Ladbrokes Coral Fined £5.9 Million As Customer Loses £98,000
The battle over the protection of vulnerable customers rages on, this time seeing Ladbrokes Coral given a £5.9 million fine for failing to live up to its responsibilities.
Bookmakers have a responsibility to ensure that the most vulnerable bettors aren’t exploited and that their services can’t be used to launder money, yet the latest report from the Gambling Commission appears to charge Ladbrokes and Coral with both offences. The issues took place between November 2014 and October 2017, meaning that it happened before and during the merger talks between the two companies.
It’s also worth noting that the offences occurred before GVC Holdings took over Ladbrokes Coral, which was a deal that took place in December of 2017 and was completed in March of the following year. The Merger created Britain’s biggest bookmaker, but it’s clear that the sheer size of the new company wasn’t enough to stop the companies from getting on the wrong side of the Gambling Commission on more than one occasion, including failing to stop one customer from losing £98,000 in spite of the fact that they had had 460 attempts to deposit money into their account declined.
Failure To ‘Prevent Consumers Suffering’
Both Ladbrokes and Coral were guilty of different offences that fell under the same bracket of criticism for the Gambling Commission, which was a failure to stop them from ‘suffering gambling harm’.
In the case of Ladbrokes, one customers asked the company to stop sending him promotions but continued to receive them. He then made as many as 460 different attempts to deposit money into his gambling account declined, yet were still able to lose as much as £98,000 over a two and a half year period.
For Coral, the major criticism came from that fact that one of their customers was able to spend as much as £1.5 million over a three year period, yet the company did not ask the punter to confirm where he was getting the funds from. In one month they logged onto their betting account ten times a day on average and lost £64,000 over the course of a four week period, yet Coral couldn’t show any evidence of ‘social responsibility interactions’ occurring between them and the customer in question during the period in which he lost all of the money.
GVC ‘Regrets’ Systemic Failings
There is an extent to which GVC Holdings have been lumped with the failings of someone else, given they didn’t own either of Ladbrokes or Coral when the issues flagged up by the Gambling Commission occurred. Yet the company’s Chief Executive, Kenneth Alexander, hasn’t shied away from his firm’s need to take responsibility. He admitted that the ‘historical failings’ were far from acceptable and that he himself had overseen a ‘systematic review’ of the player protection procedures that the companies use.
Alexander was, however, quick to reassure people that ‘the individuals responsible for the problems have exited the business’, declaring his confidence that the company has put ‘industry leading’ player protection procedures in place for the future. Even so, Richard Wilson, the Executive Director of the Gambling Commission, didn’t pull his punches when talking about what had taken place, referring to ‘systemic failings’ that resulted not only in ‘consumers being harmed’, but also in ‘stolen money’ being allowed to make its way through the system that he referred to as ‘unacceptable’.
GVC Holdings Shares Rose
GVC Holdings isn’t just responsible for Ladbrokes and Coral, also being the parent company of betting firms like Crystalbet, bwin, Sportingbet, Neds and Eurobet. It is also the company behind other firms that offer some form of gambling, including Foxy Bingo, partypoker and PartyCasino. Ordinarily you might think that a firm being given a fine of such magnitude might lead to it suffering some form of negative reaction, but the shares in GVC Holdings actually rose to 611.37 pence, a rise of 0.59%. They also recently announced positive revenues in spite of the FOBT crackdown.
That was in spite of the fact that Gambling Commission had issued it with one of the largest fines ever. The gambling watchdog had previously required 888 to pay £7.8 million in 2017 after a series of failures in its handling of vulnerable customers, which was a record amount at the time.
Daub Alderney was then fined £7.1 million more than a year later for similar failings. William Hill was also on the receiving end of a fine, this time of £6 million, when they were guilty of a ‘systemic senior management failure’ to protect consumers in February of 2018.
No ‘Effective Safeguards’
The biggest issue in the eyes of the Gambling Commission was the fact that no effective safeguards had been put in place by either Ladbrokes in Coral, which is why these failings were allowed to happen over a three year period.
With the cases of suicides as a result of gambling harm increasing and the government seemingly determined to offer a crackdown on the social responsibility placed on bookies, many expected the fine presented to GVC Holdings as the parent company of Ladbrokes and Coral to be much harsher than it actually was, which might help to explain why the company’s share price rose instead of feel when news of the fine was confirmed.
GVC Holdings reacted to news of the fine by promising to pay £4.8 million as well as divesting £1.1 million that it said it had ‘gained from customers as a result of its failings’. It also ‘acknowledges and regrets’ that some of the legacy systems that were in place at the time ‘did not adequately meet the regulatory requirements’.
The group, which is based on the Isle of Man and purchased Ladbrokes Coral for £4 billion in 2018, will put the £4.8 million towards preventing problem gambling and use the other £1.1 million to give money back to victims of crimes that saw their money used to fund gambling habits. The initial Gambling Commission investigation came about as a result of reports from the police and lawyers made to the body.