point of the penal element of the fine”.

We have also made minor changes to the wording of some of the steps in order to ensure clarity but these are not substantive changes to the proposed process or its application.

Final wording

This requirement will come into force on 10 October 2025.

Paragraphs 2.6 to 2.8 of the amended SoPfDFP

Criteria for determining the quantum of a financial penalty

2.6. Although the Act does not set a limit for a financial penalty, a penalty will be set at a level which the Commission considers to be proportionate to the breach.

2.7. The total amount payable by a licensee will normally be made up of two elements:

  1. Disgorgement Element: an amount to reflect any financial detriment suffered by consumers and/or remove any financial gain made by the licensee as a result of the contravention or failure3 (Step 1 below) and
  2. Penal Element: an amount that reflects the seriousness of the contravention or failure, the impact on the licensing objectives and the need for deterrence (Steps 2 – 7 below).

2.8. The Commission will ordinarily approach the quantum of a financial penalty in the following way:

  1. Step 1: Calculate the disgorgement element to reflect any financial detriment suffered by consumers and/or remove the financial gain to the licensee, if possible (see paragraphs 2.9 – 2.10). Set this figure aside to add to the penal element at Step 5.
  2. Step 2: Consider the seriousness of the breach to determine the appropriate starting point for the penal element of the fine (see paragraphs 2.11 – 2.20).
  3. Step 3: Consider any aggravating and mitigating factors that may increase or decrease the penal element (see paragraphs 2.21 – 2.24).
  4. Step 4: Consider the need for a deterrence uplift to the penal element, having regard to the principle that non-compliance should be more costly than compliance and that enforcement should deliver strong deterrence against future non-compliance (see paragraph 2.25).
  5. Step 5: Consider a discount to the penal element where early resolution has been reached (see paragraphs 2.26 – 2.28). When the final penal element figure is reached add the disgorgement element reached at Step 1.
  6. Step 6: Consider whether an adjustment should be made to ensure the sum of the figures at steps 1 (if calculated) and step 5 (the Disgorgement element and the penal element) are affordable (see paragraphs 2.29 – 2.32).
  7. Step 7: Consider whether an adjustment should be made to ensure the sum figure at step 6 is proportionate.

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.

2This is the financial detriment suffered by consumers and/or the financial gain to the licensee derived directly from the breach.

3An assessment will only be made when the figures can be calculated.

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Proposal 7: Criteria for the imposition of a financial penalty Next section
Proposal 9: Step 1 - Detriment to consumers and/or financial gain to the licensee
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