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Swedish Gambling Regulator Conference - Sarah Gardner speech

05 March 2024Speech by Sarah Gardner

This speech was delivered by deputy chief executive Sarah Gardner at the Swedish Gambling Regulator Conference on Tuesday 5 March.

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 for having me here today. I’m Sarah Gardner, Deputy Chief Executive of the Gambling Commission.

Whilst the Gambling Commission’s commitment to international collaboration is strong – something I’ll come back to later – it hasn’t yet stretched to helping our staff become as multi-lingual as we should be in the modern world so thank you to Yvonne’s team for providing the live translation service.

It's really great for me and the Gambling Commission to be invited to speak to you here today. Sweden and the Swedish Gambling Authority (SGA) are valued partners for the Gambling Commission and that I think is proved by, not only me being here today with you in Stockholm, but that tomorrow in London some friends from the SGA are in London speaking at our Conference too. And we are really looking forward to hearing from them on illegal online gambling and I am sure we will be able to learn a lot from their experience.

We’ve been regulating gambling in Great Britain for a little over 16 years now and have regulated all online gambling in Great Britain since 2014 when we moved to a Point of Consumption model of regulation. I’ll return to this shortly.

As well as commercial gambling of all types, except spread betting, which is regulated by our financial markets regulator - the Financial Conduct Authority - we also regulate the UK’s National Lottery which celebrates its 30 year Birthday this year.

Last month, we awarded the Fourth Licence to run the National Lottery to a new Licensee for the first time in the National Lottery’s 30 year history so we’ve been busy on that front too.

So today I want to tell you a bit about the journey we’ve been on at the Gambling Commission since we were first created in legislation in 2005.

Since becoming fully operational in 2007, we’ve found out a fair bit about what works and what doesn’t work. Today, I’d like to share some of that story with you and talk about some of the lessons we’ve learned.

I’ll touch on how we see gambling impacting on our wider communities and the debate around that back home too. I will of course give you an update on the UK Government’s Gambling Act Review which is helping us update and strengthen some of our powers as well as our approach.

And as I’ve already said, I want to explain why we at the Gambling Commission are so committed to international collaboration and what we think that approach can deliver going forwards.

But first, I thought it would be helpful to set the scene. So, what does gambling look like in Great Britain today?

Well, from a headline perspective the British market is both a mature market and one that is in good health commercially. By the way, I talk about Great Britain as opposed to the UK as - apart from the National Lottery - we regulate gambling across England, Scotland and Wales only – not Northern Ireland. For the National Lottery, our remit extends across all four of the UK nations.

For the year of April 2022 to March 2023 total Gross Gambling Yield (GGY) of the Great Britain gambling industry was £15.1 billion. That’s the first time it’s ever topped £15 billion and is 6.6 percent up on what it was in the last pre-Covid stats that we have. Roughly speaking, and not allowing for day-to-day fluctuations, that means around 200 billion Krona and around 17.5 billion Euros.
The British online market is still the largest regulated in the world as well, worth £6.5 billion by GGY in the year up to March 2023. That too is up on pre-Covid stats, by 13.3 percent.

Over time, the proportion of GGY attributable to the online market has grown year on year with the online GGY accounting for nearly 60 percent of total B2C GGY when excluding lotteries.

Not only has there been a shift in channel, but there has also been a change in the shape of the market, mainly as a result of extensive mergers and acquisitions activity. So you can see here how GGY has become more concentrated in the largest operators. These are the sorts of shifts which I think raise some quite interesting questions for regulators in terms of their strategies and approaches. It is certainly something which we have factored into our thinking at the Commission.

When we look at participation in gambling though we see that it remains fairly stable.

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. That’s 22.5 million people gambling in one form or another each month.

For in-person gambling in the same period, the participation rate also remained statistically stable at 27 percent, although this figure remains below the pre-pandemic level of around 35 percent.

The online gambling participation rate also remained statistically stable at 26 percent compared to year to March 2022 as well.

So gambling in Great Britain has adapted to the world following the uncertainty that Covid-19 brought and whilst land-based participation remains down, overall, it has continued to grow in value in recent years. That this is without growth in participation is worth noting.

We did - of course - publish further participation data last week and I will of course say a bit more about our work to gather the best possible participation and prevalence data later on.

But for now, this data shows that the British market is a mature one – there is no easy growth anymore and if you want to grow your share of the market as an operator, you need to be out competing and out innovating your rivals.

That’s tough for operators but it also raises challenges for the Gambling Commission as the regulator too. Because whilst gambling is never going to be a risk free product, minimising the risk of harm – in particular to the young and vulnerable – is a key licensing objective of the Gambling Commission.

And over recent years making sure operators get the message on what is acceptable in line with our rulebook – the Licence Conditions and Codes of Practice (LCCP) – has been a costly process for the industry.

In the financial year of 2022 to 2023 the Commission concluded twenty four enforcement cases with operators paying over £60m because of regulatory failures.

This compares with just three operators paying out £1.7m because of failures in the 2016 to 2017 financial year.

And in the space of just over six months between August 2022 and March 2023, we broke our record for largest penalty twice.

Ultimately the action we have taken in recent years has generally been for breaches of the operator’s own policy, things which are clearly short of existing standards and in all cases for things operators have not wished to defend.

Now happily, we are not on course to be breaking records again over this last year. Our Compliance and Enforcement teams remain busy and are as committed to policing our standards as ever but we are seeing a much-improved picture, compared to the sorts of breaches we were seeing and which contributed to this picture.

As of now, there are some very advanced systems for identifying and addressing risk amongst operators in Great Britain and I am sure that other regulators may be interested in testing whether those well-developed systems are being used in their own markets, where they see the same operators we do.

And of course, things continue to evolve in Great Britain.

I’ll come on to how things are evolving a little later but for now we see a mature, large market in Great Britain that has seen its fair share of issues with poor compliance from operators but we now see the signs we need to see that this is improving.

It has been remarked to me that given when we both started regulating gambling, in one sense the Commission might be seen to be ten years ahead of our friends in Sweden. I do not see it that way and of course, we are committed to any and every fellow regulator being able to learn from our example and experience.

And so I think it is worth spending a little time looking at the question, how did gambling in Great Britain get to where it is now?

Whilst the Commission story starts further back, I would like to start this brief reflection with the changes made to our regulatory approach ten years ago.

You see, it was 2014 that saw gambling in Great Britain become a point of consumption regime when it comes to remote and online gambling. Overnight the Gambling Commission now had full regulatory coverage of online gambling. This was a key moment. Prior to 2014, we had a Point of Supply model which meant that only around 15 percent of the online gambling available to British consumers was regulated by the British regulator.

The 2014 legislation means that all gambling which is offered to or advertised in Great Britain requires a licence from us, irrespective of where the business is based. As such, this was a very important development in our history. It means that all licensed gambling offered to British consumers is regulated to ensure the same high standards are common across everything the consumer sees.

I leave aside unlicensed, illegal gambling there, of course but will come back to that later.

Without this change we would still be unable to properly protect consumers in Great Britain and we would not be able to successfully enforce high standards on the market in the way we do nowadays. This change of course meant a huge increase in workload for our Operations team covering Licencing, Compliance and Enforcement too. It also meant extending our reach to wherever a gambling firm was based and scaling up our resources in key areas.

Since then we have looked not only to our Compliance and Enforcement work to improve standards in the licensed market but also using our research and data to zone in on where we can improve our own rules to further strengthen our regulation.

I have already talked about what the necessary ramping up of our Compliance and Enforcement work has looked like and as I say, we think we are seeing results. But we also think our wider work to improve protections and come up with innovative solutions in recent years has been an important part of the puzzle.

Over recent years we have taken steps to improve our research, evidence and data and also strengthen our rules and improve guidance for operators too.

Let us start on the evidence base. I suspect you all know this too, but at the Gambling Commission, we are clear: better data, better evidence will lead to better regulation and in turn better outcomes for everyone associated with gambling. That includes both consumers and operators too. So in recent years we’ve continued to make further steps forward.

We have established three Expert Groups that can be called on to help our work: the Advisory Board for Safer Gambling which provides us with advice on safer gambling based on expertise and insights from academia and research. The ABSG includes Dr Ulla Romild, a colleague I am sure many of you are also familiar with from all her great work here in Sweden. We also have our Digital Advisory Panel which advises us on developments in the world of digital and online technologies which may have an impact on gambling and how we regulate it. And we have our Lived Experience Advisory Panel, which provides expert independent advice based on its members personal lived experience of gambling harms. Besides these, we have recently recruited for an Industry Forum to give us even more insight into Industry’s perspective. Our three Expert Groups have all become vital groups for the work of the Commission and I am sure the Industry Forum will do so as well, under the chairmanship of Nick Rust OBE who I am delighted will bring his extensive knowledge of the gambling sector to bear in this way.

Beyond this, last year we held a one-day conference titled ‘Setting the Evidence Agenda’ which saw packed sessions discussing how we can make better use of the data we already collect and how we can improve the evidence we gather.

That event helped the development of our new participation and prevalence statistics and fed into the publication of our three-year evidence gaps programme.

So, following the success of last year’s Conference, we have organised another one-day event: ‘Better Evidence, Better Outcomes’. It is taking place tomorrow as I said, including with representation from here in Sweden, and will look further at some of the questions raised by our three-year project on the evidence gaps we see in gambling research.

And as I have alluded to several times, we are now in the process of finalising our new participation and prevalence statistics that when they become Official Statistics will be known as the Gambling Survey of Great Britain (GSGB).

The GSGB will be the most comprehensive data set of its kind in the world when it is introduced, with an annual response from around 20,000 people..

The work to design it started with a consultation back in 2020 and it is already delivering results with data from its experimentation phase having been published last November and the first actual Official Statistics to be published using the new methodology coming just last week with new participation data released.

This was a big moment but the publication of Professor Sturgis’ independent assessment of both our new methodology and our approach to its development was as well when it was published earlier in February.

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. Last week’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 have 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.

If anyone here would like to know more about this work please do get in touch and we’ll be happy to discuss it with you but for now, we are building towards the annual GSGB report in July and you can expect more on this then.

Alongside this work though over the last few years we have also continually strengthened our rules and guidance. Some examples that again, we would be happy to share more information on include:

  • tightening age verification so that operators must verify customer age before the customer can deposit funds into an account or place bets with their money or free bets or bonuses

  • through collaboration with Industry we tackled so called ‘VIP schemes’ and made online gambling games and products safer by design through measures such as banning auto-play.

  • and we banned gambling with credit cards for all online and offline gambling products with the exception of non-remote lotteries. Something I know is now being looked at here in Sweden. For the record we have evaluated the ban and whilst the full evaluation has yet to be published, the interim report did confirm that the ban achieved our aim of restricting credit card use in the licenced commercial gambling market in Great Britain.

What is more, we continue to work with industry and fellow regulators in the UK on how to make gambling safer, fairer and crime free. The GamProtect project started as our challenge to industry to work with the tech sector and the UK data regulator - 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 Betting and Gaming Council (BGC), a trade body, has led on that piece of work and having run a trial last year, is now increasing the number of operators involved. We support their continued efforts and we are pleased that even in the trial, the system actively helped protect thousands of consumers.

GamProtect is however currently focused on extreme self-declared markers of harm. To meet the original goal and to be of use in informing decisions around risk GamProtect must develop beyond this. But we are confident that BGC are committed to meeting the original goal and look forward to working with them to help this become reality over the coming months.

And of course, with Government and others, we are now implementing at pace the UK Government’s Gambling Act Review. Itself work that provides a once-in-a-generation opportunity to deliver positive change for gambling in Great Britain and for all people impacted by it. As the regulator, we are, as you would expect, playing a key role in the implementation of the Review. This is a very large programme of work which is at the top of our current priorities.

In terms of where we are with that work, we have just closed the second round of consultations that we have carried out in support of implementing the Review.

These included topics such as socially responsible incentives, the use of customer-led tools like deposit limits and proposals to increase transparency to consumers if their funds are held by licensees that offer no protection in the event of insolvency.

We are also looking to publish responses to the first round of consultations that we kicked off last Summer in the coming weeks.

One of the topics that we consulted on last Summer continues to attract attention and that is Financial Risk Checks. Our Summer consultations of course attracted a lot of responses, thousands in fact and it is clear that the concern of some people who either are involved in or follow horseracing drove this level of interest to a significant degree. Whatever someone’s reason for submitting a response, I am clear, and the Commission more widely, is clear that we welcome them taking the time to respond, we welcome their views and we look at all the responses and listen very carefully to what everyone has to say as we work out our responses and next steps.

Just two weeks ago we published an update on this particular consultation on financial risk, where we laid out some of the areas where feedback has helped us start to make changes to how we intend to implement these Checks. Further proof if it were needed that we consider all responses carefully.

Ultimately, we are not quite ready to publish the full response yet, that will chart how we implement Financial Risk Checks in full but, we are nearly there and as we have already said, we are committed to conducting a pilot before we mandate changes in this area.

On top of all of this work we have also been having some success in an area of focus that all regulators have to grapple with. That is of course illegal online gambling.

We might have different views on how big of an issue this is in our differing jurisdictions but in some shape or form it is an issue for us all. It is also worth pointing out at this point that what is an illegal, unlicensed operator for me in Great Britain may be a legitimate, licensed business for you and vice versa.

At the Gambling Commission we have consistently held the view that whilst illegal online gambling exists and presents a risk which of course must be managed, some of the descriptions of the scale and nature of the risks may be overblown and, either way, we do not accept that the presence of illegal gambling means that we should accept lower standards in the regulated market in a race to the bottom which ultimately could be dangerous for consumers.

To be absolutely clear, because this message has often become misconstrued, the Gambling Commission has never denied that illegal gambling is a problem. On the contrary, protecting the integrity of our regulated market is absolutely central to what we do. We have recently invested more in this area since receiving additional funding in our most recent fees settlement. This has helped us direct more resource at tackling illegal online activity.

Alongside our own ongoing intelligence-led disruption efforts, we have now brought further focus on to where we can look to maximise our efforts to disrupt unlicensed, illegal online operators through collaboration with others. This includes payment providers, internet search and service providers and fellow regulators.

We are also working with software licensees to prevent access to popular products when their games appear to be available on illegal sites. We are clear that licensees must do all they can to prevent access to Great Britain licensed products via unlicensed websites.

And we are engaging with our licensees if we discover their affiliates have placed adverts on illegal sites – ensuring licensees remove advertising and encouraging an assessment of business relationships with these affiliates. This is in the interest of our licensees as we have also been clear that they are accountable for anything which happens under the auspices of their licence so it is their responsibility to ensure that any connected parties or affiliates are conducting their business in a way which is consistent with the terms of that licence.

Thanks to the Gambling Act Review, we are also expecting to receive new powers through new Government legislation that will help us shut down illegal websites quickly and increase the costs to illegal operators for trying to do business in Great Britain.

Our work in this space has led to significant results:

  • we have increased our enforcement actions by over 500 percent between 2021 to 22 and 2022 to 23

  • more than doubled the number of successful positive disruption outcomes

  • intervened with social media to close down hundreds of illegal lotteries and to stop influencers promoting unlicensed gambling.

Through our focused activity and by working with others, we have been identifying websites with high footfall and ensuring they are not accessible to Great Britain consumers - either through hosting restrictions or self-imposed geo blocking. And we know software providers are making similar efforts also.

Ultimately though this work is yet another clear example of how we can all make more progress towards safer, fairer and crime free gambling if we prioritise collaboration, which I want to come onto now.

We work hard to strengthen our relationships with other regulators abroad, these are relationships that matter. It is why I am so pleased to be with you here today, delighted that Swedish colleagues are heading to London for our conference tomorrow and why it is great that I will be signing an updated Memorandum of Understanding with the SGA later this afternoon.

Rest assured, at the Gambling Commission we will always look to share our experiences with you and likewise we are keen to learn from you.

With you, we want to further build a culture of sharing best practice between regulators. This will benefit us all.

To this end we intend to play a leading role in the new working group set up by IAGR - the International Association for Gaming and Gambling Regulators - and we would encourage you to join us. We are also determined - where appropriate to do so - to share information on the many operators who now trade globally.

Many operators who are active and licensed here in Sweden are also active and licensed in Great Britain. It just makes sense that we look to work together where we can.

The slide behind me gives you a flavour for how we have prioritised working with our fellow regulators over the last year. And this is something you will be hearing more from the Commission in the months ahead.

We have also demonstrated our willingness to work with licensees to solve issues impacting consumers quicker than through policy development and formal consultations. Like with GamProtect, where industry can agree to sensible and proportionate measures which deliver for consumers, we will work with them and where necessary formalise those standards.

This approach has been used in recent years to raise standards in how so-called VIP schemes operate, the use of ad-tech to ensure responsible advertising and to introduce measures designed to address the risk associated with online slot games.

But what else does the year ahead have in store for gambling in Great Britain?

Well, there will be more consultations as we look to further implement the Gambling Act Review.

We will also continue to work to improve our data, statistics and evidence base. Better evidence will lead to better outcomes.

More immediately we will be publishing our latest Corporate Strategy next month that will outline our areas of focus and priorities for the next three years. Whilst I cannot go into all the details of it yet, it will represent an evolution of our approach rather than a revolution.

Alongside the strategy we are continuing to develop a coherent way of measuring the impact our regulation is having to make gambling safer, fairer and crime free.

The strategy will focus heavily on implementing the Gambling Act Review and making sure the National Lottery continues to successfully and safely generate returns for good causes.

But one area I can tell you a bit more about today is our approach to communicating with industry. In this Corporate Strategy we will hard wire a focus on communicating clearly and building effective partnerships. This will include engaging constructively with industry to try and ensure compliance at the earliest opportunity.

It will also mean educational efforts, clearer guidance as well as hosting events for operators to hear more from us and improve their compliance. Much of this is not new, but what we are highlighting is we want to invest more in this approach to reduce the reliance on formal enforcement where we can.

So, there you have it. Gambling is a highly competitive and innovative sector providing products and services which many consumers enjoy but which carries some risks which have to be proportionately managed in order to ensure it is crime-free, safe and fair. In the modern globalised world, this is an industry which often looks more like Big Tech than it does the traditional image we all have of it. That is true if you are in Great Britain or here in Sweden.

Whilst I think both we at the Gambling Commission and the Swedish Gambling Authority have proved in our own way that you can make progress, we are now embracing the opportunity to go further through collaboration and cooperation. With industry where possible, with other stakeholders like academics and the third sector. But crucially across borders with other gambling regulators.

Working together we can raise standards across jurisdictions and take steps to that shared goal of safer, fairer and crime free gambling.

Thank you again for inviting me to speak to you today and I am looking forward to your questions.

Thank you.

Last updated: 5 March 2024

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