Commission revises fee structure after negative feedback

Commission revises fee structure after negative feedback

Tuesday, January 3, 2017
New category limits fee increase for medium operators

The UK Gambling Commission has altered its proposals for annual fees after feedback from the bingo industry.

The regulator has been consulting on its new fee structure, which will see an average cut in annual fees of 10% across the industry but sees some larger operators in some sectors with greater bills.

The bingo sector expressed the greatest concern about the move from fee categories based on premises numbers to GGY-based fee categories, and the annual fee increases that would result for several commercial bingo operators as a consequence.

As such a number of bingo operators stated their preference for a third option of a flat 10% reduction in annual fees for each operator to be pursued instead.

However the Commission argued that a move from premises-based fee categories to GGY would mean that the fee burden would move away from the very smallest bingo operators that generate very low GGY (including working men’s clubs, other members’ clubs such as social clubs or welfare institutions, and holiday and caravan parks) towards high street and retail bingo operators that generate significantly larger volumes of gambling.

It explained: “The Commission is of the view that GGY is a much fairer way of recovering its regulatory costs. The fees structure will continue to take account of the fixed costs of regulating operators, the economies of scale in regulating the largest operators, and compliance costs. However, most costs are generated by thematic areas of work (for example, ensuring that new gambling products and business models are in keeping with the regulatory framework or providing advice to government on gaming machines) rather than direct compliance costs with individual operators.

“Most costs are therefore driven primarily by the volume of gambling generated by operators rather than simply by the number of premises in an operator’s gambling estate. As those thematic costs exhibit few economies of scale, it is more appropriate to recover them in proportion to the gambling volume (GGY) generated by operators.

“We therefore consider it to be fairer and more proportionate that the proposed fee bands, being based on GGY rather than premises numbers, would realign cost recovery within the non-remote bingo sector away from the clubs, holiday parks and caravan parks that generate very little gambling volume, towards larger retail bingo outlets that generate much larger volumes through offering much more extensive gambling facilities.”

However, after considering responses received to the consultation, the Commission agreed to further review its costs and has recommend some small modifications to the proposed fee bands.

These will reduce the scale of the fee increases for several medium-sized bingo operators, while meaning that a slightly greater proportion of costs are recovered from the largest operators in the bingo sector. The Commission said that this is proportionate to its cost of regulation.

It added: “Under the consultation proposals, all bingo operators with a GGY between £750,000 and £2m would have been due to pay an annual fee of £3,055. The Commission estimates that around 20 bingo operators who currently pay an annual fee of £1,531 would have been subject to that new fee level. We intend to introduce a new fee band for operators with an annual GGY between £750,000 and £1.25m, with an annual fee of £2,050. We estimate that around 16 of those 20 operators will therefore pay annual fees of £2,050 rather than £3,055 as under the original proposals.”

Totally Gaming says: While an increase in fees is never welcome, the Commission has estimated that the new annual fee as a percentage of GGY will be only 0.08% to 0.13% for regional retail bingo operators, and between 0.09% and 0.27% for bingo operators currently in the highest fee category. It suggests that these percentages are comparable with those of operators subject to fee increases in other sectors of the gambling industry.

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