Annual report and Accounts 2019 to 2020
Making gambling fairer and safer
The Commission is an independent public body funded:
by application and licence fees set by the Secretary of State, approved by Parliament and paid by the gambling industry. These fees fund all gambling regulation except that for the National Lottery.
in respect of National Lottery functions, by grant-in-aid from the National Lottery Distribution Fund (this grant-in-aid is not treated as income in accordance with FReM).
Our total income from fees and other sources was £19.90m for the year (£18.99m for 2018-19). This ﬁgure does not include the £17.020m (2018-19 £6.7m) of grant-in-aid funding in respect of the National Lottery functions which is transferred directly to reserves. Within the 2018-19 ﬁgure, the Commission received £0.16m in relation to preparatory work undertaken for the proposed transfer of the horserace betting levy from the Horserace Betting Levy Board (HBLB) to the Commission which did not subsequently take place. This funding came from HBLB Levy.
Our fee income for the year was made up of the following:-
- operator application fee income was £1.02m (2018-19: £0.74m);
- fees for personal licences £0.92m (2018-19 £0.75m);
- operator annual licence fees £17.71m (2018-19 £16.98m);
- miscellaneous income of £0.25m (2018-19 £0.53m). This was mainly attributable to contributions to compliance and enforcement costs received from operators.
Total fee income has been analysed by industry sector:
Annual operator fee income by sector 2019-20
|Sector||Percentage per sector|
During the year, total expenditure on operational costs including depreciation was £37.45 million (2018-19:
£27.58 million), an increase of £9.87 million on the prior ﬁnancial year (36%).
Expenditure on gambling regulation totalled £21.20 million (2018-19: £20.52 million) National Lottery functions accounted for £16.26 million (2018-19 £6.89 million). This included £13.29 million on the National Lottery 4th Licence competition. This is a signiﬁcant increase over 2018-19 (£9.21 million), as the competition has completed the market engagement stage in-year and has started the Invitation to Award (ITA) stage.
Employee costs for the year were £19.49 million (2018-19 £17.46 million), an increase of £2.03 million. Employee costs for gambling regulation were £14.31 million (2018-19: £13.72 million) and National Lottery regulation £5.18 million (2018-19: £3.65 million).
Of this, £2.83 million related to the National Lottery 4th Licence competition (2018-19 £1.60 million). Employee costs for Horserace Betting Levy activity was nil (£0.29 million in 2018-19), funded entirely by levy funds.
For comparative purposes, the following table shows year-on-year operational expenditure comparison for gambling and National Lottery regulation expenditure, and the costs of Horserace Betting Levy activity which was funded by the Horserace Betting Levy and ceased in 2018-19.
|National Lottery regulation||5.00**||2.80**||2.20*||2.50***||2.70||2.67||2.98||2.81||2.97|
|National Lottery competition||–||–||–||–||–||0.20||0.64||4.08||13.29|
|Horserace Betting Levy activity||–||–||–||–||–||–||0.04||0.16||–|
|Total costs of operation||18.30**||16.60**||16.60*||18.30***||19.60||20.88||23.19||27.58||37.45|
* of which £0.55 million was incurred by the National Lottery Commission prior to the merger.
** expenditure incurred by the NLC prior to the merger.
*** includes one-off redundancy costs of £0.2 million following the merger.
**** Under the Gambling (Licensing and Advertising) Act 2014, we began regulating online gambling provided to the UK by operators based overseas. This widened remit had an impact on both the Commission’s fee income and expenditure from November 2014.
Net expenditure for the year
During the year, the regulation of gambling under the 2005 Gambling Act, as amended and updated by the Gambling (Licensing and Advertising) Act 2014 produced an income and expenditure deﬁcit of £0.597 million*. The deﬁcit for the year was budgeted under the Commission’s medium-term ﬁnancial plan using reserves created from the fee income collected in prior years as a result of the continuing expansion of the gambling industry, particularly within the remote sector. The Commission sought to address this by achieving a deﬁcit in 2019-20 through expenditure exceeding licence fee income. Expenditure on the Commission’s regulatory activity, particularly in relation to technological developments, is increasing and together with the reduction in licence fees that came into effect from 6 April 2017, this resulted in the planned deﬁcit for the year. The total income and expenditure deﬁcit arising for the year is £17.62 million, including regulating the National Lottery. This deﬁcit is due to the requirement to transfer grant-in-aid funding in respect of National Lottery regulation direct to reserves and not being included as income.
Statement of financial position
At 31 March 2020 the book value of non-current assets was £6.57 million (2018-19: £1.54 million) (Due to the impact of adopting IFRS 16 during 2019-20 and the decision of not to exercise the break clause of the Victoria Square house building lease In 2021 (note 16), the lease will continue for an additional 5 years, resulting in increased expenditure in year of £0.236 million).
Assets less liabilities at 31 March 2020 amounted to £3.97 million (2018-19: £4.56 million) (Due to the impact of adopting IFRS 16 during 2019-20 and the decision of not to exercise the break clause of the Victoria Square house building lease In 2021 (note 16), the lease will continue for an additional 5 years, resulting in increased expenditure in year of £0.236 million). The year-end closing cash balance at 31 March 2020 was £16.61 million (2018-19: £25.76 million). The cash balance reaches its peak between August and November each year, after the largest tranche of annual fees fall due, which are paid in advance by operators. Grant-in-aid to fund National Lottery regulation is drawn down on a monthly basis as required, satisfying the normal conventions applying to Parliamentary control over income and Payment performance.
The Commission’s policy is to pay all invoices within 30 days of receipt unless a longer payment period has been agreed or the amount billed is in dispute. In the year to 31 March 2020, 74% (target 95%, 2018-19: 85%) of invoices totalling £18.15 million were paid within 30 days of receipt.Previous section
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Last updated: 16 November 2020
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