Rank to Appeal UKGC ￡5.85M Fine
Author:
Scott Lawson
The UK’s Gambling Commission has issued Rank Group subsidiary Daub Alderney with a ￡5.85 million fine, in response to anti-money laundering and social responsibility failures. The operator has announced plans to appeal the hefty fine though, as the regulatory breaches occurred before it acquired Daub Alderney.
Rank has said that it has plans to appeal the fine, which comes in response to failures at Daub Alderney before its acquisition. ?Towfiqu Barbhuiya/Pexels
Regulator Uncovered Failings
The Gambling Commission, which regulates the UK’s gambling industry, has issued a statement detailing its action against Daub Alderney. It makes it clear that operators can expect to face the full consequences of regulatory failures, even if they happened before ownership.
The regulator has chosen to make an example of Rank Group and Daub Alderney, issuing a warning to other operators to take notice. Daub Alderney has been given a warning and ordered to pay ￡5.85 million following an investigation by the regulator into social responsibility and anti-money laundering failures.
While the name Daub Alderney may not be familiar with most members of the British public, it is best known for running some of the UK’s most popular betting and gaming sites. Amongst its brands are Lucky VIP, Lucky Pants Bingo, Kitty Bingo, Regal Wins, Magical Vegas and Spin and Win. It also runs Aspers Casino Online, the web counterpart to the famous casino franchise.
The regulator outlined in further detail the responsibility failures that it uncovered between January 2019 and March 2020. These included neglecting to act on policies and procedures for customer interaction when there were concerns that customer activity could indicate problem gambling. The Gambling Commission highlighted three examples of this type of failure.
In one case, a customer was able to lost ￡43,410 in four months, despite exhibiting signs of gambling harms. That customer used four different payment cards in one day, as well as reversing a request to withdraw ￡133,873.
Over the course of a month, another customer was able to lose ￡40,500, but only received two safer gambling messages and a pop up, which wasn’t evaluated for effectiveness. A third customer lost ￡39,000 over three and a half months, but received just one safer gambling message and two pop ups.
Warning to Operators
A number of anti-money laundering failures at Daub Alderney were also noted. The Commission found its policies, procedures and controls to prevent money laundering and terrorist financing to be inappropriate and ineffective. For example, one customer was able to deposit ￡50,000 before the operator sought source of funds evidence.
Another customer was allowed to deposit ￡41,500 in a month, despite not providing adequate source of funds evidence. A third customer was able to lose ￡53,000 over eight months, during which time the only source of funds evidence that was obtained established that the customer lived in a house worth ￡233k.
Executive Director of the Gambling Commission, Helen Venn, commented on the case. Speaking on behalf of the regulator, she wanted to make it clear that operators can expect action to be taken against them if they fail to raise standards. The Daub Alderney case was the result of planned compliance activity.
Venn did acknowledge that a significant proportion of the failures uncovered occurred before Rank took over the business in October 2019. She also accepted that improvements had been made to the business since that acquisition. However, she added that those facts did not negate the need for a financial penalty stating:
“The Licensee’s culpability, and the requisite penalty reflecting that culpability, cannot be affected by the fact that its shares have now passed from one set of investors to another. The Licensee does not escape or mitigate the consequences of its actions because its shares are sold.”
Daub Alderney is the licensed branch of Stride Gaming, a business that Rank bought in 2019. The deal, which was estimated to be worth ￡115.3 million, helped Rank to secure its foothold in the UK’s online gaming market and offset reduced interest in its land-based casinos and bingo halls.
Appeal to Go Higher
According to the Gambling Commission, the licensee co-operated with it throughout the investigation. The decision is currently subject to appeal, and it has been reported that Rank will do just that. Rank believes that the case is subject to both equity and public policy issues, and it plans to appeal to the First-Tier Tribunal.
However, this is not the first time that Daub Alderney has had a run-in with the regulator. In 2018, it was made to pay a ￡7.1 million fine over social responsibility and anti-money laundering issues. Extra conditions were also imposed on its UK license.
Speaking at the time, former Executive Director at the Gambling Commission, Richard Watson, described the lapses as “serious”. He added that the operator’s standards fell short of the protections required. With this track-record in mind, it could be difficult for Rank to argue that it was unaware of issues at Daub Alderney when it made the purchase.
Rank commented on the situation in its annual statement, published in August. It said that a routine compliance assessment conducted by the Commission in March 2020 first flagged up the concerns with Daub Alderney. It initially issued a ￡3 million fine on the licensee, which Rank labeled as unfair, citing the actions it took to raise standards at Daub after its acquisition.
Rank appealed the size of that initial fine to the Gambling Commission’s Regulatory Panel, and in response, the fine was increased to ￡5.85 million. Now Rank will take the case higher, to the First-Tier Tribunal.
If Daub Alderney loses its appeal and is forced to pay the ￡5.85 million fine, it will be a minor blow for Rank. The operator is set to receive a tax rebate from HM Revenue and Customs over VAT paid on slot machine income. After winning a legal challenge against the tax authority, it could receive up to ￡80 million from the government.
