DCMS Launches Consultation into UKGC Licence Fee Hike

The Department for Digital, Culture, Media and Sport (DCMS) has launched a public consultation into the funding of the UK Gambling Commission (UKGC). If proposals are accepted, the cost of a licence could rise by 72%.

The cost of applying for, or renewing an existing Gambling Commission licence could increase by 55% this year under proposals from the Department for Digital, Culture, Media and Sport (DCMS). Land-based gambling establishments, such as casino and bookmakers, will not see any increase to fees until April 2020 in recognition of the impact Co-vid 19 has had on the industry.

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Consultation Begins Over Licence Fee Hike © Pixabay.

If the proposals are accepted, the annual fees payable by online sports betting, online casino and online bingo operators would be increased by 55%. The current process of offering a 5% discount for holding multiple licences would also be removed.

The plans would also increase the ‘flat-rate’ for operators who offer more than one vertical.

In monetary terms, an operator who offers two verticals, for example, sports betting and casino products their licence fee would increase from £2,500 to £5,000. An operator who offers all three products, sports betting, casino and bingo, the fee they will be required to pay increases from £5,000 to £10,000. Operators who use an RNG (random number generator) will have to pay an additional fee with the UKGC pointing out that fees for using an RNG have not increased since 2009.

In the Executive Summary of the proposals, the DCMS state that the consultation is based on recommendations from the regulator to government and an uplift in charges is needed to cover anticipated future costs. If changes are accepted, secondary legislation will be brought into force, enshrining the changes into law.

The new charging regime would come into effect from 1st October. The fees for non-remote operators will remain unchanged for 2021 with the increase for non-remote operators being introduced in April 2022.

The current funding model of the UKGC has been criticised as the commission is publicly funded. The commission does generate income, but the commission itself states that it is facing a funding shortfall.

“The commission forecasts that without increases in fees it will see a decline in income in 2021-22. It has seen a decline in the number of premises-based (non-remote) gambling operators and the rate of growth of online is now slowing,” the UKGC explained.

“It has also seen merger and acquisition activity in the industry which has reduced income. The cost of pension contributions has also increased,” the consultation states.

According to its estimates, every £1bn of reduced industry GGY [gross gaming yield] would lead to a reduction of around £1.5m in its fee income, approximately 7% of its current yearly income.

Other proposals included in the consultation:

  • Hire more technical staff, including a Chief Product Officer (CPO), to identify and translate the impact of technological changes.
  • Invest in tools and products to improve its approach to compliance.
  • Improve access to the wealth of industry data the Gambling Commission possesses.
  • Employ more staff whose focus is on driving the international regulatory agenda.
  • Have closer relationships with international regulatory partners and agencies.
  • Hire more specialist staff to interrogate and who can understand complex corporate structures.
  • Task more staff to investigate the scale of illegal gambling.
  • Increase the ability to prosecute offenders involved in the operation of illegal gambling.

In Summary, the Gambling Commission estimates that the proposed changes would increase charges of between 15% and 21% for non-remote licence holders. For all other licence holders, including remote licence holders and software licensees, the increase would be between 55% and 72%.

The consultation opened on the 29th January and is open until 25th March. More information on the consultation can be found on the DCMS website.

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