On 13 April 2018, the Gambling Commission (the “Commission”) announced that it had imposed a penalty of £84,000 on Tabcorp UK Limited (trading as SunBets). The Commission found that SunBets had weaknesses in its systems and controls in relation to self-exclusions, novelty betting markets and risk management of promotional events. The gambling operator has also had additional conditions imposed on its licence, but appears to have avoided further sanction by self-reporting to the Commission in a timely manner, conducting a thorough internal investigation and taking other pro-active steps upon identifying its failings. In its decision, the Commission issues a clear warning to other operators that it expects them to heed the social responsibility lessons to be learned from SunBets, with any operators disregarding such lessons to be dealt with “more severely” in future.

Self-exclusion failings

Following 12 complaints, SunBets’ investigation found that 118 self-excluded customers had been able to open 141 duplicate accounts across a ten month period. This was a breach of Social Responsibility Code 3.5.3(1) and (6), which require licensees to have (and put into effect) procedures for self-exclusion and to take all reasonable steps to refuse service or otherwise prevent individuals with self-exclusion agreements from participating in gambling. Those procedures must include (i) having a register of those excluded, with appropriate records (name, address, other details and any membership or account details); (ii) having a record of the card numbers to be excluded; (iii) providing staff training to ensure staff can administer the procedures; and (iv) removing access from persons found to have gambled or to have attempted to gamble.

The Commission found that SunBets’ self-exclusion procedure was easy to circumvent. Personal details could be retained for new accounts so long as users changed their usernames, bank card details and email addresses. £50,000 of the overall £84,000 penalty package imposed on SunBets related to the self-exclusion failings, and will be paid to charities for socially responsible purposes in lieu of a fine. Approximately £24,000 was paid to 127 affected customers in the form of a refund of deposits (14 customers had withdrawals exceeding what they had deposited). The remaining £10,000 of the penalty package covered the Commission’s costs.

Novelty betting markets

The Commission investigated two incidents involving “novelty markets”, so-called because they involve bets that do not include any standard occurrence during a sporting event. SunBets was found to have failed properly to assess the risks in relation to two novelty markets that, had such an assessment been conducted, would not have been offered to customers.

“Pie-gate”

SunBets had offered odds of 8/1 on Sutton’s reserve goalkeeper eating a pie during a football match. When the goalkeeper did so, he was fined £375 by the Football Association for intentionally influencing a betting market and was banned from playing for two months. The Commission found that SunBets had not carried out a specific risk assessment on the potential impact of the market on the individual concerned, who in turn had a pivotal role in determining the outcome of that market. Offering this particular market carried a risk of inciting an individual to breach the rules of a sports governing body. The potential integrity risks could not be fully managed merely because the incident was being broadcast on the BBC, which Tabcorp accepted.

Streaking

This novelty market was dependent on a streaker running across the pitch during a football game, which the Commission found was inconsistent with the licensing objective to keep crime out of gambling. It risked encouraging individuals to commit a criminal act, which should have been recognised by an internal risk assessment process.

Licence conditions

Although neither of the novelty market failings led to a financial penalty, SunBets has had additional specific conditions placed on its licence, requiring it to ensure that:

- all novelty markets are appropriately risk assessed;

- all novelty markets are only created and approved in line with SunBets’ written novelty markets procedure;

- it does not offer improper novelty markets;

- an audit trail identifies a named individual with responsibility for approving novelty markets;

- it does not offer novelty markets dependent on an event which (i) would be a breach of the relevant sport governing body’s rules; or (ii) would involve the commission of a criminal offence.

Management of risks relating to the provision of facilities for gambling

SunBets employees had manually taken details of bets from customers at a marketing event in London due to a failure in SunBets’ remote technical equipment. No bets were ultimately placed because SunBets realised it did not have the correct licence to take the bets. The Commission found that SunBets had failed sufficiently to manage the risks of its staff offering facilities that SunBets’ licence did not cover, which could have been avoided with additional staff training and supervision.

Implications and lessons for operators

The Commission’s SunBets decision comes in the wake of the highest fine the Commission has ever imposed on an operator (William Hill) for breach of social responsibility and money laundering obligations, as well as a £1 million penalty package on SkyBet for breach of social responsibility obligations alone (see our Law Nows here and here). The Commission is clearly maintaining its momentum in enforcing the regulatory framework around social responsibility in order to protect vulnerable customers, and is ready and willing to make examples of operators in order to encourage others to take these obligations seriously.

The Commission expects operators to take heed of such decisions and use them as a prompt to review their own practices in order to identify weaknesses and implement improvements. This is important not only from a regulatory perspective; failings in self-exclusion procedures create a risk of civil liability because operators owe a duty of care to customers who have chosen to self-exclude.

Operators can take a number of pro-active steps to improve their own systems and controls in relation to social responsibility, including:

  • Conducting thorough risk assessments of events that are the subject of a bet in order to determine potential risks to betting integrity. In particular, does the bet/market:
    • induce the breach of rules of a sports governing body;
    • induce a criminal offence; and/or
    • impact an individual with a pivotal role in facilitating the outcome of that market?
  • Mastering technology and self-audit functions to ensure self-exclusion procedures are robust, and testing them continually;
  • Ensuring self-exclusion procedures are also robust in terms of the nature and extent of the details to be changed when customers self-exclude, to avoid duplicate accounts being opened;
  • Conducting holistic reviews of the business and using all available information, including customer complaints, to identify potential weaknesses;
  • Ensuring customer contact arrangements identify potential failings, so as to enable prompt investigation and remedy; and
  • Providing appropriate training and supervision to staff and ensuring compliance team involvement in marketing events.

The fact that SunBets took pro-active steps to address its failings and weaknesses appears to have been a significant factor in the Commission’s decision not to impose a greater financial penalty, as was SunBets’ decision to self-report and co-operate with the Commission, including sharing the results of its internal investigation. This decision is a clear encouragement to operators proactively to review their systems and procedures and make improvements to bring them in line with the Commission’s expectations and guidance, in order to avoid financial and other penalties.