The United Kingdom Gambling Commission (UKGC) is on the warpath again. Yet the work that it is doing serves to protect online gamblers. Operators have suffered through a series of high fines and other penalties recently. The UKGC has tackled gambling companies on customer protection and other issues. In August of 2022, Entain received a £17 million fine from the regulatory body. That stood out as the biggest penalty imposed on a gambling brand in the UK. It looks as though William Hill has now managed to trump that record, though.
The UKGC issued a massive £19.2 million penalty to the company. Citing three of the firms it owns, issues surrounded failure to protect customers. Weak anti-money laundering controls were also highlighted. The biggest problem came about from the Commission’s discovery of customers able to bet large sums of money in short timeframes. In one instance, a player opened a new account and spent £23,000 in 20 minutes. No checks were undertaken within that period, either.
Issues Surrounding Three Firms Owned by WHG (International) Limited
The William Hill brand comes under the ownership of WHG (International) Limited. It is this brand that will pay the largest share of the £19.2 million penalty. The Commission issued a £12.5 million fine to that firm. Mr Green Limited received a £3.7 million penalty. That firm handles the Mr Green website. Finally, the William Hill Organization Limited firm will pay £3 million. This is the company responsible for operating 1,344 physical gambling premises in the UK.
The fines issued to those three brands is the latest in a series of constant penalties. Only a week prior, the UKGC fined two operators belonging to the Kindred brand. They received a combined £7.2 million penalty for failures. Including that fine and the new one for William Hill, the UKGC has concluded 26 enforcement cases. Through such, operators have paid up £76 million altogether in fines.
In relation to the William Hill failures, the Commission looked at various activity. The investigation covered the period between January 2020 and October 2021. The issues uncovered included the following:
- A single player opened a new gambling account and then wagered £32,500 over two days. No checks occurred in relation to this player.
- The group did not identify customers at risk of experiencing gambling problems. One instance saw a customer lose £14,902 in a 70-minute timeframe.
- William Hill failed to impose a 24-hour delay between receiving requests for an increase in credit limit and issuing it. This resulted in one player being able to make a £100,000 wager straight away. That was even though he had a credit limit of £70,000.
- Various customers were able to place large bets without any checks taking place. No source of funds checks occurred.
- One customer staked £19,000 in a single wager. William Hill did not carry out any source of funds checks on the player. Another case saw a player wager £39,324 over 12 days, and they lost £20,360 in that period. Again, no checks took place from the operator’s side.
- Ineffective controls allowed 331 customers to gamble at Mr Green, despite having self-excluded.
- AML staff training did not provide adequate information on risks and how to manage them.
The failures of William Hill were so widespread that they caused considerable alarm. Andrew Rhodes, operating as UKGC chief executive, said licence suspension was also considered. It was only due to the operator recognising their failures and enacting improvements that stopped this action. Instead, the Commission imposed the largest penalty on the company.
The operator will also have extra licence conditions imposed. This will ensure that it has a business board member to oversee an improvement plan. William Hill and all firms connected to it will also undergo a third-party audit. This will assess how effective the changes are relating to its AML and safer gambling policies.
888 Holdings in Control of William Hill
While it may seem like William Hill is in the bad books, there is a bigger picture to look at. Last year, 888 Holdings acquired the company from Caesars Entertainment. The latter took over the brand for £2.9 billion in 2020. Yet it did not want to keep control of the European operations of William Hill. Thus, 888 stepped in and acquired everything there for £2 billion in July 2022.
888 announced recently that it expected to report revenue of £1.85 billion for 2022. Adjusted earnings stood out at £310 million in that same estimate. Doubtless, the penalties imposed on William Hill came as quite the blow. The problems did occur under previous ownership, and 888 made swift changes to address them.
Despite this, it isn’t the ideal news for 888 Holdings. Quarterly rebalancing saw the company knocked out of the FTSE 250. The company’s share price has dipped by more than half since January 2023. One year ago, share prices were in a much better place at 224.20. As of this writing, those same shares stand at 53.55 following the news of the UKGC fines. This is an 11-year low for the company, which at one time traded shares at almost 500p each. That figure occurred in the midst of the COVID-19 pandemic. It now has to figure out how to get out of the mess it is currently in.
As a result of the changes, the company isn’t even big enough to make it into the FTSE 350. That will doubtless take a lot of time to rectify.
Of course, the debt that the brand has after its William Hill takeover remains in place. It is this that has had the most impact, due to interest rate increases. Combining that issue with the recent penalties on William Hill put 888 in a difficult position.
It’s quite a different story to the one predicted by Peel Hunt. The investment bank said in 2021 that the takeover by 888 would likely drive its share price up by 50%. In September of that year, the shares stood at 390.4p. They never reached the lofty 750p heights that Peel Hunt estimated. It will take a lot of work to see them ascend to that level now, too.
