I received this reply from the DCMS:
Ministerial Support Team
Department of Culture, Media and Sport
4th Floor, 100 Parliament Street
London SW1A 2BQ
T: 020 7211 6000F: 020 7211 6309
Thank you for your email of the 13 February regarding Canbet and the Gambling Commission. We are sorry to read of the problems you and others are facing regarding Canbet.
The role of the Gambling Commission as the regulator of commercial gambling in the UK,is to look at the suitability (including the financial circumstances) of a gambling operator.However they do not oversee the day to day running, or monitor the financial health operators directly in real time. This would impose significant expense, and provide customers with a false sense of security. The Commission focusses on whether operators are ensuring that the terms and conditions that their customers sign up to are fair and open.
It is a matter for the regulator if an operator takes bets from players in circumstances where they are not likely to be able to pay out, or if an operator is deliberately or recklessly misleading players. However, issues over good customer service and delays in paying customers are not primarily a regulatory matter.
It is important that players understand that they are playing and investing at their own risk. There is no guarantee as to the rate at which funds are repaid to players against insolvency if an operator runs into financial difficulty. It may interest you to know this case is not the first to demonstrate the significant gap that exists between the level of protection that customers assume they might receive for their gambling deposits and the actual level of protection afforded.
The Gambling Commission were consulting on the issue of trying to prevent loss to players in the event of operators going into insolvency, before this specific case began.The Commission was looking into introducing trust or indemnity arrangements, or how they might help close the gap in perception, for example by requiring operators to put more information about whether and how they protect deposits in the public domain as a condition of holding an operating licence. They will be reporting on the outcome of that consultation shortly.
I hope that this is helpful,
Ministerial Support Team
26 March 2014
(Well, no, it isn't helpful.)