Annual Report and Accounts 2020 to 2021
The Commission is an independent public body. We are funded in two ways:
- 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 £18.87m for the year (£19.90m for 2019-20). This figure does not include the £19.520m (2019-20: £17.020m) of grant-in-aid funding in respect of the National Lottery functions which is transferred directly to reserves.
Our fee income for the year was made up of the following:
- operator application fee income was £0.66m (2019-20: £1.02m)
- fees for personal licences £0.58m (2019-20: £0.92m)
- operator annual licence fees £17.22m (2019-20: £17.71m)
- miscellaneous income of £0.41m (2019-20: £0.25m).
This was mainly attributable to contributions to compliance and enforcement costs received from operators.
During the year, total expenditure on operational costs including depreciation was £38.06 million (2019-20: £37.45 million), an increase of £0.61 million on the prior financial year (0.02%).
Expenditure on gambling regulation totalled £20.47 million (2019-20: £21.20 million) National Lottery functions accounted for £17.59 million (2019-20: £16.26 million). This included £14.83 million on the National Lottery 4th licence competition (2019-20: 13.29 million). Employee costs for the year were £21.39 million (2019-20: £19.49 million), an increase of £1.90 million.
Employee costs for gambling regulation were £15.94 million (2019-20: £14.31 million) and National Lottery regulation £5.45 million (2019-20: £5.18 million). Of this, £3.19 million related to the National Lottery 4th licence competition (2019-20: £2.83 million).
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.
|2016 to 2017|
|2017 to 2018|
|2018 to 2019|
|2019 to 2020|
|2020 to 2021|
|National Lottery regulation||2.67||2.98||2.81||2.97||2.76|
|National Lottery competition||0.20||0.64||4.08||13.29||14.83|
|Horserace Betting Levy activity||-||0.04||0.16||-||-|
|Total costs of operation||20.88||23.19||27.58||37.45||38.06|
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 £0.809 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 because of the continuing expansion of the gambling industry, particularly within the remote sector.
The Commission sought to address this by achieving a deficit in 2020-21 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 efect from 6 April 2017, this resulted in the planned deficit for the year.
The total income and expenditure deficit arising for the year is £19.30 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 2021 the book value of non-current assets was £5.19 million (2019-20: £6.57 million). Assets less liabilities at 31 March 2021 amounted to £3.95 million(2019-20: £3.97 million). The year-end closing cash balance at 31 March 2021 was £17.56 million (2019-20: £16.61 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 2021, 71% (target 95%, 2019-20: 74%) of invoices totalling £15.08 million were paid within 30 days of receipt. Steps will be made to improve performance during 2021/22, by reviewing invoice processing to reduce time taken to resolve queries.Previous section
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Last updated: 28 July 2021
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