UKGC Presents Three Licence Fee Options Following DCMS Document Leak

The government has officially opened consultations on a gambling white paper proposing a shake up of the United Kingdom Gambling Commission (UKGC) licensing fees.

Three options have been tabled, but any changes enforced would come into effect from October 1, and it represents a significant moment for the betting industry.

However, the Department for Digital, Culture, Media & Sport (DCMS) pulled down a set of documents from the government’s website yesterday morning following a publishing error.

The blunder represented another governmental embarrassment, given the contents of the November budget were inadvertently leaked by the Office of Budget Responsibility (OBR) before the Chancellor delivered her statement.

Option 1: A headline 30% increase

This option would see a 30% average increase in licence operating fees. Here, the DCMS insists the Gambling Commission ‘can maintain its current programme of regulatory effort to manage risks to the licensing objectives’.

The last operating licence fee review took place in 2021, but the proposed 30% uptick would help plug any shortfalls between the Commission’s current fee and the cost for the Commission to carry out its usual range of functions.

It was suggested in the proposal that a 30% uplift would provide savings of around £3.2 million. However, with William Hill, for example, feeling the pinch given they are carrying out a rigorous strategic review of their operations, this option might not be ideal.

Option 2: A headline 20% fee increase

Another potential option open for debate is a flat 20% fee increase. If this option is executed, the Commission, according to the DCMS, would need to make savings of around £15.8m over the next six years to Financial Year (FY) 2030/31.

The Commission would also need to rethink its overall approach, meaning that some policies would need to be halted or slowed down to adhere to key areas of the Gambling Act of 2005, such as licensing and enforcement.

A 20% boost in fees would also save £3.1m less than the first option presented, and it could also impact the Commission’s ability to clamp down on illegal gambling in the long term.

Option 3: A headline 20% fee increase, plus a 10% increase ringfenced for illegal markets

Alternatively, the Commission could go for a mix of Options 1 and 2. Here, there would be a 30% fee uptick, of which a third of the additional fee income would be committed to disrupting illegal markets. Black market gambling has become a prevalent problem in the UK, and industry experts have continuously raised their concerns.

With this option, the supposed value of the ‘ringfenced funds’ would be around £2.6m, and this would mean a more concerted approach to the work carried out by the first option. The third option would give the Commission more freedom to disrupt the illegal gambling market and keep crime out of betting.

Filling a financial black hole

As things stand, the UKGC has a financial black hole to fill. Based on projected calculations, it is believed the Commission is close to its minimum reserve of £4m by the end of the 25/26 FY.

With costs on the rise, the UKGC has supposedly warned its reserves could be completely wiped out by FY 26/27 if a fee increase isn’t enacted in October.

Naturally, the budget has fundamentally changed the betting landscape. For now, there will be deep discussions, and it will be fascinating to see what happens after the consultation deadline on March 29.