Million $ fines, license withdrawals and even prison sentences – the cost of non-compliance for iGaming companies and individuals can be eye-watering. We profile 10 of the most eye-watering penalties in recent history.
Gambling is one of the world’s most heavily regulated business activities. Laws, regulatory authorities and compliance requirements vary by jurisdiction, ranging from outright bans to ‘relaxed but highly attentive’. Our suite of compliance courses help iGaming operators and suppliers remain on the right side of regulators.
Achieving compliance isn’t just good practice – it’s also an extremely prudent investment. Avoiding your responsibilities leaves your business AND yourself exposed to risk of significant sanctions, not to mention highly-damaging PR.
Here are 10 examples of how non-compliance can be severely punished, from multi-million dollar fines to – at the most extreme – prison sentences for those complicit and in leadership roles.
1 – “Black Friday”
$5,000,000+ & Prison Sentences – Multiple Poker Operators – USA, 2006
In what have known to become the Black Friday Indictments, a crackdown of online real money gambling games in 2006 by American congress saw the indictment of 11 serving employees of online platforms Absolute Poker, Full Tilt Poker and Pokerstars. A 3 -year prison sentence and $5 million Million dollar fine was handed down to Ira Rubin for processing payments whilst Absolute Poker’s Brent Buckley received a leaner 14 months for his involvement. Pokerstars’ payments director Paul Tate escaped a prison term by forfeiting $119,000 accrued.
2 – Paddy Power AML ‘Know Your Customer’ Failures
£310,000 Fines + Penalties – Paddy Power, 2016
The luck certainly wasn’t with the Irish bookmaker Paddy Power when the UK gaming commission (UKGC) imposed over £300,000 in fines, citing a number of malpractices. The bookmaker failed to carry out proportionate KYC checks into 2 high value clients, who were later to of found to be funding their addiction through being overworked (one was working 5 jobs!) They also neglected their duty in adequately investigating AML suspicions brought about by a branch manager involving the disproportionate use of Scottish tender.
3 – Bet365 Deceptive Advertising
Online operator guilty of false ‘free bet’ offers
AUS$2,750,000 – Bet365, 2016
Bet 365 weren’t experiencing a g’day with their Australian operation in 2016 when they were subject to a $2.75 million fine handed out to them by the Australian Competitions and Consumer Commission, under whose jurisdiction they fell, for deceptive and misleading advertising. The Stoke-based company promoted ‘Free Bets’ to entice new players to their site when in reality members were first obliged to gamble $200 dollars of private funds.
4 – PokerStars’ 5 Years Of Illegal Operation
$870,000,000 – Amaya / PokerStars, 2015
A Kentucky judge imposed an eye-watering $870 million fine on parent company Amaya, citing its subsidiary PokerStars’ illegal practices between October 2006 and April 2011. Under the Unlawful Internet Gambling Enforcement Act the court found the gaming operator guilty of providing gambling services to 34,000 players which had grossed an estimated revenue of $18 million.
5 – The Wrong Numbers: Lottery Faux Pas
£300,000 Fine – Camelot / National Lottery, 2015
Camelot fell afoul of the UKGC regulator in 2015 for posting the incorrect lottery results on its website. The wrong result was published for an hour and viewed more than 100,000 times. The indiscretion, which cost the company £300k in fines, was deemed to have breached the terms of its operating licence according to the UKGC.
6 – (Not So) FreeLotto.com
PlasmaNet’s ad campaign was a classic bait-and-switch scheme
$1,500,000 Settlement – Plasmanet / FreeLotto, 2010
The Promotional techniques of Plasmanet were brought to bear between 2006 and 2007 when the New York State Attorney General Andrew Cuomo ruled in the favour of consumers who inadvertently purchased Freelotto.com FAST service which subscribed them to a ‘not nearly as free as it sounded’ $14.99 per month charge. A 1.5-million-dollar settlement was reached to compensate for practices which Cuomo would describe as ‘deceptive and misleading.’
7 – Coral Accept Stolen Funds
£880,000 Fine + Procedural Review – Coral UK, 2016
Coral were found liable for a fine and costs by the UKGC for failing to determine the source of income for one of their high value customers who gambled away £800 thousand pounds in stolen funds. Although investigations were initiated they were not considered robust enough and an immediate review of procedures were ordered, along with a £880k fine.
8 – Self-Excluded Advertising by Caesars
$10,000 Fine – Caesars New Jersey, 2014
Caesars Entertainment were caught short in New Jersey when they failed to comply with state legislation which states that promotional material cannot be targeted towards players who have signed up to their ‘online exclusion’ list. In an effort to help self-confessed problem gamblers, the exclusion list was introduced in 2013. Between the 16 Feb and 28 May 2014, though, 250 people who signed up were still sent marketing material. A fine of $10,000 was subsequently handed down by The New Jersey division of gaming.
9 – Western Union Processes Illicit Gaming Payments
Western Union failed to maintain an effective AML program
$586,000,000 Federal Penalty – Western Union, 2017
The U.S. federal government sanctioned a fine of $586 million on financial services behemoth Western Union for consistent failings in its AML safeguards. The tip of the iceberg came when payments were found to have been processed to illicit internet gaming companies in Costa Rica.
10 – Ladbrokes Entice Australian Public To Gamble
AUS$85,000 Fine – Ladbrokes, 2017
Repeat infringers Ladbrokes upset the authorities once again by enticing the public to gamble by means of their marketing activities, a practice which is prohibited in Australia. A fine totalling AUS$85,000 was handed down to them due to promotions put out on their website, as well as Youtube and in the Sydney Morning Herald.
Protect Yourself Against Compliance Sanctions
iGaming Academy’s suite of regulator-recognised compliance courses cover Responsible Gambling, Anti-Money Laundering, Payments Fraud and more. View our courses and enquire today.
