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UKGC Fines Betfred £3.25 Million

The Gambling Commission has fined Betfred £3.25 million after an investigation exposed social responsibility and anti-money laundering failures. The operator, which is responsible for 1, 750 betting shops, has been ordered to pay the sum as part of a settlement with the regulator.

A croupier placing poker chips on a table.

The Gambling Commission is keen to raise standards across the industry.
©Anna Shvets/Pexels

Regulatory Settlement

Leading British bookmaker Betfred has been fined £3.25 million by the Gambling Commission after serious failures were uncovered at the operator. An investigation carried out by the gambling watchdog found shortcomings in Betfred’s social responsibility and anti-money laundering policies and procedures.

Done Bros Limited, which trades as Betfred, must now pay the sum in lieu of a financial penalty as part of a settlement with the Gambling Commission. All £3.25 million of the fine will be directed towards socially responsible causes. This settlement includes a divestment of £1, 052, 717.

As part of the settlement, Betfred agreed to the publication of facts in relation to the case. It is also responsible for payment of costs incurred by the Commission in conducting the review. Issuing a public statement on the breaches of Betfred’s license, the regulator noted that the failures occurred between January 2021 and December 2022.

Betfred is responsible for 1, 750 high-street betting shops across the UK. The operator also offers online betting and casino products as part of its separate Petfre business. The bookmaker was first founded in 1967 by Fred Done. While Done is no longer the CEO of Betfred, he still owns the betting business. According to the Sunday Times Rich List, Fred’s combined fortune with his brother Peter stands at £1.87 billion.

Speaking on behalf of the Commission, Executive Director of Operations, Kay Roberts, expressed the importance of vigilance when overseeing the retail betting sector. While online operators have hit the headlines over their failures towards customers, this case highlights the need for improvement across the industry. Roberts stated:

“In recent years there’s been a public focus on online gambling but this case illustrates how important it is for us to continue our drive to raise standards across the whole industry. Gambling is a legitimate leisure activity enjoyed safely by millions but it is vital that every single operator – either online or offline – has in place effective safeguards to prevent harm or crime.”

Winners Not at Risk

The Gambling Commission revealed details of the social responsibility failures found at Betfred’s retail shops. The operator breached conditions outlined in paragraphs one and two of Social Responsibility Code Provision 3.4.1. These require licensees to interact with customers in a way that minimizes the risk of customers experiencing gambling harms.

Betfred was found to have had insufficient controls in place to protect new customers. It was also ineffective in monitoring high velocity spend and duration of play. This exposed players to the risk of incurring substantial losses without being subject to safer gambling interactions.

The bookmaker made assumptions that customers were not at risk of experiencing harm because they were winning customers. In one case, Betfred failed to carry out any safer gambling interactions on a customer that staked £517, 499 over the course of two months.

Betfred took the view that no interactions were necessary because the customer was a professional poker player and showed no signs to staff that encouraged interaction. During the period analyzed, the customer was in a winning position of £8, 585. However, the customer was able to stake close to the entirety of his net worth in that two-month period.

The bookmaker did not always conduct safer gambling interactions with customers soon enough, and when those interactions did take place, they were not always effective. One customer was allowed to deposit £337, 029 over five months, placing 1, 375 bets and losing £19, 336. 28.

Betfred interacted with this customer twelve times, noting each time that the customer was happy with their level of spend. However, signs of harm including the placing of large bets and a card being declined were evident. The bookmaker failed to escalate the interactions and offered no information or support to the customer.

The regulator found a lack of evidence that the operator effectively evaluated individual customer interactions. There was also a lack of record keeping, which in turn limited the success of future interactions.

Source of Funds Checks

Alongside the social responsibility failures, weaknesses in Betfred’s anti-money laundering policies and procedures were clear. These included poor record keeping and financial thresholds that were set too high. For one customer, who lost around £61, 000 within four months, no action was taken as Betfred deemed that there were ‘no AML concerns’. In this case, the licensee had relied solely on an ID document.

The regulator noted that Betfred was unable to track customer play across its products. It also failed to consistently obtain appropriate ‘know your customer’ identification and Source of Funds documentation from customers when financial alerts were triggered. A customer hit the AML trigger with £250, 000 staked in 365 days, but their ID was only requested after a ten-day delay.

Betfred relied heavily on open-source information and should have taken greater steps to corroborate customers’ Source of Funds information. Certain customers were allowed to stake large sums of money without the licensee conducting appropriate KYC checks.

Publishing the statement on Betfred’s settlement, the Gambling Commission noted a number of aggravating factors that affected the outcome of the case. These included the serious nature of the breaches identified, the impact on licensing objectives and the fact that senior management at Betfred should have been aware of governance issues.

The regulator did accept certain mitigating factors, including steps taken by the licensee to remedy the breaches. Betfred implemented an early action plan to combat its failings. It also met the Commission’s timetable in terms of providing material and responses, accepted the Commission’s findings and entered into the regulatory settlement process early.

Betfred’s fine comes less than a week after the gambling watchdog ordered Star Racing Limited to pay £594, 000 after similar failures were uncovered. Last month, Videoslots Limited was fined £2 million and Paddy Power Betfair was made to pay £490, 000.

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Author: James Richardson