The Irish bookmaker Paddy Power Betfair has been hit with a hefty fine – £2.2m ($2.91m) by the UK Gambling Commission.
The industry regulator claimed that during 2016, the operator failed to protect its customers and stop stolen money from being gambled.
Failed to intervene
The commission charged that the betting group failed to intervene when customers displayed signs of problem gambling and did not carry out adequate anti-money-laundering checks. An investigation by the regulator revealed that two customers were allowed to gamble “significant sums” of stolen money on the company’s betting exchange, Betfair.
Failings were also identified involving three online customers and in the betting firm’s shops, including weaknesses in its source of wealth and social responsibility checks. All of the above contributed to the £2.2m fine.
Operators “have a duty”
The executive director of the commission, Richard Watson, said: “As a result of Paddy Power Betfair’s failings, significant amounts of stolen money flowed through their exchange and this is simply not acceptable. Operators have a duty to all of their customers to seek to prevent the proceeds of crime from being used in gambling.
“These failings all stem from one simple principle: operators must know their customer. If they know their customer and ask the right questions, then they place themselves in a strong position to meet their anti-money-laundering and social responsibility obligations.”
The Paddy Power Betfair chief executive, Peter Jackson, said: “We have a responsibility to intervene when our customers show signs of problem gambling. In these five cases, our interventions were not effective, and we are very sorry that this occurred. In recent years, we have invested in an extensive program of work to strengthen our resources and systems in responsible gambling and customer protection.”
The latest penalty is part of a wider clampdown by the Gambling Commission on failures within the betting industry. In February, it fined William Hill £6.2m ($8.2m) for failing to protect consumers and prevent money laundering.
Of the fine, £1.7m ($2.25) will be donated to Gamble Aware, an independent charity working to reduce gambling-related harm across the UK. The money stolen from Birmingham Dogs Home by Price and spent with Betfair will be returned to the charity. However, the Commission also earmarked about £50,000 ($66,000) to be put towards their own investigative costs.
A bad month
Altogether it has been a bad month for Paddy Power Betfair, as shares have dropped to only 30% from just six months ago after the Irish Prime Minister, Paschal Donohoe, announced an increase in the Irish tax rate. As a result, £250bn ($329.75bn) was wiped off its share value.
Also troubling is its Australian brand Sportsbet, which has been struggling recently because of changes in “point of consumption taxes.”
The company announced it had cut its annual earnings guidance by around £12.5m ($16.5m), despite the extra funds generated by the summer’s World Cup. Investors have expressed their disappointment with this year’s figures to date, with six-month growth also falling short of predictions.