Gamesys’ £6m Fine and the Problem of Over-Regulation in the UK Gambling Industry

In 2023, the Gambling Commission netted over £40m in regulatory action against licensees with one record-breaking sanction, hitting over £19m and levied against William Hill. Surprisingly, this figure represented a drop from 2022 (the high-ranking year on record for total financial sanctions), when the Gambling Commission amassed over £46m from non-compliant licence holders. 

Gamesys has now become the first name on the list of rule breakers for 2024, receiving a fine of £6m for social responsibility and anti-money laundering failures. The trend in ever-staggering financial sanctions leaves many in the industry questioning whether the Gambling Commission’s primary concern is creating a culture of compliance or whether it’s simply become too profitable to ignore.

The Gamesys case

On January 10th, 2024, the Gambling Commission published a fine against Gamesys via their Enforcement News page. The Commission justified the regulatory action on two fronts: social responsibility and anti-money laundering (AML) failures. 

If this news feels familiar, it should. Most of the regulatory action taken in the last few years has focused on these two points, which many in the industry now consider almost customary reasoning for validating million-pound fines. 

The Gamesys assessment cited failures between November 2021 and July 2022, making the following conclusions:

Social responsibility failures

1. Not consistently identifying customers at risk of experiencing harms associated with gambling by:

• Placing inappropriate reliance on checks that indicate whether a customer had a historical individual voluntary arrangement or has been bankrupt or insolvent as a sign of gambling harm.
• Having a system of deposit limits which, for some customers, did not identify risks of harm quickly enough – no risks were identified when one customer deposited £8,255 within three days of opening an account, another lost £5,968 within five weeks of opening an account, and another lost £17,482 within 34 days of opening an account.

2. Not always interacting with customers who may be at risk of or experiencing harm associated with gambling. Examples include:

• Only interacting with one customer once they had lost almost £10,000, and that ‘responsible gambling interaction’ involved recommending new games and promotions.
• Carrying out only one responsible gambling interaction with a consumer who lost £19,709 over five months.

3. Records of interactions, considerations, and rationale for decisions were not always recorded in sufficient detail, despite this being specified in the licensee’s responsible gambling procedures.

Anti-money laundering failures

1. In certain circumstances, some customers were able to evade some of the licensee’s AML triggers/thresholds and go on to spend significant sums without AML checks being conducted – one customer deposited £14,585 in 28 weeks, another deposited £18,884 in just over six months and another deposited £34,280 in five and a half months.

2. Conducting inadequate customer due diligence and being over-reliant on third-party information (such as internet research) or the customer’s verbal assurances for a number of customers, including one who deposited over £25,000 in three months, another who deposited over £58,000 in six months, and another who deposited over £65,000 in six months.

3. Having a ‘reinvestment of winnings policy’ was insufficient to mitigate the risk that deposited funds could be from illegitimate sources and not just from previous winnings.

While the case clearly demonstrates violations of key licensing commitments, what’s key to note is the lower levels of financial sums and the Gambling Commission’s acknowledgment in the statement that the payments could not be proved to be linked to crime. Given these two facts, the penalty given to Gamesys is disproportionate.

Why are gambling firms treated so harshly?

Looking at evidence from other industries and other gambling regulators around the world, no other sector or gambling jurisdiction levies fines against businesses that add up to millions upon millions in financial sanctions (even banks have received more minor fines for AML failures than William Hill’s 2023 penalty), begging the question: why are UK gambling firms receiving these harsh punishments? 

It seems that UK gambling companies are held to higher standards than other UK industries and gambling operators in other gambling locations. While there are other cases, such as Meta’s GDPR infringement, which landed the company a £1bn sanction last year for mishandling data, in most cases, UK gambling fines top the charts for most considerable financial punishments. 

Between 2017 and 2022, the Gambling Commission accounted for roughly 86% of the financial total of fines given out across all gambling jurisdictions. The average penalty for UK operators is £2.9 million, whereas the average in other jurisdictions is £211,000. Only two other gambling jurisdictions (Malta and Australia) have crossed the £1 million mark. The UK also gives out roughly 3.5x the fines of other gambling commissions. 

The numbers are stark and point to a problem with over-regulation and disproportionate fines in the UK. In case you’re wondering, the number of licensees and market size do not explain the differences in the volume and total financial weight of the fines.

One of the central issues many of these fines highlight is money laundering failures. Yet money laundering is heavily monitored among all industries, making it unlikely that regular casino players commit offences of this kind. 

Financial experts and economists have previously commented that the Gambling Commission uses AML rules as a tool against problem gambling. Still, this doesn’t entirely justify the GC’s thirst for financial penalties, especially as recent research has exposed that problem gambling is at low levels in the UK. 

Slot Gods have also uncovered significant flaws in the methodology the Gambling Commission uses in collecting and analysing problem gambling figures, which suggests figures are likely even lower than reported by the Commission. Despite the factual information, the drive toward more stringent regulation and compliance grows ever greater.

The problem of over-regulation

So, what is the logic behind these jaw-dropping fines? Is it a case of creating a culture of compliance, or should fines such as Gamesys be considered more of a revenue-generating exercise on the part of the government, which already benefits significantly from gambling taxes? Perhaps that is far too cynical a position.

A more likely scenario is that it’s a case of virtue signalling and an attempt at appeasing those who firmly oppose the UK’s gambling industry. This sector argues gambling harms are too great and sees gambling companies as too profitable.

But why are gambling operators silent on the matter? Over the last few years, the argument has been made many times that the UK industry is racing towards over-regulation and a state that will encourage consumers to use offshore casinos where their play is not limited (stake limits, slowing down spins, banning autoplay and bonus buys) and where their finances go unchecked. However, more recently, and in the face of strict opposition from the Gambling Commission, this opinion seems to have quietened, with many falling into line and getting behind the upcoming UK gambling review rules.

This leaves us questioning if the Gambling Commission has, through such monumental fines, created an atmosphere not of compliance but one where stakeholders fear the repercussions of speaking out. If so, this is not a conducive or effective environment for trust, which is especially problematic when the Gambling Commission claims to value transparent, two-way relationships with its licensees.