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BGC AGM - Andrew Rhodes speech

29 February 2024Speech by Andrew Rhodes

This speech was delivered by chief executive Andrew Rhodes at the Betting and Gaming Council (BGC) Annual General Meeting on Thursday 29 February.

Please note: This is the speech as drafted and may slightly differ from the delivered version.

Thank you for that introduction and thank you everyone. I am pleased to be here today, to update you on a few areas of interest for us all that we at the Commission have identified, to reflect on the progress we have made and the work that is still to come. Before I do so, I would just like to take the opportunity to wish Brigid well for the future as her time as BGC Chair comes to an end. Engagement between a regulator and a trade body for those they regulate can at times be difficult – Brigid knows that as well as anyone else here. But she has always strived to be constructive even when it has been difficult to do so and that is appreciated.

I do want to spend some time reflecting on how I hope we have a better more constructive relationship today than when I first started as Commission Chief Executive almost three years ago. The last few years have not been easy and have not provided a straight-forward backdrop against which to build relationships. A pandemic, the long gestation period of the Gambling Act Review and the white paper that followed, a series of major enforcement cases, changes in the economic situation and an incredibly polarised debate on gambling are just some of the things casting a shadow.

There is always an inherent tension between the regulator and the industry it regulates, as well as a whole swathe of other interested parties who may have very strong views on what the regulator ought to do or not to do.

What we are seeking to do at the Commission is to be open and transparent with our thinking and our work. We will also signal areas we intend to explore in future and areas we might have concern about. I speak to a lot of the people in this room on a regular basis, or at least as often as I can.

I will not speak for too long today as I want to make sure I leave plenty of time for questions. Whether I have actually spoken for too long is, of course, a matter of judgement.

But first, a brief reflection on how we have all progressed over the last few years.

In the last two years or so, and particularly in the last 12 to 18 months, we have seen a very clear difference in the levels of compliance across the operators we have assessed, particularly where there have been previous areas that needed to be improved. The picture is a much more positive one.

Over the coming year and beyond, the Commission will be focusing on operators we classify as being tier 2, 3 and 4. Our concern, and our casework seems to support this, is compliance is lower in some of these areas and data also indicates possible displacement of higher risk customers into some of these operators.

From a regulatory point of view, it cannot be acceptable for operators to make the changes and investment they have to drive higher standards, only to potentially observe others in the same market appearing to ‘get away’ with lower standards. This is where a lot of our focus will be in the coming year – ensuring the required standards are met right across the board.

I think we have been able to start building a different relationship with you – the industry we regulate. We want a more open, collaborative, grown-up relationship with you. One where problems can be aired and resolved quickly. One where if we see an issue of concern or interest, a genuine dialog can take place as to what may need to happen. That is the essence of what I set out in 2022 with the principle of ‘compliance at the earliest opportunity’ - moving away from an enforcement-led approach to one of securing improvements as quickly as possible, with enforcement action an important tool where that has not been the case. So, as I think many of you here today have already noticed, myself and my Executive team have been out there more, meeting with you, visiting your venues and offices and bringing groups of you together to talk through key challenges. And I hope this approach is already bearing fruit.

We are still only a few years on from the worst of Covid-19. The global picture – and gambling is a global industry – remains uncertain in many ways. You all have challenges to face in your businesses as a result. But whilst we have seen an improved picture on compliance, we have also seen an improved picture, at the top line level, for the gambling industry too. For the first time, Gross Gambling Yield (GGY) in Great Britain topped £15 billion in the year to March 2023. And that shows a 6.6 percent uptick on what GGY was in the last pre-Covid stats that we have. That of course doesn’t allow for different factors the industry has to face and nor is it even growth. Online GGY has grown 13.3 percent in the same time frame. This versus a land-based sector that whilst it has recovered still sees participation down on pre-Covid times.

But that in itself leads to an interesting observation. Because that growth in GGY has been at a time when participation was stable. Now you will not be surprised to hear I’ll be touching on how we measure gambling participation shortly but from our official stats at the time, in year to March 2023, overall participation in any gambling activity in the last four weeks remained statistically stable at 44 percent when compared to year to end of March 2022.

So for the purposes of transparency I wanted to say today, we see that Return to Player figures have dropped for a number of your businesses and products. Plenty of businesses across plenty of sectors have taken steps to keep profits up in challenging times. It is not our job as the gambling regulator to necessarily take a view on this at present. But it is something we are aware of. On another transparency point, we are interested in how we can see more transparency for consumers too when it comes to restrictions on play or withdrawals. Again, we are not at a point where we are looking to move towards formal use of powers or to open up another front for regulatory changes. But we are still getting complaints in these areas and so we do want to see operators making proper efforts to explain to customers what the checks and restrictions they may face are. Currently too many consumers are given the impression that any check they have to go through is linked to affordability. And whilst checking for financial risk is an important part of customer interaction for a small minority of customers, we know it is not the only reason customers are facing checks. So if its your terms and conditions or AML, or for purely commercial reasons then you should say so.

Discussions with several of you and your operational teams, as well as our own observations and casework, suggests the abuse of terms of conditions, bonus abuse and potential criminality regarding identity fraud are rapidly increasing issues. This is an area we are concerned about as it can drive all kinds of adverse outcomes, ultimately for consumers, so this is a topic I and my team will be talking to you about in the coming months.

And again, in the spirit of transparency, this brings me on to some criticism we get regarding the Regulator’s Code. As I have said before, the Code is a document that contains a number of very sensible guiding principles for Regulators and its one which we take very seriously at the Commission and apply to our work. For example it encourages regulators to simplify how they work with the industries they regulate and that is something you will see more from us in the future. But we do sometimes get thrown at us that the Code means we should therefore be talking the industry up and encouraging growth. A few points on that. I doubt anyone in this room today could argue that as the regulator we could have been ‘talking up’ the industry in recent years given some of the enforcement issues we’ve seen. We are not here to champion the industry, that is what you have the BGC for. The Code is aimed at ensuring that we carry out our activities in a way that supports you all to comply and grow. But before I move on I would just pose the question: given the figures I mentioned earlier where participation is flat over several years, what growth do you think you should have but you do not?

As some of these points reflect, a more grown up relationship with more open discussions doesn’t mean things get easier. In many ways when the problems are not so clear cut, solving them actually gets harder. Arguably an example of a difficult issue that can be difficult to crack is illegal online gambling.

Now views in this room today will differ on the scale of illegal online gambling in Great Britain. We at the Commission recognise illegal gambling as a strategic risk which undermines the regulatory framework and creates an uneven playing field to you all. Hopefully everyone in this room today and reading this speech later will agree that we all need to take it seriously. The main target for illegal operators online - in Great Britain at least - are those who are already vulnerable, in particular the self-excluded and tackling these websites is core to our work in this space.

For our part the Commission has ramped up our work in this area, giving it more resource since the last Fees Review and building significant relationships with other sectors and regulators to help tackle the issue further upstream – blocking payments, delisting websites and in all ways looking to frustrate and force out illegal operators. We are also really pleased that the Government found space in the Criminal Justice Bill that is currently working its way through Parliament to give us further powers to directly shut down illegal websites.

Still a large part of our work in this space is through collaboration with our fellow gambling regulators abroad. So we welcome the International Association of Gaming Regulators (IAGR) setting up a working group to help better tackle this issue across its membership. This is an issue of growing salience across the globe. And whilst I am sure many of you welcome this, I would also say that the benefits of this work are a two-way street. I do not want to be getting contacted by other gambling regulators to tell me about GB operators acting without licences elsewhere. I also want to ensure that an affiliate, payment processor or supplier who facilitates illegal gambling cannot also benefit from revenue from your legitimate businesses. You can exert commercial influence over these criminal actors.

Now no speech from the Commission is complete without a mention for the White Paper and the ongoing work to implement it. It was great to hear from the Minister earlier about this and also to hear the Shadow Minister’s perspective too. As no one in this room will be surprised to hear, the Commission is continuing to play its part in the implementation of the White Paper, with our second round of consultations having closed on the 21 February. I want to thank all of you who have made submissions to these and through them, played your part in giving us the information we need to improve regulation for the better. BGC itself has also been active across the consultations and again, we thank you for your work here too. The work of implementing the Gambling Act Review is still going to be with us for the foreseeable future. But the steps we have taken as well as Government mean as we approach 12 months on from the publication of the White Paper, meaningful progress is being made.

We will shortly – as in March – be publishing our full consultation responses to the areas we consulted on last Summer. This includes Financial Risk Checks. We of course were able to publish a short update on this last week and I would encourage anyone interested in this to have a read of the blog on our website.

Another piece of work that is completely connected to the White Paper and that we have received important feedback on recently is how we will measure gambling participation and the impact of gambling going forwards. The journey to the Gambling Survey for Great Britain (GSGB) as it will be known, started when we consulted back in December 2020. Today we have published our first Official Statistics under the new methodology, with new gambling participation data coming out. This is a big moment but last week’s publication of Professor Sturgis’ independent assessment of both our new methodology and our approach to its development was also.

Professor Sturgis has some key recommendations for the Commission to consider to ensure the quality and robustness of the statistics continues to build confidence and we will deliver against those. We are of course pleased he has described our work developing this methodology as ‘exemplary in all respects’, but we also note the risks he identified in having a new methodology and the caution that should be applied when seeking to draw precise conclusions. Today’s publication means the GSGB is now a reality. We will continue to develop it over time, of course. But there is no turning back the clock and nor should there be. As Professor Sturgis makes clear, previous methodologies are no longer delivering like they used to and it is not credible to persist with a methodology that is outdated and has the gaps in evidence we’ve experienced. The Commission has taken the steps we needed to both safeguard and improve our data. Better evidence, driven by better data will lead to better regulation, which in turn will lead to better outcomes.

Better outcomes of course for everyone too. Consumers, operators and everyone else concerned with gambling. That is the prize we are aiming for over the next couple of years. We’ll be exploring this theme a bit more closely at our Spring Conference, conveniently titled ‘Better Evidence, Better Outcomes’, next week and I hope to see some of you again there.

For now though, we have already made some steps forward. We are seeing better compliance. We are building a better, more constructive relationship as a consequence. The challenge now is to keep going. Thanks for listening and I am looking forward to your questions.

Thank you.

Last updated: 29 February 2024

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