Andrew Rhodes, UKGC

Andrew Rhodes, UKGC: Black market risk does not condone legitimate firms’ malpractice

The UK Gambling Commission (UKGC) asserts that there has been no explosion in gambling over the past two years, but major developments have taken place in other ways. 

Andrew Rhodes, UKGC CEO, addressing industry stakeholders in a CEO Briefing speech, examined market trends in the British betting and gaming space, noting an uptick in M&A, concerns around illegal betting and the emergence of new products.

The year of M&A

Citing current difficult economic conditions, the impact of regulations and the resurgence of retail betting post-lockdown, Rhodes noted that the UK’s top 10 operators have strengthened and could further expand their market share, currently accounting for 77% of gross gambling yield.

“What’s more the appetite for acquisitions continues and the focus of mergers and acquisitions seems to be driven by operator strategies to diversify into new jurisdictions, as well as a number of deals taking place in the B2B market space,” he continued.

“Mergers and Acquisitions are a pertinent example of the complexity facing the regulator too. We are seeing more and more complex transactions or complex ownership structures. Licensing has become far more complex than it once was and this has accelerated in recent years. 

“This means we need to rethink the way we approach this area from an operational standpoint as a minimum. There are also financial implications that come from this for us. We are seeing more novel products which push the boundaries of the definition of gambling and either look to capture existing market share or to draw new consumers into the market.”

Taking a look over the past year, Rhodes’ observations around M&A are clearly demonstrated – one of the UK’s oldest bookmakers and high-street staple William Hill was acquired by 888 Holdings, purchasing the firm’s non-US assets from Caesars Entertainment.

On M&A developments, however, Rhodes clarified that this was merely an observation of the level of activity across the industry, adding that any judgements on competitive threshold breaches would lie with the Competition and Markets Authority (CMA).

Blurred lines and no excuses for bad behaviour

Increased competitiveness in the UK betting space has also driven innovation, Rhodes noted, but this itself has also presented a regulatory activity. 

The UKGC has stated in the past that it has become well-aware of ‘novel products’, particularly blockchain-based assets such as NFTs and ‘synthetic shares’.

The extent to which these products can be ‘defined and regulated as gambling is becoming increasingly blurred’, the CEO continued, and the Commission will have ‘questions of any operator’ which may be probing the space. 

Rhodes added that the Commission has also been ‘watching with interest’ the measures some operators have implemented to bolster player protection. 

However, he also observed that there is an ‘inherent danger’ of customers turning to illegal sites that do not offer such protections, whilst noting the concerns of some operators that enhanced safety measures have impacted revenues.

“The illegal market will always continue to evolve and is difficult to eliminate, so our efforts will increasingly be further upstream to seek to disrupt these illegal sites as much as possible,” he said. 

“But we cannot see this as being about the lowest common denominator. We cannot reasonably argue that some practices should continue because illegal gambling is worse. 

“We cannot condone bad practice in the legitimate market and I think you would all agree with me on that. I think the risks from the so-called black market are overstated, but that doesn’t mean I don’t think they exist.”

To better combat illegal operators, the UKGC has increased its cooperation with other regulatory bodies to improve the consistency of its own operations.

“I think this is important as many of you operate in multiple jurisdictions, so any consistency we can achieve, assuming that is a positive consistency, has to lead to a better regulatory landscape,” he added.

“A key focus of our increasing interaction with those international regulators has been in building a combined effort to tackle illegal gambling sites. 

“Clearly between the regulators there is a difference between illegal gambling sites that face into a jurisdiction where they must have a licence and operators who have customers in countries where the operator cannot seek a licence. 

“Hence this is why I refer to illegal gambling sites as opposed to saying black market as these can mean quite different things.”

What can we expect from the UKGC?

Concluding his speech to the assembled operators, Rhodes provided the room with an update on what the industry can expect from its regulator moving forward.

With the Gambling Act review judgement apparently due soon, according to Minister Paul Scully earlier this month, the UKGC Chief outlined that the regulator has three goals – ‘putting people first’, ‘doing the right thing’ and ‘regulation that works for all’.

However, he also had a warning for the assembled delegates. Although welcoming the introduction of responsibility policies and practices, the CEO also acknowledged a raft of regulatory penalties handed out this year to the likes of Entain, Sky Bet, Smarkets and others.

“I will be very straight with you, as I generally am. I am sick of talking about non-compliance and I am already tired of it defining how we see the industry you are in and the experience of too many consumers,” he said.

“It is not everyone in this room, but whether you like it or not, the serious non-compliances we see are defining how all of you get perceived. It defines how you are lobbied against and it defines how government, politicians, the media and a raft of others picture you. 

“Some of you may not care. It’s not my issue, it’s yours, but it can have consequences for all of you. I’m going to set out for you now where my focus is and where I would like it to be and how I want us to get there.”

SBC News Andrew Rhodes, UKGC: Black market risk does not condone legitimate firms’ malpractice

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