The following is a copy of our response to the Gambling Commission’s consultation on the future of regulatory settlement payments. We believe that regulatory settlements should, for the time being at least, remain ringfenced for work that specifically addresses gambling-related harms. This submission reflects the views of the AFSG’s Executive Committee alone.
We disagree with the Commission’s proposal that regulatory settlement funds should be added to the Consolidated Fund (CF) for the following reasons. Firstly, regulatory settlement funds arise from specific breaches by identifiable operators, often linked to demonstrable consumer harm. Applying these funds to gambling harm mitigation reflects the polluter pays principle, ensuring that harm resulting from regulatory failures is directly addressed. Regulatory settlements serve a dual deterrent purpose: first, as a financial penalty to reinforce compliance, and second, as a means to fund work and organisations that actively counter harmful industry practices. Operators understand that a regulatory settlement does not just result in a financial loss, but also carries with it a requirement to visibly contribute to addressing the harms that their breaches have caused. Redirecting settlements to the Consolidated Fund, by contrast, treats enforcement as a general revenue-raising exercise, undermining both the ethical rationale and the regulatory logic of the settlements.
Secondly, the statutory levy and regulatory settlements serve different purposes regarding gambling harms mitigation. The statutory levy is designed to provide predictable, consistent funding, whereas regulatory settlements are episodic, harm-linked, and corrective. As a point of principle, it seems unfair that operators that abide by the terms of their licences should be expected to contribute the same proportion of their gross gambling yield to gambling harms mitigation work as operators which breach the terms of their licences. This would be the effect of transferring regulatory settlements to the CF. Such an arrangement is neither fair to responsible operators, nor does it provide any form of redress to those harmed by irresponsible operators. The existence of a levy does not remove the need for remediation where regulatory failures have occurred. Where direct remediation to specific, named customers is not possible, it is both more just and preferable that regulatory settlement payments be directed to gambling harms mitigation work.
Thirdly, once funds enter the CF, there is no guarantee – legal, procedural, or political – that they will be spent on gambling-related harm. While the Government may allocate funds from the CF back to gambling harms mitigation work, this is not a given. Indeed, a changed policy environment could see future tax cuts to the gambling industry funded – at least indirectly – via the CF. This risks creating a credibility gap with affected communities, treatment providers, and people with lived experience, who reasonably expect harm-related funds to address harm. Such a possibility is especially offensive to those who have been significantly harmed as a result of their own or someone else’s gambling.
It should be noted that several other regulators already have similar arrangements in place that are based on polluter pays principles. Ofgem’s Energy Industry Voluntary Redress Scheme, for instance, directs payments from energy companies that have breached Ofgem rules toward projects that support energy customers in vulnerable situations or towards just transition or clean energy projects. The Financial Conduct Authority (FCA) has likewise moved towards a regulatory regime that prioritises redress for affected customers over fines that go to the CF: ‘We will prioritise compensation to consumers over fines where that is the right thing to do’ (FCA, 2024). Given the readily acknowledged economic costs of gambling (estimated in 2022 at between £1.05 and £1.77 billion per year in England alone according to Government figures), disassociating regulatory settlement payments from gambling harms mitigation risks being seen as a regressive step.
Finally, a particular strength of the current regulatory settlement landscape has been the ability to fund genuinely innovative work. The creation of our own organisation, the Academic Forum for the Study of Gambling (AFSG), for instance, would likely not have been possible without the flexibility of regulatory settlement funding. The establishment of a group such as ours would likely not be possible under the levy structure either as we are neither a higher education institution nor a traditional prevention or treatment charity. Regulatory settlement funding, however, is ideally placed to support innovative approaches to gambling harms mitigation or work which is at risk of slipping through the gaps in a more tightly controlled and regulated levy framework.
Once regulatory settlement funds enter the Consolidated Fund, their use is no longer hypothecated and becomes entirely decoupled from gambling harm mitigation. In a different or future policy environment, this creates a risk that such funds could support policy choices that are neutral or even counter-productive to harm reduction, including measures that benefit the gambling industry.
The current consultation itself notes that “the Government can direct funds from the Consolidated Fund for any purpose they wish, and this could include those connected with gambling”. On that basis, it must also be acknowledged that a current or future Government could direct funds towards purposes that support the gambling industry and may exacerbate gambling-related harm. If such foreseeable scenarios are not considered, the proposal risks being insufficiently prudent and lacks robustness across different policy environments.
The current proposal for regulatory settlements, moreover, assumes that the statutory levy will remain in its current form for the foreseeable future, even though it has not yet been in operation for 12 months. Indeed, the Explanatory Memorandum to the Gambling Levy Regulations 2025 states that a final evaluation report of the levy is not to be expected until autumn 2027. As such, the decision to add regulatory settlements to the CF at such an early stage of the levy’s life – and without any robust evidence as to the operation and impact of the levy – would seem to be premature.
We believe that there is a viable alternative to the current proposal. A core part of the current proposal is that it is necessary to align regulatory settlements with the statutory levy to avoid a duplication of effort and an uncoordinated approach. The Gambling Levy Programme Board (GLPB) and Gambling Levy Delivery Group (GLDG) are well placed to oversee the administration of regulatory settlement funds.
The GLPB and GLDG could be tasked with overseeing a coordinated and strategic approach to the administration and application of regulatory settlement funds. To support effective administration and mitigate the challenges associated with the unplanned nature of such funding, regulatory settlement monies could be accumulated until a pre-defined threshold is reached (for example, £5 million).
Once this threshold is met, the GLPB and GLDG could jointly agree an approach to the deployment of the funds. This could include, for example, the establishment of an innovation fund accessible to organisations working across research, prevention and treatment; allocation of funds in line with the existing 50-30-20 levy split; a targeted call for proposals addressing an identified gap, emerging risk or area of immediate concern; or other approaches consistent with the strategic priorities of the levy system. The Gambling Commission would not be eligible to receive funding under this arrangement, thereby effectively handling the concern that the Gambling Commission could be seen to have a vested interest in the collection of greater regulatory settlements.
This model would address concerns about uneven or ad hoc funding, ensure regulatory settlement funds are fully integrated within the existing levy governance and commissioning framework, and support coordinated decision-making, effective evaluation and strategic alignment.
An additional point for the Gambling Commission to consider is the destination of any regulatory settlements already collected but not yet allocated or which are collected before any changes are made to the current system. Until such a time as a new system is implemented, the Commission must consider how existing regulatory settlement funds are to be distributed. Such funds should be distributed in accordance with the version of 2.39 of the Statement of principles for determining financial penalties that was in force at the time the financial penalties were set.
As for the timeline for any changes to the current system, a decision to decouple regulatory settlements from the purposes of gambling harms mitigation work is premature at this point in time. The levy is new and it has not yet been subject to any independent evaluation. It is, therefore, too early to make an informed decision on the future administration and application of regulatory settlements.
Regulatory settlement funds should continue to be applied to gambling harm mitigation at least until the final evaluation report on the statutory levy is published in autumn 2027. Subject to the findings of that evaluation, the Gambling Commission could then appropriately revisit the question of the destination of regulatory settlements in late 2027 or 2028.
This approach would also allow sufficient time for the Gambling Levy Programme Board (GLPB) and Gambling Levy Delivery Group (GLDG) to assess the effectiveness and impact of the proposed process under which they would be responsible for the coordinated distribution of regulatory settlement funding. If this arrangement is found to be effective, proportionate and well aligned with levy objectives, it should be retained on a longer-term basis, reflecting the fundamental principle that regulatory settlement funds should be used to address gambling-related harms.
Finally, with regard to section 149 of the Equality Act 2010, it should be noted that gambling-related harm is not evenly distributed across the population. A substantial body of evidence demonstrates that certain groups, including individuals experiencing socio-economic deprivation, some minority ethnic communities, young men, and individuals with co-occurring mental health conditions, are disproportionately affected by gambling harm. There is also evidence that people experiencing disability, including mental health disability, may be at increased risk of experiencing gambling-related harm.
Under section 149 of the Equality Act 2010, the Commission must have due regard to the need to eliminate discrimination, advance equality of opportunity, and foster good relations between persons who share a relevant protected characteristic and those who do not. In practical terms, advancing equality of opportunity includes removing or minimising disadvantages suffered by persons who share a protected characteristic and taking steps to meet their particular needs.
The current regulatory settlement framework enables funds arising from operator misconduct to be directed towards targeted harm mitigation activity, including initiatives designed to reach disproportionately affected communities. Removing the hypothecation of such funds may reduce the Commission’s ability, indirectly but materially, to ensure that resources generated from regulatory breaches are used to address the needs of those most adversely impacted.
In particular, the episodic and flexible nature of regulatory settlement funding has supported innovative or targeted work that may not fall neatly within mainstream commissioning structures. If such funding is absorbed into the Consolidated Fund and loses its sector-specific link, there is a risk that resources may become less responsive to the particular needs of protected groups who experience gambling harm at higher rates or with greater severity.
While the proposal does not directly discriminate against any protected group, its indirect impact on the allocation and targeting of harm mitigation resources should be carefully assessed. A full equality impact assessment should consider whether removing the direct link between enforcement-derived funds and harm mitigation could reduce the capacity to advance equality of opportunity for those groups disproportionately affected by gambling harm.
Academic Forum for the Study of Gambling 