Who has sovereignty over gambling policy in the UK?
Campaign for Fairer Gambling
The Campaign for Fairer Gambling raises an EU question on gambling policy with various companies based offshore.
Earlier this month, the Guardian reported a Gambling Commission investigation into remote gambling operator, Prefre (Gibraltar) Ltd t/a Betfred. The report recommended independent third party auditing based on failings in social responsibility and anti-money-laundering procedures.
Our understanding is that this is the first time this type of auditing measure of a bookmaker has been required by the Commission. However, this does raise quite a few questions.
Why doesn’t the Commission itself conduct the audit?
Will the independent auditor be selected by Betfred for having a track record of whitewashing corporate failings?
Furthermore, would the Commission even have conducted the investigation were it not for recent reports that through their online platform, Betfred had merrily extracted almost £443,000 from a customer who was money laundering cash he had stolen from his employer? Fred, never one to be outdone by his competitors, follows hot on the heels of Paddy Power and Coral, who were also both recently reprimanded and fined for failures in money laundering and responsible gambling procedures.
Betfred is both a UK and a Gibraltar licensee and along with Coral, Ladbrokes and William Hill, is also a member of the Gibraltar Betting and Gaming Association (GBGA) where they base their remote operations. However, the Commission does not reference any cooperation in the investigation by Financial Services and Gaming in Gibraltar. The GBGA claims that the UK Governments’ decision two years ago to introduce UK regulation of offshore operators accessing UK gamblers is “dangerous” and “unlawful”.
The reality though, is that it is dangerous to allow remote gambling sites to operate under lax regulation as it facilitates the conduct of business in jurisdictions where government authorities assert that activity is illegal. Wild west regulatory standards also allow gambling operators to profit from operating illegal gambling and therefore in essence, money-launder the proceeds themselves.
The GBGA opposes the concept of paying tax where the gambler is located, the point of consumption, where the consequential gambling harm is suffered. It has taken action in the EU courts to try and reverse a UK court decision that this tax should be paid. It is the status of Gibraltar being a UK protectorate that enables this fiasco. Clearly the UK ceded a degree of sovereignty over gambling in the UK when allowing offshore sites to have legal access to UK gamblers.
The major UK bookmakers were not regulated until the 2007 enforcement of the 2005 Gambling Act. Their offshore sites avoided UK gambling tax obligations until a 2014 change in UK gambling law which the bookies see fit to challenge.
Remote operators take their customers full personal details, bank details and are expected to verify them. Once this is done, they can then track each customer’s spend, bets, losses and wins and monitor unusual behaviour.
Betfred had all that information for their online customer. His bank statements showed irregular deposits and one had been doctored to hide substantial payments from his employer. However, despite the fact that the customer had lost over £400,000, Betfred claimed that he was a professional gambler. On each and every aspect of the due diligence that should have been carried out on this customer, Betfred failed. They also failed to adhere to money laundering regulations with their inadequate policies and procedures to promote socially responsible gambling and their inadequate procedures for customer interaction. These are all damning failures for a licensed gambling operator. However, will anyone lose their license as a result?
At the very least it should raise some very serious questions about what is going on in Betfred shops. This case happened with a known customer but just imagine how much more dangerous betting shop’s anonymous cash gambling actually is.
As a DCMS Evaluation showed, FOBT gamblers’ previous staking of over £50 per spin on Roulette (the easiest game to launder money on) would rather reduce their stake to less than £50 per spin and remain anonymous than obtain a player loyalty ID card.
There is a clear issue with the operational culture at Betfred that has culminated in such a damning indictment by the regulator. Yet the Gambling Commission has devolved responsibility for reviewing those internal issues to an “independent third party” to be arranged by Betfred! So many breaches, so many failures, what a tough regulator!
After being tipped off by West Yorkshire Police and realizing the scale of failures at Betfred online, are they running scared of taking a look at what is going on in Fred’s shops and his near 5,400 FOBTs? The Commission has already described betting shops as having a “high inherent money laundering risk, especially where that model also offers B2 gaming machines”.
If Fred has been given an “F” for failure in his online operation, then concerns over the standards being upheld in his land based betting operation will certainly have been aroused.
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