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Statement of principles for determining financial penalties

The Commission's statement of principles for determining financial penalties.

Published
1 June 2017

Last updated
16 October 2025 - Changes

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  1. Contents
  2. 2 - Applicable principles

2 - Applicable principles

Following the 2023 Consultation on proposed changes related to financial penalties, this guidance was updated on 10 October 2025. Information about the updates is provided within the consultation response (opens in new tab).

The purpose of imposing a financial penalty

2.1. When exercising its regulatory powers, the Gambling Commission has a duty to pursue the licensing objectives as set out at section 1 of the Act. The Commission regulates gambling in the interest of consumers and the wider public. The exercise of regulatory powers may have a punitive effect on the licensee. The primary aims of financial penalties will be to:

  • change the behaviour of the licensee
  • eliminate any financial gain or benefit from non-compliance with licence conditions
  • deter future non-compliance of other licence holders.

2.2. In order to change behaviour, deter licence condition breaches and promote a culture of compliance across the licensees’ business (including groups) and the wider industry, the penalty should be set at a level where non-compliance is more costly than compliance and which takes account of the financial resources of the licensee. In addition, it should be proportionate to the nature of the breach of licence condition and, where relevant, the harm as well as potential harm caused.

Criteria for the imposition of a financial penalty

2.3. By virtue of section 121(7) of the Act, in considering the imposition of a penalty, the Commission must have regard to:

  • the seriousness of the breach of condition in respect of which the penalty is proposed
  • whether the licensee knew or ought to have known of the breach
  • the nature of the licensee (including, in particular, the licensee’s financial resources).

2.4. The Commission may also have regard to such matters as it considers relevant including (this is not an exhaustive list):

  • whether the breach of a licence condition is an example of repeat behaviour by the licensee and whether the licensee has previously been subject to regulatory enforcement action
  • whether the licensee has adequately demonstrated its consideration of previous Commission cases and published lessons learnt
  • the timeliness of the licensee’s admissions and remedial actions for licence condition breaches
  • whether the licence condition breach was intentional or reckless
  • whether the licensee could have prevented the licence breach
  • a breach of a licence condition arising from a systemic failure
  • whether the licence condition breach gave rise to financial gain for the licensee
  • whether the breach of a licence condition caused or had the potential to cause harm to consumers, and if so the extent of any such harm
  • whether the licence condition breach could reasonably be expected to have undermined public confidence in the gambling industry
  • whether the licensee was aware of the licence condition breach but did not report it
  • whether the licensee’s response to licence condition breaches and failures was timely and effective
  • whether a financial penalty is necessary to deter future contraventions or failures and to encourage compliance.

2.5. A financial penalty will not normally be used in the following circumstances (the list is not exhaustive):

  • if the breach of a licence condition was trivial in nature, in that it does not pose a risk to the Licensing objectives, the interest of consumers and the wider public
  • if the breach, or possibility of a breach, of a licence condition would not have been likely to be apparent to a diligent licensee
  • if the Commission considers that other regulatory action is more appropriate.

Criteria for determining the quantum of a financial penalty

2.6. Although the Act (opens in new tab) 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 and proportionate to the financial circumstances of the licensee.

2.7. The total amount payable by a licensee will normally be made up of 2 elements:

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 breach or failure2 (as detailed in the following Step 1).

Penal Element: an amount that reflects the seriousness of the breach or failure, the impact on the licensing objectives and the need for deterrence (as detailed in the following Steps 2 to 7).

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

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 to 2.10). Set this figure aside to add to the penal element at Step 5.

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 to 2.20).

Step 3: Consider any aggravating and mitigating factors that may increase or decrease the Penal Element (see paragraphs 2.21 to 2.24).

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).

Step 5: Consider a discount to the Penal Element where early resolution has been reached (see paragraphs 2.26 to 2.28). When the final Penal Element figure is reached add the Disgorgement Element reached at Step 1.

Step 6: Consider whether an adjustment should be made to ensure the total of the figures at steps 1 (the Disgorgement Element) (if calculated) and step 5 (the Penal Element) are affordable (see paragraphs 2.29 to 2.32).

Step 7: Consider whether an adjustment should be made to ensure the total figure at step 6 is proportionate.

Step 1: Detriment to consumers and/or financial gain to the licensee

2.9. Where the Commission can accurately identify the financial detriment suffered by consumers and/or the financial gain to the licensee derived directly from the breach, this sum will constitute the disgorgement element3.

2.10. Where the disgorgement cannot be reasonably accurately identified then detriment to consumers and/or financial gain to the licensee will not result in a disgorgement element under Step 1. However, the number of consumers suffering detriment and/or the amount of actual, potential or intended financial gain from the breach, either directly or indirectly, may be factors relevant in assessing seriousness under Step 2.

Step 2: The seriousness of the breach to determine the starting point of the penal element

Step 2(a) Determining the seriousness of the breach

2.11. To determine the level of seriousness of the breach(es), the Commission will first make an assessment of the breach(es) by taking account of all of the circumstances of the case and considering all factors it considers to be relevant, which may include consideration of (this is not an exhaustive list):

  • the impact on the licensing objectives
  • the nature of the breach
  • the scale of the breach across the licensed entity and/or group
  • the absence of internal controls or procedures intended to prevent the breach
  • the duration or frequency of the breach
  • whether the breach was carried out deliberately or recklessly
  • the impact and potential impact on consumers and the wider public
  • the number of consumers likely to have been affected by the failings
  • whether the breach had an effect or potential effect on vulnerable consumers, whether intentionally or otherwise
  • the level of any potential financial gain, financial gain or intended financial gain from the breach either directly or indirectly
  • whether the breach continued after the licensee became aware of it (and prior to the Commission’s point of knowledge)
  • the extent of any attempt to conceal the failings or breach
  • the involvement of middle and senior management, including consideration as to their knowledge of the failings and, if so, whether they are complicit in them
  • the awareness and involvement of company boards including consideration as to whether they conducted the business with integrity.

2.12. When making an assessment of the breaches to determine the level of seriousness, the Commission will exercise its judgment.

2.13. Based on the Commission’s assessment of the breach(es) a level of seriousness will be assigned. The level of seriousness ranges from Level 1 (least serious) to Level 5 (most serious). Level 5 is reserved for the most serious cases.

2.14. The following describes the factors the Commission may consider when assessing the level of seriousness. It is not intended to be a prescriptive list, and it is ultimately a matter of judgment for the Commission to consider by reference to the circumstances of a case. It is not necessary for all factors listed to be present in order to determine a breach at a particular level. In some circumstances a minimal number of factors may be sufficient to determine that a breach falls within a particular category of seriousness.

Seriousness level 1

The factors at this level are as follows:

  • a low threat to the licensing objectives
  • the breach was small in scale across the licensed entity
  • a low number of consumers suffered detriment or potentially suffered detriment
  • a low amount of actual, potential, or intended financial gain from the breach, either directly or indirectly
  • low impact and/or potential impact on consumers and/or the general public
  • low impact on vulnerable consumers, whether intentionally or otherwise
  • internal controls or procedures intended were largely effective
  • isolated incident and/or minimal duration.

Seriousness level 2

The factors at this level are as follows:

  • limited threat to the licensing objectives
  • the breach affected a limited number of individuals or systems within the licensed entity
  • middle and senior managers demonstrated a minimal lack of oversight and/or awareness
  • a limited number of consumers suffered detriment or potentially suffered detriment
  • a limited amount of actual, potential, or intended financial gain from the breach, either directly or indirectly
  • limited impact and/or potential impact on consumers and/or the general public
  • limited effect on vulnerable consumers, whether intentionally or otherwise
  • weaknesses in internal controls or procedures intended to prevent the breach were limited
  • the duration of the breach was limited.

Seriousness level 3

The factors at this level are as follows:

  • moderate threat to the licensing objectives
  • the breach affected a moderate number of individuals or systems within the licensed entity
  • middle and senior managers demonstrated a moderate lack of oversight and/or awareness
  • the breach was preventable and/or elements of recklessness demonstrated
  • moderate number of consumers suffered detriment or potentially suffered detriment
  • moderate amount of actual, potential, or intended financial gain from the breach, either directly or indirectly
  • moderate impact and/or potential impact on consumers and/or the general public
  • moderate effect on vulnerable consumers, whether intentionally or otherwise
  • weaknesses in internal controls or procedures intended to prevent the breach were moderate
  • company boards demonstrated a lack of awareness but were uninvolved in the breach, and conducted the business with integrity
  • the duration of the breach was moderate.

Seriousness level 4

The factors at this level are as follows:

  • a serious threat to the licensing objectives
  • breach was widespread across the licensed entity
  • middle and senior management demonstrated a lack of oversight and/or awareness and/or were inexcusably ignorant
  • breach was reckless and/or had an element of deliberate risk
  • serious number of consumers suffered detriment or potentially suffered detriment
  • serious amount of actual, potential, or intended financial gain from the breach, either directly or indirectly
  • attempt to conceal the failure or breach
  • serious impact and/or potential impact on consumers and/or the general public
  • serious impact on vulnerable consumers, whether intentionally or otherwise
  • serious deficiencies in internal controls or procedures intended to prevent the breach
  • company boards demonstrated significant failings in governance and/or ethical conduct
  • the duration of the breach was serious.

Seriousness level 5

The factors at this level are as follows:

  • a very serious threat to the licensing objectives
  • breach occurred across all aspects of the licensed entity, or impacted the entire entity
  • middle and senior management failed to exercise due diligence and were either actively involved in the misconduct or grossly negligent in their oversight responsibilities
  • breach exhibited characteristics of deliberate intent
  • very serious number of consumers suffered detriment or potentially suffered detriment
  • very serious amount of actual, potential, or intended financial gain from the breach, either directly or indirectly
  • a deliberate and wide-ranging attempt to conceal the failure or breach
  • very serious impact and/or potential impact on consumers and/or the general public
  • very serious impact on vulnerable consumers, whether intentionally or otherwise
  • substantial weaknesses in internal controls or procedures designed to prevent the breach
  • the company boards demonstrated significant failings in governance and ethical conduct, with potential evidence of complicity or wilful blindness
  • the company boards demonstrated significant failings in governance and ethical conduct, with potential evidence of complicity or wilful blindness
  • the duration of the breach was very serious.

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)4 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 apply the appropriate percentage of GGY according to the level of seriousness (as determined at stage 2a) which will form the starting point of the Penal Element of the fine, as shown in the following table. The Commission will use its judgement on a case-by-case basis to decide upon the appropriate percentage within that range.

Table 1: GGY percentage summary

Table 1: GGY percentage summary
Seriousness level GGY over relevant period (percentage)
1 0% to 0.99%
2 1% to 2.99%
3 3% to 4.99%
4 5 % to 9.99%
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:

  • the licensee’s business model is not reliant on GGY (such as white label operators)
  • cases relating to Personal Functional Licence (PFL) and Personal Management Licence (PML) holders
  • 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)
  • where there is no potential of GGY being generated from the breach such as failing to report key events
  • cases relating to society lotteries or external lottery managers.

2.21. In those cases, the Commission will instead use an appropriate alternative starting point for the penal element. The Commission will adopt a similar approach by assessing seriousness in accordance with Step 2(a) taking into account the relevant factors, but the starting point will be assessed based on the Commission’s experience, knowledge and judgement of previous cases. In these cases, the Commission will confirm its rationale for not using GGY to the licensee in its decision.

Step 3: Mitigating and aggravating factors

2.22. The Commission may increase or decrease the sum calculated at Step 2, to take into account factors which aggravate or mitigate the breach.

2.23. The following list of factors may have the effect of aggravating the breach (this list is not exhaustive):

  • whether there has been a repeated breach or failure by the licensee or other licensees within the same group of companies
  • whether the licensee had previously undertaken to carry out a particular course of action but failed to do so
  • whether the breach arose in circumstances that were similar to previous cases the Commission has dealt with which resulted in the publication of guidance such as ‘Public statements’ or guidance documents alerting the wider industry
  • the licensee’s regulatory history (such as previous sanctions imposed; the licensee has been subject to the special measures process defined within the Licensing, compliance and enforcement policy (LCE))
  • the failure to take action at pace to address the failings after becoming aware of the commencement of the Commission’s investigation
  • the deliberate targeting of a vulnerable group of consumers
  • any attempt to conceal relevant information or provide misleading information to the Commission’s investigation team
  • cases where illegal markets activity has been identified (such as supply chain failures by B2B or B2C operators)
  • any other factor deemed relevant and not already considered at Step 2.

2.24. The following list of factors may have the effect of mitigating the breach (the list is not exhaustive):

  • appropriate action was taken to resolve the breach shortly after it was identified, and it was resolved in a timely manner
  • the extent of steps taken to address or remedy the breach and ensure future similar failings were prevented
  • the licensee’s early and voluntary reporting of the breaches to the Commission
  • timeliness and degree of co-operation the licensee showed with any investigation undertaken by the Commission
  • any other factor deemed relevant and not already considered at Step 2.

2.25. Having considered any aggravating and mitigating factors, the Commission will consider whether it is appropriate to increase or decrease the starting point for the penal element calculated at the end of Step 2 by an appropriate sum.

Step 4: Adjustment for deterrence

2.26. Having regard to the principle that non-compliance should be more costly than compliance, and that enforcement should continue to deliver strong deterrence against future non-compliance of the licensee or others, if the Commission considers the figure arrived at after Step 3 is insufficient to deter the licensee, or the wider industry, from committing further or similar breaches the Commission may increase the penal element. The Commission will exercise its judgment as to what additional sum for deterrence is required on the facts of an individual case. The uplift will be applied to the figure determined after Step 3.

Step 5: Discount for early resolution

2.27. The Commission may apply a discount to the penal element if it considers there have been early and voluntary admissions and/or disclosures leading to an early resolution of the Commission’s investigation and/or enquiries.

2.28. If admissions and/or disclosure occur prior to, or immediately after the issuing of the Commission’s preliminary findings (within the 28-day representation period), or at an appropriately early stage in enquiries made outside of a review, then a discount may be applied for early resolution.

2.29. The level of discount will range between 5 percent and 30 parcent and will be assessed on a case-by-case basis.

Step 6: Affordability

2.30. The total amount to be paid by the licensee will be either the sum of the figures determined at Step 1 (if calculated) and Step 5, or Step 5 alone if no figure is calculated at Step 1.

2.31. It is recognised that the impact of financial penalties on licensees may differ depending on the nature of the licensee. Accordingly, the Commission may consider a reduction on affordability grounds if the total penalty is likely to cause significant financial hardship such as to endanger the solvency of the licensee or its ability to continue trading.

2.32. The Commission may request financial information regarding the financial resources available to a licensee, including but not limited to its own resources and those of any parent or group company or ultimate beneficial owner as set out at paragraph 5.29 of LCE. In the absence of sufficient information to the contrary, the Commission will conclude that the licensee has the resources to pay such financial penalty as is appropriate in the circumstances of the case.

2.33. In circumstances where the total has been reduced on the basis of non-affordability, the Commission will set out the financial penalty it would have imposed (prior to any reduction on affordability grounds) in its sanctions register and any other publications.

Step 7 – Proportionality

2.34. As a final step, the Commission will consider whether the sum which is proposed as a financial penalty as a result of Step 6 is proportionate in all the circumstances.

Procedural matters

2.35. Section 121 imposes a number of procedural steps which must be taken before the Commission can impose a financial penalty. Before imposing a requirement on a licensee to pay a penalty under this section the Commission must notify a licensee:

  • that the Commission proposes to require it to pay a penalty
  • of the amount of the proposed penalty
  • of the Commission's reasons
  • of a period within which the licensee may make representations to the Commission.

2.36. The Commission will normally give licensees 14 days to make representations, and these representations will be considered prior to a final decision being made.

Payment plans

2.37. The Commission will only agree to a payment plan in exceptional circumstances, notably where affordability concerns are so serious that the size of the financial penalty if paid immediately would have a significant impact on the viability of the licensee, and in circumstances where such an arrangement is necessary and proportionate.

Time limits

2.38. By virtue of section 121(3) of the Act, the Commission may not give a notice in respect of the breach of a condition after the end of the period of two years beginning with the day on which the breach occurred or began to occur, or, if later, the day on which the breach came to the knowledge of the Commission.

Payments in lieu of financial penalties

2.39. Payments made in lieu of a financial penalty as part of a regulatory settlement do not need to be paid into the Consolidated Fund in the same way that financial penalties imposed under section 121 of the Act do. As a result, there is more flexibility about how such monies may be used. However, the Commission will apply the following principles in approaching such agreed payments:

  • the Commission reserves the power to approve the destination of monies paid as part of a regulatory settlement
  • licensees must not generate positive publicity from the regulatory settlement
  • payments need to be demonstrably over and above 'normal' Research, Education and Treatment (RET) contributions, or any levy amounts due under Section 123 of the Act
  • where practicable, the operator should return money to any identified victims
  • if victims cannot be identified or there are no victims, the monies should be given to charity for socially responsible purposes
  • socially responsible purposes would include purposes which address gambling related harm or in some way promotes one or more of the licensing objectives
  • where payments are made with the aim of addressing gambling-related harm, the presumption is that the money would be paid to GambleAware to be used for specific agreed purposes that accelerate their commissioning plans
  • licensees should have no interest in organisations who will receive divested funds
  • there should be meaningful evaluation of the effectiveness of projects or research funded by specific regulatory settlements
  • research findings must be made public to help raise standards
  • clear timeframes should be set for payment of monies and for delivery of work paid for from those monies.

References

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

3 This sum is net of tax.

4 Gross 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 in our Regulatory returns guidance.

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Statement of principles for determining financial penalties - Introduction
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