GC response to Ladbrokes Rule 4 incident ‘proportionate’

The UK’s Gambling Commission has insisted it has taken “proportionate and appropriate” action to ensure bookmakers do not mishandle so-called Rule 4 deductions in horse racing after Ladbrokes escaped without a fine following an investigation into an incident that occurred in January 2015.

Last year, race-horse trainer David Evans was fined £3,000 by the British Horseracing Authority after he had admitted to delaying news of a non-runner, Tango Sky, in the hope of backing another of his horses, Black Dave, in the same race at better odds.

Immediately after placing the bet, Evans told the Ladbrokes trader on the telephone that Tango Sky would be withdrawn. The Commission concluded that the Ladbrokes trader had deliberately shortened the price on Tango Sky in order to maximise Rule 4 deductions, under which a certain amount of money is taken out of winnings to balance the effect of the non-runner and the increased chances of winning for the other runners.

However, despite finding that Ladbrokes had “failed to appropriately review all information available to them prior to initially providing the Gambling Commission with what were proven to be inaccurate explanations as to the reasons for the price shortening on Tango Sky”, the regulator stopped short of imposing a fine and instead wrote to the bookmaker to “provide them with advice in relation to their conduct”.

The regulator said that although the trader had acted against company policy, Ladbrokes had not contravened the commission’s LCCP licensing rules.

“The outcome was conditional on our ability to use the case to provide wider industry messaging on the issue,” a commission spokesman told iGamingBusiness.com. “A fine was not appropriate as no actual licence condition breach had occurred.”

The spokesman added that Ladbrokes had taken positive steps following the incident, including making revisions to its sports-betting integrity policies and undertaking refresher training courses with all of its trading staff.

The fact that the incident only affected two customers, resulted in a negligible net gain of £7.70 for the bookmaker and occurred before the commission’s public statements about the fair application of Rule 4 were also highlighted as mitigating factors in the context of imposing a financial penalty.

However, the spokesperson confirmed that changes could be made to the Rule 4 licensing regulations if further incidents occur in the future – not just involving Ladbrokes.

“We have taken proportionate and appropriate action having considered all the circumstances involved,” the spokesman added.

“Group online brands – including GVC brands Bwin and SportingBet – now have a Rule 4 approach of application at time of bet placement rather than horse withdrawal. Coral retail also has this approach, with Ladbrokes to follow in due course aligned to introduction of new premises software. The approach mitigates the risk of misuse of Rule 4.

“We have also taken into consideration the fact that, due to their own internal audit processes, Ladbrokes did comply with the LCCP requirements in relation to reporting the sports betting integrity concerns… before the race in question commenced.”