The United Kingdom Gambling Commission (UKGC) seems to have been on a tear over the past year or so, finding gaming organizations to be in violation of their obligations and ordering them to pay seven-figure fines. The latest target of this watchdog organization is Paddy Power Betfair, which was found culpable in relation to its failure to protect problem gamblers and its lack of adherence to anti-money laundering (AML) guidelines. Paddy Power Betfair must hand over more than £2.2 million ($2.9 million) for these infractions.
According to the information provided in the Oct. 16 ruling on the UKGC website, Paddy Power Betfair allowed two people to gamble on its Betfair betting exchange using stolen funds. The Betfair Exchange is similar to a traditional sportsbook, but all bets are conducted between individual customers with the operator merely taking a percentage commission.
One of the customers had pilfered the cash that he used for betting from his employer, a charity. While this person and the charity in question remained unnamed by the UKGC, independent media outlets have determined that the culprit was Simon Price of the Birmingham Dogs Home. Mr. Price and his wife Alayna were convicted on fraud charges and given sentences of five years and two years (suspended) respectively in December 2017.
The Executive Director of the Gambling Commission, Richard Watson, commented:
“As a result of Paddy Power Betfair’s failings significant amounts of stolen money flowed through their exchange and this is simply not acceptable. Operators have a duty to all of their customers to seek to prevent the proceeds of crime from being used in gambling.
“These failings all stem from one simple principle – operators must know their customer. If they know their customer and ask the right questions then they place themselves in a strong position to meet their anti-money laundering and social responsibility obligations.”
The incidents in question occurred in 2016. In addition to its errors with regard to the two Exchange bettors noted above, the gambling firm was also found to have exhibited AML and consumer protection inadequacies involving three retail and online bettors.
Paddy Power Betfair has accepted that its current practices are inadequate, and it has promised to undertake improvements in its AML and problem gambling policies. Furthermore, it will pay penalties exceeding £2.2 million, broken down as follows:
Paddy Power Betfair was formed by the February 2016 merger of bookmaking leaders Paddy Power and Betfair. On top of its strong online presence, the corporation manages more than 600 Paddy Power brick-and-mortar betting shops across the United Kingdom and Ireland. Besides its two leading brands, this conglomerate also operates U.S. television channel TVG, betting risk management service Airton Risk, Australian sportsbook Sportsbet.com.au, and several other gaming-related enterprises.
The latest addition to the Paddy Power Betfair fold is daily fantasy sports site FanDuel, which was purchased in the wake of the U.S. Supreme Court's Murphy decision in May 2018. FanDuel shortly opened up a New Jersey sportsbook although the NJ division of FanDuel has not been without its issues.
Besides a betting exchange, Betfair also offers a more standard sportsbook, casino gaming (including live dealer games), a racebook, pools betting, bingo, and an online poker room. The Paddy Power website provides most of these same types of wagering, except for the exchange and pools betting.
Paddy Power Betfair is publicly traded on the London Stock Exchange as PPB. In 2017, it earned an operating profit of £392 million ($513 million) on revenues of £1.75 billion ($2.3 billion). The £2.2 million that it has been penalized thus represents less than 1% of its annual profits: a sum that it should easily be able to afford.
The UKGC has found fault with Paddy Power before when it was a separate company and not yet merged with Betfair. In February 2016, Paddy Power was levied a penalty of £300,000+ ($393,000) for AML and social responsibility missteps stretching back to early 2014.
In a strange tidbit foreshadowing the recent October 2018 ruling, a specific individual convicted of fraud in 2015 was determined to have bet with the firm using stolen cash. Mr. Mark Cooney lifted more than £250,000 ($327,000) from customers of the bank where he worked and then deposited it at Paddy Power to gamble with.
Gambling enterprises that decide to obtain the proper licensure to transact legally in the United Kingdom must comply with the decisions of the UKGC, which has shown a penchant for decreeing outsized fines. For instance, in June 2018, 32Red had to forfeit more than £2 million ($2.6 million) for letting a high-roller gamble substantial sums without inquiring adequately into the source of his income. And in August 2017, the Gambling Commission issued its largest-ever fine of £7.8 million to 888 ($10.2 million) for deficiencies in safeguarding vulnerable consumers.
In addition, there are several other bodies that weigh in on various aspects of the gambling industry, often to the detriment of the businesses engaged therein. The Advertising Standards Authority sometimes declares specific ads to be in violation of the rules as it did when it determined that a GalaSpins commercial implied that slot machine results are determined by skill and when it took PokerStars to task for allegedly confusing viewers into believing that making big bluffs was all that was needed for poker success. The Competition & Markets Authority has interfered in the acquisition of Sky Betting & Gaming by The Stars Group, parent company of global internet poker leader PokerStars.
The tough regulatory requirements of U.K. gambling licensing may perhaps not deter the biggest multinational conglomerates, like Paddy Power Betfair. Yet, smaller players may find the demands of staying in full compliance with the ever-shifting rules too burdensome to bear. Therefore, many of them may elect to exit the market while others opt to remain without seeking the proper licenses.
In fact, there are already several trustworthy betting sites that serve U.K. citizens without holding a valid license from the UKGC. We know that they're honest and reputable because of their solid record conducting fair gaming and paying cashouts faithfully in other countries around the world.
We recommend Sportsbetting.ag if you're in search of an all-in-one gambling shop that ignores the nanny-stateish commands of the British authorities. It has a poker room, sportsbook, casino, live casino, racebook, and other gambling products. Read our detailed Sportsbetting review page for additional info.