Videoslots Limited has been ordered to pay £650,000 by the UK Gambling Commission for significant anti-money laundering and social responsibility failures.
Under the microscope for the operator of videoslots.co.uk, mrvegas.com and megariches.com was its deposit limit mechanism, which the UKGC noted runs across a calendar month and does not include the customer’s initial deposit.
As a result, a customer was able to lose £5,000 in a month despite having a £3,000 monthly deposit limit. Another also lost £7,500 over 18 days despite having a £2,000 monthly deposit limit.
The UKGC also found that the monitoring systems deployed by Videoslots also did not effectively identify customers who were potentially at risk of gambling harm, citing one customer who did not receive any interaction from the operator despite losing £6,550 over the course of three active days of gambling across a two-month period.
Alongside the financial penalty, Videoslots has received a warning and is also required to undergo a third-party audit to ensure it is implementing its AML and safer gambling policies and procedures.
This is not the first time that Videoslots has been in hot water with the UKGC. In June 2023, the company paid £2m as part of a settlement with the regulator due to similar AML and social responsibility failures.
Open-loop payments in the spotlight
Another area of significant concern for the UKGC was Videoslots’ processes related to accepting payments from pre-payment vouchers.
The case cited a customer who was able to fund their account in excess of £75,000 using digital pre-payment vouchers, before transferring the proceeds of their gambling activity to four different bank accounts.
Despite the presence of these high-risk factors, the customer’s automated AML risk score did not trigger the threshold for the operator to request source of funds information promptly, ‘leading to unacceptable delays in an account review taking place’.
John Pierce, Commission Director of Enforcement, explained: “Open-loop payment systems are high risk in nature because they could enable anonymous deposits and make it harder to trace funds.
“In this case, the licensee failed to implement timely customer interactions and did not conduct enhanced customer due diligence until the customer had reached significant spend thresholds – such failings are unacceptable.”
UKGC guidance classifies all pre-paid payment methods as high-risk due to the ability for these methods to be pre-loaded using cash or, in some cases, cryptoassets.
The commission requires such payment methods to be factored into a customer’s risk profile and appropriate risk-based due diligence to be undertaken.
“Operators must review how open-loop payment systems such as prepaid digital vouchers are managed in a gambling environment because they are high risk and present operational challenges in terms of effective monitoring,” added Pierce.
Commission calls for crypto review
The need to address the rising popularity of crypto payments has been a particular focus for the UKGC’s CEO, Andrew Rhodes, who earlier this month emphasised the “pressure building within the system”.
“The reality is, in some years to come, there will probably be a significant cohort of consumers who use cryptocurrencies because that is what they’re accustomed to. It is a demographic shift that will find they have no place in the legitimate industry because of the currency they use,” stated Rhodes during his CEO briefing.
He added that any changes must be led by government-level discussions, as ‘once you open that door, you cannot close it’.
“The reality is, and this growth in those demographics means, I don’t think governments can ignore that pattern,” said Rhodes.
SlotBeats has reached out to Videoslots Limited for comment.