888 sees upturn in share price despite record £7.8m fine

888 sees upturn in share price despite record £7.8m fine

Thursday, August 31, 2017 Posted by James Walker
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Online gaming firm 888 Holdings saw its share price jump by 5% this morning, despite being handed a record £7.8 million over “serious failings” in its handling of vulnerable customers.

The record penalty package follows the discovery of what the Gambling Commission called “significant flaws” in 888 UK Limited’s social responsibility processes, which aim to protect consumers from gambling-related harm.

However, the market has responded positively to the announcement, as the Gambling Commission could have taken matters much further. The upturn in share price may also be indicative of the fact that the company could well become an M&A target, now this issue is no longer overshadowing its future.

“Due to a technical failure in 888’s systems, over 7,000 customers who had chosen to self-exclude from their casino/poker/sport platform were still able to access their accounts on their bingo platform,” the regulator stated this morning.

The breach went undetected for a prolonged period of time, meaning self-excluded customers were able to deposit £3.5 million into their accounts, and then continue to gamble, for more than 13 months.

While 888 did have self-exclusion procedures in place, the Gambling Commission said they were not robust enough and “failed to protect potentially vulnerable customers”.

In addition, it was found that 888 failed to recognise visible signs of problem gambling behaviour displayed by an individual customer, which was so significant that it resulted in criminal activity. The customer staked over £1.3 million, including £55,000 stolen from their employer.

During a 13-month period, the customer placed a large number of bets, gambling on average 3-4 hours a day.

“The lack of interaction with the customer, given the frequency, duration and sums of money involved in the gambling, raised serious concerns about 888’s safeguarding of customers at-risk of gambling harm,” the Commission stated.

In line with its statement of principles for licensing and regulation, the regulator decided that 888 must pay a regulatory settlement, including a £4.25 million payment in lieu of a fine imposed by the Commission and reimbursements to customers of £3.5 million.

The operator, which accepted its failure to meet Gambling Commission standards, will also pay £62,000 compensation to the employer who had funds stolen by the 888 customer.

“Safeguarding consumers is not optional,” said Sarah Harrison, chief executive of the Gambling Commission. “This penalty package of just under £8 million reflects the seriousness of 888’s failings to protect vulnerable customers.

“The 888 sanction package will ensure those affected don’t lose out, that the operator pays the price for its failings via a sum that will go to tackling gambling-related harm, and that independent assurance will be given to see that lessons are learnt.”

The news comes as the Gambling Commission and various social responsibility organisations continue to ramp up pressure on operators to demonstrate they are making a positive impact through their work to protect consumers and promote safe play.

Following new research published by the Commission last week, the regulator has called for a renewed focus on addressing the harms that can arise from problem gambling.

The report – Gambling Behaviour in Great Britain in 2015 – provides, for the first time since 2010, a comprehensive analysis of gambling across all nations of Great Britain, examining the rates of participation, at-risk gambling and problem gambling, and explores the associated characteristics and behaviours.

The report comes after the Responsible Gambling Strategy Board (RGSB) published its first assessment of how much progress has been made with delivering year one of the three-year National Responsible Gambling Strategy.

Although the group recognised and welcomed the “considerable activity” that took place during the first year of the strategy, the RGSB said it had concerns with four key areas of its responsible gaming action plan, including the search to find better ways of identifying and measuring gambling-related harm, and the perceived reticence of both public and private organisations to accept their responsibility to address problem gambling.

Totally Gaming says: Given the huge number of customers affected, the duration of the breach and scale of the gambling involved, the Gambling Commission said the issues identified in the 888 case are “likely to form the basis for future compliance assessments of gambling operators”. While 888 Holdings’ stock price jumped nearly 5% this morning, the record fine will no doubt grab the attention of gambling industry stakeholders across the UK.

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