Why Have Betway Been Fined a Record £11.6 Million by the UKGC?

Posted by Harry Kane on Sunday, April 26, 2020

The UK Gambling Commission (UKGC) has been no stranger to issuing huge fines of late, with a cumulative total of £19.7 million in financial sanctions imposed on iGaming operators during 2019 alone.

This trend is set to continue in the near-term too, with online betting giants Betway having been hit with a record £11.6 million fine for accepting stolen money from high-rolling ‘VIP’ customers.

But how did this unfold, and why is it indicative of such a major problem for iGaming operators in the current regulatory climate? Here’s the lowdown!

The Fine and the Background – What You Need to Know

The huge, £11.6 million settlement has broken new ground in the iGaming market, as this dwarves the previous record of £7.8 million paid by 888 back in 2017.

It’s also nearly double the £6.2million paid by William Hill in 2018, with this fine imposed after the UKGC ruled that the operator had breached anti-money laundering regulations and failed to protect potentially vulnerable customers.

The obvious question, however, is what failings justify such a hefty fine? Well, the UKGC found that Betway had allowed a staggering £5.8 million to flow through the business during its investigation, with much of this stolen money that was being laundered by customers.

Additionally, much of this stolen cash was wagered by high-spending VIP customers, a number of whom demonstrated clear signs of addiction and problem gambling over a sustained period of time. This has been a common issue since the UKGC announced the protection of vulnerable players as one of its core strategic objectives through 2021, but the sheer extent of Betway’s failing is truly breathtaking.

In one case, Betway accepted a staggering £8 million of deposits from a single customer over the course of four years, with the individual in question losing an estimated £4 million during this period.

Not only this, but the account was flagged as a potential risk on 20 separate occasions, and every time the brand’s customer service representatives took the gambler’s word as evidence for their source of funds.

At one stage, an external report was commissioned, and this failed to verify the customer’s ability to afford the bets. The case was subsequently referred to the Betway board of directors, who incredulously allowed the individual to keep playing at wagering at the same exalted level.

Incredibly, the account was only closed after the police contacted Betway about the customer, at which stage the UKGC also intervened and an in-depth investigation commenced.

In another case, a gambler deposited £1.6 million and lost more than £700,000 over three years, despite being unemployed and making no attempt to disguise this fact. In this instance, Betway also relied on unverified and open source information as evidence for affordability, which completely contravenes the current UKGC guidelines.

The brand also accepted total deposits worth £494,000 from a customer who had 11 different accounts with the firm. This customer had also previously signed up to an independent self-exclusion program to curb their behaviour, but this did not prevent Betway from accepting the individual’s cash.

As you can imagine, these significant and consistent failings have incurred the wrath of the UKGC, who said that Betway had proved “inadequate” in its dealings with seven problem customers in total, while “failing to fulfil its obligations to prevent both money laundering and problem gambling”.

This is becoming a dark but common theme in the iGaming market, and it’s one that could have stark consequences for the industry and even the most responsible operators going forward.

The Problem with VIP Players and the Risk to the Industry

This issue is indicative of iGaming’s dark and troubling underbelly, with a recent report into VIP players highlighting that operators are becoming increasingly reliant on this demographic.

In the case of one betting firm, it was found that 83% of its deposits were drawn from VIP players, who accounted for a paltry 2% of its customers. Another operator took 58% of its account deposits from 5% of its customer base, while a third accepted 48% of turnover from just 3% of players.

These figures highlight a clear and growing trend, and one that makes less scrupulous operators increasingly likely to overlook the wellbeing of VIPs in order to optimise profitability in a difficult economic and regulatory climate.

Betway clearly showed minimal regard for the welfare of their own VIP demographic, or the impact that problem gambling can have on society as a whole. There’s also a wider issue of operators being lax about accepting stolen or laundered money, which raises an additional legal concern that will occupy both regulatory and legislative bodies.

While this may be troubling enough by itself, we must also consider how these continued failings could impact on the future of the iGaming industry in the UK. After all, the government is also considering a huge legislative crackdown that could lead to a full review of the Gambling Act 2005 and all existing licensing agreements.

Led by the cross-Parliamentary APPG group (which is chaired by former Conservative leader Iain Duncan-Smith), this body has been investigating the impact and extent of gambling-related harm in society. It has also proposed a number of radical measures for the UKGC to consider, including the rollout of a £2 betting cap across all online verticals.

Similar to the controversial FOBT cap, this would have a huge impact on the ability of online operators to generate revenue, potentially forcing smaller casinos out of business and causing others to either downsize their operation or refocus their operation on less mature and high-growth overseas markets.

This recommendation is now with the UKGC, who will consider this for a period of six months before making a final decision. Regardless of the final extent, it’s almost certain that at least some form of betting cap will be introduced, and the failings or brands like Betway only make this increasingly likely.

Make no mistake; the only way for operators to avoid restrictive legislation is to collaborate fully with the UKGC and adopt a proactive approach to enforcing its core values, as this will negate the need for government intervention and empower brands to shape the future of the market.

Otherwise, the legislative powers in the UK will take matters into their own hands, leaving operators at the mercy of high taxes, low betting caps and incredibly restrictive regulatory measures.