David Clifton – Licensing Expert – A month of major UKGC regulatory developments

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David Clifton

The last month has seen a large number of regulatory developments that will have direct bearing on operators licensed by the Gambling Commission.

Although it was not the first in chronological terms, my starting point is a speech given by Sarah Harrison, the Gambling Commission Chief Executive, at the Bingo Association AGM. It represented a summary of:

  • what she called “the current landscape”with particular reference to national self-exclusion schemes, local risk assessments, FOBTs and a “stepping up of requirements in relation to money laundering”,
  • the Commission’s intended focus over the next 12 months, and
  • the issue of social responsibility, reflecting the Commission’s “continuing emphasis …. on protecting the customer” and drawing attention to the National Responsible Gambling Strategy recently published by the Responsible Gambling Strategy Board and aimed at minimising gambling-related harm over the next three years.

For a wide-ranging summary of the Commission’s current main areas of concern, the speech is well worth a read; you’ll find it at http://cliftondavies.com/wp-content/uploads/2016/05/Sarah-Harrison-Bingo

You can read more about the National Responsibility Gambling Strategy at http://cliftondavies.com/rgsb-publishes-strategy

Sarah Harrison’s speech presaged publication of the Commission’s new three-year business plan that can be accessed at http://cliftondavies.com/wp-content/uploads/2016/05/GC-Corporate-

Described by the Commission as setting out “how consumers will be at the heart of the Gambling Commission’s work over the coming year”, the plan’s themes include:

  • “building on vital work” to protect the most vulnerable, and set standards for responsible and safe gambling,
  • ensuring markets are fair and open for consumers by tackling problems with online marketing, terms and conditions, and unsolicited texts and
  • giving consumers confidence that markets are not rigged, or subject to fixing, and otherwise are kept free from crime.

The plan sets out how the Commission will support the delivery of its statutory responsibilities by way of five strategic objectives:

  • empowering and protecting consumers,
  • raising standards across all gambling sectors,
  • building partnerships and understanding, both domestically and internationally,
  • ensuring fair play on the National Lottery and
  • improving regulation

A number of Commission priorities are highlighted, including a focus on progress to deliver the above-mentioned National Responsible Gambling Strategy, implementing new regulations to tackle crime and money laundering, and reviewing enforcement policies and practices to promote credible deterrence.

These are of course particularly topical issues for the betting industry given (a) the recent public statements published by the Commission in relation to AML and social responsibility failings at both Paddy Power and Gala Coral and (b) the seemingly inevitable forthcoming inclusion of bookmakers within the ambit of the Money Laundering Regulations.

The plan also:

  • identifies how the Commission will aim to ensure that the costs of regulation fall fairly on operators as part of the current fees review and
  • signals the Commission’s intention to develop a new corporate strategy to reflect changes in markets, technology, consumer behaviours and regulatory approaches.

The new regulations to tackle crime and money laundering are to be introduced by way of changes to the Commission’s Licence Conditions and Codes of Practice; see http://cliftondavies.com/wp-content/uploads/2016/05/GC-LCCP-crime-review

Intended to come into force in the Autumn, the changes follow a consultation process that took place at the end of last year. As well as the written responses to that consultation, the Commission took account of comments made during a series of stakeholder meetings and workshops held between October and December 2015.

The changes focus on the outcomes the Commission expects licensees to achieve. They will allow licensees to determine the best approaches to meet those outcomes, including by the use of improving technological tools.

The changes will require gambling operators:

  • to conduct an assessment of the risks of money laundering in their business, and show that they have effective policies, procedures and measures to mitigate these,
  • to report to the Commission any criminal investigations involving them or their premises where it appears their measures to keep crime out of gambling have failed, and
  • to impose terms and conditions to prevent employees from taking advantage of suspicious or irregular betting patterns.

In terms of “next steps”, the Commission:

  • is running two short supplementary consultations on (a) the placement of digital adverts and (b) extending the requirement to assess money laundering risk to the non-remote lottery sector and
  • will publish in the Summer both a new consolidated LCCP and sector-specific extracts, incorporating amendments from this and other consultations.

Following publication on 21 April by the Home Office and HM Treasury of their Action Plan for anti-money laundering and counter-terrorist finance, the Commission has also announced that It will shortly re-publish its updated guidance “The prevention of money laundering and combating the financing of terrorism” and will review its advice to all other operators on “Duties and responsibilities under the Proceeds of Crime Act 2002” later this year.

Last, but no means least, following December’s consultation on the changes to the Testing strategy for compliance with remote technical standards, the Gambling Commission has now set out its own position arising from the responses it received and the resulting changes it has made to the testing strategy; see http://cliftondavies.com/wp-content/uploads/2016/05/GC-RTS-Testing

The changes include:

  • a simplified approach to defining major and minor updates to games and software so that licensed operators, test houses and consumers understand which products require external testing prior to release
  • greater scope for minor updates, which do not affect game fairness, to be tested in-house
  • a more streamlined approach to testing of multiple updates in the event that, for example, games are affected by a change to the remote gambling system or random number generator
  • further guidance in relation to the roll-out of existing games onto new channels; for example, where a game originally released as a flash game is redeveloped as HTML 5 or as a native mobile app
  • further guidance on effective return to player monitoring to ensure variations in payments to consumers can quickly be identified and resolved
  • an independent annual audit requirement to provide assurance that operators are correctly identifying and managing game updates.

The revised testing strategy will be published separately at the end of May. A consultation on the RTS will follow in the Autumn.

________________________

David Clifton – MD – Clifton Davies Associates

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