Legal View: What the FSB investigation means for white-label arrangements
Richard Williams, consultant solicitor at Keystone Law, gives his thoughts on the Gambling Commission’s recent decision to review FSB’s UK licence and what it might signal for white-label providers
On 22 August 2019 the Gambling Commission announced it had commenced a review of the FSB Technology (UK) Limited operating licence under s.116 Gambling Act 2005 due to “regulatory concerns”.
FSB was founded in 2007 and is a sports and technology gaming supplier based in London. FSB’s sports betting and casino platform offers operators a fully managed white-label betting and casino solution.
According to the Gambling Commission website, FSB provides white-label solutions for brands such as Genting, Jennings Bet and Blackbet. FSB has recently announced a £23m investment from Clairvest Equity Partners to pursue growth opportunities in regulated markets.
Details about the review are limited at the time of writing and FSB has not commented. However, an announcement on Blackbet.co.uk, a sportsbook and casino platform provided by FSB, states that “for regulatory purposes, we have had to take the decision to suspend all gambling activities on this site for the foreseeable future…any funds held in your account are safe and can be withdrawn.”
Under investigation
Earlier this month the 1xBet website, which was also powered by FSB, was closed in Great Britain following a Sunday Times investigation. The investigation claimed that 1xBet’s activities outside the UK included offering betting markets on cockfights, a topless croupier casino and advertising on unauthorised video file sharing sites. The Gambling Commission is said to be investigating 1xBet and its ties to supplier FSB. The 1xBet website is no longer accessible in Great Britain.
It appears that this focus on white-label gambling operators has been stepped up since criticism of the arrangements have surfaced in the press. In June 2019, Tom Watson, deputy leader of the Labour Party and a fierce critic of the remote gambling industry, published an article in Parliament’s magazine The House stating that “too many gambling licences have been granted without proper scrutiny”. In his view, “companies should have to re-apply for the privilege of operating in the British market”. He also highlighted concerns about white-label operators which are “able to market in the UK despite not having their own individual licences.”
Without doubt, there is going to be more focus on white-label licensing arrangements going forward. Some would argue that this scrutiny is long overdue. Many gambling brands who use platform providers such as FSB hold their own operating licences and therefore remain responsible for regulatory compliance, such as complying with licence conditions, AML and social responsibility requirements. Other operators can hand over all regulatory compliance requirements to the licensed white-label operator. In these situations (and particularly where gambling advertising is undertaken by the brand and not the licensee) there can be risks that the licensee is not fully aware of what is going on with its white-label partner.
Time will tell if the Gambling Commission will investigate the legitimacy of white-label arrangements. It’s possible that all entities offering gambling services to GB customers will be required to hold their own operating licence, so that the credentials of the licensee and those behind it can be fully investigated.