UKGC Imposes £2-Million Penalty Package on 32Red for Customer Protection and Money-Laundering Failures

The online gambling operator 32Red joined the ranks of the companies which have suffered a penalty imposed by the UK gambling regulatory body. The operator has faced a £2-million monetary fine for its failures to protect a consumer from gambling-related harm and also for alleged money-laundering failures.

The UK Gambling Commission (UKGC) has already imposed fines on other operations such as 888 UK Limited, Stan James Online, Gala Interactive, Broadway Gaming, William Hill, SkyBet, Tabcorp and LeoVegas for various breaches of their licenses, as well as for social responsibility, money laundering and advertising failings.

As revealed by the UKGC, the gambling watchdog had held an investigation on 32Red’s dealings with a certain customer who was permitted to deposit a total amount of £758,000 from November 2014 to April 2017 without making any social responsibility or money laundering checks.

According to the results of the investigation, there were no less than 22 incidents during the above-mentioned period, indicating that the customer in question was a gambling addict. However, instead of making some checks on the player to see whether they needed professional help to deal with the problem, 32Red provided them with free bonuses. Some of the indications of possible gambling-related harm inflicted to the player included the customer’s confessions to employees of the operator that they had spent too much.

The investigation held by the UK Gambling Commission also showed that the online gambling operator failed to make any checks whether or not the customer’s financial state was good enough for them to afford to spend so much money on the website. As revealed by the Executive Director of the UKGC, Richard Watson, 32Red even encouraged the customer to place more bets on its website, which was exactly the opposite thing of what they were actually supposed to do at the time.

Mr. Watson reminded that customer protection from gambling-related harm was a matter of paramount importance for the UK gambling regulatory body, and further noted that gambling operators are obliged to take action when they spot any signs of gambling addiction.

The penalty package imposed by the UKGC on the online gambling operator consists of £709,046 divestment of the company’s financial gain, a payment of £1.3 million instead of a financial penalty which would have been imposed by the watchdog for breaches of a licence condition, as well as a £15,000 payment to cover the Commission’s investigation costs. Improvements to policy, procedure and risk management were also included in the penalty package to be paid by 32Red.

UKGC Investigation Findings and 32Red Breaches

According to the results of the UKGC investigation on the situation, the business relationship between the customer in question and 32Red was first established in September 2011. Since then, the person became a top customer who received a special VIP status in February 2013. Considering the fact that the gambling operator got its UKGC license in November 2014, the case related only to the time under the company’s operating license.

As mentioned above, in the period from November 2014 to April 2017 there were more than 20 incidents in which the customer made complaints or referred to certain issues which could indicate that they could have been facing any gambling-related problems. Three distinctive types of contact were made by the customer, including complaints that they were spending too much, complaints of poor performance, as well as a demonstration of frustration. The incidents were supposed to lead to a customer interaction, but instead, 32Red’s staff dealt with the issues by providing the customer with a free bonus.

The fact that the company’s staff did not interact with the customer at the time of these indications is a breach of social responsibility code provision 3.4.1, which regard exactly customer interaction. In addition, the policies and procedures used by 32Red happened to omit some specific provisions which the UK gambling regulator required from them to promote socially responsible gambling. With this, the online gambling operator breached social responsibility code provision 3.1.1 (1) regarding dealing with gambling addiction.

What is more, the investigation commissioned by the UK major gambling regulator also showed that 32Red has not made the necessary checks of the customer’s account in August 2016 for their source of wealth. Other checks which should have been made, turned out to be omitted, too. At the time, the customers lifetime deposits with the company’s website from November 2014 exceeded £235,000.

A single review of the customer’s account was carried out in January 2017, due to the fact that the company’s staff reported of unusual play which suggested a possible gambling addiction. This happened to be a seven-figure win, which the customer replayed instantly. At the time when this check was made, the player’s lifetime deposits with the company since November 2014 almost equalled £500,000. After the review, some source of wealth requests were made of the customer, but the necessary information was not received for further 5 weeks.

Finally, the player’s account was suspended in April 2017, with their lifetime deposits from November 2014 amounting to the staggering £758,000. When the results of the financial checks of the player arrived, they showed volatility in the receipted income, with a monthly net income amounting to about £13,000, while average monthly deposits exceeding £45,000.

According to the UK Gambling Commission, the circumstances around the financial state of the customer showed some operational weaknesses in 32Red, as well as breaches of a condition related to money laundering regulations which was specifically added to the operating license of the company.

  • Author
Olivia Cole

Olivia Cole

Olivia Cole has worked as a journalist for several years now. Over the last couple of years she has been engaged in writing about a number of industries and has developed an interest for the gambling market in the UK.
Daniel Williams
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