The Gambling Commission has announced today (2 April 2020) that, following an investigation that revealed social responsibility, money laundering and customer interaction failures between January 2016 and December 2018 (including “serious systematic failings in the way the company took decisions about VIP customers“), it has concluded a regulatory settlement with Caesars Entertainment UK Limited (“CEUK”) under which:
- CEUK will pay £13million in lieu of a financial penalty, which will be directed towards delivering the National Strategy to Reduce Gambling Harms,
- Additional conditions will be imposed on the casino licences held by CEUK group companies,
- CEUK has agreed to the publication of a statement of facts in relation to this case (that you can download below); and
- CEUK will pay £115,000 towards the Commission’s costs of investigating the case.
The Commission’s announcement lists:
- the following examples of social responsibility failings:
- Inadequate interaction with a customer who was known to have previously self-excluded and lost £240,000 over a 13-month period
- Inadequate interaction with a customer who lost £323,000 in a 12-month period and had displayed signs of problem gambling which included 30 sessions exceeding five hours
- A customer allowed to lose £18,000 in a year despite identifying herself as a self-employed nanny and informing staff that her savings had been spent, and that she was borrowing money from family and using an overdraft facility to fund gambling activities
- Inadequate interaction with, and source of funds checks on, a customer who identified as a retired postman and lost £15,000 in 44 days.
- the following examples of money laundering failings
- The operator not carrying out adequate source of funds checks on a customer who was allowed to drop around £3.5 million and lose £1.6 million over a period of three months.
- The operator not obtaining adequate evidence of source of funds for a politically exposed person (PEP) who lost £795,000 during a 13-month period
- The operator not carrying out enhanced customer due diligence (ECDD) checks on a consumer who lost £240,000 over a 13-month period
- The operator not carrying out adequate source of funds checks on a customer who identified as a waitress and was allowed to buy-in £87,000 and lose £15,000 during a 12-month period.
The Gambling Commission has added that:
- “as a result of this investigation three senior managers at the company surrendered their personal licences“, and
- in order to ensure industry learning, gambling operators should take account of the failings identified in this investigation and consider the following questions:
- Are your governance and audit arrangements effective?
- Are your policies and procedures for identifying high risk customers for AML and SR purposes effective?
- Are you following the Commission’s guidance as set out in ‘The Prevention of Money Laundering and Combating the Financing of Terrorism – Guidance for remote and non-remote casinos’?
- Have you adequately resourced your AML and SR departments, so your staff are always able to put your policies and processes in place for all customers?
- Are you following the Commissions guidance set out in ‘Customer Interaction Formal Guidance Non Remote – July 2019‘ in respect of recording all customer interactions, including decisions not to interact with customers, and are these records available for colleagues to refer to when making decisions?
- Are your customers providing documentation to support their level of spend and loss, and not simply giving assurances?
- Do you have resilience within your eService reporting team?
- Have you completed a local risk assessment and are you periodically reviewing it (at least annually)?
The above are all matters on which we have considerable experience in advising both land-based and remote casino operators (before, during and after investigations by the Gambling Commission), so anyone requiring advice in any of the above respects is welcome to contact us.
Announcing the terms of the regulatory settlement, the Commission has said:
The action against Caesars is the latest in a line of tough regulatory action by the Commission.
Neil McArthur, the Chief Executive of the Gambling Commission, has added:
We have published this case at this time 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 in which we must see rapid progress made.
The failings in this case are extremely serious. 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. We will now continue to investigate the individual licence holders involved with the decisions taken in this case.
In recent times the online sector has received the greatest scrutiny around VIP practices but VIP practices are found right across the industry and our tough approach to compliance and enforcement will continue, whether a business is on the high street or online.
We are absolutely clear about our expectations of operators – whatever type of gambling they offer they must know their customers. They must interact 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 full Public Statement in relation to CEUK can be downloaded below. It comes one day after the Gambling Commission published its response to the recommendations of the industry working groups on use of VIP incentives, safer products and safer advertising online, on which we have reported separately here.