Industry reaction to Entain paying £17m to the UKGC over social responsibility and AML failures
As the UK’s gambling watchdog enforces its largest ever censure of an operator, how was the news greeted around the sector?
The Gambling Commission (UKGC) set industry tongues a-wagging on Wednesday when it published details of a combined £17m package paid by top-tier UK operator Entain over failings in its social responsibility and anti-money laundering (AML) procedures.
In a culture that always looks to records, this was a package which set a new bar for the UK gambling industry but for all the wrong reasons. Failings identified by the UKGC were of a historic nature, and far from the evolved Entain business and its focuses on safer gambling, but the operator endured a wave of criticism from industry commentators, journalists and safer gambling advocates alike.
With the UKGC seemingly ramping up its enforcement, will this record package for Entain be the first in a series of record-breaking censures of operators? Industry stakeholders weigh in:
Richard Williams, gambling and regulatory partner at Keystone Law
“The Commission now appears to be ramping up sanctions against repeat offenders and has warned Entain that this is the second time it has fallen foul of rules designed to make gambling safer and crime free. The industry has been told that it must ensure that commercial interests do not take priority over regulatory compliance. Entain will now be monitored very carefully for any similar regulatory breaches, and it has been warned that any further serious breaches could result in the revocation of its operating licence.
“These penalties will be worrying for all gambling businesses operating in Britain, as complying with strict social responsibility and anti-money laundering rules will inevitably impact on profitability, because high spending customers, who generate the most profits, will come under greater scrutiny.”
Entain’s fine today amounts to less than 10% of their net profit last year. When a business model derives a majority of its revenue from people addicted or at-risk, it’s cheaper to pay the fine as a cost of doing business than change the overall approach pic.twitter.com/8lvLxGUf9i
— Clean Up Gambling (@cleanupgambling) August 17, 2022
David Clifton, director, Clifton Davies limited
“I suspect there is more to this story than first meets the eye. Entain’s statement that it ‘entered into the regulatory settlement with the Commission in order to …. avoid further costly and protracted legal proceedings’, coupled with its carefully chosen phrase ‘alleged historical licensing breaches’ seem somewhat at odds with the GC’s two Public Statements that refer to the respective Entain licence holding companies accepting they had breached licence conditions, that ‘weaknesses and shortcomings’ existed in (and in implementation of) their policies and procedures and were not fully in compliance with SR Code [social responsibility] provisions of the LCCP [Licence Conditions and Code of Practice].”
Words I never thought I'd say
"Well done @GamRegGB"
New regime looking like it serous in bringing industry to task.
And credit where credit due. https://t.co/vDJ6iit8eZ— Carolyn Harris (@carolynharris24) August 17, 2022
Richard Bradley, partner and gambling industry compliance expert at Poppleston Allen
“Our advice to operators, over and above the obvious reminder to regularly review compliance processes meticulously, with a particular focus on monitoring customer accounts and player behaviour, is to be proactive and cooperative when engaging with the Gambling Commission.
“We’re noticing an increase in enquiries relating to potential compliance failings and we also see that the Gambling Commission is increasing the number of compliance inspections. It’s clear that operational scrutiny is intensifying and in the event of any failures, waiting to be caught out and taking a reactive rather than proactive approach could result in more severe penalties. Fines and regulatory settlements are also increasing, particularly for repeat offenders, and there is always the risk of licence revocation, albeit that is currently reserved for the most serious cases.”
Northridge Law LLP partner Melanie Ellis
“The GC’s findings in this case reflect its continuing focus on customer interaction and source of funds enquiries and I expect we will see a number of further cases with similar findings against other operators. It is worth noting that the shortcomings documented by the GC occurred in 2019 – 2020 and the group appears to have made significant changes to its procedures and controls since the start of the GC’s investigation.
“However, a key issue for the Entain licensees in this case seems to have been that, although they implemented an action plan in early response to the GC’s investigations, they had not moved quickly enough to implement the revisions to the customer interaction requirements in the LCCP in October 2019. Although these October 2019 changes are now a historical matter for other licensees, it highlights the importance of updating policies and procedures as soon as changes to the LCCP are announced, and ensuring those updates effectively implement the changes. This is very relevant to the upcoming further change to the customer interaction provisions and guidance on 12 September.”