With the UK regulatory authorities taking restrictive measures seriously, another betting company was fined by the UKGC for social responsibility and money laundering failures. While the review of the 2005 Gambling Act is due to be completed this spring, the Gambling Commission has taken a series of regulatory measures against several operators who have had a number of operational failings.
Meanwhile, Flutter announced that the strict regulatory measures were the cause of the company’s declining profits. The owner of brands like Paddy Power and FanDuel warned that the recent witch-hunt for VIP players and the newly implemented strict measures will lead to negative growth of the UK gambling market.
UKGC Imposes £9.4 Million Fine on 888
Following an investigation of the UKGC, it was revealed that 888 UK Limited had several cases of social responsibility and anti-money laundering failings. As a result, the online gambling company had to pay a fine of £9.4 million. The said business operates 78 different websites, with 888.com being one of them. In addition to the imposed fine, 888 UK Limited also received an official warning and was required to go through an extensive period of self-sustaining auditing.
The recent fine marks the second time the gambling business has been penalized by the UKGC. In 2017, 888 UK Limited had to pay a penalty package of £7.8 million due to failings related to handling vulnerable customers.
Andrew Rhodes, Chief Executive of the UKGC, said that while the reasons for the recent fine were different, they were still related to failing the customers of the company, which is not something that the Commission can ignore. He added that this financial penalty is one of the largest fines imposed by the regulator and if the company repeats its failings, the Commission will have to assess whether 888 UK Limited can fulfil the licence objectives and ensure a fair and safe gambling environment.
As mentioned above, social responsibility failures are among the reasons for the imposed financial penalty. The company failed to recognize high-risk players as SOF checks were required only after customers had deposited £40,000. The company also did not establish any customer interaction with a player who lost £37,000 in a period of six months during the global pandemic.
The Commission also revealed that 888 UK Limited failed to follow the UKGC formal customer interaction guidance. A customer who was an NHS worker and earned £1,400 a month was allowed to set up a deposit limit of £1,300. These and several more cases of social responsibility failures were recorded during the Commission’s investigation.
As for the anti-money laundering failures, the company allowed some customers to deposit £40,000 before they have been asked to go through SOF checks, as well as the company relying on verbal assurances instead of requesting the proper documents for SOF checks. The company also was not clear about the type of documents that needed to be provided for the SOF process.
Other cases of money laundering failures include a customer being allowed to spend £65,835 over five months without being asked to go through a SOF check. Meanwhile, the company also failed to properly manage all of the accounts of customers with multiple profiles. For example, a customer with 11 accounts had one of them restricted due to SOF issues but he was able to open three new accounts and continue to wager money.
Flutter Reports Profit Decline Due to Harsh Regulatory Measures
Last week, Flutter, which runs gambling companies like FanDuel and Paddy Power, reported that profits in the UK are experiencing a severe decline due to the crackdown on high-rollers and the stricter betting regulations imposed by the law.
According to the gambling giant, the adjusted earnings which are calculated without taking into consideration interest, depreciation, amortisation, or tax have declined 18% to £1 billion in 2021. The company said the reasons for this drop include its attempts to restrict the number of VIP customers in the UK and also the pressure to abide by the strict regulations imposed in Germany and the Netherlands.
Flutter, just like many other gambling companies in Europe, is striving to remodel its operation as regulatory bodies are imposing stricter gambling regulations. There have been multiple campaigns targeting gambling operators, accusing them of taking advantage of vulnerable players by using marketing tools and data to prompt consumers into excessive gambling.
To be compliant with the stricter rules implemented due to the upcoming review of the Gambling Act in the UK, Flutter introduced several measures. The company does not accept credit card deposits by customers who reside in the UK as well as in Ireland. There has also been a trial bet limit of £10 on online slots for UK customers. Flutter has also implemented a deposit limit that customers under 25 are requested to set up when opening their accounts. Last week, the company also announced that it will tie its staff bonuses to battling gambling addiction. While attempting to be compliant with the stricter regulatory rules, however, the company reported a huge decline in its profits.