Paddy Power High Court victory "source of significant embarrassment" for Flutter

Flutter Entertainment International CEO Dan Taylor has admitted historic responsible gambling and due diligence failings are a “source of significant embarrassment” for the FTSE 100 giant.

Taylor was speaking at the conclusion of a High Court case between Flutter and Amarjeet Singh Dhir, a Dubai-based businessman and former business associate of property developer Antonio Parente.

Parente is a problem gambler who allegedly stole money from Dhir’s property business over a three-year period between 2013 and 2016 before staking £282,000 in stolen funds with the operator.

Dhir alleged Parente worked as an introducer for his property development firm over the period, with the two signing a profit-sharing agreement.

He sued Paddy Power owner Flutter for failing to prevent this fraud taking place, with justices assessing the case both on UK and Dubai laws. However, judges sided with the bookmaker on the case specifics after questioning Dhir’s reliability as a witness, as well as his account of the period under examination.

Despite the legal victory, Taylor was downbeat over the ruling and discussed the failings made by the business during the period.

“Whilst we have always maintained that this claim was without merit, today’s ruling is no cause for celebration,” Taylor explained.

“The way Mr Parente’s account was handled, the failings of which were acknowledged in 2018 as part of a settlement agreed with the UK Gambling Commission, is a source of significant embarrassment for Flutter.

“Our business today is unrecognisable to what it was five years ago, but we know there is more we must do as an industry to ensure the most vulnerable are protected.

“We are committed to leading a race to the top in safer gambling and will continue to prioritise investment in this area,” Taylor added.

In considering the case, Mr Justice Griffiths asserted that Paddy Power was aware Parente was gambling “with an unhealthy and unsustainable gambling addiction on an escalating and desperate scale”.

He wrote: “Paddy Power knew that his losses were unsustainable on his known income and assets.

“Paddy Power knew that when they tried to get information from him to show source of wealth and source of funds, they failed.

“The information he provided did not suggest that he could afford to gamble on this scale, or that he had legitimate sources of wealth from which to fund it.

“They knew all this, but they continued to accept his stakes and, indeed, by providing gambling bonuses and lavish hospitality, to encourage him to gamble more. It stopped only when he stopped it himself by self-exclusion,” Griffiths added.

Parente initially held a Betfair account between 2008 and 2010 when he self-excluded. He later moved from the UK to Dubai, where he worked with Dhir on a property business.

He later attempted to open a second Betfair account in July 2013, but the account was closed immediately. The court heard that Parente used a VPN to gamble in the UK from Dubai, where online gambling is illegal.

In 2014, Parente met Ladbrokes premier account manager Tony Carroll, who the court heard provided Parente with free hospitality as a VIP customer, including tickets to Premier League matches and the Grand National. Carroll left Ladbrokes in 2015.

Parente was then supplied with a £20,000 sign-on bonus to switch over to Paddy Power in September 2015, where he staked £548,000 in a day, as Paddy Power staff continued to ply him with complimentary tickets to events.

Carroll, along with his wife Ericka, signed an agreement with the Dublin-based bookmaker, under which he was entitled to receive 25% of his clients’ losses after introducing customers to the firm.

Labelled as a “wild man” in internal Paddy Power emails, Parente placed 164 bets totalling £548,065 on the Playtech Instant Casino game, losing £15,000 in one day. However, he was later rewarded with a 7.5% bonus on his losses.

Court documents show that Paddy Power conducted an enhanced due diligence check on Parente in November 2015 when his losses reached £152,912. Despite this check being ordered and carried out, he was still allowed to continue to gamble over the period.

The bookmaker also failed to link Parente’s Paddy Power account with his previous records with Betfair. Anti-money laundering and source of wealth checks were also established by the court to have not been conducted during the period in question.

Parente’s Paddy Power account was finally suspended in June 2016 after an anti-money laundering (AML) rule breach was triggered.

However, the court heard that Paddy Power retail staff went on to accept £127,000 in cash over the counter during an eight-week period before Parente closed the account by self-excluding in October 2016.

Taylor admitted in cross-examination by Dhir’s lawyers that there were “without doubt strong indicators of problem gambling” in respect of Parente’s case.

Taylor conceded the bookmaker had not met its responsibilities in this case and that Paddy Power’s responsible gambling procedures were “not good enough” at the time.

“Mr Parente was able to spend significantly more than was affordable, and for that I am embarrassed,” Taylor added, before pointing out the UK gambling industry has made great strides in protecting vulnerable customers over the last few years.

In considering the case, Justice Griffiths questioned whether lessons had been learned in the handling of problem gamblers by Paddy Power.

He said: “These events took place only five years ago. All the witnesses before Mr Taylor tried to defend the indefensible.

“I cannot comment on industry norms but, in my judgment, Paddy Power knew that it was dealing with a compulsive gambler who could not afford what he was doing, and Paddy Power did not really care.

“I do not see what industry norms can offer by way of exculpation for that,” Griffiths concluded.

Parente lost a total of £3.4m with Paddy Power, Ladbrokes, bet365 and William Hill over a three-year period before admitting to fraud and gambling addiction.

Parente confessed to defrauding more than 20 people, including his own sister, to fuel his gambling habit and received a suspended jail sentence in 2017.

Paddy Power was fined £2.2m by the Gambling Commission (UKGC) in October 2018 for anti-money laundering and customer-protection failings relating to the case.

Paddy Power divested £498,508 of the monies received, while paying £50,045 of UK Gambling Commission investigation costs following the case.

In October 2020, Flutter cancelled its existing introducer agreements following the fallout.