The UK’s Information Commissioner’s Office (ICO) has backed proposals for the financial sector to share data with gambling companies to protect customers from unaffordable losses.
In a letter to industry trade body UK Finance, the ICO clarified that data protection laws do not prevent gambling companies from conducting financial risk checks on customers, and that lenders can share people’s personal information.
However, any sharing of personal information must be done transparently and proportionately.
As part of the Gambling Act review, the ICO has collaborated with the UK Gambling Commission (UKGC) to develop privacy safeguards for financial risk checks.
Specifically, the UKGC plans to consult on two forms of financial risk check. Firstly, background checks at moderate levels of spend, to take place at £125 net loss within a month or £500 within a year.
Second, at proposed thresholds of £1,000 net loss within 24 hours or £2,000 within 90 days, there should be “more detailed” checks for a customer’s financial position.
Go-ahead for UKGC consultation
The UKGC has welcomed the ICO’s decision and described it as an “important step” ahead of its own consultation.
The ICO’s decision “will allow stakeholders to progress discussions about how such assessments can take place, the necessary safeguards and transparency for data sharing, and to build appropriate data-sharing agreements,” the UKGC said.
Meanwhile, Stephen Almond, executive director of regulatory risk at the ICO, emphasised the severe consequences of problem gambling.
He said: “Problem gambling has devastating consequences for people’s finances, relationships and health. We are keen to see the financial sector share data to protect people from unaffordable losses and spiralling debt.”
The ICO informed that it is of the opinion that the UK’s General Data Protection Regulation (GDPR) “does allow credit reference agencies to share personal information with gambling operators for the purposes of enabling financial risk checks.”
“We are keen to see the financial sector share data to protect people from unaffordable losses and spiralling debt.”
However, “in accordance with the GDPR, the information that is shared must be limited to what is necessary,” Almond added.
Additionally, the ICO stated that credit reference agencies should carry out a data protection impact assessment prior to processing personal information for financial risk checks.
This assessment is necessary due to the nature of the processing and the potential outcomes, which could include denial of service.
Moreover, the ICO emphasised that gambling operators have a responsibility to protect any additional information they receive and utilise it solely for the purpose of conducting financial risk checks.
Furthermore, the ICO has called for banks, lenders, and other involved parties to update their privacy notices and other relevant accountability information to reflect the expanded scope of data sharing.
Data-sharing between operators
The ICO has also expressed its support for the initiative of gambling companies to share information regarding customers identified as high risk and engaged in gambling across multiple platforms.
Earlier this year, the Betting and Gaming Council (BGC), along with operators such as Entain, William Hill, 888, Gamesys, bet365, and Flutter, participated in a pilot project that was also referred to as “single customer view”.
The project aimed to explore data-sharing practices among gambling operators when there are signs of potential harm to the customers.
Almond added: “Data sharing can be a force for good, enabling organisations to protect people from gambling-related harm. We’ve been pleased to work with the Betting and Gaming Council through our Regulatory Sandbox to help them safeguard gamblers while upholding their rights to privacy.”
Following the successful completion of the Sandbox pilot, the data-sharing single customer view project, now named GamProtect, will be implemented across the gambling industry with the support of the BGC and its member operators.
The UKGC added: “Now that the sandbox phase is complete and a solution is in place, we look forward to the rapid development of GamProtect.
“This will include the onboarding of more gambling businesses and the expansion of markers of harm to identify individuals at serious risk.”
The ICO’s full report on GamProtect, including guidance on the necessary safeguards for sharing personal data between different operators, can be accessed here.
Flutter Entertainment must pay a fine of £490,000 to the UK Gambling Commission after a subsidiary contacted self-excluded customers with promo offers.
The failing, which occurred in November 2021, was committed by PPB Counterparty Services Limited, which was trading as Paddy Power and Betfair at the time.
The breach saw the operator’s app send an offer of enhanced odds for bets on a Premier League football match to Apple devices linked to accounts that were registered with UK self-exclusion scheme GAMSTOP, as well as accounts that had self-excluded with the licensee.
This action broke Commission rules requiring gambling businesses to take all reasonable steps to prevent any marketing material being sent to self-excluded customers.
Licensed operators are required to remove the name and details of self-excluded players from marketing databases within two days of the self-exclusion being completed.
“Although there is no evidence the marketing was intentional, nor that all the people with apps saw the notification or that self-excluded customers were allowed to gamble, we take such breaches seriously.”
Flutter accepted the breach but initially appealed the penalty to the first-tier tribunal. It then agreed to dispose of the appeal and accept a substitute penalty of £490,000.
The operator contacted the regulator with news of the breach five days after it had occurred. The UKGC confirmed it had received no complaints from customers regarding the matter.
Kay Roberts, Gambling Commission executive director of operations, said: “Although there is no evidence the marketing was intentional, nor that all the people with apps saw the notification or that self-excluded customers were allowed to gamble, we take such breaches seriously.
“We would advise all operators to learn from the operator’s failures and ensure their systems are robust enough to always prevent self-excluded customers from being sent promotional material.”
This is the second six-figure enforcement action sanctioned by the UKGC this week after SkillOnNet was ordered to pay £305,150 for social responsibility and AML failures.
Malta-based white label iGaming supplier SkillOnNet Limited has been ordered to pay £305,150 by the UK Gambling Commission for social responsibility and AML failures.
Background info
SkillOnNet runs 50 separate operator websites in the UK, for companies including Genting, PlayOJO and Metal Casino, among others.
During a regulatory review carried out by the UKGC between January 2021 and December 2022, the company was found to be in breach of several different regulatory requirements relating to the prevention of money laundering and terrorist financing, as well as the prevention of customers from experiencing gambling harms.
Following the conclusion of the review, the Commission has ordered SkillOnNet to make a payment in lieu of a financial penalty totalling £305,150, including a £105,650 divestment, as well as conducting an independent third-party audit to ensure the effective implementation of AML and safer gambling procedures.
AML failures
SkillOnNet accepted that it was in breach of AML-related licence conditions between May 2021 and December 2022, as its money laundering and terrorist financing risk assessments did not sufficiently reflect the Gambling Commission’s expectations or take into account the regulator’s ML/TF risk assessment of the British gambling industry.
The company failed to appropriately consider payments received from unknown or unassociated third parties of customers, appropriately consider organised crime groups and ‘mule’ accounts, or adequately take into consideration information on money laundering and terrorist financing risks provided to it by the UKGC.
SkillOnNet was also found to have relied on customers’ own declarations to provide proof of source of funds and therefore mitigate money laundering risks, and was considered to have failed in effectively risk profiling its customers.
It also failed to require a nominated officer to provide an annual report covering the operation and effectiveness of its AML systems and controls.
In addition, customers were allowed to deposit and lose more than double the £2,000 limit the company had in place to mitigate the risks of unverified payment methods, while previously won and withdrawn funds were accepted as evidence of available funds for gambling up to 30 days after withdrawals had taken place.
The business “made assumptions that customers were recycling winnings without obtaining any evidence from the customer to support that assertion,” the UKGC said.
Social responsibility failures
In addition to its AML and terrorist financing failures, SkillOnNet also failed on several counts of social responsibility and customer protection.
All UK licensees are required to interact with customers in a way which minimises the risk of experiencing gambling harms.
The UKGC said SkillOnNet failed to identify customers displaying markers of harm following a win, such as an increase in sessions and stakes.
Customers were also able to deposit and place high value bets at high speed without effective safer gambling controls activating due to a technical issue.
Further, SkillOnNet failed to identify customers spending disproportionately, for example one customer who was able to deposit and lose up to £3,000 per month, despite that being more than their evidenced monthly salary.
Another customer was able to deposit £16,000 and lose £3,225 over 41 days. After receiving multiple automated safer gambling pop-ups and emails, the customer also had a number of safer gambling chats and provided basic information to the company, after which they were allowed to continue gambling.
The UKGC deemed that the interactions were not effective in identifying whether or not the customer was at risk.
The company also failed to recognise night play as a marker of harm, and failed to effectively interact with some customers by relying too much on automated pop-ups.
Commenting on the UKGC’s decision on LinkedIn, Northridge Law LLP partner Melanie Ellis said: “The example customer identified in the section on safer gambling failings is worth noting as the figures are relatively low compared to other cases and the operator did conduct interactions.”
Ellis also suggested that the ruling showed the Gambling Commission has already begun implementing one of the major changes introduced as part of the Gambling Act review, which recommended that detailed financial checks should be triggered by a net loss of £2,000 within 90 days.
B2B gaming streaming start-up BeyondPlay has been granted a supplier licence by the UK Gambling Commission (UKGC).
The securing of a Remote Casino Host and Gambling Software Licence from the UK Gambling Commission follows the granting of a B2B Critical Supply Licence from the Malta Gaming Authority in December 2022.
The UK licence marks a major milestone for BeyondPlay, which offers a portfolio of community-oriented products designed to turn solo game sessions into multiplayer entertainment experiences via shared streaming.
Further licence applications are underway for Ontario, Sweden and in various US states.
In response to the news, BeyondPlay founder and CEO Karolina Pelc wrote on LinkedIn: “Let’s get ourselves a UKGC licence, it can’t be that difficult! – said no one ever. This has been some time coming but we finally made it!”
She added: “This stamp of approval marks a momentous occasion, as BeyondPlay will introduce new and thrilling gaming experiences, offering unparalleled entertainment value and community play for real-money gaming operators in Great Britain.
“Our multiplayer product boasts an array of features that exceed standard responsible gaming requirements.
“These features include low-stake and community-pooled betting, spectator mode and time-outs, which ensure that players can enjoy the product in a secure and enjoyable environment.”
In February 2023, LeoVegas Group divested its initial 25% shareholding in BeyondPlay to a group of strategic investors, including US VC firm Bettor Capital.
BeyondPlay had generated a 73% return for LeoVentures, the operator’s investment arm, in less than two years.
The transaction was part of BeyondPlay’s larger fundraising efforts, which have been completed, with further details to be announced in due course.
BeyondPlay has already partnered with four companies, including Casumo, ComeOn Group, LeoVegas and Soft2Bet, with additional plans to roll out solutions in Q2 and Q3 2023.
Octoplay, the online casino gaming supplier, is pleased to announce that it has been granted a licence to distribute its games within the United Kingdom.
This prestigious achievement enables the fast-growing company to expand its operations to deliver UK-centric casino games for the first time.
The Remote Gambling Software Licence was rapidly approved within an impressive three-month period, a testament to the efficiency of the UK Gambling Commission.
Martina Borg Stevens, director of legal and compliance at Octoplay, expressed her delight at receiving the license in record time.
She remarked: “The granting of the UKGC licence is a monumental milestone for Octoplay. We are thrilled to bring our exciting new games to the UK market and thank the UK Gambling Commission for its diligent work in assessing Octoplay’s suitability.”
This accomplishment comes in addition to the company’s recent recognition by the Malta Gaming Authority in December 2022 and the acquisition of a Romanian licence in August 2022. With the UKGC licence now in hand, Octoplay can broaden its customer base and introduce its content to UK players.
CEO Carl Ejlertsson added: “We are proud to have obtained this UKGC licence, which will allow us to deliver our games to our roster of UK partners that have already committed to working together. This is a significant achievement for the company and an exciting time for the industry as we move forward with our disruptive plans.”
Octoplay was founded in October 2022 with a singular objective in mind: to create the most exciting and enjoyable slots in the world.
Kindred Group’s Q4 2022 financial performance has fallen short of expectations. Management has pledged to take immediate action.
Topline numbers
Kindred Group has reported a 25% rise in Q4 2022 revenue to £305.5m, primarily driven by the operator’s return to the Netherlands. Q4 underlying EBITDA climbed by 42% to £39.1m.
The Netherlands continued to perform strongly with daily average gross winnings revenue of £0.6m in Q4. It was the exception to the rule, however, as Kindred’s overall performance “fell significantly short of management expectations”.
This has led to immediate actions being taken to improve profitability. More on that below.
For full-year 2022, total revenue declined by 15% to £1.07bn as underlying EBITDA fell by 61% to £129.2m, down from £332.1m in 2021.
In Q4, active customer numbers climbed 25% to 1.83 million thanks to marketing investments both before and during the World Cup. This marked Kindred’s second highest quarterly customer base ever.
During an exclusive conversation with iGaming NEXT, CEO Henrik Tjärnström revealed it was rather a quarter of “what could have been” for Kindred Group.
The operator’s Q4 sports betting margin came in lower than expected at 8.9%. If it had been closer to the rolling 12-month average betting margin of 9.4%, Q4 revenue would have come in approximately £10m higher, according to Tjärnström.
Regulatory headwinds in both Norway and Belgium caused Q4 revenue declines of 12% and 15% respectively when Kindred had actually anticipated revenue growth. This again led to an estimated £12m reverse swing in revenues.
Finally, Q4 saw Kindred make the biggest pay-out in its history after handing £4.4m to Jim “Mattress Mack” McIngvale on his bet for the Houston Astros to win the World Series.
“If you take those three elements, it would have meant around £25m more in revenues which would have changed things completely,” said Tjärnström.
News nugget
Kindred Group has set aside a provision of £7.1m for an imminent UK fine following a review into its Unibet and 32Red brands. That amount is based on continuing discussions with the UK Gambling Commission as the group awaits a final outcome from the regulator.
Elsewhere, Kindred has pledged to tackle the weaker than expected Q4 performance by taking immediate actions to improve profitability.
These includes reducing marketing investments in the US ahead of launching on its own platform in the States, having already withdrawn from Iowa.
Other measures include the “reprioritisation” of investment projects and the further optimisation of operating expenses.
“We’re really looking across the P&L and also the CapEx investments as we want to really make sure we are as optimised as we can be,” said Tjärnström.
When asked whether lay-offs were inevitable, the CEO said: “We’re trying to stop that problem before it arrives” and suggested a delay on new recruitment in the business.
Best quote
Tjärnström discusses Kindred’s World Cup disappointment:
“It was known in advance the disruption of the sports schedule that would happen during the fourth quarter. But we expected the tournament to actually compensate for that, and also to overcompensate for the slower period both before and after the tournament.”
As it was a World Cup quarter, Kindred increased marketing investments to 26% of gross winnings revenue, which is thought to have added pressure to short-term profitability.
The reduced calendar resulted in around 25% fewer top football league fixtures compared to Q4 of last year. Kindred’s World Cup turnover was not strong enough to reduce that impact.
Best question
Today’s award goes to Morgan Stanley analyst Ed Young. Zooming in on Belgium, Young asked why Kindred had reported a revenue dip of 15% when Entain had reported double-digit growth and a large private competitor had also reported a “much milder” impact.
Tjärnström said Kindred had suffered from being a clear market leader in Belgium after the new deposit limits had spread customers across more operators. “In that sense, we’re probably a little bit more impacted than smaller operators in the market,” he added.
Current trading and outlook
In a new trading update Kindred said average daily gross winnings revenue for the group up to 5 February 2023 was £3.7m, a 36% uptick on the whole of Q1 last year. That rise drops to 9% when excluding for the Netherlands.
Gross winnings revenue from sports betting has also been positively impacted by a stronger sports betting margin of 12.2% after free bets over the same period, compared to 10.2% for the whole of Q1 2022.
The Stockholm-listed operator’s share price ticked 6% higher at one point in early trading. Many of the headwinds were previously communicated in a trading warning on 13 January 2023.
Underlying EBITDA for full-year 2023 is estimated to reach at least £200m, assuming a long-term average sports betting margin.
Mansion Group has become the latest gambling operator to quit the UK market due to increasingly challenging regulatory requirements.
The Gibraltar-based operator’s casino site stopped accepting deposits from players on 12 January, while customers are being urged to withdraw their funds before 12 April 2023.
Online casino was the only vertical left for the group in the UK following the closure of its MansionBet sportsbook brand back in March of 2022.
At the time, Mansion said it had chosen to focus solely on casino due to the heightened competition and regulatory environment in the UK.
However, its portfolio of casino sites have now fallen victim to the same set of circumstances.
“Mansion has enjoyed serving UK customers for almost 20 years, but we are all aware of the increasingly challenging regulatory conditions that have led to much narrower paths to profitability and ultimately, the decision that Mansion has taken.”
“Mansion has enjoyed serving UK customers for almost 20 years, but we are all aware of the increasingly challenging regulatory conditions that have led to much narrower paths to profitability and ultimately, the decision that Mansion has taken,” said a spokesperson.
UK-licensed operators have been forced to adapt to stricter regulations for the best part of five years now and further restrictions are expected when the government’s gambling white paper is published in the coming months.
The Gambling Commission has tightened measures to combat money laundering and social responsibility requirements such as age verification, self-exclusion and deposit limits. It has also ramped up its enforcement efforts, with £45m paid out in fines by operators in 2022.
Adhering to these guidelines has come with increased operational costs for many operators and Mansion is not the only firm to conclude the UK market is simply not worth the outlay.
As far back as 2020, Betsson shelved eight of its UK-facing brands for similar reasons, while companies including bet-at-home and Genesis Global also pulled the plug in 2022.
The UK Gambling Commission (UKGC) has imposed a £672,829 fine on GGPoker licensee NSUS Limited for social responsibility and anti-money laundering failures.
NSUS – which trades as GGPoker in the UK – has also received an official warning for the breaches. The Gambling Commission has not revealed when the breaches occurred.
According to the regulator’s investigation, the operator failed to identify – and interact with – customers that may have been at risk of experiencing gambling-related harm.
GGPoker also sent marketing emails to 125 users that had self-excluded from gambling. The company did not take all reasonable steps to prevent such a breach, ruled the UKGC.
In March, Sky Betting & Gaming (SBG) was ordered to pay a £1.2m fine for a similar breach, when its Sky Vegas brand emailed a promotional offer to 41,395 self-excluded gamblers, as well as 249,159 individuals who had previously unsubscribed from marketing emails.
AML failures at GGPoker included failing to conduct adequate risk assessments of the business being used for money laundering and terrorist financing, as well as failing to ensure they had the appropriate policies, procedures and controls in place to prevent such crimes.
The fine was imposed on 22 September 2022.
Dublin-headquartered NSUS has been live in the UK with a remote casino licence since August 2017 and with a remote gambling software licence since July 2019.
GGPoker is the world’s largest online poker room, having overtaken Flutter Entertainment-owned PokerStars for that coveted title back in 2021.
It is one of the leading poker operators in the UK and offers the most popular online poker variants, including Texas Hold’em and Omaha, as well as unique poker variants such as fast-fold Rush & Cash, Flip & Go, Spin & Gold and All-In or Fold.
The site also offers traditional casino games such as Blackjack, Baccarat and Roulette.
The Gambling Commission (UKGC) has postponed the introduction of new rules that require operators to take action on the first signs of gambling-related harm and ban licensees from sending marketing messages to vulnerable consumers.
The decision was taken by the regulator after the industry requested an extension to the deadline. Operators will now need to comply with the new rules by the later date of 12 February 2023.
In April, the UKGC published a set of new safer gambling measures, which require operators to do more to identify and take action to protect consumers at risk of harm.
In June, this was followed by new consumer protection guidance to help operators comply with the new requirements, which were set to take effect on 12 September.
However, operators were struggling to meet the deadline, citing technical challenges in meeting the new standards.
“After careful consideration, we have decided that the majority of the new requirements will come into force as planned,” the UKGC said.
“Remote gambling operators are already subject to a duty to conduct effective customer interaction, and the new requirements reflect the minimum steps that we consider are necessary to meet that duty,” the Commission added.
However, two new standards will no longer be enforced in time for next week’s deadline.
The first was the requirement to take timely action where indicators of vulnerability are identified, while the second delayed requirement was based on the prevention of marketing new bonus offers to those showing strong indicators of harm.
The UKGC’s decision can be read here.
UKGC: “Remote gambling operators are already subject to a duty to conduct effective customer interaction, and the new requirements reflect the minimum steps that we consider are necessary to meet that duty.”
In addition, operators will also not be required to take into account the UKGC’s guidance on customer interaction for remote operators.
Instead, the regulator plans to conduct a consultation on the guidance, which will likely to be launched during late September and will last for six weeks.
“The guidance is a living document which is intended to be amended over time,” said the UKGC. “As part of the consultation, we will be particularly interested to hear about good practice in implementing the requirements, based on the lessons learned by operators during the period between April and September and to hear about any implications arising out of recent research, evidence and casework,” the UKGC said.
The UKGC promised to carefully consider all views expressed in response to the consultation before taking a decision.
The industry can expect the updated guidance on the requirements to be published in December 2022, and it will take effect approximately two months after publication.
“We consider this will allow the industry a reasonable period to consider the guidance before it takes effect,” the UKGC added.
Requirements that will come into force next week include the monitoring of a specific range of indicators, as a minimum, to identify gambling harm, and the implementation of automated processes for strong indicators of harm.
However, the two delayed safer gambling requirements are likely to attract negative attention from the industry’s detractors during a time where gambling-related harm is still at the forefront of the discussion in the UK ahead of the release of the Gambling Act review white paper.
The Betting & Gaming Council (BGC) has welcomed the publication of record low problem gambling figures in the UK, recently released by the Gambling Commission.
Alongside this welcome news, however, the trade association was quick to point out that upcoming government reforms – in the shape of an impending review of the 2005 Gambling Act – may have an impact upon “regular punters”, and drive more traffic to unlicensed, offshore operators.
Problem gambling in the UK has remained historically low at 0.2% in the first half of 2022, according to the latest Gambling Commission figures.
The statistics showed the rate of problem gambling was down from 0.4% in 2021, and remained the same as the last published annualised figures in April 2022.
The rate of problem gambling among women stayed at 0.1%.
While these rates are low by international standards, figures released last week by Gamstop, the UK’s self-exclusion scheme for online gambling, painted a different picture.
Gamstop recorded 9% more sign-ups in the first six months of 2022 compared to the same period in 2021, while 1 July marked the day with the highest number of single-day registrations since the service first went live in April 2018.
BGC chief executive Michael Dugher: “The latest problem gambling figures will come as a blow to anti-gambling prohibitionists who like to vastly overstate the issues to suit their efforts to treat gambling like tobacco, not like alcohol, but it also provides food for thought for new ministers considering a white paper this autumn.”
Both sets of statistics come at a time of much discussion about the future of iGaming in the UK, with the government’s white paper on gambling law reform expected to be published in the autumn.
Against this backdrop, the BGC warned that it is “essential that we do not do anything that inadvertently drives any of the 22.5 million regular punters away from the regulated industry and into the arms of the unsafe, unregulated and growing gambling black market online”.
The association further commented that “most problem gamblers do not suffer from addiction, gambling addiction requires a clinical assessment. The two are often conflated, but they are entirely different.”
Good news from the Gambling Commission: Problem gambling rates – falling and low by international standards – are at 0.2%.
My reaction here: Welcome news, no room for complacency, but food for thought for ministers as we look forward to the white paper. https://t.co/iLL5G4OwHI
— Michael Dugher (@MichaelDugher) July 29, 2022
BGC chief executive Michael Dugher said: “These newly released figures are yet again further evidence of the positive progress we have made on problem gambling, which is low by international standards and has fallen in recent times, thanks to the many initiatives we have taken including using advertising to promote safer gambling tools like deposit limits and time-outs, as well as other changes we have made to further raise standards.
“The latest problem gambling figures will come as a blow to anti-gambling prohibitionists who like to vastly overstate the issues to suit their efforts to treat gambling like tobacco, not like alcohol, but it also provides food for thought for new ministers considering a white paper this autumn,” Dugher added.
The BCG considers the white paper “an opportunity to drive further changes”, but Dugher also warned that “the new government should be guided by evidence and seek to carefully target future measures on problem gamblers and those at risk – not intrude on the perfectly safe enjoyment of millions of punters whose choice of leisure does so much to support jobs and the economy, as well as providing a lifeline for sports like racing.”