Entain’s £17m ($20m) settlement with the Gambling Commission (GC) of Great Britain last week was not a great moment for the European gambling industry.
With the UK’s ever-protracted Gambling Review White Paper hanging over the industry like a sword of Damocles, a record-breaking “fine” (although it’s not technically a fine) hitting the headlines is less than ideal for the reputation of the sector.
Entain, formerly GVC Group, is home to some of the UK’s best-known gambling brands, including storefront retail bookmaker Ladbrokes. The latter was responsible for £3m of the settlement. The remaining £14m was incurred for failures with the group’s 13 online businesses, including Ladbrokes.com.
The process of “settlement” within a regulatory context is different from one in a legal context. The GC accepts settlement as recourse to regulatory breaches if the licensee cooperates with required disclosure requests and agrees to work with the Commission to correct its failings rapidly.
In the GC’s own words: “Regulatory settlements in the Commission context are not the same as ‘out-of-court’ settlements in the commercial context. A regulatory settlement is a regulatory decision, taken by the Commission, the terms of which are accepted by the licensee concerned.”
In Entain’s case, it was likely in its favour that the failings had not led to any criminal breaches and that the firm had improved its security features after the period in question, from December 2019 to October 2020.
Despite the settlement, though, the GC’s chief executive Andrew Rhodes did not mince his words, making it clear that this was the “largest enforcement outcome to date” and that “further serious breaches will make the removal of their licence to operate a very real possibility.”
To make things worse, this was not Entain’s first clash with the regulator. In 2019, the company agreed to a £5.9m settlement for systemic compliance failings within Ladbrokes. At the time, legacy GVC’s CEO Kenneth Alexander admitted that the legacy compliance issues with Ladbrokes had come to light after its acquisition.
Alexander pledged improvements, even saying, “I am confident that we now have in place a robust and industry-leading approach to player protection.”
However, further investigations were already underway at that point and it was only a matter of time before the GC compiled a body of evidence with which it could accuse GVC’s successor Entain of further breaches.
In response to the most recent breaches, the company stated, “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. However, the Group also notes the Commission’s statement that it found no evidence whatsoever of criminal spend within Entain’s operations.”
Furthermore, Entain highlighted that in 2021, it launched its Advanced Responsibility and Care (ARC) program, which uses AI technology to risk assess each customer.
As for the initial UK trials of ARC, Entain claims its risk-assessment accuracy is more than 80%, a 120% uplift in the use of safer gambling tools by those most at risk and a 30% overall reduction in customers increasing their risk levels.
In May, Entain was awarded the Advanced Safer Gambling Standard by problem-gambling charity GamCare, suggesting the firm has sought external audit to check its new procedures are effective.
It is shocking to read that the operator allowed punters to deposit hundreds of thousands of pounds without adequate source-of-funds checks and that large deposits were also made by potentially at-risk players.
However, it’s not that surprising that such activity slipped past the company’s gatekeepers, when you consider the pace at which it grew between its incorporation as GVC in 2010 and its rebranding as Entain in 2020.
Over that decade, the group made a series of acquisitions: Sportingbet in 2012; Bwin, which included various brands, in 2014; and the major Ladbrokes deal in 2018. The company saw rapid growth and was certainly managing multiple tech stacks, all of which were dealing with AML and player protection differently.
In the case of Ladbrokes in particular, clearly the tech and procedures were not up to scratch. But arguably, Entain’s due diligence should have revealed this prior to acquisition and action should have been taken sooner.
Legacy tech is a perennial issue within the igaming industry. Proprietary tech stacks are notoriously hard to update and adapt to changing business needs and have caused legacy operators, such as the retail bookmakers, to lose significant ground to modern online competitors.
However, as the regulatory stakes get higher, it is harder to blame legacy tech for AML and player-protection failings. Quite simply, as the GC said last week, “We expect better and consumers deserve better.”