32Red and Platinum Gaming fined £7.1m by the Gambling Commission

32Red Limited (“32Red”) and Platinum Gaming Limited (“Platinum Gaming”), which are both group companies of Kindred Group plc (“Kindred”),  have been issued warnings and a £7.1m financial penalty by the Gambling Commission (the “Commission”) for social responsibility and anti-money laundering ("AML”) failings under the Licence Conditions and Codes of Practice (“LCCP”).

32Red

On 25 January 2023, following a review of its operating licence, the Commission imposed a warning under section 117 (a) of the Gambling Act 2005 (the “Act”) and a financial penalty of £4,195,655 on 32Red.

Breaches

AML

LC 12.1.1(2) and (3) of the LCCP provide that operators must ensure they effectively implement appropriate policies, procedures and controls, drawing on their risk assessment and which must be kept under review and revised appropriately.

LC 12.1.2(1) of the LCCP requires that operators based in foreign jurisdictions must comply with Parts 2 and 3 of the Money Laundering Regulations 2007 (UK Statutory Instrument No. 2157 of 2007) as amended by the Money Laundering (Amendment) Regulations 2007 (UK Statutory Instrument No. 3299 of 2007) (the “Money Laundering Regulations”).

The Gambling Commission found 32Red to be in breach of LC 12.1.1(2) and (3) and LC 12.1.2(1) as follows:

• It failed to thoroughly implement the measures described by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer Regulations 2017).
• It was overly reliant on the assumption that funds coming through Financial Conduct Authority (FCA) regulated firms mitigated/removed proceeds of crime risk.
• Its financial triggers for AML reviews were too high and not appropriate to effectively manage money laundering and terrorist financing risks.
• Customers were able to gamble significant amounts of money in short spaces of time without providing any substantial information about their financial circumstances.
• Most customers subject to source of funds and source of wealth checks were not restricted from depositing and gambling during the two-week response period. For example, following the expiry of a deadline for an information request, one account was able to continue depositing, gambling £16,280 in total and losing £8,321 for a further two weeks until the account was blocked.

Social responsibility

Social Responsibility Code Provision (“SRCP”) 3.4.1(1) and (2) of the LCCP (applicable at the time) state that operators must interact with customers in a way which minimises the risks of customers experiencing harms associated with gambling. This involves identifying at risk customers, interacting with them and evaluating the effectiveness of such interactions.

32Red was found to be in breach of 3.4.1 SRCP(1) and (2) as:

• It should have identified customers who may have been experiencing gambling related harm earlier with reference to gambling session times.
• Its controls failed to identify and protect gamblers with a potential problem. For example, one customer was able to deposit £43,000 and lose £36,000 within seven days.
• Customer interactions were found to be superficial and operators failed to probe customers further than accepting their own assurances that they could afford their level of gambling.

Platinum Gaming

On 13 February 2023, following a review of its operating licence, the Commission imposed a warning under section 117(a) of the Act and a financial penalty of £2,937,599 on Platinum Gaming.

Breaches

AML

LC 12.1.1(1) of the LCCP requires operators to conduct a risk assessment of money laundering and terrorist financing risks facing their business, which must be appropriate and reviewed as necessary in light of any changes in circumstances.

As above, LC 12.1.1(2) and (3) of the LCCP provide that operators must effectively implement appropriate policies, procedures and controls, and LC 12.1.2 of the LCCP requires compliance with the Money Laundering Regulations.

The Gambling Commission found Platinum Gaming to be in breach of LC 12.1.1 and 12.1.2 as:

• Its policies, procedures and controls in relation to AML were not appropriate.
• Its policies and procedures were not kept under review, or revised appropriately to ensure that they remained effective.

Social responsibility

SRCP 3.9.1 of the LCCP requires operators have and put into effect policies and procedures designed to identify separate accounts which are held by the same individual.

As above, SRCP 3.4.1(1) and (2) of the LCCP states that operators must interact with customers in a way which minimises the risks of customers experiencing harms associated with gambling.

Platinum Gaming was found to be in breach of SRCP 3.9.1 and 3.4.1 as:

• It failed to put in place effective policies and procedures to identify separate accounts held by the same individual. For example, self-excluded or blocked customers were able to register on Platinum Gaming after being blocked or self-excluded on 32Red.
• It failed to identify and interact with customers who may have been experiencing harms associated with gambling.

Comment

The Commission recognised that both operators had co-operated with it throughout its investigation and took corrective steps to address the identified failings.   

Kay Roberts, Executive Director of the Commission said:

“These failures highlight clearly that both operators failed to interact with customers in a way which minimises the risk of them experiencing harms associated with gambling. Our investigations also showed that policies and procedures were overlooked, both around customer accounts and anti-money laundering practices”.

“Ultimately, it is an example which all gambling operators should take notice of to ensure they protect their customers at all times.”

Kindred responded to the publication of the Commission’s findings to accept that “certain systems and processes in place in 2020 and early 2021 were not in line with Commission expectations around affordability”. It emphasised that improvements included, but were not limited to:

• Imposing limits, tailored to their financial risk profile, set on their account as part of a robust affordability framework – including a bespoke approach to customers under 25 years of age.
• Implementing full registration blocks for players who shown signs of significant financial pressure.
• Imposing voluntarily stake limits on certain products depending on individual risk profiles – with lower affordability customers unable to stake at higher levels.
• Rolling-out automated interventions to ensure rapid reaction to any signs of escalating risk among players.

It also noted that “[s]ince Q1 of 2020 up to Q4 of 2022, there has been a 57 per cent reduction in the revenue derived from high risk players in the UK. Over the last 90 days in the UK, 87 per cent of the interventions made after a detection by it’s the PS-EDS monitoring system resulted in healthier behaviour – with over 50 per cent of UK players now voluntarily using at least one responsible gambling tool. This is a strong foundation to continue building from”.

The Commission’s public statement provides limited information on the specifics of the failings identified, but it is clear that affordability was a focus – referring to losses in short periods of time, superficial interactions and a failure “to probe customers further than accepting their own assurances”.

Co-authored by Charlotte Sanderson