William Hill fined £19m for ‘social responsibility’ failures

It’s a record that nobody in the gambling industry ever wants to break. The issues stem from repeated failures to adhere to AML and ‘social responsibility’ standards. More on the nebulous social responsibility aspect further down, but first let’s jump right into the facts and figures and get a few things out of the way.

It’s stated that some users were allowed to deposit large amounts without appropriate AML checks by William Hill. The largest examples given were a few in the tens of thousands of pounds, in time spans ranging from around a week to a month. Given the size and scale of money laundering as a whole, this doesn’t even register as a drop in the bucket. Furthermore, the funds were largely (if not all) lost. Not quite optimal if the intent is to actually launder money. There were also reports that license suspension was considered, but realistically that was most likely just tough talk to make the record fine seem more moderate and also to appeal to certain onlookers and activists.

With all of that now out of the way, we can see that deep down this is really about the ‘social responsibility’ aspect. A fundamental issue with this is that there is no clear set of standards, so operators are presumably each just using their own best guesses. Even the term social responsibility is so vaguely general in regards to the gambling industry that I’m not sure anyone could accurately define it well enough to attain a reasonable consensus, let alone create an effective and comprehensive set of standards for it. Below is a list of some, but certainly not all, potential issues and other considerations.

Lack of clarity – Without clear and specific guidelines, it may be difficult for companies or organizations to know what is expected of them in terms of social responsibility. This can lead to confusion and uncertainty, and may result in inconsistent or incomplete implementation of measures. Often feels almost like it is intentionally designed to be impossible to succeed.

Lack of consistency – If social responsibility standards are defined and controlled by a small group of individuals, there is a risk that the standards may be applied inconsistently or unfairly. This can result in some companies or organizations being unfairly penalized, while others are given a pass for similar or even worse behavior. Hmm, wonder which ones will be more likely to get a pass?

Unintended consequences – Implementing the practices may have unintended consequences – such as reducing competition, increasing costs, or limiting innovation. These consequences may have negative impacts on both the industry and society as a whole. Also consider the recent case where a bettor was up 5k (likely much more including bonuses/promos) over months with over 300k total bet, lost 54k in a day with 112k bet, and now suing for it back. Seems it could open up a strategy of various martingales for consistent small profits, then sue when it ultimately goes awry.

Political bias – If social responsibility is defined and controlled by a small group of individuals with a specific political agenda or bias, there is a risk that these standards may be used to promote that agenda or bias, rather than promoting genuine social responsibility. This can lead to a lack of trust and credibility, and may even result in backlash against the concept altogether. Rather coincidentally, ‘gambling harm’ groups and activists skew overwhelmingly in one direction on the political spectrum.

Regulatory capture – If these standards are developed in close collaboration with industry stakeholders or under the influence of industry lobbyists, there is a risk that the standards may be watered down or weakened to suit the interests of those stakeholders. This can result in weak standards that lack any real teeth. Basically just busy-work that needlessly wastes valuable resources.

Compliance burden – Implementing the standards can be a significant burden on operators, particularly those that are smaller or less well-resourced. This can be especially challenging if they’re complex, difficult to interpret, or require significant investment in new processes or systems. Given the ongoing war on smaller operators and gambling startups, it shouldn’t come as a surprise that the giants aren’t fighting back much on these standards.

Liability risk – If social responsibility standards are not clearly defined or if operators are unsure how to comply with them, there is a risk that they may be held liable for any negative impacts that result from their activities. This can result in costly lawsuits or reputational damage. Sound familiar?

Lack of stakeholder engagement – If standards are developed without sufficient input from a diverse range of stakeholders, there is a risk that they may not reflect the needs or concerns of those stakeholders. This can lead to a lack of trust in the standards and may result in stakeholders taking their own, potentially conflicting, approaches to social responsibility. It’s hard to have much empathy for the current stakeholders though, since so many are comfortable banning sharp bettors. But quite hypocritically, they would be immensely enraged if financial markets banned or limited sharp traders.

Risk of whitewashing – When standards are poorly defined or overly vague, there is a risk that companies or organizations may engage in whitewashing or other forms of deceptive advertising. This is where they make misleading claims about their performance in order to improve their reputation. Especially regulated operations, who are very eager (or outright desperate) to dispel the unique stigma of the gambling industry – seemingly at nearly any cost.

Conflict with shareholder interests – In many cases, efforts to implement social responsibility standards may conflict with the interests of shareholders or other investors who are primarily focused on maximizing financial returns. This can create tension within companies or organizations and may make it difficult to gain support for these initiatives.

It seems that activists have really opened a can of worms on this one. Many operators and regulators also share much of the blame – for being largely complicit in allowing these great-sounding, yet poorly thought-out concepts to take hold in the gambling industry. They’re so desperate to shake off the old public image of gambling and present a conspicuously-clean socially-conscious (and laughably fake) image, that they seem to have created an insatiable monster which is now well out of their control and largely in the hands of politicians and astroturf activist groups.

Even when it comes to such a user-centric concept like social responsibility, it seems the hard truth is that the vast majority of users objectively end up even worse off. They  now have to suffer even more intrusive and time-wasting measures, plus pay more for them through worse odds. And when they go through the inevitable losing streaks, they get to look forward to being grilled on being a problem gambler and forced to undergo lengthy enhanced affordability checks where multiple parties comb through practically all of your transactions. How humiliating.

We need better options ASAP. And VCs/investors would be very wise to look into diversifying into promising alternatives, especially with how they have been treated in this current system. We would all be better served by systems centered more around fairness, transparency, and sustainability. Blockchain technology in particular has formidable inherent strengths in these areas and is uniquely suited to the challenges facing the online gambling industry, but only if it is implemented properly.

Whitewashing the current unsustainable and corrupt system with fake notions like ‘social responsibility’ is merely kicking the can down the road. We’re much better off just avoiding that whole legacy minefield, at least as much as realistically possible, and getting down to the real work of investing in and building the systems of the future.

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