The Gambling Commission (the “Commission”) unveiled its three-year corporate strategy on 8th April 2024 (the “Strategy”). There are some admirable aims within the Strategy which – if achieved – will absolutely benefit the industry and consumers alike. However, there are also areas for caution, particularly: (i) making sure the Commission remains mindful of the statutory limitations to which it is subject; (ii) ensuring the Commission properly consults with licensees before imposing change; and (iii) ensuring appropriate collection and use of data.

The three-year plan is ambitious and the Commission will need to work hard and smart to achieve its goals.

The key takeaways are:

• The Commission focusing more broadly on the ‘fair and open’ licensing objective (including understanding consumer concerns, improving information to players, and ensuring the fairness of gambling products).
• A focus on, and greater use by the Commission, of relevant data.
• The Commission becoming ‘digital by default’.
• Increased clarity and transparency for licensees and the public.
• Driving long-term change to boost consumer trust and confidence in the industry.

Five areas of ‘strategic focus’

Alongside the Commission’s ‘ongoing core regulatory work’, it has identified five areas of ‘strategic focus’ where it believes improvements to regulation will have the biggest impact in delivering better outcomes for consumers, the public and licensees.

These priority areas are:

1. Using data and analytics to make gambling regulation more effective.
2. Enhancing the Commission’s core operational functions.
3. Setting clear evidence-based requirements for licensees.
4. Being proactive and addressing issues at the earliest opportunity.
5. Regulating a successful National Lottery.

Priority 1: Using data and analytics to make gambling regulation more effective.

The Commission’s position that better evidence, driven by more effective use of data and access to higher volumes (and quality – omitted, but clearly integral) of data will, if used properly, lead to better regulation and outcomes is uncontentious. However, any regulatory change based on the Commission’s use of such data could have a huge impact on the industry. As such, it needs to be proportionate; to achieve this, it must be evidence-based. So, whilst it is commendable to see the Commission feature the need for data at the heart of its three-year plan, it will inevitably take time to compile and analyse the necessary data, and it remains to be seen what data sources the Commission will utilise.

The Commission also intends to implement greater automation of its systems and process to direct more resources to its ‘frontline regulatory activities’ and to invest in technology and recruit personnel to create a new ‘data innovation hub’ to house its ‘ambitious’ data programme.

Its key commitments in respect of its use of data are:

• Significantly increasing the depth of its understanding of the gambling market and consumer behaviour.
• Using data science methods to improve early identification of issues and the Commission’s understanding of industry Such use includes using data to ‘generate insight’, leading to action at the earliest opportunity. A noble goal, but care must be taken to ensure that any such methods are used as envisaged – to gain insight. It would be wrong for the Commission to use such data to undertake specific compliance evaluations by stealth.
• Consumers and the wider public will benefit from a reduction in the likelihood of sustained or significant failings going undetected and which result in consumer harm. It will be fascinating to see how this plays out when ‘harm’ is so vaguely defined by the Commission. Further, the Commission will build a ‘leading understanding’ of gambling-related Readers may recall that the Customer Interaction Guidance (for more on that, please see our previous blog here was criticised for not attempting to define harm and vulnerability, while saying operators must take steps to minimise a non-specific concept. Clearly defining what is meant by ‘harm’ (whether through the use of enhanced data or otherwise) is a key area for the Commission to show leadership in the next three years.
• The Commission will develop its internal capability to embed the effective use of data across all aspects of its work. This is an interesting point; those who have experienced compliance assessments will be aware that the Commission has a tendency to say one thing in public and another in the private forum of an assessment. Further, some operators will have experienced the Commission deviating from its public policy (particularly around financial risk assessments), which is confusing and unacceptable. The Commission’s efficiency will be greatly improved if it can establish – and communicate – a single message both publicly and privately, so that licensees and regulator alike can sing from the same hymn sheet.

Before the Commission makes too many advances into this new data-first regime, it is worth noting the criticisms of the Commission’s approach to data collection and the interpretation of that data in its much-heralded Gambling Survey for Great Britain. Whilst consumers and licensees will benefit from regulation and policy development based on improved understanding, it is vital this understanding is based on high quality data sets and analysis tools.

Priority 2: Enhancing the Commission’s core operational functions.

Few would disagree that the Commission investing in its core processes and technology is a bad idea. The Commission’s acceptance that its ‘core technology and systems are reaching the limits of their capabilities’ will not come as a surprise to anyone who has been waiting for a response on their licence application. Investment here is desperately needed and will be welcomed.

Another aspirational goal (if achievable) is the Commission’s commitment to increasing transparency of industry compliance levels by ‘theme and licensee’. Historically, the Commission has held licensees to a high standard of what constitutes acceptable behaviour without giving clear enough instruction as to how such threshold can be achieved, or what changes licensees need to make to reach the standard. Increased transparency and a move away from identifying an individual licensee’s failings and instead providing a snapshot of the Commission’s compliance findings, as a whole, will be a positive move.

It is reassuring to read that the Commission will consider improvements to its compliance work ‘subject to all necessary consultations’. While the Gambling Act requires the Commission to consult before enacting any regulatory changes, this is an obligation that, at times, has been overlooked. The Commission must learn the lessons from the much-ridiculed 2020 Enforcement Report: it cannot use these ‘snapshots’ of its compliance findings to re-write regulation without proper consultation. If it fails to properly consult before implementing changes, licensees will simply attack any such changes in subsequent enforcement cases.

The Commission has announced that by the end of its three-year plan, the gambling industry ‘including those who advise or are in a position to positively influence licensees’ will have better awareness of the relative levels of compliance and be better able to ‘identify areas of good practice’. Is this yours truly featuring in the Strategy?  Watch this space!

Finally on the topic of the Commission’s core objectives, it is great to note its pledge to tackling illegal gambling. This marks something of a shift and a much-needed recognition that the black market needs properly addressing rather than, per recent times, a denial of its impact as a way to ward off the spectre of resistance to regulatory change. The Commission’s previous refusal to accept the significance of the black market when enacting changes has been rightly criticised.  Consumer access to illegal gambling undermines the regulatory framework and its protections for the wider public and must be taken seriously. It makes a mockery of the regulatory framework if black market operators can run roughshod over it with no concern whatsoever for player safety. The Commission is realistic and acknowledges that it is not possible to eliminate illegal gambling entirely given the ‘nature of modern technology and the way criminal enterprises continue to evolve their approaches’.

Priority 3: Setting clear evidence-based requirements for licensees.

The primary objective for the Commission here is the delivery of those measures for which it is responsible in the Government’s White Paper, with a focus on improving player protections and product safety. Notwithstanding myriad other commitments to invest in and increase resource to adequately enable the Commission to meet its goals, the ‘majority’ of the Commission’s policy resource and a ‘significant proportion’ of its wider resources will be used to protecting consumers and the wider public from ‘harm’ (still to be clearly defined). Somewhat cryptically, the Commission will also consult ‘on the use of its powers’, to inform and implement reforms. Something to look forward to.

The Commission acknowledges it must not lose sight of is its commitment to deliver on the Government’s ambition to ensure that gambling regulation in Great Britain remains appropriate, proportionate and effective in this digital age. The Commission’s approach must reflect the mandate given to it by Government’s and not overstep them.

We can expect a review of how the Commission communicates its requirements and related guidance to licensees and the public, with the LCCP ‘evolving further with the changes emerging from the Government’s White Paper’. The Commission is committed to ensuring licensees ‘fully understand their responsibilities…to enable compliance at the earliest opportunity’. This is a welcome proposition; too many Commission guidance documents at presents are vague and lead to confusion and disparity of approach (as an example, see our comment in respect of SRC 3.4.3 above). The Commission would benefit from seeking an external review of its policy and guidance documents (including any changes to the LCCP) prior to publication from those who will have to interpret and implement them (including us!)

A final thought from us on this key priority. There is a concerning mention about consumers and the wider public being able to ‘hold licensees to account’ for delivering (or presumably failing to deliver) their requirements. There are already various remedies and actions available to disgruntled customers. The establishment of an industry ombudsman is underway, and the Commission should avoid conflating licensees’ regulatory obligations (as between licensee and regulator) with licensees’ obligations to consumers (as enforceable by the consumer against the licensee).

Priority 4: Being proactive and addressing issues at the earliest opportunity.

Another non-contentious statement here from the Commission is that it is in the best interests of consumers, the public and the industry itself for licensees to be compliant at the earliest opportunity. The Commission aims to achieve this using proactive activities and interventions rather than using reactive compliance and enforcement measures. This is absolutely to be endorsed; collaboration between regulated and regulator is key. Over recent years, s.116 of the Gambling Act has lost its impact, with the Commission exploiting its broad discretion to review gambling licences. There is a stark contrast between a derelict operator, and another who has struggled to implement outcomes based on mandated regulation in the absence of precise guidance. Compliance assessments should be an opportunity for both parties to work on together, not simply the first step in an inevitable enforcement process. Indeed, this proposal is a positive indication of a shifting relationship between the Commission and licensed operators, where those operators who are making best endeavours to operate within the rules will be treated with a more pragmatic approach by the Commission.

The Commission promises that licensees will have access to ‘clear information and guidance’. We look forward to the Commission delivering on this good intention.

And of course, more spending. The Commission will invest in a ‘programme of activities exploring how licensees can be supported to meet their responsibilities to consumers and the wider public’. If the Commission dedicates sensible and appropriate time and resource to the other objectives within its Strategy, this additional investment may not be required. If the expectations of, and obligations on, licensees are clearly communicated and the Commission is using data more effectively to create an overall picture of compliance, do we really need an additional ‘programme of activities’? The Commission has a lot to get through with the other key priorities; there is a risk this could end up becoming a distraction. However, on balance, the introduction of engagement events at which the Commission can communicate clearly with stakeholders to address and identify shared concerns, is a positive step in the relationship between regulator and licensees.

Finally, the Commission will increase resource around its understanding of issues which pose a risk to the ‘fair and open’ licensing objective. With an improved understanding of consumers’ priorities, the Commission aims to be better able to target its resources and ‘any future regulatory activity’. Hidden within this message is an intention to focus on account restrictions, which is clearly an area on which certain customers’ interests and those of operators diverge. Were any additional regulation to be introduced in this respect, that would mark quite the shift. The Commission will therefore need to be careful to differentiate between those restrictions validly imposed on customers’ accounts by operators, and those designed to frustrate or delay a customer’s access to betting opportunities.

Priority 5: Regulating a successful National Lottery.

Tucked away in the final key priority is reference to the Regulators’ Code ‘guiding’ the Commission’s approach. Recent statements emanating from the Commission could have been interpreted as an attempt to somewhat undermine the Regulators’ Code’s importance. It is pleasing to see a different approach in the Strategy.

Conclusion

Overall, there is a lot of positive messaging and noble goals from the Commission. It remains to be seen whether it can all be achieved within the three-year target, how the use of datasets will materialise and how much input licensees will have. Ultimately however, the overwhelming message is one of additional investment and resourcing, mirroring the ever-increasing costs associated with a mature regulated market.

The Strategy can be accessed here.