Consultation response
Amending section 2.39 of the Statement of principles for determining financial penalties: Consultation Response
This response sets out our position in response to the consultation on amending section 2.39 in the Statement of principles for determining financial penalties.
Summary of responses and our position
Proposal
We consulted on amending section 2.39 of the Statement of principles for determining financial penalties to propose that in future regulatory settlements are paid directly to the Consolidated Fund, aligning with the process that is in place for financial penalties as set out in the Gambling Act 2005. This would mean that the government would be responsible for making decisions on the use of such funds whether for tackling gambling-related harm or for other purposes.
We did not propose any changes to the process and criteria for considering the appropriateness of a regulatory settlement, such as whether it includes a financial aspect or any divestment as part of our regulatory enforcement activity. Therefore, the position as set out in section 5 of our Licensing, Compliance and Enforcement Policy Statement remains unchanged.
Consultation questions
To what extent do you agree with the proposal to amend section 2.39 of Statement of principles for determining financial penalties to make it clear that in future all regulatory settlements agreed as part of Gambling Commission enforcement action will be directed to the Consolidated Fund as financial penalties are?
Can you foresee any issues related to amending the destination for future regulatory settlements to the Consolidated Fund?
Do you consider that there is an alternative destination for future regulatory settlements that we have not considered?
Are there any additional issues related to amending the destination for future regulatory settlements that we should consider?
Do you have any views on the proposed timetable for implementation?
Can you foresee any issues related to amending the destination for future regulatory settlements to the Consolidated Fund?
Respondents’ views
Of the 28 responses to the consultation, around a third of respondents (mostly from gambling businesses) and a trade association agreed or strongly agreed with our proposal. Just over half of respondents, mostly from charity and third sector organisations, members of the public and those affected by gambling harm disagreed or strongly disagreed and the remaining respondents were neutral in their views.
Those in support of the proposal to send regulatory settlements to the Consolidated Fund in future generally agreed that this was really the only viable option in the absence of a central body or bodies who could receive and spend regulatory settlement funds. They agreed that to direct regulatory settlement funds outside of the new levy structures would risk inconsistency, duplication, and misalignment with centrally agreed commissioning priorities and some respondents also noted that our proposed approach would be consistent with that of other regulators.
Some respondents also acknowledged that regulatory settlements were never intended to form part of the core funding mechanism for addressing gambling-related harm and that while the historic approach was pragmatic at the time, it was no longer suitable or appropriate in the context of a statutory levy system.
Those in support also agreed that the unpredictable and irregular nature of regulatory settlement funds makes them unsuitable for integration into the new levy commissioning structures, which require stability and forward planning to enable the delivery of effective outcomes. Some respondents agreed that the introduction of the statutory levy represents a fundamental change to the funding and commissioning of gambling research, prevention and treatment and that the levy provides a planned, transparent and accountable mechanism for funding such activities, with decisions appropriately resting with government and the designated levy commissioning bodies. However, there was still some level of support for government choosing to spend any regulatory settlement funds received in the Consolidated Fund on gambling prevention and treatment if at all possible.
Respondents who did not support the proposal were concerned that funds would be leaving the gambling ecosystem and would be used by government for non-gambling priorities and that there would no longer be a 'polluter pays' principle for regulatory settlements where funds should be used to mitigate any harm created by gambling businesses rather than being sent to the Consolidated Fund. There was a belief that without this connection, regulatory settlements would no longer act as a deterrent.
In terms of alternative proposals, some respondents felt that regulatory settlements should still be added to the overall levy pot and used by the levy commissioning bodies whereas others supported a more flexible approach which could be more easily accessed by smaller third sector organisations who may not receive any direct funding from the levy system. As explained in the consultation, we are clear that this option is not something the Commission could or should have a role in.
A few respondents who were against the proposal did understand our intention to align regulatory settlement payments with the process used for financial penalties but were concerned that this would remove transparency around how regulatory settlements are used. Not being clear what monies sent to the Consolidated Fund are spent on was a common theme among those respondents not in support of the proposal with some respondents suggesting that any regulatory settlements should be ring-fenced within the Consolidated Fund to be spent only on activity that would address gambling harm; this would be a decision for government. A small number of respondents were also concerned that the proposal was too focused on efficiency and simplicity, and a few were simply worried that they would no longer have access to regulatory settlements as a potential additional funding stream.
Our position
We have carefully considered all of the responses to the consultation and have decided to proceed with the proposal to amend section 2.39 of the Statement of principles for determining financial penalties so that in future all regulatory settlements will be paid directly to the Consolidated Fund.
As part of our analysis and decision-making processes the Department for Culture, Media and Sport (DCMS) and the levy commissioning bodies reconsidered the possibility of future regulatory settlements being added to the overall levy pot and distributed among levy commissioning bodies to consider if the original concerns remained or whether the position had changed since the consultation.
Having carefully considered the views of all respondents and stakeholders, the Commission considers regulatory settlement payments should be sent to the Consolidated Fund. Concerns around the complexity and potential volatility of regulatory settlement funds are felt to create more challenges for levy commissioning bodies while existing levy allocations should already be large enough to enable and support effective and sustainable research, prevention and treatment across the system without the need for additional ad hoc regulatory settlement funds. We consider that the deterrent effect of a regulatory settlement is not affected by this decision and that regulatory settlements will continue to reinforce regulatory standards and deter misconduct. The deterrent effect comes from other factors such as the actions required of an operator by the settlement, the amount of any financial element in lieu of a financial penalty and the publicity involved.
We acknowledge that our decision to send future regulatory settlements to the Consolidated Fund will be unpopular with some respondents, particularly those who have received regulatory settlement funding in the past. However, despite the lack of overall support for the proposal, given the limited alternative options available to us we still believe that in the absence of a central commissioning body or bodies that can receive and spend regulatory settlement funds in a coordinated way, that sending regulatory settlements to the Consolidated Fund in future remains our only viable option.
We understand the strength of feeling from some stakeholders who feel that regulatory settlement funds should be used to mitigate any harm created by a gambling licensee rather than being sent to the Consolidated Fund, where the use of such funds may not be hypothecated to purposes connected with gambling. However, we remain of the view that the new statutory levy system should mean that there is sufficient funding to deliver a sustainable and equitable funding system for research, prevention and treatment of gambling-related harm that will be distributed in line with the strategic direction of the government and commissioned by the levy commissioning bodies. Government can still choose to direct funds from the Consolidated Fund for any purpose they wish, and this could include those connected with gambling-related harm. If they choose to do so, the delivery of this work can be commissioned, properly evaluated and aligned to the broader programme of work being conducted under the levy system. In addition, it is important that regulatory settlements continue to be applied by the Commission as one option in the regulatory toolkit and solely for regulatory purposes.
Final wording of section 2.39 of the Statement of principles for determining financial penalties
This amendment will come into force with immediate effect.
Applies to: All regulatory settlements that are finalised on or after this date and which include an amount in lieu of a financial penalty.
Payments in lieu of financial penalties
2.39. Payments made in lieu of a financial penalty as part of a regulatory settlement will be paid into the Consolidated Fund, in the same manner as financial penalties imposed under section 121 of the Act.
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Last updated: 22 July 2026
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