£17 Million Penalty Imposed on Ladbrokes Owner Entain for Regulatory Failures

ladbrokes shopIn the gambling industry, Entain is known as one of the mammoth companies, being the owner of sports betting giants Ladbrokes and Coral. And while they are known for providing inviting online and offline gambling opportunities to avid players, it seems as though Entain will also be known for having the largest fine imposed on it in history by the United Kingdom Gambling Commission.

The £17 million penalty came about after the company failed to ensure proper checks were in place so as to support customers who were struggling with gambling debt.

The Commission said that Entain had acted in a “completely unacceptable” way with its failures, and it stands to lose its UK gambling licence if it is found to be in breach of anymore rules. Since the issue had been brought to light via an investigation by the regulatory body, Entain said it had introduced a batch of safer gambling measures for all its brands to follow.

The banner displayed in the shop window in the picture shown above says “ready to make history” – I’m not sure this is quite the history they wanted to be making!

The Issues That Arose From The Investigation

entainThe record penalty that Entain will have to pay came about due to failures in the areas of social responsibility and anti-money laundering. £14 million of the £17 million total comes from such failures at its LC International Limited business, which is responsible for running 13 online betting sites. They include the Ladbrokes platform, Coral, and Foxy Bingo. The extra £3 million comes from failures discovered at the Ladbrokes Betting & Gaming Limited branch, which operates 2,746 gambling premises across the country.

The primary problem raised by the investigation was that customers who were struggling with gambling debt issues had not received adequate help in time. One customer utilising an Entain site gambled for extended timeframes overnight and was able to proceed with depositing over £230,000 into their online account. That occurred within an 18-month period, but the player was only contacted once via the online chat service regarding their spending.

Someone else was able to deposit a total of £186,000 in just six months at an Entain site. Sufficient checks on the player and their affordability level were not carried out, even though it was known that the customer resides in social housing. What’s more, some customers were able to create accounts at other online sites owned by Entain, despite the fact that they may have built up debts at other gambling sites from the company.

Such is the case of one player who had been blocked from using the Coral website due to spending £60,000 within a 12-month timeframe. The player failed to provide adequate source of funds details, but they were able to instantly open an online account with the Ladbrokes platform instead. Through doing so, they were able to continue depositing, adding £30,000 to their account in a single day at that platform.

Additionally, Entain permitted customers to deposit vast amounts of money into their accounts without actually carrying out any source of funds checks on them before, during or afterwards. This led to one player managing to deposit £742,000 in 14 months. Even though this happened, the player wasn’t flagged for potentially engaging in money laundering via the site.

The Gambling Commission Steps In

gambling commission signSetting out to investigate the Entain brand and its various sites, the Gambling Commission said that it had uncovered “serious failures” as a result. This led to the “largest enforcement outcome to date”, said Chief Executive of the regulatory body, Andrew Rhodes. It also marks the second time that Entain has been penalised by the Commission, following a £5.9 million fine handed out to the Ladbrokes owner in 2019.

“They should be aware that we will be monitoring them very carefully and further serious breaches will make the removal of their licence to operate a very real possibility”,

said Rhodes.

Entain made a statement of its own, announcing that it had agreed to pay the £17 million fine. It said that it had done so to be able to “bring the matter to a close” and so as to avoid any additional potentially expensive legal proceedings. However, it also mentioned that the issues raised by the Commission were related to the period of time between December of 2019 and October of 2020. This period, it said, was before changes had occurred in the safer gambling scene.

The investigation by the Commission for that timeframe found that Entain had failed to conduct proper risk assessments surrounding the possibility of its businesses being utilised for money laundering purposes or terrorist financing. This was noted alongside the issues of players being able to deposit up to £742,000 over a timeframe of 14 months without conducting proper source of funds checks.

Having had the fine issued, Entain will be subject to additional licence conditions, which includes the appointment of a specific board member to oversee improvements in the problematic areas. A third-party audit is also required to review the compliance protocol within 12 months’ time.

Meanwhile, Entain said that it had found no evidence relating to criminal spending at any of its online platforms. It was in 2021 that it introduced artificial intelligence technology so as to enforce its new safer gambling rules. At the same time, the £17 million penalty was already accounted for in the latest financial statements from the group. The report on such made it clear that its online gaming revenue had decreased by 7% in the six months to June, when compared with the same period of the previous year.

The news of the penalty sent Entain shares into a slight spiral, falling 3.4% at 9:43 a.m. in London. Yet the fine also comes around at a time when the UK government is looking to tighten regulatory laws on the gambling industry. Plans to overhaul the general rules surrounding operating gambling businesses have been spoken of, and a white paper is hopefully set to be released when the new Prime Minister is assigned to their role.

Author: Julia Bowman