The parent company of Ladbrokes and Coral, have been fined a record £17 million by the Gambling Commission for a series of “completely unacceptable” safer gambling and anti-money laundering failings, with a warning that further serious breaches will make the removal of their licence to operate a very real possibility. The penalty issued to Entain, is the largest ever levied by the Gambling Commission and alarmingly, the second time the company has been fined in the last five years.
How did this come about?
It follows an investigation concerning activity in 2019 and 2020, and does predate the company’s launch of its Advanced Responsibility and Care (ARC) initiative, during 2021. The settlement figure is made up of £14m for failures in Entain’s LC International online brands, which is the sector that Ladbrokes and Coral fall under, along with Foxy Bingo, and then the remaining £3m for issues generated across all of its retail premises.
On top of the heavy fine, the group must also nominate a member of the board to oversee vast improvements, and accept a third-party audit, which will be conducted at some point during the next 12 months, to ensure licensing commitments and Codes of Practice are complied with.
What was discovered?
There were some quite alarming issues unearthed during the investigation, these included:
- Failure to prevent an online customer who had their account closed with one of the company’s brands, opening one with a another of their brands immediately afterwards and depositing £30,000.
- One customer who deposited £186,000 over a six-month period despite being known to live in social housing.
- Not recognising the risks of its business being used for money laundering and terrorist financing.
- Only undertaking one single interaction with a particular customer who deposited £230,845 within an 18 months period, and was regularly gambling in the middle of the night, which is a very obvious sign of addiction.
Gambling Commission Exec’s damning verdict
Andrew Rhodes, the Chief Executive of the Gambling Commission said forcefully: “There were completely unacceptable anti-money laundering and safer gambling failures. Operators are reminded that they must never place commercial considerations over compliance. Sadly our investigation revealed serious failures that have resulted in the largest enforcement outcome to date.”
Then aiming a warning over future indiscretions, Mr Rhodes added: “This is the second time this operator has fallen foul of the rules put in place to make gambling a safer and crime free activity. They should be aware 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.”
“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 safeguards. However, the Group also notes the commission’s statement that it found no evidence whatsoever of criminal spend within Entain’s operations.”
They went on to say: “In May of this year, Entain were awarded the Advanced Safer Gambling Standard by Game-Care, having evidenced the highest standards of player protection and social responsibility for its online and land based gambling businesses in Great Britain. We have now entered into the regulatory settlement with the commission in order to bring the matter to a close and avoid further costly and protracted legal proceedings.”
Analyst offers hope moving forward
Gaming and leisure analyst, David Brohan offered up some encouraging words, pointing out that although it was “disappointing” for Entain, the hope for the company was that its ARC programme had addressed most of the concerns raised.
He said: “The £17m figure represents further evidence of the commission “ramping up” enforcement, and whilst this is the second time the group has been fined, their heightened focus on responsible gambling, should prevent further failings.”
Mr Brohan continued: “Entain also recently pointed out its reliance on VIP customers has reduced significantly, with 90 per cent of revenue now generated from recreational and low-spend players, up from around 60 per cent, just 12 months ago.”
Who exactly are Entain?
They are an Isle of Man-based company and one of the world’s largest sports-betting and gaming groups, operating both online and in the retail sector; recently being valued at £8billion.
In March 2018, when still known as GVC Holdings, they completed the acquisition of Ladbrokes Coral in a deal worth up to £4 billion, enthusiastically declaring at the time: “In a dynamically evolving industry, this transaction creates an enlarged Group with the scale, diversity, proprietary technology and management expertise, to pursue many opportunities globally.”
They proudly continued: “GVC has a proven track record of creating shareholder value through the successful integration of acquired businesses and the GVC Board believe this transaction will create further value for our shareholders and those of Ladbrokes Coral.”
At the end of 2020 they were rebranded to Entain, to reflect what they stated was their “ambition to be the world-leader in sports betting and gaming entertainment.” With more than 2,500 betting shops, they are the UK’s leading high street bookmaker.
Other impressive names in their comprehensive portfolio include: Bwin, Eurobet, Sportingbet, and Partypoker. Chief executive Jette Nygaard-Andersen told shareholders in June 2021: “We are at the forefront of safer technologies and we continue to lead the market in the critically important area of responsible betting and gaming.”
This fine outstrips the £13million penalty handed to Caesar’s Entertainment in 2020 and represents a significant blow for the industry, which had claimed vulnerable customers were already adequately protected.
Nevertheless, campaigners reacted angrily insisting that the fine was still too small to prevent law-breaking. They highlighted that it pales into insignificance in comparison to Entain’s annual profits, which are more than half a billion pounds, with some calling for chief executives to face criminal action, for failures that could allow money laundering and ruin lives.