Ladbrokes Coral to pay £5.9m for social responsibility and AML failings

31 July 2019

The GB Gambling Commission has handed Ladbrokes Coral a penalty package of £5.9m (€6.4m/$7.2m) for systematic failings related to social responsibility and anti-money laundering measures, while investigations into the actions of personal management licence-holders continue.

A Commission-led investigation found that from November 2014 to October 2017, both Ladbrokes and Coral failed to put in place effective safeguards to prevent money laundering and consumers suffering gambling harm.

The regulator noted that this applied to when Ladbrokes and Coral operated as separate entities prior to merging in November 2016, as well as after they joined together to form the Ladbrokes Coral Group, which is now owned by GVC Holdings.

The Commission, which said GVC fully complied with its investigation, focused on Ladbrokes Coral’s handling of seven customers’ accounts, having brought together complaints from legal representatives, reports from other agencies and associated media reports.

Among the specific failings highlighted by the Commission was an instance when Ladbrokes did not carry out any social responsibility interactions with a customer who lost £98,000 over two-and-a-half years, had 460 attempted deposits declined, and asked the operator to stop sending promotions. 

Another customer spent £1.5m over the space of two years and 10 months, and although Coral did request to see evidence of their source of funds, the operator could not provide evidence of social responsibility interactions. This is despite the customer displaying signs of problem gambling, including logging into their account on an average of 10 times per day for a month and losing £64,000 in the process.

Ladbrokes could also not provide evidence of carrying out social responsibility interactions with a customer who deposited more than £140,000 in the first four months of their account being open.

In addition, the Commission highlighted how Ladbrokes identified concerns with a customer, but allowed further significant gambling without taking additional steps to verify the source of funds or consider if the customer in question could afford to spend and lose this amount of money.  

The Commission ruled that Ladbrokes Coral was in continual breach of licence condition 12.1, which requires full compliance with the Money Laundering Regulations 2007, and the ordinary code provision that preceded this condition before being replaced with the updated version in October 2016.

Licence condition 12.1.1(1) requires: licensees to conduct an assessment of the risks of their business being used for money laundering and terrorist financing.

The regulator also found Ladbrokes Coral in breach of social responsibility code provision 3.4.1, which requires effective policies and procedures for customer interaction. This includes a requirement to make use of all relevant sources of information, to identify at-risk customers who may not be displaying obvious signs and to interact with VIP players.

GVC and Ladbrokes Coral have admitted to the failings and agreed to pay the penalty package in full. A payment of £4.8m will be made in lieu of a financial penalty, which will be directed towards delivering the National Strategy to Reduce Gambling Harms. 

A total of £1.1m will be paid out to victims where it has been found, or could reasonably be suspected to be, the proceeds of crime. GVC will also pay £24,700 towards the Commission’s costs of investigating the case.

GVC has also committed to review five further customer accounts identified by the Commission and will divest itself of any gross gambling yield as directed.

“Decision makers at gambling businesses need to invest in the welfare of their customers and the integrity of money being gambled with,” the Commission’s executive director, Richard Watson, said.

“These were systemic failings at a large operator which resulted in consumers being harmed and stolen money flowing though the business and this is unacceptable.”

In addition to agreeing to pay the fine, GVC has committed to overhauling its responsible gaming and customer interaction processes, including increases in resources, staff retraining and hiring a dedicated player protection expert outbound call team. 

GVC will also implement its ‘Changing for the Bettor’ strategy, comprising research and educational projects, funding treatment for problem gambling, creating cultural change and promoting responsible attitudes in the industry.

Further planned activity includes engaging a UK firm of solicitors to review any new high or higher-risk customers as may be identified by the Commission or by GVC, with any findings to be fed back into improvements that could be made to current processes and dealing with divestment. 

The solicitors' firm will also undertake a review and dip-sample of an internal review completed by Ladbrokes Coral from July to October 2017, applying its new processes to all active customer accounts to evaluate whether it was robust and fit for purpose. GVC will then instruct the firm to dip-sample an internal review of a group of customers, to evaluate the robustness of this process. 

The appointed firm will manage and oversee a review of the current Ladbrokes Coral process and provide an independent analysis of its procedures to ensure it meets or exceeds its regulatory obligations. 

In addition, the solicitors will review the top 50 customers by gross gambling yield (GGY) for the years 2015, 2016 and 2017 to consider whether any of the failings identified in the Commission’s report are evidenced and if so, to divest GGY accordingly.

Commenting on the ruling, GVC chief executive Kenneth Alexander said: “Soon after the acquisition of Ladbrokes Coral following meetings and ongoing enquiries by the Gambling Commission, it became clear to GVC that there had been historic compliance failures within certain areas of the operations.

“Working closely with the Gambling Commission and an independent firm of solicitors, GVC facilitated a thorough, prompt and far-reaching investigation, which has led to today’s settlement.

“These historical failings were unacceptable and since the acquisition, I have overseen a systematic review of the enlarged group’s player protection procedures and the individuals responsible for these problems have exited the business. I am confident that, we now have in place a robust and industry leading approach to player protection.

“More broadly, GVC is determined to take the lead in the critical area of responsible gambling, and is taking decisive, tangible action across a range of initiatives.

“However, there is more to be done and social responsibility and we will continue to work with other gambling companies and the Gambling Commission to raise operating standards.”