KPMG Gibraltar eSummit 2024 - Sarah Gardner speech
08 July 2024Speech by Sarah Gardner
This speech was delivered by deputy chief executive Sarah Gardner at the KPMG Gibraltar eSummit on 27 June 2024.
Please note: This is the speech as drafted and may slightly differ from the delivered version.
Thank you for that introduction and thank you everyone for being here today. I’d also like to pass on Andrew’s apologies for not being able to make this week’s event. Since this event was announced and we had agreed to attend, a General Election has been called in the UK, so we are now in the pre-election period, which does mean I have needed to change the focus of my speech to reflect that. I will touch on some of the things we have already announced and are implementing but it will be for the next Government, whoever that is, to lay out their policy agenda when they take office, without people like me having recently commented on what parts of policy or regulation may or may not look like. As such, I won’t be talking further about the 2023 White Paper, that laid out various reforms to gambling regulation in Great Britain.
So what will I be talking about today? Well, as you may have heard myself and our CEO, Andrew Rhodes, as well as others say before, the Gambling Commission has a lot to be getting on with and a number of projects that deserve attention outside of the work to implement the 2023 White Paper. I also want to take the opportunity to reflect a little on what we see emerging in the industry and what regulators may need to turn their attention to, or at least what we might need to think about.
The world is a changing place but the British jurisdiction remains important for a number of reasons. We are, of course, still the largest regulated online jurisdiction in the world and quite possibly one of the most liberalised. As such, many of the things that happen in the industry happen in Great Britain first. We do now see many new regulators emerging in economies addressing the growth they will have seen in online gambling in particular during the pandemic or where those nations want to regularise and regulate gambling for the first time, or to update their approach to reflect political, social and consumer behaviour changes.
Core to so much of what we do is the evidence base we have and need. There is sometimes much sentiment and emotion involved in the industry people in this room work in, regulate or supply services to, and that is not unimportant, but ultimately we need to be guided by the evidence. Related to that, I’ll touch on the impact that our Compliance and Enforcement work has had and what that means for how we can engage with the industry now and in the future. So I will also spend some time discussing how we are developing the better statistics and evidence that will allow us to make better decisions that lead to better outcomes in the future as well. All of this work is of course tied together by the new Corporate Strategy we published in April. But back to the here and now. What does the gambling sector look like in Great Britain today?
Last year, the British market, for the first time went through the £15 billion mark in terms of Gross Gambling Yield (GGY): £15.1 billion for the financial year April 2022 to March 2023. But what about participation?
Earlier today we have released Wave 2 findings from the Gambling Survey for Great Britain (GSGB), based on 5,000 responses collected between November 2023 and February 2024.
This release focuses on participation in gambling during this time, 48 percent of respondents aged 18 years and over had gambled in the past 4 weeks (about the same proportion who told us they have visited pubs/bars or clubs in the past 4 weeks), with lotteries and scratchcards being the most popular activities that people take part in (36 percent and 13 percent respectively).
We found that most respondents who had gambled in the past 12 months were motivated to gamble for ‘the chance of winning big money’ and ‘because it’s fun’, and overall, when asked how they felt about gambling respondents said they neither loved it nor hated it.
We know that 21 percent of respondents have only taken part in lottery draws in the past four weeks (either National Lottery or Charity Lotteries), whereas 27 percent are taking part in other types of gambling.
For respondents aged 45 to 74 years old, participation in lottery draws makes up a significant part of their gambling.
This is the second release from the GSGB, as we’ve already started calling it, following the Wave 1 findings which were published in February 2024. In July we’ll also be publishing the first annual report for the GSGB, this will include more detail about the impact of gambling alongside the findings on the types of activities that people are playing.
There is a natural interest in how the evidence base we, and others, rely on to underpin our regulatory work and I think that’s important. Those of you who are active in the British jurisdiction or follow it closely, you will know there has been plenty of comment on the new methodology for the GSGB. We commissioned and then published an independent assessment into the GSGB by Professor Sturgis – who looked at both our new methodology and our approach to its development. In his assessment, Professor Sturgis made some key recommendations for the Commission to consider, to ensure the quality and robustness of the statistics continues to build confidence. We will naturally deliver against those and we also note the risks he identified in having a new methodology and the caution that should be applied when seeking to draw precise conclusions. But alongside this, Professor Sturgis not only described our work developing this methodology as ‘exemplary in all respects’; he makes clear there is no going back.
GSGB is now a reality. We will continue to develop it over time, of course. But the Commission has taken the steps we needed to both safeguard and improve our data. Better evidence, driven by better data will lead to better regulation, which in turn will lead to better outcomes.
I think it’s right that everyone should be able to see how we have approached this and what the independent review says, but for those wanting to debate trends in the industry it is important to be equally rigorous when relying on other sources and to be clear what the strengths and limitations of that dataset is. I have seen some seeking to decry the GSGB before it has even been published in full, because we have been open about the areas where we need to exercise some caution, sometimes vocally supporting datasets which support their argument, where there is little or nothing known about how those figures have been constructed. I think everyone can do better than that and there is an obligation on all of us to use research, statistics and insight in a responsible way.
We also hear concerns sometimes that we don’t do enough to hear from consumers who suffer no harms from their gambling. Gamblers who some often describe as gambling recreationally. I thought it might be useful to dig a little deeper on what we are doing with our Consumer Voice research, which is one of the ways we engage with consumers who gamble recreationally, as some describe it.
Our Consumer Voice programme is designed to deliver in-depth research that brings the voice of gambling consumers into the Commission. This is made up of both a mix of quantitative and qualitative methods to gather views, opinions, and insights from gambling consumers.
The work complements our nationally representative statistics on gambling participation and the prevalence of problem gambling, collected using the GSGB, but goes into more depth on key issues and emerging areas of interest.
In the last year we have spoken to over 7,000 consumers through the programme, covering topics including the cost of living, bonus offers and incentives, financial risk checks, and consumer trust. We speak to consumers in a range of different ways – through focus groups, in depth interviews, online communities, behaviour diaries and online surveys. And in these different ways, the programme gives us access to a diverse and representative pool of consumers to ensure that we take on board the experiences of all gamblers – from those who gamble occasionally to those who are more engaged.
So these aren’t small groups and samples sizes that we are then extrapolating regulatory direction from. This work is being done year in, year out, at scale and we are speaking to consumers in depth to really understand their views and experiences. It’s also worth pointing out that all this work is another important focus of our Corporate Strategy as well. Underlining the importance we place on this work in the years ahead.
The findings from our Consumer Voice research are not considered in isolation either, but alongside evidence from a range of different sources as part of the bigger evidence picture that we assess using our evidence assurance process. And that gives us real scale. When you take together the different types of surveys and statistics we run each year, in 2023 it represented the views and behaviours of around 40,000 people. So let there be no doubt over whether the Gambling Commission is interested in the views of consumers and those impacted by or interested in gambling. We are to the tune of tens of thousands of people each and every year.
So the Gambling Commission is committed to strengthening its evidence and improving our own statistics. We’re doing that through our participation and prevalence methodology. We’re doing it through how we engage with consumers. And we’re going further by investing in and applying research techniques and approaches to gambling that haven’t been used enough before. One such example is our work with Open Banking data.
This project forms a key pillar of our data innovation programme, together with the GSGB and the Regular Feed of Operator Core Data (ROCD) project. Simply put, through analysing millions of rows of data, the Open Banking project has already had a positive impact on our regulatory development. Alongside other evidence, including of course the thousands of consultation responses, the Open Banking data helped us settle on the most appropriate thresholds at which to set the new financial vulnerability checks. It enables us to see not just a sample of individual’s spending behaviour with specific operators, but also their spend across all remote operators, all within the context of their wider financial behaviours.
We are currently in the process of further expanding the scope of this project, by procuring an increased sample size and incorporating regular data updates. This will enable us to track consumer behaviours and the market over time as the regulatory environment evolves, providing a powerful new tool for research, regulatory development and evaluation.
There are new challenges from the broader use of data at our doorstep today though. There are always new trends emerging but if you look at the evolving role of both team-level and player-level data in sports betting you can see some really big movements that have been taking place. Many have commented on the growth of bet builders and in-play markets in recent years, but what we see now are new challenges for consumers as they can engage with much more subjective micro-markets.
Whether a goal has been scored, a corner given, a yellow card shown and so on are events that are not subjective – they either happened or they didn’t. People might debate if they should have been awarded in their opinion, but there is no dispute that they were. That’s not so much the case on the increasingly popular player-level markets. Whether a shot was taken, was on target, a tackle made and a variety of other micro-markets are ultimately more subjective. Once we introduce concepts which require a human being to make a subjective judgement, we introduce debate and argument. I’m not saying these micro-markets should not exist, but we have seen a notable increase in disputes from consumers where already higher-margin, multiple-selection bets now have elements which one person might see differently, especially when it makes the difference between winning and losing.
Technology and its continuing development, as well as Artificial Intelligence (AI), may well help here but what we do already see today is a significant set of products where consumers are disputing whether the micro-event, perhaps just a single movement in 90 plus minutes of football, happened or not and that brings all kinds of challenges for regulators, as well as the industry. The compilers and providers of data have many processes in place and specific rules to describe events and they often have no relationship with the bets or liquidity itself, but nonetheless this has brought new challenges to us.
An extension of this is the likely continuing journey towards hyper-personalisation. There are already products in development which allow the user to see an event in 3D with data easily presented which is more and more meaningful to their preferences, which you can easily imagine being converted into options rather than things which are merely interesting.
On the one hand, perhaps it presents an opportunity to reduce unwanted cross-selling of products to consumers, but if products or the delivery of them is increasingly attuned to a consumer’s interests and what engages them most, what risks does this present in terms of managing the risks of excessive gambling?
I’m not standing here with a view or position on that, but let’s all understand these are things which will need serious thought by both the industry and its regulators.
The shape of the British market has continued to change in recent years. My colleague, Rab Grewal presented some thoughts on what our Market Insight data tells us a little earlier today and I hope a number of you were able to have a listen. Our Market Impact data isn’t the same as our official Industry Statistics – they aren’t comparable – but they are another valuable tool in analysing what’s going on in the market. So what does it tell us about recent years? Well as Rab told us earlier, we’ve continued to see:
- the number of active accounts bring reported by operators is going up and the number of products they are engaging in has gone up too. For example, the number of actives engaging in real event betting increased 15 percent in March of this year compared to March 2021
- whilst at the same time, the average GGY generated by these active accounts has gone down, as has the number of spins and bets. In the year 2021, an average active playing casino games other than slots placed 137 bets in a month, whereas in 2023, it was 128 bets.
I don’t want to make any rash judgments from this data and what it may mean especially as it only covers a segment of the market. But this data is consistent with what the larger operators have been saying publicly about a shift to a more recreationally focused business model. As our data for GSGB participation builds, we will be able to use the market insight dataset in conjunction with findings from GSGB to better understand the number of activities participants are engaging in.
Another area where we are looking to improve our data and where we recently consulted are our Regulatory Returns. This is the core data operators have to provide us each year, and having consulted on changes we are now implementing them. Getting it right is critical. Hopefully those of you here today representing gambling businesses with a licence from us already know this but, we are moving to collect this data quarterly from all operators instead of the previous set up that only asked for data annually from many operators. At the same time we are also reducing the number of questions operators have to answer. These changes will come into force from 1 July 2024 – that’s next week - for all licensees. So if you aren’t already on top of this, here is your final warning to do so.
And that means that the first set of the now quarterly regulatory returns – those relating to the quarterly return period 1 July 2024 to 30 September 2024 - must be submitted by all licensees by 28 October 2024. If anyone hearing this or reading it later has questions, get in touch with us. As I said, it’s critical we get this right.
Of course there is another – often more publicised - data point operators are involved in and that is our compliance and enforcement work. But, what we are seeing today in our compliance assessments, compared to previously, is a very significant increase in the number of larger operators in particular being found to be compliant at the point of their assessment by the Commission. What we saw last year was the rate of operators achieving compliant first time outcomes in our assessments more than doubled and the compliance rate of the largest operators has almost trebled in the past 2 years. This does mean that with less of our resources deployed working with Tier 1 and 2 operators, we are able to spend more time with other tier operators in our market.
And that uptick in compliance has been mirrored in our enforcement work. I’m sure, from my conversations with the industry, that the years of record breaking penalties made operators sit up and take notice: Myself and Andrew are often asked at industry events whether I think the period of significant enforcement cases and penalties is behind us and the reality is that I can’t know that but I hope that is the case. The trend data certainly points to that looking much more established, but we should never be complacent. The reality is, ensuring compliance is complicated and is dealing with individual consumer behaviours which are not linier and not always predictable:
- in the financial year of 2022 to 2023 the Commission concluded 24 enforcement cases with operators paying over £60 million in sanctions
- this compares with 19 enforcement cases in total in 2023 to 2024 leading to £13.4 million in sanctions.
As I said: we aren’t being complacent and our work in Compliance and Enforcement is a focus set out in our Corporate Strategy. But this is we think, encouraging evidence of an improving compliance picture from operators offering gambling to consumers in Great Britain.
Beyond this our Enforcement and Intelligence teams have also been stepping up their work against illegal online gambling as well. Our aim set out in our strategy, is to make it difficult to provide illegal gambling at scale to consumers in Great Britain.
That means identifying high impact, upstream disruption methods. This involves identifying the key facilities an illegal operation requires such as visibility, payment processing and software and facilities. Then finding smarter ways of shutting those off.
Alongside a significant increase in our intelligence-led disruption efforts, we’ve also been engaging for some time with other bodies and regulators, such as the National Crime Agency, the Police Intellectual Property Crime Unit and His Majesty's Revenue and Customs (HMRC), to deliver a combined approach wherever possible.
For example, our work with HMRC where we have been tackling illegal Facebook lotteries has not only seen those lotteries shut down by the Gambling Commission, but the organisers have found themselves paying £600,000 in penalties to HMRC as well.
And what is all of this achieving?
- in 2023 the Commission issued 452 cease and desist and disruption notices. This includes 291 cease and desists notices to illegal websites and 161 referred to Facebook for closure, resulting in 212 instances where supply was disrupted (79 online websites and 133 Facebook closures)
- in the same period, over 7000 URL’s associated with illegal gambling were reported to Google for delisting
- but we have greatly increased our illegal markets disruption activity again in 2024. In April and May this year, we referred a further 28,000 URLs associated with 113 websites and to date, 89 of those websites have been removed from Google’s search results. We have also issued 339 Cease and Desist and disruption notices.
More work in these areas is planned with meetings arranged with Yahoo to replicate the URLs work undertaken with Google and we also plan to engage with others in this space too.
So for every intervention you see from the Commission in the licenced sector, I’ve hopefully given you an insight into the quantity of work we’re also doing in the unlicenced, illegal space as well.
Much of what we do has been grounded in another key element of our approach and that is collaboration – another key part of our Corporate Strategy. Whether with industry, other regulators, or others, the Commission remains committed to collaborating with others to make gambling safer, fairer and more crime free. Last year we engaged with stakeholders over 250 times, through events like this, one to one meetings or our own workshops and roundtables. That’s a senior stakeholder engagement for every working day of the year. We’re committed to this approach because it delivers results. For both consumers and operators a like. And the great thing is, the more results we deliver, the more space we have to explore where else we can look to collaborate on even more issues.
So let me leave it there. The Gambling Commission is determined to work with anyone who will work with us to build better outcomes in Great Britain. For consumers, for operators and for wider society.
Thank you.
Last updated: 18 July 2024
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