Historically, the gaming andgambling industry has been associated with money laundering and other criminalactivities, which have resulted in many jurisdictions imposing strictregulations and restrictions on firms in this industry. Added to this, is thefact that more than 420,000 British gamblers lose at least £2,000 a year ingaming and gambling according to recent research conducted by the NationalCentre for Social Research (NatCen) and the University of Liverpool.

Also, unsound practices in the UK’s multi-billion-poundgambling industry have forced the regulator to issue several large fines overthe past two years with the biggest fine ever of 19.2 million pounds issued bythe regulator to the William Hill betting group for failure to protectconsumers and stop money laundering.

Increased regulatory scrutiny

In an attempt to address the shortcomings inthe UK gaming and gambling industry, the UK published the long-awaited gamblingwhite paper in April which caused the largest shake-up in the betting industryin almost 20 years. According to the Financial Times the white paper introduceda statutory levy on betting companies to fund public health initiatives with astake limit of between £2 and £4 on online casino games for young adults andproposed tighter financial affordability checks on questionable gamblers.

The new regulations alsoimply that gamblers who are losing large amounts of money could face checks. Although the white paper is currently subject toconsultation, minister Stuart Andrew, ParliamentaryUnder Secretary of State for Sport, Gambling and Civil Society, and Ministerfor Equalities and Parliamentary Under Secretary of State indicated thatthe changes would be implemented by the summer of 2024. According to the BBC, when the Gambling Act 2005 was introduced, mostbetting still took place in physical locations: betting shops, casinos, andracetracks but the industry now makes two thirds of its revenues from onlinegambling.

One of the main reasons forthe new regulations which will force gambling firms to step up checks ongamblers is to offer increased protection especially to gamblers who are unableto afford small losses and in doing so, also tackles gambling addiction. CultureSecretary Lucy Frazer clearly stated that “Weneed a new approach that reflects that a flutter is one thing, uncheckedaddiction is another. So, we are bringing our pre-smartphone regulations intothe present day with a gambling white paper for the digital age”.

The situation in Ireland

Thegambling industry in Ireland has grown substantially and is estimated to beworth up to €8 billion per year. This growth is due to major changes which havetaken place over the past two decades and the growing popularity of onlinebetting. As a result, the Irish government introduced the Gambling Regulation Bill in December2022, and it is the most significant reform of gambling legislation in Irelandsince the formation of the State.

The Bill provides for theestablishment of the Gambling Regulatory Authority of Ireland and aims to bringIreland in line with the UK regarding prohibiting licensees from acceptingcredit cards for the purposes of gambling and to also stop licensees fromextending credit facilities or knowingly enable the giving of credit inrelation to gambling activities.

The impact of newregulations on the gaming and gambling industry

According to a recentarticle published by Reuters, Flutter, theworld's largest online betting company indicated that it welcomed the proposed changesas laid out in the UK’s gambling white paper to crack down on problem gambling.The firm’s chief executive, Peter Jackson stated that "We welcome thepublication of the white paper, which marks a significant moment for the UKgambling sector. We believe proactive change will lead to a better future forour industry".

Although reporting entities shouldconduct annual Anti-Money Laundering (AML) risk assessments and have robust AMLframeworks in place, which includes standard operating procedures forscreening, conducting due diligence and for the quality of reporting suspicioustransactions, the newly proposed legislation for the UK and Ireland will alsorequire the gambling industry to conduct tighterfinancial affordability checks on questionable gamblers. However, not allgaming and gambling firms have the required expertise and resources to addressthese regulatory requirements.

How Lysis Group canhelp

Wehave established a solid reputation as a global leader in the field of FinancialCrime Compliance and Client Lifecycle Management. We deliver a unique and cost-effectivecombination of superior service offerings across the full spectrum of financialcrime compliance including client onboarding, ongoing monitoring screening support,Know Your Customer (KYC) remediation and refresh, transaction monitoring remediationand real-time alerts review and our award-winning managed services.

We canspecifically help your firm by:

·       Addressingthe core problems of the firm’s financial crime framework by conducting healthchecks and maturity assessments in a cost-effective manner.

·       Streamliningand optimising the customer onboarding process by introducing tighter financialaffordability and source of wealth checks on questionable gamblers, as part ofthe KYC process.

·       Helping withthe selection of the right transaction monitoring system which is aligned with a firm’s bespokeoperational nuances.

·       Standardisingcapabilities to deliver a scalable solution to balance experience, team sizeand structures. This can build a high performing team which could maximiseeffectiveness with a positive impact on the bottom line.

·       Applying aunique and cost-effective four-state process for initiating, running, andcompleting transaction monitoring remediation effectively.

·       Reviewing andoptimising financial controls across the entire Client Lifecycle Management(CLM) process because we focus on the overall chain of client activities.

‍