The UK Gambling Commission has levied a record fine against Betway
Online gambling operators all across the UK are on notice now that the UK Gambling Commission has levied a record fine against well-known betting firm Betway 1. The £11.6 million settlement allows Betway to make peace with the Commission after being investigated for a number of practices the Commission was not happy with.
Make no mistake about it, the fine is a wake-up call for all online gambling operators with operations in the UK. The Gambling Commission has made it clear that they intend to follow through on their two-year-old promise to get tougher with gambling operators. They said what they meant and, as it now appears, they also meant what they said.
The Commission's fine against Betway is the largest such fine they have ever levied. The next biggest fine of £7.8 million was levied against 888 back in 2017. Neither operator lost its license as a result of the Commission's action. However, it is not beyond the realm of possibility that future violations could lead to license revocation.
Gambling with stolen money
There were two specific issues the Commission was concerned about with Betway. The first was the online casino's habit of allowing customers to gamble with stolen money. The Commission didn't come right out and accuse Betway of money laundering, but that sure seems to have been the implication.
At any rate, the Commission claims that Betway did not do enough to verify the legitimacy of funds deposited by some customers. They further contend that at least a portion of some £5.8 million in deposited funds they looked at constituted stolen money. The Commission based its accusations on investigations of at least seven Betway customers.
In pointing out the stolen money issue, the Commission said that Betway's strategies for verifying funds were "inadequate" in terms of preventing money laundering. Again, the implication being that Betway may have facilitated money laundering either ignorantly or knowingly.
Not afraid to investigate
Statements made by the Gambling Commission are a clear indication that they are not afraid to investigate suspected cases of money laundering. It is also clear that they are willing to go to great lengths to find proof of what they suspect. What does this mean for online gambling operators? It means they have to step up their game and do everything they can to verify funding sources.
There is no possible way an operator can catch every pound of stolen money that might come through its business. But operators still have to do the best they can. They should be especially careful of cryptocurrency transactions.
Depositing funds via a bank account or a credit/debit card provides a digital paper trail that makes it easier to track funding sources. Betting with Bitcoin or another cryptocurrency makes verification a bit more difficult. Betting with something like Monero completely eliminates any hope of funding source verification.
Perhaps that is why so few casinos accept Monero payments. That aside, it may be time for the industry to start establishing policies and procedures for verifying cryptocurrency funds. Otherwise, future investigations and fines might eliminate any incentive operators have to accept cryptocurrency deposits.
Inadequate action against problem gambling
The Gambling Commission's other issue was Betway's alleged inadequacies in helping to prevent problem gambling. Of special interest were VIP programs the Commission claims encourage problem gambling by enticing people to gamble longer and make larger bets.
In a news release outlining the settlement with Betway, the Gambling Commission pointed out one particular case in which a VIP customer "deposited and lost £187,000 in two days." Betway was faulted for not carrying out "effective social responsibility interactions" with this particular customer 2.
They also mention another customer who deposited £8 million over four years, losing about half of it during the same period of time. This was another VIP customer given great liberty to make large deposits and higher-than-normal bets.
Mandatory operator responsibilities
UK regulations place mandatory responsibilities on gambling operators in relation to preventing problem gambling. For example, Betway and other operators are required to give consideration to affordability when customers start depositing unusually large amounts. It is not clear how they are expected to meet those responsibilities but meet them they must.
Gambling operators should understand that their responsibilities are not optional. As stated by the Gambling Commission's news release:
"We have set tight deadlines for when we expect to see progress and if we do not see the right results then we will have no choice but to take further action. This case highlights again why progress needs to be made."
That statement alone is a demonstration that the Gambling Commission means business. They expect operators to meet their social responsibilities to all customers, but especially to VIP customers who may deposit and gamble with larger amounts.
To that end, the Gambling Act 2005 stipulates, among other things, three primary objectives gambling operators must achieve in order to keep their licenses:
- They must "prevent gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime."
- They must "ensure that gambling is conducted in a fair and open way."
- They must "protect children and other vulnerable people from being harmed or exploited by gambling."
It is all pretty straightforward. Gambling operators are expected to know, understand, and meet their obligations.
Foreign operators in the UK
We would expect the Gambling Commission to be tough on operators located within UK borders. But do the rules apply to foreign operators? Absolutely. Any foreign operator with business in the UK is subject to UK licensing provisions. There is no out just because an operator is based somewhere else.
Granted, it might be more difficult for the Commission to enforce rules against foreign operators using any means other than license revocation, but that is serious enough. It would make sense that foreign operators do not risk their licenses by not maintaining compliance.
For the common good
Despite Betway facing a monumental settlement unlike anything the Commission has assessed before, there is a lot of good in all of this. For starters, the rules put in place by the Gambling Act are intended to protect both gamblers and operators. You could say the rules exist for the common good, and you wouldn't be far off.
Rules meant to prevent minors from gambling online protect young people from getting involved in an activity that could prove problematic. This is not to say that every young person given a chance to gamble would become a problem gambler. Rather, it is simply to acknowledge that children's brains are not developed enough to handle adult decisions. There is no point in tempting them with an activity that their brains may not adequately understand.
By the same token, the requirement to protect other vulnerable people is intended to stop problem gamblers from making their situations worse. By not allowing problem gamblers to continue gambling, we are giving them an opportunity to be honest about their problems and get the help they need. Conversely, allowing them to continue gambling only enables already destructive behaviour.
Another positive aspect of the record settlement is that it brings clarity. Online gambling operators struggling to understand UK regulations now have a better idea of what the Gambling Commission expects and how it intends to enforce the Gambling Act.
If there was ever any confusion over the Commission's position, the Betway settlement has all but erased it. It further gives Parliament confidence that the Commission is actually fulfilling its mission. This is important in light of the fact that some Members of Parliament have questioned the usefulness of the commission in recent years.
What happens moving forward
With the investigation concluded and the settlement announced, the Gambling Commission will now step back and allow Betway to meet its responsibilities. We don't yet know how serious a hit Betway will take in terms of its finances. The company is big enough that they should be able to handle the settlement without too much trouble.
In the meantime, other online operators should be aware that the Commission might start looking at them too. The main thing moving forward is for operators to ensure that they are meeting their legal obligations. They should do everything within their power to vet VIP customers and verify funding sources. They should do everything in their power to identify problem gamblers and limit their access.
As a side note, we are starting to see online gambling operators either modify or completely eliminate their VIP programs. VIP programs have a tendency to attract high rollers who may be tempted to put a lot of money on the line unnecessarily. Eliminating such programs may cost online casinos revenues in the short term, but it would be worse to continue on and end up being investigated and fined.
So, what have we learned? That the UK Gambling Commission is serious about its enforcement efforts. Hopefully online operators will respond by being more proactive about their social responsibilities toward preventing problem gambling and money laundering. With any luck, the Commission's latest action will also pave the way for a new means of proving game fairness. That would be another step in the right direction.
- The Guardian: Record £11.6m UK gambling fine meted out to Betway
- UK Gambling Commission: Betway to pay £11.6m for failings linked to 'VIP' customers
What is Betway best known for to MegaMoolah.com readers?
Jon Heywood's Guinness World Record jackpot win on Mega Moolah back in 2015. Read about that win in our articles below:
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