UK Gambling Commission Hits EU Lotto with a $1 Million Fine

The United Kingdom Gambling Commission (UKGC) has slapped EU Lotto, the operator of the lottoland.co.uk lottery site, with a £760,000 ($1 million) fine for regulatory misconduct. According to an announcement by the Gambling Commission on Thursday, EU Lotto was found to have breached social responsibility and anti-money laundering (AML) and terrorist financing provisions after an investigation by the regulator.

On top of the hefty fine, EU Lotto will have to face “extensive independent auditing” and has also received a formal warning from the UK gaming watchdog. Following the verdict, Helen Venn, Commission Executive Director, released a media briefing to address the matter saying in part:

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“This case, like other recent enforcement action, was the result of planned compliance activity. All operators should be very aware that we will not hesitate to take firm action against those who fail to meet the high standards we expect for consumers in Britain.”

EU Lotto’s Social Responsibility and AML Failures

Per the Commission’s announcement, EU Lotto’s misconduct took place between October 2019 and November 2020. Following a review of the culprit’s operating license, the UKGC investigation team found that the operator had breached the four codes of conduct highlighted below:

• Customer Interaction: Paragraph 1 of social responsibility code of practice (SRCP) 3.4.1
• AML:  ordinary code provision (OCP) 2.1.1
• AML: Paragraphs 1, 2, and 3 of license condition 12.1.1
• AML: Paragraph 1 of license condition 12.1.2

Based on the report published by the UKGC, EU Lotto’s failed to comply with social responsibility regulations by ignoring the regulator’s formal customer interaction guide. Some of the operator’s shortcomings cited in the report include:

• Frequent change of deposit limits by consumers without being flagged as signs of potential gambling harm
• Not adequately establishing the financial suitability and affordability of a customer’s expenditure on the platform to determine whether the consumer was at risk of harm or being harmed
• Using email communication as the predominant channel of specifying the website’s responsible gambling tools without requiring a response from the customer. There wasn’t enough evidence tailoring the customer interactions with respect to the magnitude of potential harm.  

As for AML regulatory transgressions, some of the instances that the UK gaming ombudsman pointed out in the report are such as:

• Failure to effectively analyze or review bank statements submitted by consumers to confirm their address
• Failing to restrict user accounts after requests for source of funds (SoF) were made to the customer
• Letting consumers add third-party debit cards whose details don’t match their account information on record
• Heavy reliance on futile threshold triggers and a general lack of information about how much a user should be allowed to spend on the website based on wealth, income, and a range of other risk factors.

Due to the outlined failings and several more, the Commission served a formal warning to EU Lotto per section 117 (a) of the Gambling Act 2005 after issuing the fine. In addition, the lottery games operator under fire also received additional license conditions to the Lottoland operator according to section 117 (1) (b) of the Gambling Act 2005.

Lottoland Agrees to Co-Operate with the UK Gambling Commission Fully

After the UK gaming watchdog issued its rulings against EU Lotto, Nigel Birrell, the Lottoland CEO, accepted the disciplinary action taken against the company while also pointing the finger at ‘legacy issues’ in the website’s compliance controls.  He said:

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“Lottoland is fully committed to ensuring the highest standards of compliance, including its anti-money laundering and social responsibility obligations in all of the jurisdictions in which it operates. The Gambling Commission fine was related to legacy issues around some of our compliance controls which have now been addressed. Lottoland has extensive compliance measures in place, and we are confident that our current policies and processes meet all relevant standards.”

Moreover, the Lottoland CEO indicated the corrective measures that the company has taken to address the regulatory failures identified by the UK Gambling Commission. He added that:

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“Remedial action taken included significantly increased investment in our compliance function, more than doubling headcount, alongside a host of other initiatives including bringing in third-party support, enhancing training, and a review of key policies. In addition, we recently committed to building our individual processes into an automated system to improve the system even further.”

Earlier this month, the UK gaming regulator announced that it had slapped Daub Alderney, a Rank Group subsidiary, with a £5.85 million penalty for social responsibility and AML offenses. Rank Group, however, said it would appeal the fine since the regulatory misconduct took place before it had taken over the Daub Alderney unit.