UKGC Fine White Label Operator FSB £600k For Third Party Partner License Failures

The UK Gambling Commission today fined license holder FBS Technology £600,000 for failing to meet their license conditions, specifically; ineffective source of funds checks, marketing to self-excluded customers, inadequate VIP oversight and inappropriate advertising.

FSB are a third party gambling provision provider, they contact out services to companies allowing them to use their platform and license under their own brand name.  This is commonly known as a ‘white label’ service and has become the most popular method used by new betting brands when setting up a new site.  FSB white labels include BlackBet, QuinnBet, JenningsBet and others.

The judgement highlights the issues white label providers now face in ensuring its third parties adhere to the gambling license conditions, something that has become more acute as the industry has tightened social responsibility and money laundering regulations in the past year.

White Labels Under Scrutiny

Many punters are unaware a lot of the time they are even betting with a white-label, however, it is important as the license holder is the one who should protect customers.  Many well known sites are either full white labels, where the provider holds the license and does almost everything apart from marketing, or have their own license and services contracted out to the third-party provider.

There are many companies that offer third party gambling services such as, SBTech (e.g. 10Bet), BetConstruct (e.g. Vbet), Kambi (e.g Unibet) and others.  FSB, however, are known in particular for providing full white label services, meaning they hold all of the responsibility for meeting the licensing conditions.

As regulations around gambling advertising, social responsibility, verification and money laundering have increased in the UK it has proven difficult for companies like FSB who in effect farm out their license to others to appropriately monitor customers and the marketing activities of their partners.

What Were The Failings?

Most of the failings highlighted in the UKGC investigation relate to a lack of oversight of their third party brands.

The first of these focuses on inappropriate checking of customer funds in relation to a customer who showed problem gambling signs but was still allowed to spend nearly £300,000 over a year and a half period.  Further social failings were revealed such as sending over 2000 marketing emails to self-excluded customers as well a VIP manager that did not receive appropriate anti-money laundering training.

The company was also found to have failed in responsible marketing after an ad appeared for one of their third party brands that displayed both cartoon nudity and copyrighted material.

In this case FBS were initially unaware one of their partner brands had placed the ad and did take steps to remove it when notified but as they are the license holder they are responsible for maintaining these standards.  The VIP manger interaction, marketing emails to self-excluded players and problem gambling failures were also conducted by the third party companies but again FSB hold the ultimate responsibility, which highlights the difficulty in supervising third party brands.

In addition to their £600k fine FSB will now have additional conditions enforced to ensure they perform sufficient due diligence on their third party partners.

White Labels Decreasing In The UK

FSB in particular have seen a lot of their partners close or go into administration over the last 18 months.  These include Mintbet, Betsid and 21Bet (both sold off and went out of business again), Bookee and many more.  This has been driven partly by increasing costs, such as rising point of consumption taxes, in what is a hugely competitive market but also by brands pulling out because they can no longer deal with the regulatory requirements as small companies.

At the start of the year FSB were also forced to take the brand Black Type in house after the brand owners went into administration.  Holding the license and responsibility for customer funds meant the company were forced to adopt the brand.

New rules around verification and checking sources of funds have at the same time put extra strain on white-label providers who are clearly failing in their obligations to meet their license conditions.  This is compounded by the fact their third party providers can run their own marketing but it is ultimately the license holder that is responsible if this infringes the new more stringent advertising rules.

FSB are not the only white label company that are struggling with this.  Last year EveryMatrix announced that they were withdrawing all white-labels from the UK following a similar fine by the UKGC and only earlier this week the Gaming Innovation Group (GIG) announced they were withdrawing UK white-label operations.

Even brands that are not full white labels but license parts of their product form providers have been struggling of late.  Premier Punt, a brand that ran on SBTech, also closed down recently, funnily enough the company behind them, Incentive Group Limited, had bought  failing FSB brands 21Bet and BetSid only to see them go under for a second time within a year.

Over the past 5 years there has been a staggering increase In the number of UK licensed white labels.  For a long time this offered the easiest, quickest and most cost effective way for new brands to enter the market as they do not need to pay for their own platform, manage payments or wait for a license application to go through.  The fact so many of these brands have closed in the last 2 years shows that the landscape for white labels has changed. With modern compliance and betting companies running on a shoestring budget using another companies license it is becoming increasing nonviable.

For the customer this may not be the best thing either as the current regulatory environment plays into the hands of the biggest companies with the deepest pockets and resources.  There is no argument that the new regulations are needed and that they are designed to do good but the side effect of this is it will make it harder to enter the market, which could lead to a further monopolised industry.

Quinnbet Apply For Their Own License

One of the best performing FSB white labels in Quinnbet, a brand that we promote and very much like.  In is a sign of the difficulties FSB white labels are having Quinnbet are in the process of moving their brand to a new license holder, Belbridge Consultancy Limited.

This is good news for Quinnbet customers who will now be safe if FSB white-labels are withdrawn from the UK, which is a very distinct possibility given what has happened in similar cases over the last year.