Key considerations that relate to the development of an effective policy and regulatory framework
to identify and manage risk related to remote gambling
I am going briefly to set the context within which Britain moved to regulate online gambling in 2005,
and say then something about the regulatory approach and framework that was put in place.
Context
By 2005 the British government had decided that the decades old gambling regulation needed
modernisation and that remote gambling would be permitted (along with more widespread
advertising of gambling) but subject to the operators being subject to national regulation and
licensing.
The government recognised gambling as a mainstream leisure activity albeit one with risks, rather
than a vice to be tolerated – interestingly though, the majority of population continue to disapprove
of gambling, thought it associated with crime, while at the same time agreeing with the
government that people should be allowed to gamble - a tension which continues until today and
has been made worse by the rise in gambling advertising.
Britain already had a mature gambling market with a large range products including remote
gambling legally available either in betting shops or from overseas operators so including remote
gambling licensing and regulation was not so radical a step as for some jurisdictions where remote
gambling was prohibited or strictly limited.
At the same time there was a general move in British regulation away from a prescriptive, rules
base regime policed by inspections ( often staffed by ex policemen ) with compliance regarded by
some operators as a necessary but essentially tick box add on function, to a more risk and
outcome based approach. Modern regulators in Britain were expected to minimise the burden of
regulation, work on basis of risk, targeting interventions and minimising duplication with other
regulators
When the Commission was set up it was given clear regulatory objectives ie to permit gambling
while keeping crime out and protecting consumers and the under age and vulnerable.
It was also clear that
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promotion of the gambling industry was for the government not the regulator
regulators should be independent within the established legal/policy framework especially
in relation to casework
raising tax revenues was not a consideration for the regulator.
So that was the context
The Gambling Commission was set up in 2005 , an independent regulatory body covering the vast
majority of gambling and lotteries including the National Lottery as from 2013.
The Commission has wide powers ,
-- able to set licence conditions and codes of practise
- collect information and
- take enforcement action if necessary including prosecution
We aim to impose the minimum of regulation consistent with achieving the licensing objectives.
The basic features of the regulatory regime are
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An attractive legal market
Risk based to focus efforts and keep regulatory burden proportionate
Role of regulator to oversee and holds to account using transparency to help maintain and
force up standards
Onus on operators to act responsibly and lead developments in responsible gambling
provision using the power of digital audit trail to underpin regulation
Strong deterrence and disruption for those attempting to supply illegally
Strong collaboration with other regulators here and overseas to maximise understanding
and intelligence and reinforce each other efforts
Build and share evidence base on emerging trends and risk and learning from when things
go wrong – remote gambling regulation has the huge benefit of the digital audit trail and the
increasing power of data analytics.
In more detail:
Having an attractive legal market and scope for making money from highly responsible gambling
provision reduces the attractions of the black market for both player and operator.
This means
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allowing as wide a range of products as possible and being open to innovation and keeping
regulatory overheads down and
having a regulatory framework that reinforces the pursuit of the licensing objectives and
deters the less responsible from undercutting the more responsible. This is why we licence
all those in the supply change that can affect the outcome of the bet or game
So we licence B2Cs, B2Bs and software suppliers – what is more we hold them jointly responsible for
shortcomings and expect them to terminate contracts with subcontractors who are not up to
standard and or who deal with unlicensed or illegal operators competing with our licensees.
We now have nearly 300 remote operators and another 150 software suppliers accounting for
around £3.5billlion in gross gaming yield.
We also licence the key executives including the marketing director (marketing is a critically
important function online) as it is people not corporate entities that decide how an operator
behaves and we hold those licensees personally to account.
We start from the assumption that the onus is on operators to ensure they only provide gambling
in a legal and socially responsible way and to be able to demonstrate this to us. They are better
placed to work how to do so in a way best suited to their business.
So in imposing Licence Conditions /codes of practise aimed at ensuring a high standards
throughout the licensed industry we adopt a risk based and outcome focussed approach, typically
requiring an operator to have policies and procedures to achieve X , say self exclusion and then
asking them to demonstrate to us that their policies are working.
And we have just introduced assurance statements for the larger operators which, a bit like
statements of internal control in financial accounts, will be succinct accounts of how the operator is
pursuing the licensing objectives and how effective they think they are , including a narrative
statement about the extent to which they are reliant on money from those with a gambling problem
and what they are doing to reduce that. This should require relatively little additional effort from
operators already putting the socially responsible provision of gambling at the centre of their
thinking but should force others, in particular their boards and key executives, to give social
responsibility the attention it needs.
It is not enough however to provide an attractive legal market and expect the operators to behave
responsibly, we also need to deter and disrupt those who would compete unlicenced or, if licensed,
cut corners and undercut the more responsible
Advertising has a key role here – getting and keeping a licence enables operators to market to those
in Britain and third parties such as Google and Facebook have been willing to check licensed status
and refuse to deal with unlicensed; and we can act against third parties carrying advertising.
The payment providers are also critically important – we have agreements with Visa, MasterCard
and others whereby if we demonstrate an operator does not have a licence, they will refuse to deal
with them, a powerful deterrent and disruption tool.
And then we have the usual range of regulatory sanctions, including fines and licence revocation and
even prosecution, but again we make it clear to operators that if they are open about any
shortcomings, have convincing plans to put things right, are willing to share any learning with the
rest of the industry, and divest themselves of any commercial benefit they may have received from
the shortcomings, there may be no need for formal and time consuming formal regulatory sanctions
process. They can pre-empt the need for formal regulatory action by proposing a voluntary
settlement covering those aspects including in particular an agreed public statement so that other
operators can make sure that they address any similar shortcomings immediately and the public can
be assured that effective regulatory action is being taken.
Again we see transparency about what is expected and performance against those expectations as
key to maintaining high standards and promoting the maximum amount of self policing on the part
of the industry and minimising the regulatory overhead which ultimately the consumer pays for. This
promotes greater public understanding about what responsible gambling provision looks like and
what to expect from the industry and also harnesses the pressure of public opinion in support of
more responsible operators.
Working with other regulators and law enforcement bodies is critical both to maximise information,
minimise duplication and maximise pressure on operators to be compliant
Another key aspect of our framework is the building and sharing of the evidence base on which to
develop and evaluate our approach and associated licence conditions and codes, so we collect data
on participation , attitudes and work with other bodies on problem gambling surveys so we can see
the impact of remote gambling and of regulation
And we require regulatory returns from operators to help assess what is happening in the industry
and to be alerted about key events such as software malfunctions or change in key executives.
We have not however required data safes or real time data submission- in our context that would be
disproportionate but we have required operators to make regular returns on key monitoring data
and keep other data that might be needed – if operators fail to do so, that immediately calls into
question their licence suitability.
In short our risk and principles based, outcome focussed approach looks to the licensed operators
to put social responsibility at the heart of their businesses, reinforcing this with licence conditions
and codes of practise which set a minimum standard and deterrents for non compliance or choosing
to trade without a licence – above all holding the key people involved ( for eg CEO , finance and
marketing directors) personally accountable for compliance and the proper pursuit of the licensing
objectives.
Jenny Williams chief executive and commissioner , British Gambling Commission October 2005 2015