Part two: Tim Miller on the impact of fines and international cross-collaboration

EGR: On the subject of financial penalties, do you expect that trend to slow down, given we have only seen one this year? Is it a case of operators having their houses in order for the most part?

Tim Miller (TM): I certainly hope that’s the case. Regulators in any sector will always be slightly cautious of saying ‘I think everything’s fine’ because invariably that’s when you discover things. But if you look back at our casework over the last year or so, and the engagement we’ve had with operators around it, there are genuinely some really positive signs there.

Our focus on trying to drive compliance at the earliest opportunity is paying dividends, and I think operators themselves quite like that approach. Increasingly, when I’m out talking to operators, they’re very positive now about the kind of compliance visits we do and the approach we take. They are very clear, it’s no less robust than it used to be, but it feels a more positive approach, and that actually we’re all generally trying to push in the same direction.

The lessons that particularly the big operators have needed to learn from our penalties seem to be filtering through there, but what we need to be really alive to is that that risk doesn’t get displaced. In particular, we’re watching closely as to whether any of the slightly smaller companies are seeing rapid growth in terms of their customer base and in terms of their GGY, because that may well point to them not taking as robust an approach and not learning the lessons from our casework in the same way that some of the bigger operators have done. We will be watching that very closely and stepping in where we need to.

EGR: Fines are obviously an important part of your arsenal as a regulator. What would you say to those who argue penalties are just a drop in the ocean for some operators and aren’t a sufficient deterrent to initiate change?

TM: I think you need to look at fines in the context of the wider regulatory arsenal we have. Fines play an important role but they are not intended – and indeed the law is very clear on this – as a route to try and put a company out of business. If a company shouldn’t be in the market anymore, then we should be suspending or revoking its licence, a fine is not the way to do that.

When talking to operators, and not just those that have been on the receiving end of a fine, I do think fines have an effect. Operators all look at those decisions. They don’t want to be next on the list because a fine also has an impact on reputation. Increasingly, we’re seeing boards of operators, investors, shareholders and others all looking at that. So, the fine does serve a purpose in that it raises the profile of failings. But remember, we’ve got a whole range of powers available to us that we use. We have required operators to do independent third-party audits in different areas and develop responses, and that’s been really important for changing both processes and culture in businesses.

The other really important tool we have is the personal licence regime; for us to actually have the ability to hold individuals to account for failings is really powerful. And you’ll have seen recently we’ve been consulting on strengthening that regime so that we’re very clear that there are certain roles that must have those personal licences. So, I think that combination of holding a business accountable, holding individuals accountable as well as the public profile that comes from tough regulatory action is actually a very powerful suite of regulatory responses.

EGR: You’ve previously mentioned a shift in how you as the regulator and operators work together. Was it the case before that the operators were running scared and now it’s much more of a conducive relationship?

TM: We are always very reflective as an organisation. We’re always asking is the way we’re engaging businesses, consumers and others actually helping us deliver our regulatory objectives? And if it can be strengthened then that’s what we do. And I’m sure there’s been an element of that over the last year or so. But, as someone who’s been at the Commission for a number of years, for those first few years I was there, I think it would have been very difficult for us to have had a more collaborative approach because, frankly, some of the failings we saw were not just marginal breaches of the rules, some were so far beyond what was expected.

Frankly, we did have to carry a big stick and we had to speak very robustly. I understand if you’re on the receiving end of that then it doesn’t feel pleasant, but the industry had a very, very long way to go to approach anything resembling compliance. But, as I said earlier, we have seen really positive signs, and that then gives you as a regulator slightly greater freedom to take a more nuanced approach to how you engage with people. And perhaps that’s starting to come through now.

EGR: Through the official partnership with the National Council of Legislators from Gaming States and the GC, what’s your view on the relatively nascent landscape in the US? Fines so far have been relatively low scale, maybe not even touching seven figures yet. So, are you concerned about the way US regulators are monitoring their markets currently?

TM: Individual regulators need to take the approach that is relevant to their jurisdiction and in accordance with their powers. It’s not for me to offer any views on whether I think they’re taking the right or wrong approach. As regulators, we all have really tough jobs to do. I think what we have seen, and last year when I went out to their regulator’s conference, is that many of the failings we’ve seen in America are often a repeat of what’s happened here in the UK and in Europe.

What that points to is that while we are seeing evidence of operators within the UK learning the lessons from our regulatory interventions, those companies that perhaps operate in multiple jurisdictions don’t seem to be transferring that learning to their operations in other countries. I can point to sometimes almost identical failings that have happened in the UK that a few years later are happening in North America. So, I do think there’s a change for us as regulators to make sure operators transfer that learning, but there’s also a challenge for operators themselves. Namely, if you operate in multiple jurisdictions, make sure you are able to learn the lessons from those jurisdictions. That’s a key part of it.

The other thing I would say about the importance of this collaboration is it’s not just about the US teaching other regulators things or them learning lessons from us. We are getting just as much from the partnership. When we first started properly regulating online gambling, it was a very young industry, technology was quite different to what we have now. Now, there are regulators coming online where they are bringing online gambling live in a world where the technology is totally different. We can learn from that experience and apply it to our jurisdiction. I’m really hopeful and confident that by increasing collaboration, it is going to make us all much more effective regulators. I think it will have benefits for operators as well. If regulators can, for example, not harmonise their rules, but have more in common than not, then that’s got to be beneficial for operators working in different countries. I suppose, more importantly, consumers then benefit because they know that their regulators are building a collective knowledge from experiences all around the world.

EGR: Regarding the similar failures in multi-jurisdiction operators from country A to country B, is there any chance that potential failings in another country could affect their licence in the UK?

TM: The first thing to note is we’re not seeking to be, nor should we be, the world’s policeman here. It’s not for us to make any determinations on regulatory issues that might arise in other jurisdictions. We focus on Britain and British consumers. However, if an operator based here is found to have significant systemic failings in another jurisdiction, we can’t close our eyes to that. We need to feel satisfied that those same failings aren’t present within our jurisdiction, so undoubtedly there will be questions to ask.

The other area where there could be significance, and we’ve said this publicly before, is that operators rightly identify the risks that come from the black market. But what we do know is that sometimes an operator’s licence in one market can actually be the black market in other jurisdictions. If we get to a point where, through appropriate regulatory legal processes, an operator is absolutely found to be acting illegally in one jurisdiction, then we may well ask ourselves the question, is that operator suitable to hold a licence here? We won’t make the determination whether what they were doing was illegal in that country, that’s for those authorities to do, but clearly we would be asking some questions about it.

You can read the first part of this interview here