Gambling Commission PUNISHES Gamesys With £6M+ Fine

The United Kingdom Gambling Commission (UKGC) is at it again, handing out massive fines for failures to adhere to ever-tightening gambling rules. The latest incident involves Gamesys Operations Limited, which has been fined £6 million ($7.7 million) for social responsibility and Anti-Money Laundering (AML) shortcomings. The news was announced in a statement on the UKGC's website dated Jan. 10, 2024.

About Gamesys

Gamesys Operations Limited is a Gibraltar-based organization that holds licenses from the UKGC to conduct casino gaming, bingo, and sports betting over the internet. It has around a dozen active domains that are listed on its license, including those for the brands Bally Casino, Double Bubble Bingo, and Jackpotjoy.

Jackpotjoy appears to be the most popular of its gambling websites, judging by the amount of web traffic it attracts. We can look at this brand to get an idea of the products offered by Gamesys.

Website of Jackpotjoy

We can see the categories for Online Bingo, Slots, Casino, and Slingo & Scratchcards. So far this seems to be a standard online casino fare though we do note the presence of poker in the menu too. Gamesys does indeed run its own poker network, focusing on small-stakes play and its bespoke lottery-style poker game, called “Wild Seat Poker.”

Gamesys was founded by a small group in 2001. Beginning in 2013, it was the subject of several rounds of corporate acquisition and consolidation before finally being purchased by U.S. casino company Bally's in 2021. For the year 2020, its last before being bought by Bally's, Gamesys booked net income of £67.2 million ($85.7 million) on revenue of £727.7 million($927.7 million). It traded on the London Stock Exchange under the ticker symbol GYS.

What Did Gamesys Do?

Like with many of the crackdowns initiated by the UKGC recently, this one involves alleged oversights when dealing with sizeable sums of money. These failures fall broadly into the categories of Anti-Money Laundering (AML) and social responsibility. AML shortcomings relate to funds that might possibly be derived from illegal activity while social responsibility faults relate to inadequate protections for users who might have a gambling problem.

Among Gamesys' social responsibility failures were:

• Relying too heavily on checks for prior bankruptcy or insolvency to determine if someone was experiencing gambling harm
• Deposit limits that did not identify risks of harm soon enough. For example, no red flags were triggered when one customer deposited £8,255 ($10,523) within three days of opening an account nor when another lost £5,968 ($7,608) within five days after registering an account. It was a similar story with one customer who lost £17,482 ($22,286) within 34 days after joining the site.
• Inadequate interactions with users who might be experiencing harms from their gaming, like one individual who was not contacted until losing nearly £10,000 ($12,750), and the interaction that finally did occur involved recommending new games to try.
• Not enough detail when recording “interactions, considerations, and rationale for decisions”

And on the Anti-Money Laundering side of things:

• Customers were able to fund their accounts with significant sums of money, and the appropriate AML checks were not conducted. Three instances included depositing £14,585 ($18,594) in a 28-week period, depositing £18,884 ($24,075) in around half a year, and depositing £34,280 ($43,707) in slightly less than half a year.
• Insufficient due diligence and overreliance on third party research, including on the internet, and verbal customer assurances in cases where users deposited in excess of £25,000 ($32,000) in three months, £58,000 ($74,000) in six months, and £65,000 ($83,000) in six months.
• Followed a “Reinvestment of winnings policy” that failed to deal with the risk that some funds could have derived from illicit sources rather than from prior wins.

About the UKGC's Investigation

After reviewing the license of Gamesys, the Commission determined that a series of infractions occurred between November 2021 and July 2022. Among the various conditions and regulations that Gamesys breached were:

• Paragraph 2 of licence condition 12.1.1 Anti Money Laundering – prevention of money laundering and terrorist financing
• Paragraph 1 of licence condition 12.1.2 AML – measures for operators based in foreign jurisdictions
• Paragraphs 1 and 2 of Social Responsibility Code of Practice 3.4.1 – customer interaction
• Ordinary Code Provision 2.1.1 AML – Commission guidance for remote and non-remote casinos

As a result of these findings, the Gambling Commission opted to impose a warning, as provided for under section 117(a) of the Gambling Act 2005, impose a financial penalty of £6,071,292 ($7,740,897), and add an extra condition to the company's operating license as permitted under section 117(1)(b) of the Gambling Act 2005.

Curiously, in the Nov. 22, 2023 document describing its actions, the Gambling Commission noted that the licensee was cooperative throughout the investigation and took corrective steps. None of the money deposited by the individual customers scrutinized during the review came from criminal proceeds.

That's right – despite no evidence of any criminal wrongdoing being uncovered, either on the part of Gamesys or its customers, the UKGC still felt that a fine of more than £6 million ($7.7 milllion) was appropriate in this case. We shudder to think what the suitable penalty would be had the Commission actually uncovered any legitimate instances of money laundering or terrorist financing.

Gambling Rules Too Harsh?

The UKGC has often made headlines with mammoth fines doled out to firms that have otherwise been viewed as completely respectable and aboveboard. Some examples include the time in March 2023 when it fined William Hill £19.2 million ($23.7 million), its £17 million ($20.1 million) fine of Entain Group in August 2022, and the £13 million ($16 million) penalty that Caesars Entertainment was ordered to pay in April 2020.

Indeed, it often seems that the sizes of these fines are not related to the severity of the alleged improprieties but are rather proportional to the depth of the pockets of the supposed offending companies. The sums of deposited money that are allegedly worrisome, like the £14,585 ($18,594) deposited at a Gamesys brand throughout a 28-week period, don't seem to us to be excessive. We ourselves have often moved around similar amounts routinely as part of our online poker bankrolls. Most poker pros have similar experiences; £14,585 over more than six months could easily represent the winnings of a solid online player during that span of time. Therefore, it's quite troubling to note that the UKGC finds such transactions potentially suspicious.

Kay Roberts, Executive Director of Operations at the UKGC

There are those who suggest that all of this activity on the part of the UKGC merely creates a hostile operating environment for licensed online gambling firms. The burdens of complying with the myriad regulations in force put them at a competitive disadvantage compared to offshore providers who needn't worry about such costs.

Indeed, during the past five years, such prominent names as Betsafe, Betsson, Mansion, Bet-at-Home, and STS have all abandoned the U.K. market. Many of them specifically cited a challenging regulatory environment and high tax rates as reasons for this decision.

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