Independent audit licence condition imposed on online gambling operator

The Gambling Commission has today (17 March 2021) published a further regulatory action report stating that “a gambling business is required to undergo extensive auditing after a Gambling Commission assessment revealed social responsibility, money laundering and marketing failures”.

Adding that “In Touch Games Limited will also receive an official warning and pay a £3.4M fine for the failures”, the Commission’s report continues as follows:

Social responsibility failings included:

  • Stating in its Responsible Gambling Team interaction guidance that a bonus may be offered if a customer provides identification.
  • Not putting into effect its policies and procedures for customer interaction for seven customers where it had concerns that a customer’s activity may indicate problem gambling.
  • Not using all relevant sources of information to ensure effective decision making, and to guide and deliver effective customer interactions for those seven customers. If the Licensee had followed its policy it should have given more consideration to placing mandatory limits on customer accounts.

Anti-money laundering failings included:

  • Having a risk assessment which did not take into account the risk of allowing customers to use a payment provider which also acts as an exchange for crypto-currencies.
  • Neglecting to conduct appropriate levels of Enhanced Customer Due Diligence
  • Failing to critically review Source of Funds information once it was requested.

Fair and transparent terms and practices failings included:

  • Not stating in an SMS text the minimum and maximum deposits in an offer’s significant terms
  • Not stating in an SMS text the time limit for which the bonus offer could be claimed.

As part of a new licence condition In Touch Games shall, at its own expense, instruct a firm of independent auditors to carry out an audit that ensures full compliance with the Licence Conditions and Codes of Practice.

Richard Watson, Commission Executive Director, said:

“Through our challenging compliance and enforcement activity we will continue our work to raise standards in the industry and continue to hold failing operators to account.”

Read In Touch Games full penalty on the Commission’s regulatory sanctions register.

The regulatory sanctions register makes clear that “the Licensee has co-operated with the Commission throughout the investigation”.

In Touch Games has stated:

InTouch Games is disappointed with the regulatory sanction relating to historic matters in 2019, but is pleased that the Commission recognised at the conclusion that “considerable improvements” had been made since then.

Going further than simply addressing the Commission’s criticisms, and with the external audit already in hand, InTouch Games has undertaken a full “root and branch” review of its corporate governance, including the creation of an externally chaired governance committee.  In the context of Social Responsibility it is hoped that the outcome of the consultation and call for evidence by the Commission will give further clarity to this vexed issue.

Operators should take note of Richard Watson’s use of the adjective “challenging” within the phrase “challenging compliance and enforcement activity”.

This case certainly serves to emphasise how the Commission is becoming ever more challenging when conducting compliance assessments. For example, such matters as

  • researching the wider business activities of payment providers and suppliers of other services and
  • what constitute significant conditions requiring inclusion within an operator’s SMS marketing text messages (even if they are the same as those set out within that same operator’s standard Ts&Cs)

represent issues upon which greater guidance from the Gambling Commission on its expectations in such respects would be welcomed in order to minimise the risk of other operators inadvertently falling short of those same expectations.