Caesars Entertainment to Pay £13M Sanction to UKGC

A series of systematic failings by Caesars Entertainment in multiple UK casinos has led to it being on the receiving end of a £13 million ($16m) fine from the United Kingdom Gambling Commission (UKGC). The operator, which owns 11 land-based casinos throughout the country, has also been told to implement a series of improvements to its social responsibility, money laundering and customer interaction sectors. The news was announced on the UKGC website on April 2.

Many of the failures were related to VIP players at the casinos who were allowed to play and lose large sums of money with little intervention from the establishments. The investigation into and findings of Caesars has also led to the departure of three senior managers who have proceeded to surrender their personal licenses at the same time.

Largest Fine Ever Handed Out by UKGC to an Operator

Even though the Gambling Commission has been on quite the rampage over the past couple of years, handing out fines to a number of operators and companies with regard to social responsibility and more, the £13 million sanction imposed on Caesars is the largest it has ever unleashed. The failings discovered by the Commission took place between January 2016 and December 2018 and saw multiple VIP players not given the correct attention from employees despite there being, on numerous occasions, clear indications of problem gambling situations.

The most recent fine prior to this to be handed out by the Gambling Commission was in February when it took aim at Mr. Green. The brand, which is owned by William Hill, had a £3 million (about $3.7m) fine handed out to it, which was also for what were described as “systematic failings” with regard to money laundering and problem gambling. Yet, the sanction on Mr. Green was quite minimal in comparison to the one that Caesars is being forced to pay.

Various Serious Issues Highlighted by UKGC

As part of its investigation, the Commission found evidence of instances of inadequate interaction with customers, leading to them losing large amounts of money, and not intervening on players who were gambling without the financial means to do so.

Speaking of the situation, Chief Executive of the Gambling Commission, Neil McArthur, said that the details of this sanction have been published now because “it’s vitally important that the lessons are factored into the work the industry is currently doing to address poor practices of VIP management…” “The failings in this case are extremely serious,” he continued. “A culture of putting customer safety at the heart of business decisions should be set from the very top of every company and Caesars failed to do this.”

Neil McArthur, Head of the Gambling Commission

McArthur went on to state that the individual license holders involved with the decisions that were taken in all cases remain under investigation. This is despite three of the senior management having resigned from their positions and handed in their licenses.

“We are absolutely clear about our expectations of operators – whatever type of gambling they offer they must know their customers. They must interface with them and check what they can afford to gamble with – stepping in when they see signs of harm. Consumer safety is non-negotiable,” the CEO finished with.

Details of the Findings by the Commission

The Gambling Commission uncovered details of various failings in the social responsibility sector, including:

• Allowing a customer who had previously self-excluded to gamble and lose more than £240,000 within 13 months.
• Additional inadequate interaction with a player who proceeded to lose over £323,000 over 12 months despite having displayed signs of problem gambling prior to this. These signs included a total of 30 gaming sessions going beyond five hours.
• A player identifying herself as a self-employed nanny and telling employees that her savings had all been spent but still being allowed to lose £18,000 in one year. The customer also advised staff that she was borrowing money from her family and eating into a bank overdraft to be able to fund her gambling activities – something that has occurred at casinos too frequently.
• Failure to interact with and complete source of funds checks on a customer who identified himself as a retired postman and who proceeded to lose a total of £15,000 in just 44 days.

Alongside the social responsibility findings, it was discovered that Caesars failed to adequately identify and tackle money laundering issues. These included the following situations:

• The operator not proceeding with an adequate source of funds check on a customer who identified herself as being a waitress and who was then allowed to buy-in £87,000 over a 12-month period as well as lose £15,000 in the same timeframe.
• No enhanced customer due diligence undertaken on a player who went on to lose over £240,000 in a 13-month period.
• Inadequate source of funds check on a customer who was able to drop about £3.5 million and lose £1.6 million in the short time span of just three months.
• The operator not obtaining any adequate evidence with regard to the source of funds for a politically exposed person (PEP) who lost a total of £795,000 over 13 months.

Where Does Caesars Go from Here?

The £13 million fine handed out to Caesars Entertainment will be directed in full towards the National Strategy to Reduce Gambling Harms. Launched by the Commission on April 25, 2019, this three-year strategy looks to drive and coordinate work to bring about a lasting impact on reducing gambling harms.

Some have suggested that the sanction handed out by the UKGC is an extreme measure to undertake, especially in the current climate, where land-based casinos have had to close their doors in a bid to stop the spread of COVID-19. The imposition of a £13 million fine is likely the very last thing that Caesars Entertainment needs right now; yet, this hasn’t stopped the Gambling Commission from handing it out.

In fact, since January of 2020, the Commission has taken to laying out hefty fines on various operators and companies. This included an £11.6 million fine for Betway (which prior to this sanction on Caesars, was the record for highest fine from the UKGC) and the aforementioned £3 million on Mr. Green. The Commission has managed to garner £27 million in penalty packages in 2020 alone, and the year is only three-months old.

Potential Threat to Caesars and Eldorado Deal?

This doubtless adds extra doubt to the deal that Caesars signed in to with Eldorado Resorts last June. That $17.3 billion merger was approved by shareholders from both corporations, but for the moment, it is still awaiting regulatory approval from various jurisdictions. Under the terms of this arrangement, Eldorado would acquire all of the properties owned by Caesars around the United States; yet, because of the outbreak of coronavirus, the deal could be suspended.

Shares in Eldorado have already gone through a drop of about 75% since the beginning of the year thanks to the fact that the hospitality industry as a whole has taken a severe knock from the COVID-19 pandemic. Financial institutions have pledged to put up more than $7 billion in loans for the acquisition of all Caesars’ US properties, but they could now find that selling the idea of the merger to investors is quite a difficult process. While there haven’t been any details released on how the merger stands for the time being, it’s likely to be on unsteady ground as many things in business are right now.

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