Entain to pay £17m after UKGC investigation into social responsibility and AML failings

Entain will pay the UK Gambling Commission (UKGC) £17m after the gambling regulator found failings in the operator’s social responsibility and anti-money laundering (AML) policies.

The settlement, the largest ever between the UKGC and an operator, exceeds the previous £13m which Caesars paid over failings in its VIP programmes in April 2020.

It comprises a £14m payment for failures at Ladbrokes Coral International Limited (LCI), which oversees 13 Entain group websites including Ladbrokes.com, Coral.co.uk and foxybingo.com.

A further £3m payment relates to failings identified in Entain’s land-based business, Ladbrokes Betting & Gaming Limited (LBG), which operates 2,746 shops across the UK.

UKGC CEO Andrew Rhodes pulled no punches in his remarks, suggesting “serious failures” by Entain had placed its UK operating licence in jeopardy, and had demanded the UKGC’s “largest ever enforcement outcome”.

He added: “There were completely unacceptable anti-money laundering and safer gambling failures. Operators are reminded they must never place commercial considerations over compliance,” Rhodes said.

“This is the second time this operator has fallen foul of rules in place to make gambling safer and crime free.

“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. We expect better and consumers deserve better,” the UKGC CEO concluded.

In respect of LCI, a UKGC investigation examining treatment of customers between December 2019 and October 2020 found breaches in anti-money laundering policies, as well as deficiencies in responsible gambling policies.

An investigation found that certain customers who were the subject of AML restrictions on their respective accounts were still able to open new accounts with different Entain online brands.

Highlighted AML “weaknesses and shortcomings” include allowing two customers to deposit more than £928,000 without adequate source of funds checks being carried out.

In another case, enhanced customer due diligence (ECDD) was not conducted on two customers depositing a combined £682,199, with the customers allowed to continue gambling until source of funds checks were conducted, when both accounts were closed due to questions surrounding funds.

The regulator also suggested Entain placed an “overreliance on recycled winnings” in certain cases identified, as well as an excessive reliance on open-source information in its verification practices.

Specifically, the regulator identified two cases where open-source checks were used as primary verification to customers incurring losses, without timely source of funds checks being conducted. These checks were only conducted when further deposits and losses were incurred.

In respect of social responsibility failings, LCI was found to have been “slow to interact” with customers identified as having a greater risk of gambling-related harm.

One customer was found to have made large deposits and withdrawals, as well as playing for extended periods at abnormal times of the day, depositing £186,899 in 2019 and £43,956 within six months in 2020.

The individual was referred twice to LCI’s safer gambling team but received just one chat interaction from the firm during the period. In addition, an analyst error in November 2018 led to the customer’s account being reopened, despite previous decisions by LCI to permanently close it.

In respect of a second customer who deposited £742,000 in the space of 14 months, LCI admitted engagement should have taken place sooner, with further questions on affordability and income being asked.

Failings identified at the retail LBG business were of a similar ilk, with customers able to stake large amounts of money without monitoring or scrutiny from the operator.

One customer highlighted deposited £168,000 over an eight-month period through shop terminals in cash amounts of £500 or more without AML checks being considered due to not being referred for review by staff and not hitting AML triggers.

Checks were later conducted in September 2020 as part of governance proceedings. In a similar case, a customer deposited £440,474 over 12 months, losing £68,867 without appropriate AML checks being conducted.

The regulator suggested that despite training, local staff or area managers did not escalate potential concerns quickly enough.

In respect of social responsibility, LBG was found to be slow to interact or did not interact with certain customers in a way which minimised their risk of experiencing harms associated with gambling.

Three customers were highlighted where shop staff or support teams failed to escalate high deposit, high loss customers for a safer gambling review, with affordability checks not being considered in a timely fashion.

In addition, the UKGC identified instances where interactions were not specifically adapted depending on the extent of potential harm to a customer.

Responding to the publication of the settlement package, Entain said it had agreed to pay the £17m figure to bring the matter to a close and avoid “costly and protracted” legal proceedings.

“Entain accepts that certain legacy systems and processes supporting the operations of its British business during 2019 and 2020 were not in line with the evolving regulatory expectations of the commission in respect to aspects of social responsibility and anti-money laundering (“AML”) safeguards,” Entain said.

“However, the group also notes the commission’s statement that it found no evidence whatsoever of criminal spend within Entain’s operations.

“The issues raised by the Commission relate to the period between December 2019 and October 2020, which predates the many changes in the area of safer gambling and AML that Entain has introduced,” the firm added.

Entain referenced its Advanced Responsibility and Care (ARC) social interaction programme as well as the award of an Advanced Safer Gambling Standard by GamCare as evidence that its policies had evolved since the offences identified.

As part of the settlement, Entain has also agreed to appoint a board sponsor to oversee the implementation of any further improvements identified by the original 2020 compliance assessments and to undertake an independent audit of the relevant policies and procedures at a future date.