The Commission imposed the settlement on William Hill Group and its subsidiaries over a number of serious social responsibility and anti-money laundering (AML) failings, which took place between 2020 and 2021.
The settlement represents the largest single financial penalty ever announced by the regulator, being greater than the previous £17.0m record settlement agreed with Entain in August 2022.
Lloyd Firth, counsel in WilmerHale’s UK white collar defence and investigations practice, said that the high amount “appears to be both a consequence of the seriousness of the failings that were identified and a clear signal to the UK gambling industry that the Commission is willing and able to take significant regulatory enforcement action”.
However, Firth emphasised that, rather than being a sign that enforcement was being dialled up, the outcome should be seen as a continuation of the consistent enforcement action taken by the regulator over the previous years.
This is a sentiment echoed by Nicola Finnerty, partner in the criminal litigation team at Kingsley Napley LLP, who argued that the actions saw the regulator “reinforcing” its position as one of the most assertive of the UK’s anti-money laundering supervisors.
Threat of licence suspension
In a statement accompanying the regulatory settlement, Commission CEO Andrew Rhodes said that the uncovered failings were “so widespread and alarming” that serious consideration was given to licence suspension.
In the end, the Commission did not opt to go down this path, but Finnerty argued that talk of suspension may have proved conducive for encouraging cooperation from William Hill.
gambling commission chief executive Andrew rhodes
“While we have yet to see a suspension of a major high profile gambling operator, clearly the threat alone provides motivation for early engagement.”
Firth said that the imposition of a significant financial penalty is not mutually exclusive with licence suspension, and that both could be used in combination depending on the appropriate circumstances.
“Suspension of a licence may be appropriate, for example, where there are concerns about serious ongoing breaches and a period of suspension is deemed necessary to allow the operator to remedy the breaches,” he said.
“In determining the appropriate outcome, the Commission will have regard to its published statements of principles – for licensing and regulation and for determining financial penalties – and indicative sanctions guidance. However, the policies are not prescriptive.
“The outcome will be based on an assessment of the risks, the wider circumstances of the case and the range of options available.”
Licensing conditions
In addition to the financial penalty, the Commission also will require additional licensing conditions from William Hill in future. Going forward, a board member must oversee an improvement plan, and a third party audit is to be initiated to test the effectiveness of the business’ safer gambling and AML policies.
According to Firth, these changes are “designed to strengthen senior executive accountability and test the everyday effectiveness of the compliance framework and will undoubtedly help to improve the compliance function”.
On the other hand, Finnerty argued that these changes are a “practical and effective” way for the Commission to ensure ongoing monitoring of the companies in question without further drawing on the Commission’s resources. She also highlighted the regulator’s decision to emphasise the role that technology plays in detecting gambling harms or criminal risk more quickly.
“This should be taken as a signpost for all gambling businesses to consider what technologies they could or should be looking at to strengthen their own systems and controls,” said Finnerty.
AML implications
According to Mike Ward, executive chairman of UK source of funds and AML fintech business Armalytix, the regulatory payment illustrates how the AML landscape is changing more generally.
He argued that there is an increasing acceptance in many sectors that source of funds checks are not at the level required for the new standard.
“What’s toughest for the gambling sector is that there’s no specific guidance, it is more of a principle based system. But then I would also say that most sectors are in a similar situation.”
Ward also emphasised that the relationship between different sectors was important, since criminal activity may move from one industry to another depending on the shifting competencies of AML regimes.
He added that in the future, this may mean that online gaming faces increased AML pressures as other sectors tighten up their practices.
“But if we talk about it purely from a money laundering standpoint, there’s little doubt in my mind that, not for any fault of their own, online game gambling is going to be increasingly targeted by money laundering.”
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The third Ethical Gambling Forum on the lovely Sunborn in Gibraltar.
“Hear from an excellent array of speakers about Safer Gambling & ESG. Our range of experts includes C-Level Executives, Safer Gambling teams, HR officers and a range of experts from many fields across the many subject areas. Get practical advice, case studies and the chance to share your views on the big questions!” This was the campaign with which Gibraltar promoted the event.
Gibraltar's Minister for Justice, Trade and Industry, Nigel Feetham, gave the opening speech at the Ethical Gambling Forum 2024, highlighting the importance of ethical practices within the gaming sector. In his speech, Feetham emphasized the need for responsible behavior by the regulated sectors (both financial services and gaming) in Gibraltar, which is crucial to maintaining the Rock's reputation and fostering economic growth.
The highlights of his speech were as follows:
It is a very important sector for Gibraltar and is highly valued.
The importance of gaming companies contributing financially to Gibraltar, acting responsibly and maintaining the good reputation of the jurisdiction.
Government support for regulated businesses to expand into international markets (not just the UK) to strengthen economic resilience.
The responsibility of authorized operators to comply with various laws and regulations, including tax and labor regulations.
The emphasis on public benefits derived from taxes [that levy the sector], such as financing education, health, and social services.
A call for a joined-up approach to regulation, focusing on economic contribution, compliance mindset and social commitment.
The importance of trust between the government and the business community, with a strong emphasis on integrity and compliance with ethical issues.
The Minister's support for responsible gaming initiatives, including the University of Gibraltar's Center of Excellence for Responsible Gaming.
In a press release on Friday, the Netherlands Fiscal Information and Investigation Service (FIOD) revealed that it arrested a 26-year-old male on April 29 on suspicion of money laundering, embezzlement, and fraud.
The authorities searched the Dutch national’s residence, seizing assets worth more than €11.4m ($12m), such as a luxury car, real estate, and cryptocurrency. It said that further arrests could be in the cards.
Raising suspicions
The FIOD started looking into ZKasino on April 25 after receiving complaints from people who invested in the blockchain casino project. Investigators worked closely with cryptocurrency exchange Binance’s Financial Crime Compliance and Investigations team to freeze funds.
The FIOD intends to return the money to the victims if they cooperate with the investigation. A Telegram group named “ZKasino Legal Task Force” was set up by people impacted by the scam; the FIOD posted in the channel when the arrest was made.
Investors began to question the legitimacy of ZKasino shortly after the network went live on April 20. More than 10,000 investors had invested 10,515 ETH ($33m) on the promise of earning rewards for their locked-up funds.
The platform’s owners swapped the ETH with its $ZKAS tokens, which they put into the Lido staking protocol. The website also no longer showed a statement saying investors would be guaranteed to receive their returns in ETH. Numerous cryptocurrency exchanges quickly moved to cancel their plans to list the $ZKAS token over these suspicious actions.
Parliament restricted gambling advertising on Tuesday. The texts were adopted unanimously at second reading with 198 votes in favour.
Advertising of gambling is prohibited in radio and television programmes, except for the broadcasting of the draws of the Bulgarian Sports Totalizator and their announcement, in printed works and electronic media, including websites, on state-owned and municipal property and on sites licensed under this law.
It is allowed to advertise gambling on outdoor constructed billboard-type facilities located no less than 300 meters from educational institutions – schools, universities, kindergartens, community centers, playgrounds, etc.
Advertising of gambling is allowed on equipment, sports facilities, sports halls, stadiums and swimming pools, materials or products of sports federations, clubs, associations, and organizations, except on sports equipment, materials or products intended for use by minors.
Gambling with slot machines and in a gaming, casino will only be allowed in settlements with more than 10,000 inhabitants, giving operators a three-year period to bring their operations in line with the adopted changes.
The Municipality of Salerno, through a union ordinance, has established that for public gaming halls and betting halls (including bowling and bingo halls) with gaming as their exclusive or main activity, and in which access to minors is prohibited, the following timetable must be observed: from 10am to 2am.
For businesses - equipped with slot machines - with exclusive or prevalent activities other than gaming (bars, tobacconists, etc.), and in which access to minors is not prohibited, the machines may remain switched on during the following hours: from 9 am to 12.30 pm, and from 14.30 pm to 23 pm.
The ordinance does not apply to businesses that have installed exclusively gaming machines without cash prizes and in any case to machines without cash prizes installed outdoors inside public establishments.
The UK government has published its response to the Culture, Media and Sport Committee of the House of Commons observing sessions and consultations related to the Gambling Review.
Chaired by Dame Caroline Dinenage (MP), in December, the Committee published its ‘second report of sessions 2023-to-2024’ related to implementing changes and proposals outlined by the Gambling Review’s White Paper.
The remit saw the Committee underline the 17 overarching policy proposals of the White Paper to include “new protections for online gambling consumers; the creation of a statutory gambling levy to raise money for problem gambling research, prevention and treatment; the relaxation of certain restrictions of land-based gambling premises, as well as new powers for local authorities which licence them; and the creation of a non-statutory gambling ombudsman to adjudicate disputes between gambling companies and the customers relating to social responsibility failings.”
Further proposals include strengthening the Gambling Commission with new powers to tackle unlicensed online gambling, and a review of how the Commission’s fees are set and applied.
Observing the White Paper’s proceedings, the Committee detailed recommendations that “the government must set out a detailed timetable for the delivery of the White Paper’s proposals, including when relevant primary legislation will be introduced to Parliament.”
However, the government expressed its commitment to proceeding with the consultations on the White Paper swiftly and has highlighted the ongoing work to implement the proposed measures.
Work to date includes the three public consultations on key proposals from the White Paper related to new land-based gambling measures ,the design of the Statutory Levy for safer gambling, and new stake limits for online slots.
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