Gambling Commission seeks licensee group revenue data

The Gambling Commission has announced that it will begin to require licensees to provide data in respect of their group companies’ activities in other jurisdictions. The change is driven by concerns surrounding revenues generated from ‘grey markets’ and a need to ‘keep crime out of gambling’. The announcement has been made in the Commission’s response document to its ‘Regulatory data collection’ consultation. This consultation primarily focused on changes to regulatory returns data, which all operators are required to submit as a condition of their licence on a quarterly and annual basis.

Current practice

The new requirements deviate from the Commission’s current practice. Under the Commission’s ‘Licence Conditions and Codes of Practice’ (LCCP) all licensees are currently required to notify the Commission upon becoming aware that a group company which is not a Commission licensee is advertising remote gambling facilities to those residing in a jurisdiction in or to which it has not previously advertised (licence condition 15.2.2).

Upon applying for an operating licence, B2C businesses must also disclose any market from which they derive 3% or more of their total revenue from players, or in the case of businesses with a total revenue of less than £5m per annum, markets which they are targeting where the revenue is more than 10% of their total revenue. For each of these markets the Commission requires the applicant to confirm why they think provision of gambling facilities is not illegal (whether as a result of being licensed there or having satisfied themselves that it is the case). The Commission also asks applicants to inform them of any other markets (irrespective of whether or not they meet the 3%/10% thresholds) that they are actively targeting in order to grow their business.

B2B applicants meanwhile must disclose where their revenues come from by setting out what proportion of revenue comes from: (a) operators with point of consumption licences in jurisdictions other than Great Britain; (b) from Commission licensed operators; and (c) from other operators where the B2B applicant may be uncertain about the players’ locations.

Finally, when submitting regulatory returns, operators have to identify the percentage of their revenue derived from each jurisdiction in which the are active, as well as any other jurisdictions that they are actively targeting (regardless of whether they exceed the 3%/10% threshold). As regulatory returns are specific to the licensed operator, these jurisdiction questions do not apply to the wider group.

The new proposal and response

In the consultation, the Commission acknowledged that the data received through the regulatory returns provides a revenue split at an operator level only, and not group level. Further, the Commission commented that the LCCP notification requirement only provides a backwards-looking view of jurisdictions in which the group has advertised, but does not indicate group revenues in such jurisdictions.

Consequently, the Commission proposed (and has now confirmed) that the LCCP notification is amended to require licensees to indicate either when their group begins advertising to a new jurisdiction, or when the group’s revenue passes the 3%/10% jurisdiction threshold. Whilst the Commission has not yet provided the exact language of the amendment, it has confirmed that the requirement will be to notify them at such a time as the group becomes aware of the change, and will focus on a “significant or sustained change” in the group’s revenue profile by jurisdiction. With this, the Commission proposes to remove the jurisdiction question that is currently included in the regulatory returns form.

The majority of responses to this proposal were negative (many of them pointing out that the Commission regulates entities, not groups). In response to this, the Commission stressed its duty to “keep crime out of gambling” and that, whilst licensed entities may not directly trade in other markets, they are able to benefit from sister companies doing so. As revenues generated in ‘grey’ markets could be used to gain a commercial advantage in Great Britain, the Commission wants licensees to submit data on revenues for the group as a whole.

Other changes

The Commission has also confirmed a raft of other changes as a result of the consultation. These include:

• the introduction of a requirement to report the number of times which time/money limits are set by customers as part of the licensee’s regulatory return;
• the introduction of a requirement to report GGY specifically generated from betting on eSports as part of the licensee’s regulatory return;
• the removal of the requirement to report information about gambling payment RTP faults from the regulatory return and re-designation as a key event reporting requirement under the LCCP;
• certain changes to the regulatory return form to take account of in-play betting revenues (including making mandatory the currently voluntary question relating to in-play GGY attributable to GB customers);
• the expansion of the requirement to report as a key event any Suspicious Activity Report (SAR) to also include details on whether the customer relationship has been discontinued at the time of notification (the current requirement to state total SARs in the regulatory return will be removed to avoid duplication); and
• a move away from requiring remote licensees to provide details of turnover and pay-out for relevant products (from which the Commission calculates GGY) to requiring remote licensees to provide details of their turnover and GGY / gross profits (thus harmonising it with the non-remote regulatory return).

All changes included in this response will take effect for regulatory returns due to be submitted in April 2018 and the Commission will make the relevant changes to e-Services and guidance in support of these changes in advance of the submission date.