The Gambling Commission’s enforcement report makes for essential reading for industry lawyers and compliance officers at gambling operators alike, according to Barristers Philip Evans QC and Tom Orpin-Massey, the latter of whom (pictured) helped draft it.
On 28 June the UK’s Gambling Commission published its first ever enforcement report.
Entitled ‘Raising standards for consumers’, the document is both a review of the Commission’s regulatory and criminal enforcement work over the past financial year and also a working guidance document as to how operators might avoid getting themselves into trouble in the future.
Launching the report, Neil McArthur, the Commission’s new CEO, said the Commission “wanted to find more opportunities to provide advice and guidance to operators… this report is one of the ways we’re seeking to do that”.
In this article we outline what the report contains, and ask why the Commission has decided to publish an enforcement review now, and what that might mean for the regulatory landscape moving forward. In our view the report is far more than an end of year report card.
The first question is why publish such a report, and why publish it now? In June 2017 the Commission revised its enforcement policy documentation, including its statement of principles for licensing and regulation, its licensing, compliance and enforcement policy statement, and its statement of principles for determining financial penalties.
In addition, the Commission also published a brand new indicative sanctions guidance.
The revision of the Commission’s enforcement suite brought in key changes. Central among these was that the presumption in favour of voluntary settlements was abolished. All enforcement tools are now on an equal footing.
Credit for timely disclosure was formally introduced, making a sanction or outcome more lenient where an operator had been open, upfront and honest about problems where they had arisen.
And finally, a working formula for determining financial penalties was outlined in the principles for determining financial penalties document. In that document, it was set out that the Commission would now have particular regard when determining financial penalties to “whether the breach arose in circumstances that were similar to previous cases the Commission has dealt with which resulted in the publication of lessons to be learned for the wider industry”.
Operators are always expected to keep an eye on the Commission’s website and to read and digest public statements that are published following the taking of enforcement measures. Increasingly, in recent years these public statements have sought to address the industry more broadly by including key learning points, often in checklist form.
Now it is clear that where mistakes are being repeated after public statements have been released by the Commission, any operator in breach can expect tougher treatment because they have failed to consider these wider lessons for industry.
Ignorance no excuse
This expectation is now set out clearly in the new enforcement review: “Licensees are on notice that a failure to adhere to the guidance in both this document and within our public decision notices may see us bringing enforcement action more swiftly and with greater penalty if we are of the view lessons are not being learned, or if the issue in question has been uncovered by us or another authority.”
The enforcement review brings together and sets out the Commission’s key areas of regulatory concern in a single document. The review is divided by chapters, with each chapter representing a principal area of enforcement work. In short, it is what the Commission is most busy with on a day-to-day basis.
There are the obvious themes that are familiar to the industry, such as anti-money laundering and self-exclusion, but there are also chapters on matters the Commission has been particularly concerned about in recent years, such as misleading or unfair marketing and advertising, and unfair terms and practices, which concern the Commission’s consumer-centric approach.
Each chapter sets out the work the Commission has been involved in in that particular area over the course of the financial year. Where key guidance documents have been published they are referred to in the review.
There is also reference to the key public statements following enforcement action that the Commission has published in that particular area over the course of the year. To that extent, the chapters read much like a “year that was”, and are useful to readers in industry in understanding what the major concerns are, what the latest guidance is, and what the most recent cases and settlements of note have been.
Anonymous case studies have also been selected, and usually demonstrate the most serious examples of non-compliance the Commission has dealt with over the course of the year.
However, as set out in the document’s introduction, it is also designed as a working guide to how operators may avoid falling into non-compliance. Each chapter ends with a “healthcheck”, a series of questions set out in bullet points, which, if considered and acted upon by operators, should help them avoid falling into difficulty.
The healthcheck list is designed to be a useable, working list that compliance operators can be guided by, and also take forward to their managers if they feel that inadequate resources are being allocated to ensure proper adherence to them. Without exception, each checklist asks the question whether sufficient resources have been allocated to that area.
We suggest that following these checklists, and building them into an operator’s written policies, procedures or general approach, will help to ensure that licensees do not fall into non-compliance, or in circumstances where they do, will act as significant mitigation as evidence that the operator was trying to do the right thing.
Clearly, the Commission’s first enforcement review is another important landmark in the regulation of the gambling industry, and operators would be wise to give it close attention.
Philip Evans QC and Tom Orpin-Massey are barristers at QEB Hollis Whiteman Chambers, London. Philip Evans is a silk with significant experience of licensing and regulatory matters connected to gambling. Tom Orpin-Massey spent seven months on secondment with the Gambling Commission in 2016 and continues to assist the Commission, including in the drafting of this new enforcement report.