KPMG Gibraltar eSummit - Sarah Gardner speech
15 June 2023Speech by Sarah Gardner
This speech was delivered by deputy chief executive Sarah Gardner at the KPMG Gibralter eSummit on 15 June 2023.
Please note: This is the speech as drafted and may slightly differ from the delivered version.
Thank you for that introduction, it’s great to be with you all here in Gibraltar for today’s eSummit. And it’s excellent timing for us to gather as well. At this moment in time we have the crucial work of Gambling Act Review implementation beginning: the publication of the Government’s Gambling Act Review White Paper is now behind us and in the coming weeks the Gambling Commission will be delivering our commitments, including publishing our first consultations as part of the implementation of that White Paper. So today I’m going to give you my thoughts on the White Paper and what that first consultation window is going to look like. I also want to spend some time looking at what our own recent compliance activity tells us about the state of regulatory compliance in the British market and how through collaboration we hope to make even swifter progress in making gambling safer, fairer and crime free than we have up to now.
But first given all of that, I think it would be useful to briefly cover what our statistics tell us about the state of play in the British gambling market.
We’ve been saying this for a little while now but it bears repeating. When we look at the British gambling market, even when you account for the Covid-19 pandemic, it looks and feels like the mature licensed market that it is. When we look at our statistics on participation in gambling in Great Britain we see:
- the year to end of March 2022 saw Gross Gambling Yield at £14.1 billion
- when we look at participation, the year to end of March 2023 saw 44 percent of adults taking part in a gambling activity in the last 4 weeks.
Many things have changed in the world since Covid-19 first hit and gambling hasn’t been immune but that these numbers are similar to where we were in early 2020 does tell a story in and of itself.
I think this is backed up when we look at participation too, with the land-based gambling participation rate for the last year remaining statistically stable at 27 percent and online also remaining statistically stable at 26 percent. We often hear about an explosion of online gambling since the pandemic but the numbers, whilst confirming the long-term trend for growth online, refuse to show anything like an explosion.
So the broad picture is that we have a mature, stable market in Great Britain with - when regarded internationally - a liberal approach to products and high rates of channelisation. This drives operators towards innovation if they wish to grow in what is a highly competitive market.
Partly related to this, although maybe as much to our work at the Commission, we also think we’re starting to see encouraging signs of operator innovation and competition based on their compliance as well. We started seeing this last year in what operators were saying to the market about the impact newly introduced safer gambling measures were having. Now we’re starting to see encouraging signs from our compliance activity.
The last year has of course seen the Gambling Commission conclude the largest enforcement cases in our history. In terms of scale we broke our own record for largest ever settlement twice in the last financial year. And again, in the last financial year of 2022/23 the Commission concluded 24 enforcement cases with operators paying over £60 million because of regulatory failures. This compares with just three operators paying out £1.7 million because of failures in the 2016/17 financial year.
We don’t relish these figures and we don’t mete out penalty packages and agree settlements just to mess with operators or make headlines. Neither do we do so for every minor wrinkle we see in operators practices – more on how we deal with those later. To be clear, we do it because the breaches and failings that we find have demanded it. These cases weren’t minor failings or debatable. They were serious. Each of the failings that led to these enforcement cases were failings of real people and failings that often led to the suffering of real harms as well.
For example, recent cases have included:
- one customer was allowed to open a new account and spend £23,000 in 20 minutes without any checks
- one customer was allowed to deposit £43,000 and lose £36,000 within seven days without being identified as being at risk of harm
- one customer was allowed to lose £70,000 over a 10-hour period just a day after opening the account because there were no controls in place to prevent large levels of high velocity spend by new customers.
All three of these examples are from different published enforcement cases that you can read on our website. Sadly there are many more I could have shared though. At the Commission we’re absolutely clear: failings like this cannot continue.
However, whilst these examples and recent cases show the scale of some failings in the recent past, we are seeing some hopeful signs that things are improving. I’m not saying we’ve seen an end to unacceptable breaches and we don’t have extensive data as yet, but anecdotally in our compliance work, we do appear to be seeing less of the types of outrageous and indefensible examples I’ve just given. We remain cautious and we don’t expect anyone in the sector to start patting themselves on the back anytime soon, but this is what we want to see.
What’s more, if this trend continues it will mean the Commission has more time and more resources to start dealing with areas that are far less black and white and where we know operators would welcome further insight into our expectations.
For example, when we get a moment to look beyond the indefensible failings of the sort we’ve already discussed, it is clear licensees need to consider their internal audit controls further. We are seeing instances where internal audit processes are checking that a process is being followed but not checking if the process actually works effectively, which of course is an important part of what we’re looking for when we assess compliance. I doubt anybody wants box ticking when it comes to their regulatory compliance but everyone needs to guard against it.
Likewise, whether appropriate oversight of affiliates is in place should be considered by many operators and we’re also still seeing complaints around blocked withdrawals: an issue I know Andrew Rhodes, our Chief Executive, has raised with a number of operators directly. These are areas that are often more complicated than they at first look but everyone should note, we are watching them closely.
But again, progress is being made. We want compliance at the earliest opportunity. And we are clear we’ll play our part in that too. An example of this is our Special Measures process that has helped a number of operators get back into compliance far more quickly for failings than if they had been put into full casework with enforcement action following. Of the operators who, following a compliance assessment, have been put into Special Measures as opposed to full casework, around 80% have successfully returned to full compliance at the end of the process. This not only has protected consumers quicker and supported licensees into compliance, but it also allows our Enforcement and Intelligence team to focus more resources on issues like illegal online gambling.
So whilst the last year has seen plenty of headlines about the scale of our enforcement work and the failings of the industry, we are hopeful that significant progress is now starting to be made and that the work we’ve seen behind the scenes by operators for awhile now is starting to bear fruit.
Another long-term project starting to show progress is our challenge to industry to work with the tech sector and the Information Commissioner’s Office to develop a lawful, viable and effective Single Customer View solution to mitigate the risk of serious gambling harms. The BGC has led on that piece of work and is now trialling the first phase of GamProtect, its multi operator risk sharing solution. We look forward to more details being published as we go forwards on the trial and the subsequent evaluation and development of the model.
And another area where we’re also starting to see fresh progress is our work to tackle illegal online gambling. Tackling the illegal market has always been an important area for the Commission even if we’ve sometimes disagreed with some over the scale of the issue. It does of course continue to evolve and is difficult to eliminate. Since our last fees uplift, we have been able to direct more resource at tackling illegal online activity and as a result we were able to:
- increase our enforcement actions by over 500 percent between 2021-22 and 2022-23
- more than doubled the number of successful positive disruption outcomes
- intervened with social media to close down illegal lotteries and to stop influencers promoting unlicensed gambling.
And on top of this, as we’ve said for sometime, our efforts are increasingly further upstream to seek to disrupt these illegal sites as much as possible and to work with other regulators, the jurisdictions that host these operators, payment providers and ISPs to help us cut these sites off from the British market, building relationships and working agreements to cut supply at the transaction stage.
But whilst we continue to strive for further progress in this area, so we can better disrupt these sites, we will never accept the argument that because an illegal online option exists, this should mean that the regulated gambling sector should have lower, less fair or less safe standards. Britain is, and must continue to be, a world leader in providing consumers with a fair and safe gambling market.
The Gambling Commission was also promised additional powers to deal with illegal online gambling in the White Paper that was published in April. As you might expect, that wasn’t the only part of the White Paper that the Commission welcomed and it isn’t the only thing about the White Paper or its implementation I want to discuss today.
It is of course just shy of two months since the Government published the Gambling Act Review White Paper. As you will know, the Gambling Commission supported the Review and we continue to work closely with DCMS on it. Alongside the White Paper, we published our Advice to Government on the same day. We are now working closely with Government, stakeholders and partners, to push forward with implementation of the White Paper.
But what does this mean in the real world?
Well, we will shortly publish two items that we committed to deliver in our advice to Government, reinforcing licensees’ responsibilities regarding third parties and white label arrangements as well as our vulnerability statement, which links to our guidance for operators on customer interaction. I will talk later about our work on data and filling evidence gaps, which again was a commitment in our advice to Government.
I’m also happy to say that as of now, we intend to publish our first tranche of Gambling Act Review related consultations next month. And when you see them I think it’s clear we are committed to maintaining momentum and making progress in line with the our commitments and the expectations set out in the White Paper.
This summer we intend to consult on proposals relating to:
- age verification in premises
- removing features which increase intensity of play on non-slots casino games online
- cross-selling, specifically giving the consumer power over what marketing they receive
- financial risk and vulnerability checks.
I’m not going to go into too much detail of what the consultations will say and ask, either now or in the Q&A later, but I am sharing this information as we genuinely want as much engagement with these consultations as possible from all interested parties including operators, trade bodies, consumers and of course those with lived experience.
I can say though that our most significant consultations will last 12 weeks as is our usual practice for significant proposals. As I and others at the Commission have said already, we want to get implementation of the Gambling Act Review White Paper right. And that means it’s worth taking time to do things like consultations and structured implementation timetable properly. Less haste and more speed will be our approach.
We’re also clear that implementation will be a job of several years, especially when you include evaluating the impact of any changes. The White Paper has over 60 areas of work to implement. This necessitates that we prioritise our resources. But please do not think that anything I’ve said here means we don’t want to progress things as quickly as possible. Consultations this Summer will be followed by a second tranche in the Autumn. We are determined to make progress quickly. But I’m sure I’m not the only one who has seen over the years examples of well-meaning policy changes having unintended consequences for the public due to the way they were implemented in the real world. So we will be doing everything we can to avoid making that mistake during implementation whilst still progressing. Less haste, more speed.
One way of helping implementation is if all those interested in gambling regulation in Great Britain engage with the Commission and Government in a spirit of collaboration. We want your views, we want to get this right. But wrecking tactics won’t help anyone. Collaboration is key.
Over the years where appropriate the Commission has repeatedly sought to collaborate with the gambling operators to help improve things for consumers at a quicker pace than if we act alone. The multi operator risk sharing solution GamProtect is the latest in a number of positive examples for this approach. We want to continue to deploy this approach where useful and appropriate to do so as well.
And delivering on one of our commitments in our advice to government for the Gambling Act Review, we also are continuing to work with others on improving the data, research and evidence around gambling too. We held a really successful conference in March that for the first time, saw the Commission bring operators, academics and others together to discuss and debate how we can improve the evidence base. Since then we’ve published updates on the work we’re doing to improve our Participation and Prevalence statistics – the pilot of which was delivered last year – and we’ve published where we see the evidence gaps are that could be filled in the next three years. Again, we’ve done this to be transparent about the direction of travel and to invite others to help us with what needs to be done. Both these important projects also tie in to our Consumer Voice research too. Last year we published our important Path to Play research and we will be continuing to study and publish on what drives and interests consumers and their gambling in the months and years ahead.
Finally, we’re also very active internationally. And whilst we have always valued our relationships with our fellow regulators, we are finding ourselves placing more and more value in these relationships as gambling becomes an ever more global market. So I’m pleased to say we have strong relationships with regulators you may expect us to, like here in Gibraltar, but we also meet with and share information and best practice with regulators on a regular basis from Australia and the Far East, through Africa and Europe right across to North America. And yes, some of your organisations do come up in those conversations.
So, whether it be improving our own rules, improving the evidence base or improving outcomes for consumers, at the Commission we really value what we can achieve by working with others.
It’s been said before, but for gambling in Great Britain, the next few years represent a real opportunity for all parties to make a decisive difference towards gambling in Great Britain being safer, fairer and crime-free. Implementing the Gambling Act Review will take time, improving the evidence base as well. So does eliminating unacceptable failings. But it is the Commission’s firm view that we can achieve all of this in the months and years ahead. So join us, there is plenty of work to do. Let’s make a start.
Last updated: 1 August 2023
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We corrected the increase in enforcement actions from 'by over 50 percent' to 'by over 500 percent' following an administrative error.