News of the scale of Entain’s £17m regulatory settlement this week generally ignites sharp debate between anti-industry campaigners and those in support of the sector. And with social media playing such a large part in communication today, it is easier than ever to absorb both sides of the debate.
However, there was little sympathy for Entain on Wednesday morning when the penalty was announced.
In total, Entain has agreed to pay £14m for social responsibility and anti-money laundering (AML) failures carried out by its online gaming business LC International Limited – which operates 13 UK sites, including Coral.co.uk, Ladbrokes.com and FoxyBingo.com – and a further £3m for similar breaches from its retail brands.
Pattern of enforcement
For many, the primary matter was the size of the payment. As we know, there has never been regulatory action of this size before.
Andrew Rhodes, chief executive of the Gambling Commission, called it “the largest enforcement outcome to date”. But perhaps more significantly, he then added that Entain risks having its operating licence revoked in the event of further failings.
Regulatory action of this extent speaks to the wider approach the Commission is taking. The more frequent fines and penalties began under former Commission chief executive Neil McArthur, who left the role in 2021 after four years in charge.
Now Rhodes, who joined as interim chief executive in June 2021 and permanently took on the position in June 2022, has continued this steady trend of penalties, fines and suspensions. In this case, he’s upped the stakes. This begs the question: how much further will the Commission go to clamp down on failings?
Many will surely wonder, though, what would have happened had it not been one of the industry’s biggest names. Had the same failings occurred at an operator that did not run thousands of betting shops and some of the country’s best-known online brands, would the action have been even stricter?
A number of smaller operators have had licences suspended for suspected AML and social responsibility failings in recent months.
In July, the Commission suspended German operator Bet-at-home’s GB licence, to allow the Commission to carry out a full review of its operations. Bet-at-home “surrendered” its licence and withdrew from the UK market days later. In May, Goldchip’s licence was also suspended for similar failings.
Genesis Global Limited had its own licence suspended in 2020. It was reinstated following a three-month investigation.
After the investigation concluded, the Commission released information regarding Genesis Global’s failings. In one instance, the operator did not place restrictions on the account of a user who had spent £245,000 within three months. Three days after their account was set up, Genesis Global was aware that the customer was earning £30,000 per year.
In an AML failing, Genesis allowed a customer to deposit £1.3m and lose £600,000 before requesting a source of funds check. The customer provided bank documents that did not support their level of spending.
Comparably, over the course of the Commission’s investigation into Entain, the body discovered that one customer was allowed to deposit £742,000 over 14 months. Within the six months before the investigation was opened, that same customer had lost £59,000.
In another instance, one customer was allowed to deposit £157,698 in a two-month period in 2020 before LC International Limited requested evidence for source of funds on 9 August that year. But the customer was allowed to continue gambling until 27 August, when their account was finally restricted.
For Entain’s retail segment, a customer who regularly deposited £500 cash at Ladbrokes betting terminals – and wagered £168,000 within eight months – was not referred for AML checks, as their activity was not flagged by Ladbrokes staff.
Entain’s failures were dubbed by the Commission as “completely unacceptable”, and as “serious breaches” of regulation. Yet in this case, not quite enough for further action beyond the settlement.
Whether or not that was the right call, it seems certain that many smaller operators will be left thinking that, had they done the same, an example would be made of them. The Commission may need to do something to allay these concerns, or risk losing the faith of smaller operators.
Has change come quickly enough?
In a statement released on Wednesday, Entain said the infractions had taken place before it had implemented several safer gambling and AML procedures. It cited its Advanced Responsibility and Care programme, which launched in 2021 and uses AI to track gambling behaviours, as one example.
Yet Entain also expressed similar sentiments after it paid a £5.9m regulatory settlement to the Commission in 2019 – also for compliance failings, which took place between 2014 and 2017. In this instance, Entain brought up the launch of its Changing for the Bettor gambling strategy in January 2019 as evidence that it had changed its ways.
In the last three years, Entain has been ordered to pay £24.9m in regulatory settlements. Many will argue other operators would have lost the chance to stay in the market after that, but one thing is clear: after Andrew Rhodes laid down a marker, Entain won’t get a third chance.