The Gambling Commission has (finally) published its response to its 2023 consultation which proposed changes to the Statement of Principles for Determining Financial Penalties (“Statement of Principles”). Whilst this new formula for calculating and imposing penalties is, on the whole, a welcome development for betting and gaming operators in the UK, the increased clarity and transparency only go so far. 

Background 
In December 2023, the Commission initiated a consultation to revise its Statement of Principles, which governs the imposition of financial penalties on licence holders under the Gambling Act 2005. The consultation, which ran until March 2024, sought to address stakeholder concerns regarding the lack of transparency and consistency in the existing framework. The revised version will take effect from 10 October 2025.

Key Takeaways 

The new framework doesn’t significantly change the principles underpinning the Commission’s calculation of fines. However, it does introduce a degree of transparency around the basis for calculating penalties, and in particular what the Commission’s starting point will be for the penal element of any fine. This should assist operators who are considering making regulatory settlement offers in calculating and justifying the level of those offers. It should also help operators who are seeking to estimate their potential liability for the purposes of sharing with auditors or investors. 

However, the increased clarity and transparency only go so far. In particular: 

• The formula is based on subjective assessments of seriousness, 
• The Commission’s exercise of its ability to increase or decrease penalties (and by how much) depending on aggravating or mitigating circumstances remains uncertain,
• The Commission’s exercise of its ability to increase penalties to act as a deterrent remains uncertain, 
• The extent to which the Commission will consider the resources of group companies and shareholders when assessing the affordability of proposed penalties is unclear, and 
• There remain ‘exceptional’ circumstances in which the 15% GGY threshold for the starting point of the penal element of the fine can be exceeded. 

Overview of the new process

The new Statement of Principles includes a new, structured seven-step process which will, from 10 October 2025, work as follows: 

1. Disgorgement Element:

• The Commission will calculate any financial gain from non-compliance and compensate for consumer detriment. 
• Any sum calculated here will be added to the amount of any penal element, after the end of Step 5. 
• If any financial gain from non-compliance and/or compensation for consumer detriment cannot be reasonably accurately identified, it will not result in a disgorgement element, but it will be considered in the seriousness assessment.

2. Seriousness Assessment: Starting Point for Penal Element:

• The Commission will evaluate the seriousness of the breach and assign it a level from 1 (least serious) to 5 (most serious), based on factors such as the impact on the licensing objectives, how many consumers were affected (or potentially affected), whether middle/senior management were aware or displayed insufficient oversight and whether any attempts were made to conceal the failure or breach. 
• It will then determine, based on the assigned level, the starting point for the penal element based on a percentage of the Gross Gambling Yield (GGY) during the breach period. The percentage ranges, based on the seriousness level, are as follows:

3. Aggravating and Mitigating Factors:

• The Commission may adjust the amount of the penal element based on factors that may increase (e.g., repeated breaches, lack of cooperation) or decrease (e.g., early resolution, remedial actions) the penalty.
• The Commission does not provide any further guidance on the amounts or percentage by which a penalty amount may be adjusted based on these factors, so there is no cap applied to the amount by which the penal element could be increased by aggravating factors.

4. Deterrence Adjustment:

• The Gambling Commission will then consider whether it is appropriate to adjust the penal element to ensure the penalty is a sufficient deterrent against future non-compliance by the licensee and/or the rest of the industry, with the aim of ensuring non-compliance is more costly than compliance.
• Most respondents to the consultation disagreed with adding a step for deterrence, particularly the idea of increasing a punishment for one individual operator in order to set an example for others, questioning the fairness and proportionality of that approach. The Commission appears to have considered and then disregarded those concerns and questions around fairness and proportionality.       
• There is no cap applied to the amount by which the penal element may be adjusted for deterrence. 

5. Discount for Early Resolution:

• The Commission may then apply a discount (5-30%) for early and voluntary admissions or disclosures leading to an early resolution of the investigation.

6. Affordability  

• The Commission will then consider if the amount of the fine is likely to cause a significant financial hardship for the licensee, in which case it may reduce the fine. 
• Most respondents disagreed that the Commission ought to take into account the financial resources of group companies or ultimate beneficial owners. Again, the Commission appears to have considered and then disregarded the consultation responses.
• The Commission’s position remains that it may request information regarding the financial resources available to any parent or group company or ultimate beneficial owner of the licensee. However, it is not clear how this information would be used. 

7. Proportionality:

• The Commission will, as the final step, review the total penalty to ensure it is proportionate in all the circumstances.