Gambling Commission & National Lottery Commission Merger
By Jana Sedlakova
One way of cutting public spending is to cut the number of public bodies along with the number of their employees. However, it is important to maintain efficiency, effectiveness, value for money and appropriate accountability – particularly when it comes to exercising public functions. The scheduled merging of the UK’s Gambling Commission and National Lottery Commission is by no means certain to achieve this goal.

Clive Hawkswood, CEO at Remote Gambling Association believes that “from what we have seen there will be very little saving from the merger. With regard to whether other savings can be made in the Gambling Commission it is always difficult to judge being on the outside and looking in, but the Culture, Media & Sport Committee has recently spent many months looking into this and related issues and they clearly concluded that the gambling regulator was not offering the best value for money. I’d be happy to trust their judgement on that one.” 

The public consultation for the proposed merger of the Gambling Commission with the National Lottery Commission [the new United Kingdom (‘UK’) Public Bodies Act 2011] opened on 31 July 2012. Interested parties have until 23 October 2012 to submit their comments or opinions. Amongst the bodies that have been directly contacted are organisations such as Camelot, Casino Operators Association, Responsible Gaming Trust, Gamcare, Bingo Association and others including the Gambling Commission and National Lottery Commission themselves. Those not directly contacted can also submit their comments.
Industry bodies have discussed the merger as has the RGA, as confirmed by Clive Hawkswood. “This idea is nothing new and our views have already been expressed to DCMS and the Gambling Commission so we probably won’t be putting in a response. The consultation is a formal process that has to be undertaken and it would be naive to think that the big decisions hadn’t already been taken.” 
The objective of the merger is cited in the consultation published by the Department for Culture, Media and Sport as “to continue to protect the public (by ensuring that all gambling including the National Lottery continue to be conducted fairly and openly, are crime free and do not put children or other vulnerable people at risk) and subject to that, to permit gambling and to maximise the National Lottery’s return to good causes while securing the benefits from removing duplication and from concentrating the expertise on gambling regulation.” 
In the introduction of the consultation, the government’s commitment to “increasing the accountability and reducing the number and cost of public bodies” is made clear. According to the consultation ministers consider this merger as helping to realise this goal at the same time as maintaining “appropriate and effective regulation”. The government is said to be convinced that this new united body will be in a position to advise on both National Lottery and gambling issues. 
According to the consultation the National Lottery GGY [gross gaming yield] represents 25% of the £9.9 billion that the industry is “worth to the UK economy…”, which including the National Lottery makes “over £1.4 billion a year in duty” and gives jobs to approximate 115,000 employees.
The National Lottery Commission’s offices have already been moved due to the expiration of its lease, and the so called co-location that comes with the merger is designed to help minimise costs although there is the anticipation of an early offset by alteration costs. This was further questioned and the information is in the associated impact assessment. Both, the Gambling Commission and the National Lottery Commission, are working closely with the government on this merger.
The Gambling Commission’s spokesperson said “The National Lottery Commission moved to join us in Birmingham in 2012 and we already share common services such as finance and human resources pending the proposed merger. The Gambling Commission has been closely involved in advising the government on these proposals and we’ll continue to work alongside DCMS and the National Lottery Commission as we move through the consultation process.” 
The National Lottery Commission’s spokesman confirmed its position on the consultation: “we are working with the government and the GC [Gambling Commission] to make sure that if there is a merger the new body will still be able to safeguard the Nation’s long-term interest in the National Lottery by protecting the interests of Lottery players and the £1.8 billion they raise for good causes each year. We will be seeking to ensure that any new arrangements following the merger reflect the importance of such critical functions with regard to continuing to protect the National Lottery as a national asset.”
Some issues may arise from a slightly different perspective. The Gambling Commission is purpose built for a private, commercial and a very competitive environment. The National Lottery Commission on the other hand, is not. The latter, as in the consultation, is purpose built for “public undertaking, run for public benefit in a non-competitive (monopoly) market”. Whilst in the case of the National Lottery Commission there is a ‘client like’ relationship between the commission and the outsourcer (Camelot), in the case of Gambling Commission there is no such relationship. 
However, both have comparable objectives relating to regulatory duties to public protection.
The question then will be to what extent the ‘client like’ relationship between the National Lottery Commission and the outsourcer will attribute a favoured standard of care compared to those governed by the Gambling Commission. The consultation acknowledges that this may suggest that “certain regulatory decisions were unfairly favourable to Camelot in an increasingly competitive and crowded market. There may also be a contrary concern that a single regulator is less able to prevent the encroachment of commercial gambling into the National Lottery territory, or that new and innovative National Lottery products could be unnecessarily constrained by an overly cautious approach in order to avoid accusations of bias.”
The consultation addresses the steps to minimise the risks and the importance of responsibility separation is highlighted along with the need of having a ‘wall’ created for cases where there is a possibility of existence of conflicts. The requirements how to manage the conflicts effectively were deemed ‘unnecessary nor desirable’ to be part of the Act itself. The regulation then may be seen as more adaptable to changing conditions and accordingly respond quicker.
The difficulties with the merger can be seen in terms of the different regulatory regimes and the different objectives between them. 
Clive Hawkswood said: “There is a fundamental difference in the objectives of the two regulators with the NLC having as a secondary objective the maximisation of lottery revenues. It remains to be seen how a single regulator can fulfil that aim without disadvantaging all of the other gambling sectors. However, organisationally there is nothing to stop the two coming together fairly painlessly.”
Conversely, concerning the benefits of the merger, Clive Hawkswood added “I don’t expect the industry to notice any real difference or to obtain any measurable benefits from the change, but in the longer term it will hopefully make it more difficult for supporters of the National Lottery to seek to portray it as anything other than a pure gambling product.”