The shockwaves have subsided a bit since the 15 May announcement by 888 Holdings PLC that the UK Gambling Commission has commenced a review of the operating licence held by one of its subsidiary companies.
The Commission has so far made no public comment on the subject but that is not unusual, as it will only announce publicly that it is investigating a matter in exceptional circumstances. However, according to the announcement by 888, “the review has been initiated to assess certain measures that the Licensee employs to ensure social responsibility to its customers including, amongst other items, effective self-exclusion tools across different operating platforms”.
It is highly surprising that the self-exclusion and other social responsibility measures adopted by a major operator such as 888 have raised such serious concerns that a licence review has been considered appropriate by the Gambling Commission.
In many ways, such a review is the ultimate sanction available to the Commission providing, as it does, not only the power to issue a formal warning, to attach, remove or amend a licence condition and to impose a financial penalty for breach of a licence condition, but also the power to suspend or revoke a licence where it finds that:
- a licensed activity is being or has been carried on in a manner which is inconsistent with the licensing objectives
- a condition of the licence has been breached
- a licensee has failed to co-operate with a review
- the licensee is unsuitable to carry on the licensed activities.
In particularly serious cases, the Commission has power to suspend an operating licence upon commencing the licence review. That has not happened here. Indeed a sense of perspective needs to be restored, given some of the more extreme media comments that have been made.
As a matter of principle, revocation of an operating licence will only be appropriate where that represents the only means of protecting consumers and maintaining public confidence. Accordingly, revocation is only likely to be appropriate when what occurred (or did not occur) is considered to be so serious that it demonstrates that the licensee is unsuitable to hold a licence. Revocation is likely therefore to be confined to one or more of the following situations:
- there has been a serious breach of the Commission’s licence conditions or social responsibility codes of practice within the LCCP
- what happened seriously affected consumers, either deliberately or through incompetence
- there is a continuing risk that what happened will be repeated
- what happened involved abuse of position or trust
- there has been dishonesty (especially where it has been persistent and/or covered up)
- there has been a persistent lack of insight or understanding of the seriousness of what happened, the reasons that led up to a problem or the consequences.
Another guiding principle is the Commission’s intention, when imposing sanctions, to deter future non-compliance not only by the relevant licensee but also by other licence holders more generally. Since the announcement of this particular licence review, there has been a good deal of speculation by gambling industry commentators of the level of financial penalty that might be imposed on 888. Without any more detailed information regarding the alleged failings, it is premature to express any view about that or indeed whether any financial penalty will be imposed at all.
What one can do is take account of the draft “Statement of principles for determining financial penalties” that was published by the Commission in January this year as part of its consultation on changes to its enforcement strategy, the outcome of which is presently awaited. That draft document stated that a financial penalty may be appropriate in the following circumstances (although the list is not exhaustive):
- where the breach of a licence condition was committed intentionally or recklessly
- where the breach could have been prevented by the licensee
- the licensee was aware or should have been aware of the breach
- repeated breach of a licence condition
- systemic failure to comply with a condition of the licence
- where the breach gave rise to financial gain for the licensee
- where the breach of a licence condition had an impact on consumers
- where the breach of a licence condition may have damaged confidence in the gambling industry
- where the licensee did not report the breach of a licence condition
- where there is a lack of effective remedial action after the breach or failure becomes apparent to the licensee
- where a financial penalty is necessary to deter future contraventions or failures and to encourage compliance
However, to put matters into perspective and bearing in mind 888’s stated intention to “be proactively engaged in a cooperative and collaborative manner with the UKGC throughout this review”, it must be borne in mind that where, following commencement of a review, the licensee makes full disclosure of all the relevant facts and makes appropriate admissions, the Commission is able, if it so wishes, to consider if its investigations need to continue. For example, it may consider instead whether it is prepared to agree with the licensee the relevant facts and an appropriate outcome or, in appropriate cases, what action short of the equivalent of a formal sanction should be taken. Relevant in relation to such an assessment will be how early in the investigation process disclosure of all relevant facts and appropriate admissions are made by the licensee. Each of these factors will also have bearing on whether a discount to the penalty element of a fine may be offered.
888 has said that it “will make a further announcement as and when appropriate”. That may not be for some time. That is because, unless the Commission decides not to continue its investigation, a licence review necessarily follows a set process.
This may involve the Commission holding an initial meeting with the licensee to clarify the issues, and to establish what information will be required by it during the course of the licence review, although sometimes such an initial meeting is unnecessary because the issues are sufficiently clear. In addition, the Commission may wish to interview persons who it considers can supply relevant information in connection with the review. Some time after this, the Commission sends a letter to the licensee setting out its preliminary findings, including details of the documents and any other evidence on which it relies. The licensee will normally be given 28 days from then to make representations. Following consideration of those representations, the Commission will send a further notice setting out both the settled findings and the outcome of the review. If the Commission is minded to impose a financial penalty, the licensee will be informed within that letter that it may accept the outcome of the review or refer either or both the findings and the proposed sanction to a Regulatory Panel of Gambling Commissioners for determination. This whole process could take a long time.
Given the considerable emphasis over the last two years on strengthening pre-existing self-exclusion requirements under the LCCP and the publicity given since February 2015 to the forthcoming national online self-exclusion scheme (“NOSES”), it is to be hoped that 888’s licence review is to be an isolated case, but all operators would be well-advised to check that their own self-exclusion tools are both effective and fully compliant with LCCP requirements. We will be pleased to assist any operator requiring any further information on this subject.
David Clifton – Director – Clifton Davies Consultancy Limited