- Flexi Group
Poppleston Allen: Firms face ‘increasingly likely’ risk of full UKGC licence withdrawal
The UK betting industry was shaken by August’s £17m record financial penalty against Entain, for incidents pre-dating the group’s adoption of extensive social responsibility measures.
Sharing his views with SBC News, Nick Arron, Lead Partner for law firm Poppleston Allen’s betting and gaming team, outlined how operators can navigate increasingly choppy regulatory waters as the UK Gambling Commission (UKGC) makes clear that it will not shy away from strict enforcement actions.
SBC: After handing out increasingly severe penalties, how likely is it that the UKGC will go the extra mile and revoke a major operator’s licence?
Nick Arron: In my view, this has become increasingly likely. The message from the Gambling Commission’s announcement related to Entain was clear that it would not shy away from revoking an operator’s licence, particularly in cases of repeated failings.
SBC: Entain’s offences occurred in 2019/20. Since then the company has brought in extensive safer gambling measures. Should operators be concerned about the severity of this penalty?
NA: Yes, they certainly should be. It demonstrates clearly that the Commission will continue to punish operators that don’t make compliance and protecting customers priorities in their business.
If operators are worried about historical non-compliance, they should think about making a provision for this in their accounting.
SBC: Has stricter compliance tipped the markets towards larger operators who can afford costs and resources?
NA: It definitely has. The cost of compliance is increasing and will continue to increase. Operators are having to employ larger teams of people and more employees involved in ensuring they are compliant with their operating licences and that they are adequately protecting their customers.
To compound the issue, there is a skills shortage at the moment, meaning those people with the experience and skills needed come at a premium.
The gambling industry is a relatively small industry, so there aren’t that many people out there who have experience of gambling compliance. Both of these factors are making it more difficult for small operators to compete with larger operators.
SBC: Penalties have highlighted staff training deficiencies, why has this become such a visible compliance issue?
NA: Partly, this is likely to be due to the fact that as the Commission delves deeper into operators’ businesses, it starts to understand more about where the deficiencies lie. And partly, the industry is suffering from the same problems as the rest of the economy, which are the lack of good people and issues related to the pandemic.
In particular, the land-based industry would have lost people during COVID due to store closures during lockdown and many won’t yet have been able to replace them with people with the equivalent experience or expertise.
And while responsible operators kept up their training during store closures, training people over Zoom is never as effective as doing this in person. Telling someone on Zoom what indicators of harm to watch out for is not going to have the same impact as allowing them to shadow a more experienced staff member on the floor.
SBC: Do you see UK licensing rules and regulatory decisions being replicated across foreign markets?
NA: To some extent, yes, particularly in relation to online. Other established jurisdictions such as Australia and European countries appear to be going down similar paths to the UK.
The outlier here is perhaps the US, because it is just opening up. Generally speaking, jurisdictions across the States are becoming more permissive while other regions are becoming less so.
SBC: The Commission’s new leadership (CEO and Chairman) seeks to reduce repeating offenders, do you see it adopting a three strikes policy?
NA: I wouldn’t like to be that black and white about it as I think it all depends on the circumstances. Is it more likely we are going to get a revocation? Yes. Will it be three strikes and you are out? I would not have thought so.
One reason I don’t see it happening that way is because it is relatively uncommon to see operators receiving fines or agreeing settlements for the same failings. Once an operator is the subject of enforcement action, it tends to improve in the areas it has been pulled up on.
Although later on it may again fail to meet its licence conditions, what we tend to see is that any subsequent failures are in different areas of compliance.
SBC: Could mandatory Customer Affordability Reviews improve standards?
NA: Yes, because they would force operators to comply as they would provide clearer guidance and limits to operators on when and how they should be interacting with their customers.
One of the main arguments against these, and a common reason operators do not use them at present, is that many customers do not like them and will abandon operators when asked for detailed information.