Paddy Power Betfair has been fined £2.2 million by the Gambling Commission for permitting stolen money to be gambled.  The gambling group was criticised for failing to intervene when their customers showed signs of addiction problems, gambling “significant sums” of stolen money, and failing to carry out appropriate anti-money laundering checks.

Simon Price, the former CEO of Birmingham Dogs Home, was jailed for 5 years after being convicted of defrauding the charity of approximately £900,000 which he squandered through online gambling.

Who regulates betting groups?

The Gambling Commission are responsible for regulating the industry.  All commercial gambling businesses which hold a licence under the Gambling Act 2005 must comply with the Act and the Gambling Commission’s Licence Conditions and Code of Practice.  The Gambling Commission is also tasked with combating illegal gambling activities.

What are the responsibilities of gambling groups?

Gambling businesses have a responsibility to intervene when their customers display signs of problem gambling and must ensure that their anti-money laundering checks and welfare and social responsibility checks are effective and compliant with the regulations.

The decision in the Paddy Power case

The decision in the Betfair case offers some reassurance to companies and charities who are the victims of fraud, where directors or other senior office holders unlawfully, and in breach of their duties, use company funds to pursue their gambling additions.  Holding betting groups accountable, where appropriate checks could have prevented the stolen funds being used in this way, allows companies and charities in this position to seek to recover the substantial sums lost.

The defrauding of companies can often begin as subtle and relatively small misappropriations of money over a period of time, in some cases increasing as the perpetrator’s problem grows or becomes more desperate, culminating in significant amounts of money being stolen.  Where the perpetrator is a senior officer, or even the financial director, issues can go undetected for some time.  Often, by the time a company becomes aware that it has been defrauded, the money has already been spent or otherwise embezzled, making a financial recovery against the individual wrongdoer difficult to achieve.  The ability to seek redress from gambling businesses where the funds have been spent gambling, provides helpful redress.

How we can help

Having recently made a successful recovery from a gambling business on behalf of our client in similar circumstances, we would encourage companies to speak to us as soon as possible, should they have any concerns that company or charitable funds are being embezzled as a result of gambling.

About the author

Matthew Goodwin Associate - Solicitor-Advocate

Matthew regularly acts for corporates and individuals, dealing with a variety of disputes relating to investments, negligent tax planning, tax avoidance schemes, pensions and HMRC enquiries and negotiations. In addition, Matthew advises financial institutions and FCA regulated firms on their regulatory obligations.