Is the Gambling Commission’s regulatory enforcement focus shifting to white label providers?

The Gambling Commission has announced that it is reviewing the operating licence of EveryMatrix Software Limited and, in the process, has determined to immediately suspend the ability of EveryMatrix to offer B2C remote betting and casino gaming. It has not suspended its ability to continue its B2B remote gambling software business.

Coupled with the Commission’s current review of the operating licence of FSB Technology (UK) Limited, one can’t help but wonder whether its regulatory enforcement focus is now shifting to white label providers.

In the case of EveryMatrix, the Commission has specifically referred to that company’s “customer interaction framework”. Customer interaction failings (often in conjunction with AML failings) have been a common theme behind most of the very substantial financial penalties imposed by the Commission on licence-holders in recent years.

The topic of customer interactions is very much under the spotlight at the moment:

The Gambling Commission’s announcement in relation to its review of the EveryMatrix licence reads as follows:

The Gambling Commission has instigated a review under s116 of the Gambling Act into EveryMatrix Software Limited (operating licence no 039383-R-319384-021). This followed compliance activity which included examining its customer interaction framework.

Pursuant to section 118(2) Gambling Act 2005 (“the Act”), the Commission has determined to suspend the above operating licence insofar as it pertains to the operator’s ability to offer remote facilities for real event betting other than pool betting or betting on virtual events, and to operate a remote casino. We have not suspended the Licensee’s activities of manufacturing, supplying, installing or adapting gambling software.

The suspension of EveryMatrix Software Limited takes effect immediately.

We have instructed the operator that they may settle ante-post bets which have been placed prior to the suspension coming into force and facilitate customers’ accessing their accounts to withdraw funds.

If a customer has questions concerning their account we advise they contact the operator on [email protected]

The announcement can also be downloaded below.

UPDATES:

(1) EveryMatrix has now published a statement in response to the Gambling Commission’s announcement. The full statement can be downloaded below but the most relevant part of it reads as follows:

Following a Compliance Assessment of the EveryMatrix B2C activity in the UK, the UK Gambling Commission raised concerns related to how the company manages the customer interactions. This led to a suspension of the EveryMatrix’s B2C licenses until the company can demonstrate to UKGC that it has taken steps to be fully compliant with its social responsibility obligations.

EveryMatrix sees this license review as an opportunity to further strengthen its compliance processes and procedures. The company is taking the UKGC’s concerns extremely seriously and has already taken swift and effective actions to address the Gambling Commission’s concerns sufficiently.

EveryMatrix has fully cooperated with the UKGC throughout the license review and has communicated all the steps and actions it has taken to meet its social responsibility obligations. EveryMatrix is hopeful that the suspension will be lifted shortly.

The suspension is based on a general evaluation of EveryMatrix procedures rather than specific cases of player complaints. EveryMatrix remains committed to providing a fair and safe experience to its players, and all affected players can access their accounts and withdraw any funds held there at any time during the suspension period.

The suspension is not related to failing a technical audit of the software, and as such, the B2B license in UK has not been suspended. The B2B license remains active, and the company continues to provide gambling software to UK licensed operators.

(2) The Gambling Commission has now published a “Reminder to licensees regarding white label gambling websites” (that you can also download below) in which its states:

The Gambling Commission is reminding remote operating licence holders of their obligations when operating gambling websites, including white labelled sites.

The responsibility for compliance sits with the licence holder and cannot be transferred to any other party. Failure to ensure that at all times:

may bring into question the suitability of an operator to hold a licence.

Licensees must know their customers and be able to demonstrate knowledge, oversight and proactive interactions where appropriate. Any interventions must be completed in a timely manner.

SRCP 1.1.2 – Responsibility for third parties, makes clear that licensees are responsible for the third parties that they contract with. It also requires licensees to ensure that any contracted third parties conduct themselves in so far as they carry out activities on behalf of the licensee as if they were bound by the same licence conditions and subject to the same codes of practice as the licensee.

The Commission expects that licensees will obtain the necessary assurance by conducting adequate due diligence on the third party to ensure (amongst other things) that they are competent and reliable. Any licensee that relies on a third party to conduct any aspect of the licensee’s business related to the licensed activities must ensure it has sufficient oversight and controls in place to ensure that all activities are carried out in accordance with the LCCP, notably, but not exclusively, social responsibility and anti-money laundering requirements.

Failure to maintain adequate control of third parties can result in regulatory action including suspension or the loss of the operating licence.

Finally – operators are aware that a licence is required to provide facilities for gambling (unless a specified exemption applies). Operators must ensure that their arrangements with third parties do not result in an offence under section 33 of the Gambling Act 2005. 

The Commission intends to publish further guidance in due course.