UK government launches consultation on increased licence fees

The UK’s Department for Culture, Media and Sport (DCMS) has announced a consultation on a potential increase in operator licence fees, with a 30% uplift among the approaches considered.

The consultation officially launched on 27 January and will run until 30 March. Stakeholders including operators, industry trade organisations, consumer groups, local authorities and the public have been invited to submit their views.

Three core options were included in the consultation, each of which will see some level of increase in fees. The Gambling Commission said additional fee income will be required to make up for the current shortfall in funding and allow it to properly regulate the UK market.

“Since operating licence fees were last reviewed in 2021, the commission has increased its investment in areas including disrupting the illegal gambling market, implementing reforms from the Gambling Act Review White Paper and developing its data capabilities,” the consultation document said.

“As a result of this investment and additional pressures such as inflation, the commission has operated with successive annual budget deficits and has eroded its financial reserves.”

In the UK, licence fees vary depending on vertical, licence type and the scale of a business. Annual operating fees are currently calculated using turnover-based fee bands. Any increase will be applied to each licence-holder’s existing fee.

Remote casino operators with an annual gross gaming yield of more than £1 billion currently pay £793,729 per year in licence fees, plus £125,000 for each additional £500 million over the £1 billion mark. The same rate is set for both remote sports betting and bingo activity.

Differing opinions on licence fee rises

The first option, which is favoured by the Gambling Commission, would see a 30% average rise in annual operating licence fees. This the regulator said, represents the shortfall between its current fee income and costs of carrying out its chargeable functions. It added that a 30% rise would bring in an additional £8.7 million ($12 million) in funding each year.

“This option would therefore provide the level of funding required to maintain our current work programme at a steady state, enabling it to continue to deliver its 2024 to 2027 corporate strategy and subsequent priorities,” the document said. “However, this option does not include any growth for the Gambling Commission or investment in additional regulatory functions.

Also up for debate is an option that would see annual licence fee rates rise by 20%. While this would divert additional funding to the regulator, the commission would still need to make savings of £15.8 million over the next six years to 2030-31. This, the document set out, could include job cuts.

“The commission would need to reprioritise its work, resulting in the slowing or stopping of some areas in order to focus its resources on its statutory duties and core regulatory activities,” the document said.

“Compliance and enforcement effort would need to be focused on more serious cases, meaning some suspected breaches of requirements would likely not be investigated. The commission estimates that a headcount reduction of around 10% would also be needed under this option.

Government preference for combined 30% increase

The final option under consideration is the route preferred by the government. This would see fees rise 30%, though additional funds generated from this increase would be split in a certain way.

A 20% increase would be applied to annual operating fees to support commission-related costs. However, an additional 10% would be ring-fenced and allocated to specific regulatory priorities as opposed to general operating expenses. This, the document set out, would include tackling illegal gambling and strengthening enforcement capabilities.

Should the government elect to follow its preferred approach, it was estimated that some £2.6 million would be set aside for ring-fenced activities.

“The funds would be used by the commission to ensure it is difficult to provide illegal gambling at scale to GB consumers,” the document said. “This is to protect consumers from the risks posed by unlicensed businesses and ensure consumer gambling spend remains with the licensed industry. It will also protect the integrity of the licensed gambling market from other criminal threats.”

Following the consultation on 30 March, the DCMS will review all responses before deciding whether to proceed with changes. Any approved changes would be via secondary legislation and would be expected to come into force from October 2026.

More upheaval in the UK

Higher licence fees would represent yet another tightening of regulations in the UK gambling market. In November, the government confirmed licensed operators would face higher remote gaming duty and a new general betting duty.

Remote Gaming Duty will increase from 21% to 40% in April. In addition, General Betting Duty for remote betting will rise to 25%, up from 15%, by April next year. However, the increases have been met with criticism by various stakeholders including operators and trade bodies. Some MPs also flagged concerns over a potential rise in illegal gambling on the back of the rise.

This also follows the UK statutory levy, which came into effect last April, as well as stricter marketing rules for cross-selling products and financial vulnerability checks across the board. These were proposed in the 2024 Gambling Act Review White Paper.