The independent MP Andrew Wilkie has warned fines for sports gambling companies that breach their licence conditions are so low they may be counterproductive and sending the wrong message to the $50bn industry.
Ladbrokes was fined $78,540 this week for failing to limit damages caused by former financial adviser Gavin Fineff, who stole millions of dollars from clients to service his gambling addiction. Fineff lost $758,510 with Ladbrokes, which has not returned the money to victims of his crimes.
The Northern Territory Racing Commission, which regulates almost all online gambling companies in Australia, found Ladbrokes did not investigate the source of Fineff’s money and whether he could afford deposits of $2.2m over a 21-month period. Ladbrokes instead offered bonus incentives worth $528,890.
The penalty is the latest in a series of relatively small fines when compared with gambling revenue. Last month, Bet Nation was fined $13,770 for sending a promotional offer to hundreds of gamblers who had asked to be banned from betting. Newscorp-backed Betr was fined $77,000 for directly contacting a man on the self-exclusion register and urging him to open an account.
Wilkie welcomed the ruling against Ladbrokes but said the $78,540 fine would be “lost in the company’s margin of error” and was unlikely to prevent future misconduct.
“A small fine like this is arguably worse than no fine because of the signal it sends to the industry about what you can expect in future. It says if you are found guilty of the most egregious conduct in the future, you can count on a meaningless fine,” Wilkie said.
“It should be an amount that hurts the company financially and hurts them so much that they think, ‘heavens, we can’t afford that again’. It should hurt them so much that shareholders say to the board, ‘that must not happen again’.”
Ladbrokes is owned by Entain, which revealed last year its gaming revenue in Australia surged to a record $304m in just six months. Ladbrokes and other NT licensed operators now have a collective annual turnover of $48.3bn, up from $5.7b a decade ago.
An Entain Australia spogfdgIn the Fineff case, the NTRC imposed the maximum penalty allowed by NT legislation. Its chair, Alastair Shields, recently acknowledged the low fines were an issue, telling an inquiry he’d welcome tougher legislation being introduced by the NT government. A government review into new laws has been under way for five years.
Lauren Levin, the director of policy and campaigns at Financial Counselling Australia, said the NTRC may have been able to impose higher fines if it took a different approach to categorising the breaches.
“The regulator hasn’t explained why it is treating multiple breaches of Ladbrokes failing to identify problem gambling red flags as a single breach,” Levin said.
“Why hasn’t the regulator treated each ridiculously large deposit that Fineff made as a separate event? On every one of those occasions over the two years, someone made a decision to look away. This has let the business off the hook.”
NTRC has been contacted for comment.
Wilkie said the Fineff case demonstrated the need for his private member’s bill, which would place a positive onus on gambling companies to report suspicious transactions to the financial crime authority, Austrac.
“In the case of Ladbrokes, with my bill, the company would be required to pay all the money that Fineff lost back to the people he stole from,” Wilkie said.
Wilkie said his bill has not been selected for debate in federal parliament and would probably lapse from the notice paper in coming months.
