Gambling Commission warns operators that treatment of VIP customers has to change

United Kingdom

In November 2018, the Gambling Commission were contacted by the relatives of a man who took his own life in April 2017, aged 25. The Commission subsequently undertook an investigation into PT Entertainment Services (“PTES”), which uncovered serious and unacceptable failures in social responsibility, as well as systemic failures in the protection of its players.

Prior to completion of their review, PTES surrendered its operating licence which means that it cannot be required to pay a financial penalty. However, the Commission completed the investigation and published its findings, considering that it was in the public interest to do so. The Commission is continuing to investigate personal licence holders.

Background

Between 26 December 2016 and 12 April 2017, it was reported that the customer had deposited £148,095 with a net loss of £34,068. In the 5 days between 1 and 5 April 2017 he deposited and lost £119,395.

The Commission found that PTES had not obtained information to verify whether the customer could afford his level of play, yet provided him with VIP status. Additionally, there were no responsible gambling interactions with him between the opening and closure of his account, despite:

  • Three debit card deposits being declined;

  • PTES not knowing his occupation, and commented as such in an internal email on 29 December 2016 (so were unaware whether such play was affordable); and

  • The customer stating to a VIP manager that he was gambling even more on other websites.

The Commission were also critical of a further email to the customer inviting him to “grab this opportunity to earn millions” by taking part in a promotion called Jackpot Giant. The Commission considered this to be an inducement to encourage higher levels of play, despite the fact that PTES had not gained assurance that the customer could afford such levels.

The Commission also conducted a review of PTES’ wider customer base. In the overall active customer base in 2016/2017 only 0.26% had been sent responsible gambling emails, which the GC considered to be “exceptionally low”.

Failings

The Commission considered that PTES gave no consideration to social responsibility or problem gambling checks. PTES had failed to assess and verify whether the customer could spend the amounts he was playing with and had not carried out any responsible gambling interactions. These failures were serious and unacceptable.

  • Responsible gambling triggers required the customer to be active for two to six months, leaving customers who gambled for shorter periods of time exposed; and

  •  There were no specific provisions for handling VIP customers, and no clear policy or training given to staff for how to manage VIP customer relationships and minimise harm.

Money laundering

In relation to money laundering and terrorist financing, PTES did not have a proper risk assessment which identified areas of risk and appropriate mitigation. As such, PTES was found to be in breach of Licence Conditions 12.1.1 and 12.1.2.

VIP Customers

The Commission specifically highlighted the issue with high value (VIP) customers, with Neil McArthur, the Commission’s Chief Executive commenting that:

This case – like so many others we have seen – illustrates why the management of so-called ‘high value customers’ has to change. Operators must do everything in their power to interact with customers responsibly.”

The Commission explained that they will shortly be opening a consultation around high value customers, with the intention that this will bring permanent change to the way high value customers are recruited and incentivised by operators.

This reflects the actions from three industry working groups established by the Commission, which included the use of VIP incentives.

Proposed Settlement

Prior to surrendering its licence, PTES offered a financial settlement of £619,395 which the Commission considered to be “seriously deficient”. The Commission felt a fine of at least £3.5m would be appropriate, but because PTES’ licence had been surrendered this could not be enforced.

PTES has since donated their proposed financial settlement to charity in furtherance of the National Strategy to Reduce Gambling Harms.

Comment

This is a sobering reminder of the importance for all operators to consider their VIP framework and ensure that it is consistent with the Commission’s Licensing Objectives. The Commission continues to scrutinise VIP practices, and its consultation will likely lead to changes as to how operators can recruit and incentivise high value customers.

Policies and procedures operators have in place must be appropriate for safeguarding customers, particularly those who are high risk. Operators must ensure that customers can afford their level of play and be aware of the signs of problem gambling to identify at risk players.