Government announces that gambling licence fees will increase

The UK government has announced that annual licence fees for online gambling operators will be increased by 55% from 1 October 2021.

The change was set out in the government’s response to a consultation, which had sought views on a suggested uplift of the fees following a proposal from the Gambling Commission (the Commission) to the government.

In addition to an increase of annual fees for remote licences, the government will also:

• increase all application fees by 60% from 1 October 2021;
• make other changes to simplify the fees system, including removing annual fee discounts for combined and multiple licences, on 1 October 2021; and
• increase annual fees for non-remote operating licences by 15%, with implementation of these increases delayed until 1 April 2022.

The delay in respect of increasing licence fees for non-remote operating licences was justified on the basis of the difficulties caused to the land-based sector by the Covid-19 pandemic.

The Commission requested these changes to take account of perceived new challenges in regulation, which it expected would continue and grow in the future. In particular, the Commission pointed to the following challenges:

1. Increased technological developments, in respect of both products and payment.
2. Consolidation of operators, which has (amongst other factors) caused a transformation of the market, meaning that operators are increasingly global operators.
3. Increasing risks associated with unlicensed operators and the need to protect consumers and the industry from ‘black market’ intrusion.

To help it to deal with the growth of technological innovation in the industry, the Commission initially proposes to employ more specialist technical staff, including a Chief Product Officer; invest in tools to improve its approach towards compliance; and make better use of available data.

In respect of the challenges of regulating global operators, the Commission firstly plans to engage more specialist staff to interrogate and understand complex corporate structures, and focus on driving the international regulatory agenda; increase its legal capacity to defend its positions; and work with international regulatory partners.

Regarding the risk the black market presents, the Commission plans to recruit staff to help identify the scale of illegal gambling and to assist with tackling it, including by way of prosecutions.

The Commission asserts that the above challenges have mostly arisen in the remote gambling context, meaning that the higher increase in fees for these operators is justified.

Following the last review of fees in 2017, the Commission has, in addition to using its fee income, been drawing down its reserves to fund operations. However, it explained that its reserves will not be sufficient to continue with this approach over the next few years.

The changes described above are distinct from the ongoing review of the Gambling Act 2005, which began with a call for evidence on 8 December 2020. The government acknowledged that fees may be subject to further increases as a result of the review, but made clear that the increases outlined above were aimed at ensuring the Commission could meet ongoing challenges while the review progresses.