The UK Gambling Commission has fined online sports betting company 32Red ￡2m ($2.64m) for failing to protect a problem gambler.
Last week, online sports betting and casino company 32Red made headlines for all the right reasons, announcing that it was renewing its kit sponsorship deal with Championship side Aston Villa for the 2018–19 season.
This week, it was a rather different story, as the UK Gambling Commission hit 32Red with a ￡2m penalty for failing to protect a problem gambler – someone who had deposited ￡758,000 ($863,000) with the company with, apparently, 32Red failing to carry out any money laundering or social responsibility checks.
The history
The Gambling Commission’s investigation focused on 32Red’s dealings with the customer between November 2014 and April 2017, during which time there were “22 instances indicating that the customer was a problem gambler”.
The Gambling Commission said that 32Red should have reviewed the customer’s account in 2016: instead, a review was only carried out in January 2017 when a win of ￡1m ($1.32m) was instantly gambled again.
Instead of looking carefully at the customer’s problems, 32Red continued to offer him bonuses to encourage him to place further bets, despite the customer taking five weeks to respond to requests for information about his financial position.
The reality
When this information was forthcoming, the customer showed his net monthly income as ￡13,000 ($17,160) – despite making average monthly deposits of ￡45,000 ($59,400). Sadly, when the truth finally came out, the customer’s real monthly income was ￡2,150 ($2,830).
Unsurprisingly, the Gambling Commission was highly critical of 32Red’s handling of the case, especially as the payslip supplied by the customer was “not credible and showed volatility in income”. The ￡2m fine handed out included a removal of the financial gain 32Red had made, plus a contribution of ￡1.3m ($1.7) to the UK’s National Responsible Gambling Strategy.
Clearly, there had to be suspicious or criminal activity in this case, and the Gambling Commission did indicate that the penalty included an amount for 32Red’s failure to meet its money laundering obligations. “The source of the customer’s wealth was not known to 32Red because they failed to fulfil their anti-money laundering obligations,” commented the Gambling Commission, adding ominously, “We cannot comment on any other proceedings that might be involved.”
32Red – which has been owned by Swedish online betting company Kindred since June 2017, accepted the penalty and said it was “working hard” to improve its processes.
The cynical among us might say that a starting point in “improving the processes” might be the application of some common sense. Clearly, someone depositing ￡45,000 a month either has a significant income or is getting the money from a not-entirely-legitimate source.
Will GDPR make the situation worse?
But in some ways, it is hard not to have some sympathy with the online betting companies. On the one hand the Gambling Commission is saying that records must be retained for money laundering purposes; on the other hand, the new GDPR regulations threaten them with heavy fines if they do not comply with a customer’s “right to be forgotten” request within 28 days.
On the face of it, that’s an impossible circle to square, and you suspect that there are going to be plenty more cases like this before the money laundering/GDPR conundrum is resolved. There are also going to be an increasing number of problem gamblers, with the UK Government’s recent half-hearted action on fixed odds betting terminals barely touching the real problem. You suspect that the UK Gambling Commission is going to be busy…
