In a significant blow to UK gambling operator William Hill, the company has been ordered to pay a record-breaking regulatory penalty of £19.2m ($23.6m) for widespread social responsibility and anti-money laundering failures. The penalty, described as “alarming” by the regulator, follows a previous settlement of £17m paid by Entain, another major player in the industry. Despite attempts to attribute the failings to the period prior to 888 Holdings’ acquisition of William Hill, these regulatory issues continue to impact the parent company’s share price, adding to existing challenges following the departure of the CEO.
Background:
The regulatory settlement, not classified as a fine, highlights the failings of three of William Hill’s businesses. WHG (International) Limited has been ordered to pay £12.5m, Mr Green Limited £3.7m, and William Hill Organisation Limited £3m. The parent company, 888 Holdings, emphasized that the identified issues occurred before their acquisition of William Hill and expressed a commitment to improving compliance standards in collaboration with regulators and stakeholders.
Share Price Impact and Previous Challenges:
The announcement of the penalty further destabilized 888’s share price, which had already experienced a decline following the sudden departure of its long-term CEO, Itai Pazner. The company had faced issues related to VIP players in the Middle East, and these problems have now extended to the UK market. Despite a recent upturn in share value, the announcement by the Gambling Commission caused a drop in 888’s share price from £0.65 to £0.53.
Consideration of License Suspension:
The Gambling Commission’s Chief Executive, Andrew Rhodes, revealed that the extent of the failings uncovered during the investigation prompted serious consideration of license suspension. However, due to William Hill’s acknowledgment of the failings and their proactive efforts to implement improvements, the commission opted for the largest enforcement payment in its history. While license suspension warnings should be approached with caution, given similar cases involving other operators, the likelihood of a major operator losing its license remains uncertain.
Details of the Regulatory Breaches:
William Hill’s breaches of regulations align with recent penalties imposed by the Gambling Commission. One instance involved a new customer who was allowed to spend £23,000 within 20 minutes of opening an account without undergoing responsible gambling checks. Additionally, ineffective controls enabled 331 self-excluded players to continue betting with Mr Green, one of William Hill’s subsidiaries.
The Industry’s Ongoing Challenges:
The case highlights the ongoing struggle within the gambling industry to balance responsible gambling practices with the pressure to deliver maximum returns to shareholders. Tier-one operators face the challenge of meeting strict responsible gambling standards while satisfying investor expectations. The incident serves as a reminder that the industry still has room for improvement and must prioritize customer protection.
William Hill’s record-breaking regulatory penalty of £19.2m underscores the alarming and widespread failings in social responsibility and anti-money laundering practices within the UK gambling sector. While the operator quickly addressed the identified issues, the penalty has further impacted the share price of parent company 888 Holdings. The incident serves as a reminder of the challenges faced by the industry in promoting responsible gambling and underscores the need for continued efforts to improve compliance standards and protect customers.