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How far do Gambling Companies need to Investigate Customers Funds

There have been some recent high profile cases where the Gambling Commission have investigated operators who have accepted huge sums of money in stakes from customers who have stolen the funds used for the gambling. The most recent case of this type was where the bookmaker Betfred was ordered to pay £800,000 as a settlement to the Gambling Commission’s investigation after accepting stolen cash from a “VIP Customer”. He had been allegedly offered free drinks and day trips to encourage him to keep betting. As a result of the Gambling Commission investigation Betfred were found to have failed to meet their obligation on social responsibility and the prevention of money laundering – two key conditions of their operating licence in the UK.

In this case it was shown they had taken thousands of pounds from a convicted thief without properly checking the customers wherewithal to pay or engage in it’s social responsibility obligations. The Gambling Commission stated that Betfred would pay more than £800,000 in “Compensation and in a contribution towards social responsibility causes” after it’s operating licence had been reviewed. The company was ordered to pay £443,000 to the victims of the criminal activities and a further £344,500 to social responsibility causes. The Gambling Commission also ordered Betfred to pay it’s investigation costs and perform an independent third party review of it’s anti-money laundering and social responsibility policies and procedures.

This highlights a significant issue for gambling companies who have strict obligations placed on them through the operating licences given to them by the Gambling Commission in the UK. In the instant case a significant proportion of the £850,000 that was stolen from an employer by the accountant was gambled with Betfred. The individual concerned had huge debts between 2013 and 2015 with Betfred who continued to give him free bets, days out and inducements to carry on betting. Betfred admitted that the customer was in their top five percent of customers in terms of spend and profit and was therefore treated as a VIP customer.

There is a clear anomaly for these betting companies who will want to preserve favour with VIP customers but must ensure that they undertake stringent money laundering and social responsibility checks on all of their customers. There will need to be close control over any inducements that are offered to VIP customers particularly where customers have asked to be self excluded or have clearly made contact with the gambling company to say that they are taking a break from gambling.

This case follows on the heels of Gala Coral who were ordered to pay £880,000 worth of compensation after a VIP problem gambler used the proceeds of theft to gamble with the company. In this case the Gambling Commission stated that Gala Coral had failed in its duty to prevent money laundering and problem gambling adding that it safeguards against both were inadequate. It was suggested that there were “Systemic faults” in the company’s approach to problem gambling and money laundering. In this case the company had relied on uncorroborated suggestions that the gambler was independently wealthy when in fact he had stolen £800,000 from a vulnerable person. This case again highlights the high level of compliance placed on gambling companies as the Commission stated: “Gala Coral had failed to conduct adequate enquiries about the source of funds the customer used to gamble in store and online and placed overreliance on the fact that the relevant payments were all made through one UK clearing bank account”.

The company was also criticised for failing to spot the signs that the man was a gambling addict. In this case the company agreed to pay £846,664 to the victim of the theft and his family as well as making a £30,000 payment to reflect the costs of the Commissions investigation.

These two cases show that there is a significant onus placed on the gambling companies to continue to monitor high rolling customers and be satisfied with the money laundering and social responsibility / problem gambling policies they have are robust and working in individual cases.

We are certain that these cases will not be the last of their type and are timely warnings that gambling companies must ensure that the policies they have in place are not merely written policies but are practically effective.