Betfred hit by £3.25m regulatory settlement

Betfred compliance failures, ICO updates, NCAA probes, Philippines do-over, Oz reforms +More

Compliance+More

Jul 18, 2023

Good morning. On today’s agenda:

Commission investigation reveals multiple RG and AML failures at Betfred.
The ICO suggests banks will have to amend privacy notes.
The body also provides an update on the Single Customer View project.
The NCAA says there are 17 open betting probes.
The Philippines regulator wants to launch a new licensing system.
Victoria and New South Wales announce reforms.

The luck I've had can make a good man turn bad.

Betfred failures

Betfred is to pay £3.25m to socially responsible causes after a Commission investigation revealed betting shop compliance failures.

Over the counter: The betting shop operator allowed one customer to stake more than £500k over a two-month period without completing any form of safer gambling interaction, according to the latest investigation revealed by the UK Gambling Commission.

The Commission said it was an example of Done Brothers, trading as Betfred, “making assumptions that customers were not at risk of harm because they were winning customers”.
The investigation also revealed Betfred had insufficient controls to protect new customers and monitor high-velocity spend and duration of play.
It also found a lack of evidence of evaluation of the effectiveness of individual customer interactions and a lack of record keeping, which limited the effectiveness of future interactions.

Off the books: Meanwhile, with regard to AML failures, the Commission found that Betfred had poor record keeping, while its financial alerts were set too high.

One customer lost ~£61k within a four-month period and no action was taken because Betfred previously concluded there were “no AML concerns”.
Betfred also failed to consistently obtain appropriate KYC and source of funds documentation from its customers and placed too much reliance on open source information.

It said a customer hit the AML trigger of £250k total stakes over the course of a year but their ID was only requested after a 10-day delay.

The Commission’s executive director of operations Kay Roberts said that while the focus has been on online operators, it was vital for standards to be improved “across the industry”, including in land-based operations.

Betfred will pay the £3.25m to socially responsible causes.

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Financial checks nod

The UK’s Information Commissioner’s Office (ICO) has “clarified its thinking” over financial risk checks.

Check the small print: The ICO has suggested that financial institutions will have to rewrite their privacy notices to reflect the “increased scope of data sharing” necessary for the further implementation of financial risk checks by gambling operators.

In a letter to the head of UK Finance, the executive director of regulatory risk at the ICO Stephen Almond said that in its view GDPR does allow for credit reference agencies (CRAs) to share personal information with operators for the purposes of performing financial risk checks.
As well as the amendments to privacy notes, the ICO would also expect gambling operators to “prominently and clearly” communicate to consumers the potential for data sharing.
The Almond letter noted that once such communications are introduced, consumers that “incur moderate or higher levels of spend” should expect that their data held by CRAs will be “shared with gambling operators for financial risk checks, prior to these risks occurring”.
The ICO expects the CRAs to “share only the minimum amount of personal data” in line with the UK GDPR.
The letter concluded that “in principle it is possible to design financial risk checks by gambling operators” utilizing data from CRAs that are “compatible with the purposes for which data is currently received” by the CRAs from lenders and other parties.

Somebody’s watching me: The ICO also noted that the upcoming Data Protection and Digital Information Bill currently in Parliament will include provisions around the sharing of data in relation to “safeguarding vulnerable individuals”.

Given the financial risk checks around gambling “will be critical” for protecting individuals suffering from gambling disorder, “there is a strong case that processing financial data for these checks would be considered necessary”.
“As such, we expect the future legislative reforms brought by the bill to further support the development of these safeguards”.

ICO and the SCV

I see you: The ICO also gave an update on the progress of the Single Customer View (SCV) project being run in conjunction with the Betting and Gaming Council and the major operators, which it said had entered its regulatory sandbox in February 2022.

The project has now exited the sandbox having achieved three of its first five objectives.
At the same time, the UK Gambling Commission said the project has now reached the pilot stage for a system to be called GamProtect.
It began operating on a trial basis in February 2023.

The SCV project exit report lays out how the data-sharing mechanism would work with regard to the closure of accounts due to ‘safer gambling reasons’. An initial list of seven reasons was whittled down to five:

The customer states they have a gambling problem or addiction.
The customer states they are seeking support or treatment for gambling problems.
The customer states they will harm themselves/someone else.
The customer states they should not be gambling because they have a medical condition.
The customer states they want to stop gambling forever due to problems with their gambling.

The report says that each operator would follow its own internal processes to confirm whether statements made by the customer correspond to one of these reasons, at which point it becomes known as the ‘closing operator’.

It would then share the name, date of birth, postcode, email and phone number of the customer with all other participating operators.
The customer would subsequently be notified their account had been closed and information shared via the SCV.
They would then be signposted to problem gambling support services.
The ICO report says the initial closure period would be two years.
Receiving operators would then undertake a matching process and when such a customer is identified as having an account, the account would be closed for five years.
The technology for the SCV is provided by the National Online Self-Exclusion Scheme (NOSES).

NCAA probes

The National Collegiate Athletic Association (NCAA) has logged 175 infractions of its sports-betting policy since 2018, with 17 ongoing investigations, according to a letter from the sports organization’s president obtained by the Associated Press.

Firing range: Athletes, coaches and administrators committed violations ranging from $5 punts to “providing inside information”, and the live investigations have a similar range of severity, the letter stated.

NCAA president Charlie Baker included the numbers in a response to a question by Rep. Dina Titus, a Nevada Democrat.
No schools or athletes are named in the letter, AP said.
The NCAA said that less than 0.25% of its approximately 13,000 sporting events “are flagged for suspicious betting patterns, and a much smaller percentage have specific, actionable information”.
In May, Alabama baseball coach Brad Bohannon was fired because of suspicious betting patterns involving his team.
The same month, Iowa and Iowa State said a combined 41 athletes were suspected to have broken rules on wagering.

North American notebook

Pennsylvania: The Gaming Control Board has introduced a more user-friendly online self-exclusion system enabling consumers to enroll in one, several or all self-exclusion programs.

Consumers can request removal from the casino self-exclusion program, extend the period of self-exclusion bans, view self-exclusion documents and status in real time and access links to gambling disorder information and the helpline.
All online games available within the state have options enabling players to place self-imposed limits on deposits, wagers, spend and play time.

North Carolina: Sen. Phil Berger expects a further expansion of gambling to be worked out before the legislative session ends on August 31, according to a report from AP. Berger said he believes chances to allow some form of new gambling in the state are better than 50-50.

The forms of gaming still being discussed by legislators include commercial casinos, VLTs or both.
Recall, sports betting was legalized last month and is expected to launch in the first half of next year.

Pagcor do-over

After a year to forget, the Philippines gambling regulator wants to do the whole thing again, starting with a sell-off of the country’s casinos and a brand new licensing system.

Private eyes: Speaking at G2E Asia, Alejandro Tengco, chairman and chief executive of the Philippine Amusement and Gaming Corp (Pagcor), said it was time for the regulator to divest its industry operations.

Remaining as both operator and regulator of 43 public-sector casinos gives Pagcor an “unfair advantage”, he said.
Selling off the Casino Filipino venues would also help bring in new investment and stop the regulator spreading itself too thinly.
“The privatization of our [own] casino operations is now at the forefront of our master plan, with Pagcor shifting its energy towards a purely regulatory role,” Tengco said.
In March, Pacgor wanted $1.47bn for the casinos.

Start again: The Philippines sector has been mired in corruption scandals in recent years, and the regulator believes making operators reapply for their licenses will help.

Philippine Offshore Gaming Operators (POGOs) will be required to reapply for their licenses, after Tengco said several had used their accreditations “as a cover for the conduct of illegal activities, including cryptocurrency, investment scams”.
“They will all have to reapply under a new framework and structure that we will be releasing soon. We shall undertake the painstaking process to weed out the unscrupulous companies and individuals,” he said.
Leaked reports stated that offshore operators will need capital buffers of authorized capital stock of at least $1.84m, with a quarter of that paid up.

Victoria’s new limits

Gamblers in the Australian state of Victoria will be allowed to put A$100 maximum into poker machines, down from the current load-up limit of A$1,000, under new laws.

Slow poke: The Victorian government has announced widespread reform of the electronic gaming sector, including a curfew between 4am and 10am for all venues with poker machines (except Crown Casino). ‘Pokies’ will also no longer take cash, which the government says will tackle money laundering.

Machines will be slowed to a spin rate of three seconds per game, limiting the amount of money that can be lost, alongside the new load-up limits.
"What we know through research is that the faster the spin rate the quicker you lose, but also it produces that dopamine in your brain that gives you that sense of winning even when you’re losing,” said gaming minister Melissa Horne.
Community Clubs Victoria (CCV) welcomed the tougher money laundering requirements, but said smaller clubs may take a disproportionate hit.
"We remain concerned about hyper-regulation and gambling migrating to the online space, without the same supervision in a physical environment,” added CCV chief executive Andrew Lloyd.

Tougher than all the rest: Victoria will soon have the strongest electronic gambling laws in Australia, according to the state leader Daniel Andrews. “[The reform] represents a profound step, indeed perhaps the biggest step of any jurisdiction across our country, to do just that – to keep people safe,” he said.

Some of the services provided by the Victorian Responsible Gambling Foundation will be subsumed by the Victorian Gambling and Casino Control Commission (VGCCC) from July 1, 2024.
The VGCCC was granted $71m in the state budget to tackle gambling harm minimisation.

NSW reforms

Panel beaters: Meanwhile, New South Wales wants a “comprehensive roadmap on gambling reforms” and is assembling an independent panel of experts to deliver it. The panel’s first task is to consider the fate of cashless gaming in electronic gaming machines across the state.

It will look at removing cash from gaming in hotels and clubs, whether infrastructure investments are required, and the impact on the industry in terms of revenue and jobs.
The gaming reform roadmap has a deadline of November 2024.
The panel will also explore the use of the $100m harm minimisation fund and expansion of the self-exclusion register.
Michael Foggo, former NSW Office of Liquor, Gaming and Racing commissioner, will chair the 16-member panel.
NSW is revising its state gambling laws as wider changes to advertising and self-exclusion schemes are rolled out by the federal government.

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Asian notebook

Japan: MGM Resorts in Japan has hit back at allegations of illegality on the part of its LeoVegas business, saying that before completing the acquisition last year it ensured LeoVegas blocked access to its site from within Japan.

The response came to claims from a group called the Society for Considering Gambling Addiction Problems that LeoVegas’ previous activities in Japan should disqualify MGM from being able to develop its Osaka IR project.

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