Westminster Media Forum - Andrew Rhodes speech

13 May 2024Speech by Andrew Rhodes

This speech was delivered by chief executive Andrew Rhodes at the Westminster Media Forum on 13 May 2024.

Please note: This is the speech as drafted and may slightly differ from the delivered version.

Thank you for that introduction and thank you everyone for your time today.

Great Britain is home to the largest regulated online gambling market in the world, with a gross value now north of £15 billion, with some 22.5 million adults engaging on a regular basis. It is a huge business and a widespread activity – last year the six largest operators in this country took some 90 billion bets, but it is also an industry with a complicated debate attached to it. People can have very strong views in conflicting directions on gambling and the debate about the balance between an individual’s freedom to decide what they want to do and the need to make sure people are also protected has been particularly intense, as the Government has reviewed the 2005 Gambling Act for the first time.

It is perhaps worth remembering the 2005 Act, which certainly did liberalise many forms of gambling, was introduced at a time when Friends Reunited was probably the biggest social platform and the first iPhone had only just been introduced. Much has changed since then and we’re now well into the process of implementing the Government’s White Paper.

Many of the headlines in recent years about the gambling industry have been about poor practices and major fines and penalties from its regulator. Just a few years ago, gambling companies’ compliance with regulations was poor. As an example, in the 12 months to March 2022, nearly nine in ten of our assessments of gambling companies found that major improvements were required. This is why in 2022 to 2023 we concluded 24 enforcement cases with operators paying over £60 million due to regulatory failures. This is the biggest annual total in our history, and we had to issue the largest single penalty in our history. The Gambling Commission in Great Britain is believed to be the most active regulator in the world, often reported to be the source of the vast majority of financial penalties and enforcement action across all of the regulated gambling markets across the globe.

However, we have seen much change here too. In the past year, the proportion of operators being assessed and found compliant first time has doubled and the compliance rate of the largest operators has almost trebled in the past two years. We see a very different picture amongst the largest operators today when compared to three or four years ago.

So, what are we delivering as part of the Government’s White Paper on gambling regulation?

Two weeks ago, we published our response to last year’s consultations, which covered five topics, where were:

• Game design
• Financial Risk Checks
• Age Verification in land-based premises
• Changes to direct marketing rules
• Personal Management Licences.

Our changes to remote games design build on the work we did to make online slots safer by design a few years ago. These new rules will extend those protections for online slots to other online products, reducing the speed and intensity of online products while making them fairer and increasing consumer understanding about game play. Specifically the new rules will ban:

• features which speed up the time for a result to be shown or can give the illusion of control such as ‘turbo’ or ‘slam stops’
• autoplay
• audio or visual celebrations of returns less than or equal to stake
• operator-led functionality which facilitates playing multiple simultaneous products such as roulette and blackjack tables
• casino games spin speeds of less than 5 seconds, excluding peer-to-peer poker.

Further changes also include requiring operators to display to consumers in real time their net spend and time they have spent gambling.

And whilst I’m discussing when these new rules come into force, you’ll notice many of these changes will come into effect at different points. We know there is a lot of work for industry to implement these changes. Some of that is complex. So in announcing these changes this month we also wanted to make sure we staggered the dates they come into force so that operators have the time to update their procedures and products.

Our consultation topic on direct marketing, or cross-selling, has led to us announcing measures designed to make gambling businesses provide customers with options to opt-in to the product type they are interested in receiving and the channels through which they wish to receive marketing. The aim is to empower customers by giving them more control over the direct gambling marketing they wish to receive and ensure they do not receive marketing that they do not want.

This is a good moment to highlight how consultation responses matter too. Originally we included land-based and lotteries sectors in these changes. But we had significant and persuasive responses through the consultation from these sectors regarding why the changes would not have been the right action at this time. Given the complexities faced by such operators and our focus on the remote gambling marketing, we have therefore decided we will not include land-based gambling and the lottery sectors in scope of this requirement. This requirement - applying to online gambling only - will come into force on 17 January 2025.

Next, we will introduce new rules which mean all gambling land-based licensees, including smaller licensees, must carry out age verification test purchasing. It will also change the good practice code to say licensees should have procedures that require their staff to check the age of any customer who appears to be under 25 years of age, rather than under 21 years of age. These new elements of the Licence Conditions and Codes of Practice (LCCP) will come into effect on 30 August 2024.

And on Personal Management Licenses, following on from the consultation, the Commission has clarified and extended the operator staff management roles expected to hold a personal management licence. These new and amended provisions come into force on 30 November 2024.

On to Financial Risk and the first thing to say is our response confirms the introduction of light-touch financial vulnerability checks, and a pilot of enhanced frictionless financial risk assessments. In line with the Government’s White Paper aims, these enhanced checks will only be introduced if the pilot proves they can be done in a frictionless manner, based on data-sharing.

This will help to cut down on the types of examples you have heard the Commission discuss before, where we have seen clearly unaffordable levels of loss with little or no intervention or interaction.

So what exactly are we planning to implement? First, light touch financial risk checks. These proposals are aimed at better identification of acutely financially vulnerable online customers. The intention being to identify and support customers such as those subject to bankruptcy orders or those with a history of unpaid debts.

It will do this through light touch financial vulnerability checks for those customers with a net deposit of more than £150 a month on gambling. They will focus solely on publicly available data and, following feedback through the consultation, will not require gambling businesses to consider an individual’s personal details such as postcode or job title.

To ease introduction these checks will initially come into force at £500 a month from 30 August 2024 before reducing to £150 a month from 28 February 2025.

Secondly, there has been a lot of talk about financial risk assessments. These were proposed in order to deliver consistent, frictionless processes to assess risk of harm of gambling in the context of the financial circumstances of the highest spending online accounts. So, as we committed to earlier this year, we will carry out a pilot to test the details of frictionless financial risk assessments in practice, working with credit reference agencies and gambling businesses, thereby examining potential consumer impact. Through data collection, the Commission will also explore the exact financial thresholds the assessments would be conducted at.

We expect our pilot to last six months. Following the pilot, we will then decide whether permanent rules will be implemented but this will not be done until the data-sharing is frictionless for the vast majority of customers who are checked.

And to be clear, the assessments are not being rolled out in a live environment.

It’s also important to remember that neither the light touch checks nor the financial risk assessment pilot will affect consumer credit ratings.

Before I finish talking about consultations and the changes we’re making as a result, I also wanted to highlight a further change that, whilst important has not caught the attention like some of the other changes I’ve spoken about. That is the changes we’re making to our Regulatory Returns. We have also made changes to our requirements of Regulatory Returns. This is the core data that our licensees have to provide to us each year and recently we announced we’re moving to collect this data quarterly from all operators instead of the previous set up that only asked for data annually for many operators. At the same time we’re also reducing the number of questions operators have to answer. These changes will come into force from 1 July 2024 for all licensees.

Now, a crucial example of our approach and an area that is also a key priority for the Gambling Act Review White Paper is our work to tackle Illegal Online Gambling.

The Commissions’ approach is to identify and undertake high impact interventions, to disrupt unlicensed operators targeting consumers in Great Britain. All with a view to making it difficult to provide illegal gambling at scale. Alongside an increase in our intelligence-led disruption efforts, we’ve been engaging for some time with other bodies and regulators, such as the National Crime Agency (NCA), Police Intellectual Property Crime Unit (PIPCU) and His Majesty's Revenue and Customs (HMRC), to deliver a combined approach wherever possible.

For example, our work with HMRC where we have been tackling illegal Facebook lotteries has not only seen those lotteries shut down by the Gambling Commission, but the organisers have found themselves paying £600,000 in penalties to HMRC as well.

Although we will investigate and prosecute when appropriate, our focus is predominately on delivering risk based, high impact, upstream disruption outcomes. These are designed to restrict supply and access to illegal sites at scale. We use intelligence and software programmes to identify those websites with the largest Great Britain footprint or profile and focus on those which pose the highest risk, especially those websites and affiliates which target vulnerable consumers such as Gamstop self-excluded players. There are a number of actions we are taking to disrupt unlicensed operators. This includes:

• the issuing of Cease-and-Desist notices,
• informing offending websites they are acting illegally and that if they do not desist, we will commence disruption action and further investigation.

We also conduct intelligence-led disruption efforts. Often this involves working with website hosts and registrars, informing them they are hosting an illegal website and requesting its removal.

So, in these ways we are looking tackle illegal gambling further upstream. Working with payment providers to withdraw payment services from illegal websites, engaging with banks to raise awareness and identify consumer protection protocols to identify and stop payments to illegal websites. These are all effective measures we are increasingly looking to use. As are agreeing protocols with search engines to remove illegal websites from search results and working with social media to take down posts which promote illegal gambling.

The Commission is also actively identifying UK facing online advertorial articles and engaging strongly with publishers to get these articles removed. This work includes where necessary, threatening disruption and criminal prosecution and identifying marketing affiliates on social media and getting those removed too.

Finally, we are working with software licensees to prevent access to popular products when their games appear to be available on illegal sites, ensuring licensees are doing all they can to prevent access to Great Britain licensed games via unlicensed websites. In addition, we are increasingly engaging with our licensees if we discover their affiliates have placed adverts on illegal sites. Ensuring licensees terminate business relationships with affiliates who facilitate illegal gambling.

And what is all of this achieving?

• in January 2024 we issued 98 cease and desist and disruption notices with 39 successful disruption outcomes
• in the last six months we have referred over 7,000 website URLs to Google resulting in them being removed from search results
• in 2023 the Commission issued 452 cease and desist and disruption notices. This includes 291 cease and desists notices to illegal websites and 161 referred to Facebook for closure, resulting in 212 instances where supply was disrupted (79 online websites and 133 Facebook closures) 
• since 2022 we have increased our enforcement activity by over 500%. From 89 in 2021 to 2022 and 452 in 2022 to 2023
• we have more than trebled the number of successful positive illegal website disruption outcomes – from 25 in 2021 to 2022 to 79 in 2022 to 2023.  

The work to combat illegal activity never ends and we clearly understand that. As the Government’s White Paper made clear, we still need more powers in this space, some of which are on course to be delivered by the current Criminal Justice Bill, which is progressing through Parliament. But we are sure that we are making progress in this space.

Before I finish and hand back, I wanted to reflect on our new Corporate Strategy as well. Both our work to tackle Illegal Online Gambling and the implementation of the Gambling Act Review are of course, key parts of it but as a document that sets out our direction for the next three years, there is plenty more there as well.

In addition to continuing to deliver our core regulatory work, over the next three years, the Strategy presents a series of commitments under the following areas of strategic focus:

• using data and analytics to make gambling regulation more effective
• enhancing our core operational functions
• setting clear evidence-based requirements for licensees
• being proactive and addressing issues at the earliest opportunity
• regulating a successful National Lottery.

It also prioritises key cross-cutting enablers, including a review of our people plan, approach to stakeholder engagement, and ensuring we have the right resources to regulate effectively.

And this is all with the intention that delivering these commitments will ensure that we improve the way we work. Ensuring gambling is safer, fairer and crime-free for the benefit of consumers, the wider public, and licensees.

And that feels like a good note to finish on. Thank you for your time today and I’m looking forward to your questions.

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Last updated: 13 May 2024

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