Gambling Commission Increases Licence Fees By 25% to Worsen Mood of Beleaguered Betting Operators

The UK government’s Department for Culture, Media and Sport (DCMS) has confirmed that Gambling Commission licence fees will increase by 25% from October.

It’s a considerable hike at a time that betting sites are already battling excruciating tax increases, which has already seen some operators pay almost double their previous rates.

But the DCMS has claimed that the rise is necessary to bridge the gap of funding shortfalls, while helping to finance the battle against the burgeoning black market.

All Change

The department had initially run a consultation period between January and March, asking for views on a number of different licence fee options.

There were nearly 50 respondents, mostly from operators, that had provided responses on proposed Gambling Commission licence fee increases that ranged from 20% to 30%, as well as another option of a 20% hike with 10% also ringfenced for tackling the illegal sector.

Ultimately, the DCMS has opted for a middle-ground approach of 25%, which will come into effect as of October this year. Nearly all categories of licence are impacted, with just a handful of exceptions – society lotteries chief among those in a bid to protect contributions to charitable causes.

The price rises cover licence fees, application costs and other charges, while single machine permit fees will also increase by 25%.

On course bookmakers, meanwhile, will have a revamped fee structure. Rather than being based on the number of days that the bookie is operational, the calculation will shift to a revenue share model based on GGY.

This new system is expected to reduce fees for some bookmakers, but increase them for others.

The decision to increase Gambling Commission licence fees is not one that the DCMS has taken lightly, according to insiders, but is a necessary move in plugging a funding gap that equates to around £4 million annually.

The charges are linked to market share and GGY, so smaller, independent operators may not be hit as painfully as the major industry brands, who may now have to pay six figure sums in licence renewals each year.

Black Hole

The DCMS has, somewhat surprisingly, decided not to ringfence some of its fee increases to help tackle the black market problem that is blighting the industry.

Rather than channelling some of its increased fee revenue into combating the illegal sector, the DCMS will instead instruct the Gambling Commission to make use of the £26 million pledged by the chancellor, Rachel Reeves, in Treasury funds.

Commenting on the changes, a DCMS spokesperson said:

“The government remains supportive of structural changes to the Gambling Commission’s funding framework, to enable the regulator to set licence fees.

“However, primary legislation options to deliver this are currently limited. We are therefore focused on ensuring the Commission is able to meet its imminent challenges by using the current framework.”

There was also considerable opposition from those within the industry, who report that the stringent tax regime – rolled out from April of this year – has already hampered their financial viability.

In the consultation, they generally remarked that no fee increase was the suitable course of action, citing the tax hike as well as payments into the statutory levy. Others questioned whether a fee rise ‘accurately reflects the cost’ of the regulator’s work.

Operators were generally resistant to funding the opposition to the black market, instead suggesting that the money should come from central government sources.

Respondents from social lotteries and on-course bookmakers claimed that they should pay lower fees as there are very few illegal operators within their niches.