Enforcement: tackling the illegal gaming market from a UK and European perspective

The UK has seen the use of criminal sanctions both in relation to the use of illegal gambling premises and illegal websites. In addition to reviewing some key criminal cases in the UK this article will consider the successful use of cease and desist orders and other business disruption tactics by European Gambling Regulators and the international co-operation that has developed between regulators in sharing details of intelligence and enforcement action.

Use of criminal proceedings and sanctions in the UK

The United Kingdom has achieved significant success in the past three years in tackling illegal gambling as a result of government agencies working together through the Government Agency Intelligence Network (GAIN). Regional Organised Crime Police Units have worked closely with the Gambling Commission, Licensing Authorities and HM Revenue and Customs to disrupt and close down illegal gambling activity within Great Britain.

This combined with the increased use of the Proceeds of Crime Act 2002 to prosecute offenders for money laundering offences has meant that the authorities are able to strip the perpetrators of their assets and illegal profits and secure longer prison sentences rather than prosecute for offences under the Gambling Act. The maximum penalty for the unlawful use of premises or unlawful provision of facilities for gambling is 51 weeks. For money laundering offences the maximum prison sentence on indictment is 14 years.

As recently as 28th February, 2024 the Welsh Regional Organised Crime Unit, in conjunction with officers from the Gambling Commission, HM Revenue and Customs and Cardiff City Council Licensing executed six search warrants and raided an illegal poker den in an industrial unit in Cardiff. Two individuals were arrested for Money Laundering Offences and offences under the Gambling Act. The first use of the Proceeds of Crime Act by a Licensing Authority to prosecute illegal gambling was back in 2014 when Enfield Council in North London carried out a similar raid of an illegal poker den known as Big Bluff. This was a case where the “proprietor” had been granted a Club Gaming Permit which authorises the playing of poker at restricted stakes by members of a bona fide club. The proprietor had previously been warned to comply with the terms of the Permit by the Authority and Police following a compliance visit. It was estimated that the proprietor had taken over £400,000 out of what transpired to be an illegal commercial business. He was subsequently convicted of money laundering offences and received a prison sentence of 15 months, and following his release, faced forfeiture proceedings in relation to assets the Council had managed to track down and seize. The Licensing Authority is able to use  amounts forfeited to put towards the costs of an investigation and prosecution. If a Licensing Authority prosecutes for offences under the Gambling Act, they incur considerable costs. Even if there is a costs order in their favour, they will not recover the true costs of the investigation and the proceedings.

Similar combined enforcement action has been successfully used to identify operators of illegal lotteries on social media and, in particular, on Facebook. In February 2022 the Gambling Commission issued a press statement confirming that, in conjunction with two Regional Organised Crime Units, they had identified and targeted key individuals profiting from illegal schemes.

The Commission highlighted that in these cases the promoters were targeting the vulnerable: “There were hundreds of people taking part in these lotteries, but it was important to identify those who were organising and moderating them illegally. Working alongside our colleagues at Facebook and the police, we are pleased that key individuals have been identified and this type of activity, which only increases the risk of gambling harm, has been disrupted.”

The police added: “It’s important to acknowledge the harm illegal gambling can cause, especially when unregulated lotteries like vulnerable people in our communities, especially those caught up in a cycle of addiction.”

As a result of one of the investigations an individual was the subject of a Proceeds of Crime Act forfeiture application at Middlesbrough Magistrates Court in March 2022. The police seized £140,000 from the individual’s bank accounts, which was confiscated as being the personal profit derived from the illegal activity. The court ordered the forfeiture of the whole amount.

The case officer commented: “No one should profit from criminal activity and the Proceeds of Crime Act enables police and partner agencies to confiscate cash, including money held in bank accounts and other physical assets gained through illegal means. This result serves as a stark warning that anyone involved in such activity can expect to find themselves the focus of intense security and any so-called ill-gotten gains can be forfeit.”

In 2017, the Gambling Commission prosecuted two individuals for the operation of an illegal unlicensed gambling site, FutGalaxy.com, which targeted children. Its virtual currency “FUT” coins could be used to gamble and then be converted into FIFA coins that could be traded on a secondary unauthorised site operated by one of the defendants. Fines and costs orders totalling nearly £250,000 were imposed on the two defendants.

One of the most recent cases involving the use of criminal powers has seen a significant gambling operator investigated by HM Bribery Act 2010. The full facts of the case will not be made available until the ongoing investigation into allegations against individuals have been completed – this could take years if there are trials and appeals. However, the Deferred  Prosecution

Agreement between the Crown Prosecution Service (CPS) (as the prosecuting authority in the case (on behalf of HMRC) and Entain plc, approved by the President of the King’s Bench Division in a judgement delivered at Southwark Crown Court on 5th gaming companies that “do business in the UK” wherever they are located given the extra-territorial application of the Bribery Act. The financial penalty and disgorgement of profits in the case totalled £585m along with £10m in costs payable to the CPS and HMRC, and a charitable payment of £20m. This however does not reflect the wider financial impact on Entain in being required, as part of the decision, to withdraw from a considerable number of jurisdictions where their activity was “non-legal”.

The extent of the impact of the judge’s categorisation of the terminology will only become known once the Statement of Facts is published.

Business Disruption Measures

At the time of the implementation of the remote licensing regime in 2014, the Commission gave a commitment to the licensed regulated industry from unlicensed and illegal operations. In 2021 the government increased the application and annual fees payable to the Gambling Commission. An element of the increase was to enable the Commission to increase its enforcement activity in tacking illegal online activity. The Commission has agreements with Internet service providers (ISPs) unlicensed operators and uses these very successfully to disrupt illegal activity. As part of its activity in tackling on social media, the Commission succeeded in taking down nearly 400 illegal lotteries advertised on Facebook in the period 2020/2021 alone. The French regulator has also recently taken similar enforcement action against social media sites.

In its advice to the government that informed last year’s White Paper on gambling reform, the Commission specifically raised concerns over the proliferation of unlawful raffle style sites and the fact that the prizes offered were encouraging those could least afford it to buy tickets. Many of the schemes are structured in a way that it is actually more expensive to enter by an alternative “free” method and the Commission continue to receive a large number of complaints where either the advertised is not awarded or the closing date is changed, reducing the chance of winning for those who have already entered. There are strict rules in the UK’s Advertising Codes as to how such competitions are presented and promoted and the Advertising Standards Authority (ASA) do undertake significant enforcement activity in this field. If rulings are not complied with then the ASA has powers to refer cases to Trading Standards for prosecution.

The government has confirmed in the White Paper that it will be reviewing the exemptions in the Gambling Act that permit “free draws” where there is a genuine choice of entering for free or paying to enter. It has also indicated that, given that parliament never intended that the exemption should extend to offering big ticket items such as cars and houses, it will introduce a form of regulation of promotions where the prize exceeds a prescribed limit. It has further indicated that promoters will be required by licence conditions to comply with the same social responsibility requirements as licensed gambling entities.

Another provision in the White Paper that will enhance the Commission’s powers to tackle illegal gambling is currently before parliament as part of the Criminal Justice Bill. The Commission will be given powers (as will other regulators) to apply to a court for a payment or web blocking order, which will enable it to disrupt illegal activity where they are unable to secure co-operation payment processors. To demonstrate the potential effectiveness of such powers, the Danish Gaming Authority recently announced that it had secured a record number of court orders blocking 83 websites offering illegal gambling In Denmark, of which involved skins betting sites.

I had reason to review 6 separate cease and desist orders issued by the Gambling Commission during the course of last year. Most were for skins sites that either allowed the customer to cash out or exchange skins for items of marketable value.

As the Deputy CEO of the Gambling Commission said in a speech to the Swedish Regulator’s Conference in early March: “What is an illegal, unlicensed operator for me in Great Britain may be a legitimate, licensed business for you, and vice versa.”

The Commission has, understandably, been taking a particularly tough line with the advertising of illegal sites that are targeted at self-excluded customers. All UKGC licensed remote operators are required to sign up to and participate in the National Multi-Operator Self Exclusion Scheme, GAMSTOP. As flagged in their last enforcement report, the Commission’s intelligence unit has picked up numerous illegal gaming sites advertised as being “Not on GAMSTOP” that are specifically targeting vulnerable customers who have entered into self-exclusion on GAMSTOP. However, the advertising of such sites is not restricted to gambling operators. Two of the cease and desist orders we dealt with last year involved businesses that were not part of the gambling industry but were permitting “Not on GAMSTOP sites” to be advertised in their journal. It was a hard lesson for the company as the Commission requested that their ISP block the sites and it resulted in the complete closure of an international nongambling business for six days. The company had not responded to the Commission’s order and so the message is clear: do not ignore a cease and desist order from a Regulator.

International Co-operation between Regulators

The last point I want to cover is the increase in international co-operation between gambling regulators in intelligence sharing to tackle illegal activity. In Europe there has been long standing co-operation amongst the members of GREF (Gambling Regulators European Forum) in the sharing of intelligence and enforcement activity. On 2nd February 2024 the International Association of Gaming Regulators (IAGR) announced the formation of the Illegal Gambling Working Group following extensive discussion at their 2023 Botswana conference. The Gambling Commission has volunteered to steward the Group. This will clearly be a topic of interest at the combined IMGL – IAGR autumn conference in Rome.

At the March conference Sarah Gardner addressed in Stockholm, she confi rmed the signing of an updated Memorandum of Understanding with the Swedish Gaming Authority, being just one many such agreements the Commission has with other regulators – both national and international. In her speech she referenced some statistics that are worthy of note. In just one year the Commission increased their enforcement activity by over 500 percent between 2021/22 and 2022/23 and doubled the number of successful positive business disruption outcomes, in addition to the action taken against illegal promotions on social media.